UNITED STATES DEPARTMENT OF LABOR AUG 16 BURLAP AUG IS-TIN AUG 12-COPPER AUG T SEP OCT NOV 180 160 140 120 100 DEC INCLUDES SUGAR, RUBBER, HIDES, PRINT CLOTH, SILK, BURLAP, STEEL SCRAP (CHICAGO), STEEL SCRAP (PHILADELPHIA), TIN, COPPER, LEAD, ZINC 2. INCLUDES WHEAT, FLAXSEED, BARLEY, CORM, BUTTER, TALLOW, MOGS, STEERS, LARD, COFFEE, COCOA BEANS, SHELLAC, ROSIN, COTTONSEED OIL, WOOL TOPS, COTTON in the way of experience or information, and the fact that they were dumped right down into it with a declaration of war after prices had been rising for so many months. Senator MALONEY. What held you back on the controls of the other commodities? Time? Mr. HENDERSON. Well, partly that, but also the nature of the commodity and the fact that we have a parity policy on agricultural products. Senator MALONEY. Was it principally agricultural products? Mr. HENDERSON. Well, it was agricultural products and the imported commodities, which are very difficult Senator MALONEY. Do you mean like coffee? Mr. HENDERSON. Yes; and, recently, plus the distributive items, like wholesale and retail. Senator BROWN. The Government-not particularly your section of it, but the Government-had some definite controls over some products; for instance, sugar. The Department of Agriculture has pretty definite control over the price of sugar. Mr. HENDERSON. I do not believe so. We had to step in after it had got to about 3.87 and peg it at 3.50. I must say that they had as fine information as you would need for control of any commodity. It was a very exceptional working relationship that we had. Senator BROWN. That was based upon statutory authority in the Department of Agriculture. Mr. HENDERSON. Well, their information was, yes; what we did was not based upon statutory authority. Senator TAFT. It has never occurred to the Department of Agriculture to impose maximum prices if the legislation does not authorize it? Mr. HENDERSON. No. However, they have had a standard which the American producers have never been satisfied with. They took some language that was in the President's message as a guide to the price that they shall attempt to maintain as protection to consumers. Senator BROWN. That is in the law, Mr. Henderson. I was a member of the conference committee that wrote that section, and we had the idea that it gave the Department definite control over the price of sugar within certain limitations. Mr. HENDERSON. Well, some of your fellow Senators, particularly those from the southern Mississippi region and the Michigan region— the cane-sugar and beet-sugar people-disagree considerably. They have disagreed in my office about it. At any rate, we have been holding the price of sugar at 3.50 since August. Senator MALONEY. In connection with sugar, you said this morning, I think, that you were about to move into the field of coffee, and things like that. Do you in such instances and this question is prompted by what has happened in the last few days-take up the matter with the State Department? Mr. HENDERSON. Yes; we take the matter up with the State Department and with all the other interested agencies. I do not want that to mean that we are always bound by their inclinations on it. Senator MALONEY. I should hope that you would be considerably persuaded by them right now, because as we fuss around with sugar and coffee and such things from South America and neighboring countries, right now it is pretty important that we at least hear their story. Mr. HENDERSON. Well, if I may explain, we have had continuous contact with those commodities by experts for several months. It is not a case of taking hasty action. I should like to refer to chart 27 in passing [indicating]. It takes three items: Taxes, wages and salaries, and cash farm income. It compares them 1940 over 1939, 1941 over 1940, and 1941 over 1939. It compares profits before and after taxes. The purpose was to see whether or not there had been a disparity between what had happened on income to the wage earner and to the farmer. Senator BROWN. Well, name for us each column. Mr. HENDERSON. This first column is "Corporate profits before taxes," and that is the percentage increase. This is "Corporate profits after taxes." This is "Wages and salaries." This is "Cash farm income." CHART 27 PERCENTAGE INCREASES IN PROFITS WAGES AND FARM INCOME 1940 OVER 1939, 1941 OVER 1940, AND 1941 OVER 1939 Senator TAFT. The percentage increase over what? Mr. HENDERSON. Over 1939. NO. 461 You see, this first one is 1940 over 1939, and in that period the farm income was up only 5 percent and wages and salaries were up only 9 percent. When you get into 1941 over 1940, the wages and salaries increased 12 percent, and the cash farm income increased 23 percent. When you get into 1941 over 1939, this total period, wages and salaries have a slight advantage there. These do not attempt to measure volume; they measure percentage increases. This line [indicating] would be about $11,000,000,000 if it represented corporate profits before taxes, and [indicating] the cash farm income would be around $11,000,000,000. Senator BROWN. When you say 1939, is that based on the incometax reports for 1939 or for the year 1938? The amount collected in 1939 representing 1938 income? Mr. HENDERSON. No. It represents 1939 income. Senator TAFT. Could you put into the record the absolute figures? Mr. HENDERSON. Yes. They are as follows: TABLE 2.-Profits, wages, and farm income, 1939, 1940, and 1941 Corporate profits.-1939 from Bureau of Internal Revenue; 1940 and 1941 estimated from various sample studies and their past relationship to total corporate profits and the national income. Corporate profits as here used exclude intercorporate dividends and tax-exempt interest. Wages and salaries.-U. S. Department of Commerce; 1941 estimated on basis of first 10 months. Wages and salaries as here used exclude work-relief wages. Cash farm income.-U. S. Department of Agriculture. Includes Government benefits. Senator TAFT. Of course, if you start the profits from 1938, which was a bad year, it would mean much. Mr. HENDERSON. As I say, this chart was not prepared especially for this hearing. We wanted to find out whether in the matter of cash income wage earners and farmers had had any different results. On chart 28 [indicating] we show that while hourly earnings in manufacturing industry have gone up, the output per man-hour has gone up at the same time. Let me translate that into terms of how it affects us on the inflation problem. Senator BROWN. Is that "75" over at the extreme left the cents per hour? Mr. HENDERSON. No; this is an index. This is an index in which 1935 to 1939– Senator BROWN. What are those figures: 75, 88, 90? Mr. HENDERSON. That was based on the index for 1935-39 equaling 100. Senator SPENCER. Percentage increase? Mr. HENDERSON. Yes. What that would mean is this: if you would assume that you had one unit of output produced for an average hourly earning of 50 cents, then you might have had an increase of 15 percent, or up to 572 cents an hour; but you had also, at the same time, an increase in production of 15 percent. Senator BROWN. To what do you attribute that great increase in production? To more efficient machines or to more rapid work on the part of the men? CHART 28 REAL HOURLY EARNINGS AND OUTPUT PER MAN-HOUR 1929-1941 Mr. HENDERSON. No; to using our idle capacity and running full time. It is a decrease in the unit cost. We had a tremendous reduction in the ton cost-wage cost-of steel by reason of getting up to the use of 100 percent capacity. Out of part of that reduction, the increases to the steel workers were paid last March or April in that negotiation. Since that time, however, we are beginning to have an increase in the cost per unit of production. We passed our most glorious period, our low-cost-per-unit period, somewhere in the late spring. I would say that we probably had a 7percent increase in the unit cost in American manufacturing since spring. |