police. Each man's competitors watched to see that no customer was favored and that no one in the industry sold for a higher-than-ceiling price.

These committees of industry can do the job once more. They can be supplemented locally by State councils of national defense, appointed by the Governors in each State, with subdivisions extending into every community, as in the last war. These local defense councils would know the prices prevailing in their community. Buyers would bring their complaints to the councils which would investigate and bring to bear upon violators the moral pressure of the community. If more drastic action was needed, the councils would refer the matter to the central authorities. No great bureaucracy is necessary.

An over-all ceiling has further administrative advantages over piecemeal, partial control. Under the House bill the burden of proof is upon the administrator; he must justify each time he decides some price is rising too rapidly. Under the over-all ceiling, the burden of proof rests upon those who want the ceilings changed. They must prove a price rise is justifiable.

Under an over-all ceiling, too, there is less likely to be bootlegging and defiance of price schedules. Under piecemeal controls the administrator waits until he sees a price rising too rapidly and then he "cracks down." Often he is put in the position of demanding that a price increase be rescinded. There always are protests. Sometimes the protests are made in the hope that the administrator may be induced to relax. Thus there is something of a struggle between the price administrator and the industry. Under the over-all ceiling, if any particular price is felt to be unjust, the persons affected can come in and state their case. Before they take to bootlegging or to fighting the administrator they will avail themselves of this possibility to have their ceilings adjusted in the regular way.

However, it is no solution of a problem to ignore it and it is no argument against a thing to say that it is administratively difficult. Nothing about war is easy. But we have a job to do, of preventing inflation, so let us do it. Halfway measures will not give us victory. The inescapable fact is that the demands of total war have everywhere disrupted the ordinary workings of the law of supply and demand. Unless administrative controls are developed to take the place of the law of supply and demand, the people will be left to the mercies of runaway markets, speculators, hoarders, and profiteers.

It takes time for the law of supply and demand to work and in war you do not have the time. Industrial mobilization demands the complete control of your economy so that the resources of the entire Nation can be tapped-all the resources, everywhere—and so that your economy can be adjusted swiftly and effectively to every change in the military situation. You cannot rely upon hit and miss, leave it to chance methods.

As an example, take the problem of getting workers to move from civilian industries to defense plants where their skills are more vital to the welfare of the country. At present we are relying upon haphazard methods to accomplish this, through a bidding up of wages. Defense industries bid against one another, and against civilian industries, and civilian industries, in turn, bid against defense plants. Some workers are drawn from civilian plants to defense factories; some defense factories lose workers to civilian plants. Competitive wage bidding works both ways with the net result that all wages are driven up into what may become an inflationary wage spiral.

With an over-all ceiling, however, by administrative action you can establish differentials for the wages of those industries to which you want to draw your workers. It is like establishing a slightly higher price to bring in highcost production which is needed. You don't bid up all wages; you simply raise the wages you want raised. You do not tell a worker he must take this job or that one. You rely entirely on the normal wage incentive. Only, where under supply and demand the wage incentive may interfere with your objective, under a wage ceiling you direct it to do what you want it to do. It is true a price control law means an enormous grant of power to the Government. Modern war demands such power being granted our Commander in Chief-it is as important as is his control of the armed forces. The question is not whether our normal competitive economy is to be suspended. It already is suspended. The question is, will our industrial mobilization prove effective? If it is not, we may lose the chance ever to return to a free economic society.

If our mobilization is to be effective we must tackle the job that has to be done and get it over with. We must stop trying to do things in a piecemeal, half-hearted way; we must stop backing into things, stop postponing

unpleasant decisions, stop trying to do things and not do them at the same time. We must have an all-out price control law to support an all-out industrial effort. Persons will say that all this is true but that "the people are not ready for anything but a piecemeal, stop-gap price-control law." To such men of little faith in the American people can be recommended the words of George Washington to the members of the Constitutional Convention.

"It is too probable," he told them, "that no plan we propose will be adopted. Perhaps another dreadful conflict is to be maintained. If, to please the people, we offer what we ourselves disapprove, how can we afterward our work? Let us raise a standard to which the wise and honest can repair. The event is in the hands of God."

Any price-control law should contain certain_administrative features which the experiences of the last war showed are vital:

1. The administration of price control should be vested in one man, answerable to the President. All questions of review can be left safely to the courts. The weakness in having prices administered by a board is that you don't get the prompt decisions which the emergency demands. If a board is decided upon, final authority should be given the chairman.

2. A licensing system is vital.

3. The buyer and seller both must be made equally punishable for infractions.

4. The price administration should have the right to buy and resell at lower prices so that marginal production can be tapped without giving normal cost producers a windfall.

5. The price administration should have the authority to buy all imported materials, other than those being brought in by the Reconstruction Finance Corporation, and to resell them domestically. This is to prevent imported materials from upsetting the domestic price structure.

Senator BROWN. Mr. Ginsburg, I think you could give us very briefly the legal, constitutional aspects of this matter. I understand you have a brief that you will file, and we will put that at the end of your statement, but if you could, I am saying-could you in 10 minutes give us a general summary?

Mr. GINSBURG. I think so.

Senator BROWN. And perhaps some of the members of the committee would want to ask you a question or two.

Mr. GINSBURG. I really think it ought not to take 10 minutes, now. Senator BROWN. All right. Go right ahead.

STATEMENT OF DAVID GINSBURG, GENERAL COUNSEL, OFFICE OF PRICE ADMINISTRATION

Mr. GINSBURG. The problem that we face is the problem of controlling commodity prices in time of war. That matter in its legal aspects has adequately been determined already by the Supreme Court. There is precedent for the control of food prices under the Lever Act, and also in connection with the fixing of prices on coal. The Supreme Court has sustained the power of Congress to do what we propose to do, in United States v. Macintosh, 283 U. S. 605, and in Highland v. Russell Car & Snow Plow Co., 279 U. S. 253. What is proposed here is a broader provision to bring within a single statute the kind of price-control powers that were exercised both by the price-fixing committee of the War Industries Board and by the Food and Fuel Administrations under the Lever Act. They are all subsumed under the single statute.

Now, secondly, we feel if it is necessary to go beyond the war powers, that a statute of this kind could probably be sustained-we have no special precedent for it-under the fiscal and currency powers. I am not urging that. I think it is a matter which will be

presented to the court at the time that this legislation comes before it on a test of constitutional validity. If the legislation is not sustained under the war powers or under the fiscal and currency powers we could probably go to the commerce power. That would not cover all the things that are included under the statute, but it would cover the great bulk of the materials that are likely to be regulated under this act.

So far as the fifth amendment is concerned, we have run into no particular problems. There can be no real question that price stability is imperative during this period of emergency; nor is there any doubt that we are proposing means reasonably adapted to achieving this end. The standards of the bill are perfectly clear. We do not face the difficulties of the Lever Act as to indefiniteness or uncertainty. Prices are explicitly fixed or margins are explicitly fixed, so that we have no problem of an "unreasonable" price or a price which would be generally too high and which would leave people at their peril to determine the lawful price under the bill.

These matters were fully considered by the House committee. The hearings contain long briefs on the constitutional points.1 We have summarized those briefs in a single memorandum which at the conclusion of Mr. Henderson's and my own testimony we propose to insert in the record here. There are some other questions. I do not think it is necessary to discuss them now.

START

Senator BROWN. Are there any questions from any member? Senator BANKHEAD. Mr. Henderson, Senator Taft remarked this morning that agriculture was the only business or industry that had a specific limitation, and seemed to think that was beneficial. Now, on page 8 it seems that newspapers are excluded also from it. In fact, there is no ceiling at all, and in fact you cannot put any on them at all?

Mr. HENDERSON. Section 2 (g) imposes certain limitations.
Senator BANKHEAD. In the matter of advertisements?

Mr. HENDERSON. That section reads that

The powers granted in this section shall not be used or made to operate to compel changes in any business practices or cost practices or methods relating to advertising.

Senator BANKHEAD. Will you explain that, so if I have to explain it myself and justify it I will know the ground I am doing it on? Mr. HENDERSON. Well, Senator, I did not draft that language. Senator BANKHEAD. I have been asked about it, and I did not know anything about it.

Senator TAFT. Was this amendment put on the House floor, or what?

Mr. HENDERSON. No.

Senator BANKHEAD. It was an amendment put in by the committee, Senator, as you see there, part of it sticking out there by the House.

Senator TAFT. No. Yes; Mr. Henderson is suggesting a change, but I wondered where the thing came from originally.

Mr. GINSBURG. In the House committee.

Mr. HENDERSON. In the House committee.

1 Hearings before the House Committee on Banking and Currency on H. R. 5479 (superseded by H. R. 5990), pp. 63-87, 302-340, 983-985.

2 See pp. 218-239, infra.

Mr. GINSBURG. It was not considered at the hearings, did not come up on the floor, just came in during executive session, by the committee.

Senator BANKHEAD. It was requested?

Senator BALL. It was to avoid a reduction in the advertising budget to cut their prices.

Mr. HENDERSON. That is right.

Senator BALL. That is about all.

Mr. HENDERSON. As I understand, it was intended to prevent the price administrator from forcing a cut in the amount of the advertising budget as a means of reducing the price.

Senator BANKHEAD. Well, you mean, now, the quantity or the price of the advertising?

Mr. HENDERSON. Well, the amount of dollars spent for advertising.

Senator BROWN. Well, it would operate in this way: That you could not go to Macy's in New York and tell them that they had to cut their advertising.

Mr. HENDERSON. You could not go, for example

Senator BROWN. That is what the prohibition is. That is what it

means.

Mr. HENDERSON. You could not go to

Senator BANKHEAD (interposing). Do you know whether the newspapers requested it or not?

Mr. GINSBURG. Yes, sir.

Senator BANKHEAD. They did?

Mr. HENDERSON. I think that some of the organizations representing newspapers did.

Senator BROWN. Radio?

Mr. HENDERSON. The radios.

Senator TAFT. I do not know what Mr. Ginsburg's opinion is, but I would think that he could do it anyway, so I do not really think it would make much difference. I do not think there is anything in this bill to give the Administrator the power to go out and say to newspapers, "You cannot spend money on advertising," "You cannot spend money on labor," or tell them how to run their business. Senator BANKHEAD. I am not objecting to it. I am trying to find out the justification for it and the reason for it.

Senator TAFT. I would think it was wholly unnecessary, myself. Senator BROWN. Well, it still leaves you the power unimpaired to fix the price, does it not?

Mr. GINSBURG. Yes, sir.

Senator TAFT. I do not think there is.

Senator BROWN. And it merely means that you cannot dig in and say, "You have got to cut out this advertising"?

Mr. GINSBURG. We cannot reduce the price and justify that reduction on the ground that the seller can take the reduction out of his advertising budget. That is all.

Senator BROWN. It does not mean very much as a matter of limitation cn power.

Senator TAFT. You do not want to bring it out in advertising, anyway. You do not have to, I mean.

Senator BROWN. Well, are there any other questions of Mr. Ginsburg? I assume that you gentlemen will be available during the

3 or 4 more days that we intend to continue these hearings. We are now hoping to finish on Wednesday night. We will try very hard to do so. Unfortunately we shall be unable to meet tomorrow morning, but we shall meet at 2 o'clock tomorrow afternoon. Have you another question? Senator Brookhart is here and is going to testify this afternoon on the farm amendment.

Senator DANAHER. I want only a minute with Mr. Ginsburg as to the matter of mechanics involved in the principal section appearing on pages 18 and 19 of the committee print.

Mr. GINSBURG. Yes, sir.

Senator DANAHER. I want to call your attention to subparagraph (b), lines 5 to 10, on page 19. I notice that you are reserving to the Administrator the right to take official notice of economic and other facts. Well, of course, you have opened the door to anything and everything there, have you not?

Mr. GINSBURG. No, sir. This provision, Senator Danaher, derives from the recommendations of the Attorney General's Committee on Administrative Law. By referring to "economic and other facts," we had nothing in mind except to avoid being confined to strictly economic facts. We might take official notice of the fact that we are at war; we might take official notice of the status of employment. Perhaps all such matters are included in the term "economic." We merely sought to avoid a limiting construction.

Senator DANAHER. Do you see any reason why the leeway given to you in that section should not be related to the requirement that you state the considerations involved in the issuance of the regulation or order that is referred to on page 4?

Mr. GINSBURG. Yes, sir. We had this in mind.

Senator DANAHER. All right.

Mr. GINSBURG. The statement of considerations comes out when the regulation is promulgated.

Senator DANAHER. That is right.

Mr. GINSBURG. And before it gets into the emergency court you may remember that under the bill we are required to file a statement of the economic and other facts of which the Administrator has taken official notice. Thus we can indicate to the court the operation of the regulation within the industry, and so forth, so that the court is presented with all relevant information that comes after the issuance of the regulation. That function could not be discharged if we were required to state everything in the original statement of considerations. There is a difference in timing. We really file with the court two statements of considerations: One at the time of the issuance of the regulation; the second, at the time that the regulation comes into the hands of the emergency court. We may take something into consideration at the time of the issuance of the regulation. But new facts or other facts may become available or be discovered later, so the official notice provision is designed to serve the real function of helping us with the preparation of supplementary statements at a time when they are to be filed with the emergency court.

Senator DANAHER. Well, granting that you do file a statement of considerations at the time of your issuance of your original order referred to on page 4

Mr. GINSBURG. Yes, sir.