Senator MOODY. Don't you feel that, if the Government should follow the advice of these witnesses, we would be playing squarely into the hands of Mr. Stalin and the Communists? Senator O'MAHONEY. Well, we would certainly advance the cause of inflation. Let me point this out: The record is clear, you will find it in the material of the Joint Economic Committee. Inflation now, post-Korea, has been the worst that we have ever experienced. It is the worst of any of the three wars in which we have been engaged. I call this Korean situation a war. In World War I, inflation carried prices to an extraordinary level, and so high did they go that when World War II came Congress decided, "Well, we have got to control prices." Inflation did not take hold in World War II because we did control prices. Senator MOODY. So there has been more inflation in the Korean War than there was in World War II? Senator O'MAHONEY. Not only more than in World War II, but more than in World War I. When we got in Korea in June, we tried to prevent inflation by voluntary action and voluntary agreement, without having a general rule, and prices now are at a pinnacle that, I think, ought to alarm anybody who understands that the basis of our modern crisis is economic. So I am quite sure that we ought to do that. Now, may I point out that this Committee on the Economic Report publishes every month a volumn known as the Economic Indicators. Copies are for sale through the Superintendent of Documents. The sales are running at the rate of about 2,500 copies a week. People from all over the United States, students, businessmen, and others, are buying these indicators, because they recognize the economic character of our problem. Ten of the joint committee's reports were on sale for varying lengths of time during the period from April 1950 to March 1951, and total sales amounting to approximately 10,000 copies occurred. I have a list here of all of the publications of the Joint Committee on the Economic Report, and I will ask unanimous consent, Mr. Chairman, that they be printed in the record here. The CHAIRMAN. They may be printed in the record. (The document referred to above is as follows:) PUBLICATIONS OF THE JOINT COMMITTEE ON THE ECONOMIC REPORT 1 JANUARY 1949-MARCH 1951 Joint Economic Report (Report of the Joint Committee on the Economic Report on the January 1949 Economic Report of the President), Senate Report 88: March 1949 Joint Economic Report (minority views of the Joint Committee on the Economic Report on the January 1949 Economic Report of the President), part II of Report 88: April 1949. Employment and Unemployment (initial report of the Subcommittee on Unemployment), committee print: July 1949. *Economy of the South (the impact of Federal policies on the economy of the South), committee print (sale price 25 cents): July 1949. 1 Publications marked with an asterisk (*) are on sale at the Superintendent of Documents, Government Printing Office, Washington 25, D. C. It is the general practice of the Joint Economic Committee to make available a limited supply of single copies of its publications for free distribution and to arrange for the sale of its studies through the Superintendent of Documents to take care of quantity orders. Printed reports of hearings are available only on special request for each hearing, and are distributed to depository libraries throughout the country. *Factors Affecting the Volume and Stability of Private Investment (materials on the investment problem assembled by the staff of the Subcommittee on Investment) Senate Document 232 (sale price, 55 cents) September 1950: reprinted from committee print of October 1949. Hearings on Federal Expenditure and Revenue Policies, September 23, 1949, containing National Planning Association reports prepared by Conference of University Economists: October 1949. Selected Government Programs Which Aid the Unemployed and Low-Income Families (materials assembled by the staffs of the Subcommittee on Unemployment and the Subcommittee on Low-Income Families) committee print: November 1949. *Low-Income Families and Economic Stability (materials on the problem of lowincome families assembled by the staff of the Subcommittee on Low-Income Families) Senate Document 231 (sale price, 30 cents) September 1950: reprinted from committee print of November 1949. *Compendium of Materials on Monetary, Credit, and Fiscal Policies (a collection of statements submitted to the Subcommittee on Monetary, Credit, and Fiscal Policies by Government officials, bankers, economists, and others) Senate Document 132 (sale price, $1): January 1950; reprinted from committee print. of November 1949. Hearings, Subcommittee on Investment (September 27, 28, 29, 1949) November 1949. Basic Data Relating to Steel Prices (materials assembled by the staff of the Joint Committee on the Economic Report for use in steel hearings) committee print: January 1950. *Highways and the Nation's Economy (materials assembled by the staff of the Joint Committee on the Economic Report), Senate Document 145. (Sale price 20 cents): January 1950. Hearings on Monetary, Credit, and Fiscal Policies (September 23, November 16, 17, 18, 22, 23, and December 1, 2, 3, 5, 7, 1949) January 1950. *Monetary, Credit, and Fiscal Policies (Report of the Subcommittee on Monetary, Credit, and Fiscal Policies), Senate Document 129. (Sale price 15 cents): January 1950. *Employment and Unemployment (Report of the Subcommittee on Unemployment), Senate Document 140. (Sale price 30 cents): February 1950. Hearings, Subcommittee on Investment (December 6, 7, 8, 9, 12, 13, 14, 15, 17, 1949), February 1950. Hearings, Subcommittee on Low Income (December 12, 13, 14, 15, 16, 17, 19, 20, 21, 22), March 1950. Hearings, January 1950 Economic Report of the President (January 17, 18, 19, 20), February 1950. Hearings, December 1949 Steel Price Increases (January 24, 25, 26, 27), March 1950. *Low-Income Families and Economic Stability (final report of the Subcommittee on Low-Income Families), Senate Document 146. (Scale price 20 cents): March 1950. *Volume and Stability of Private Investment (final report of the Subcommittee on Investment, Senate Document 149. (Sale price 15 cents): March 1950. *December 1949 Steel Price Increases (Report of the Joint Committee on the Economic Report), Senate Report 1373. (Sale price 20 cents): March 1950. *Handbook of Regional Statistics (material assembled by the staff of the Joint Committee on the Economic Report), committee print. (Sale price $1): April 1950. *Joint Economic Report (Report of the Joint Committee on the Economic Report on the January 1950 Economic Report of the President), Senate Report 1843. (Sale price 35 cents): June 1950. *General Credit Control, Debt Management, and Economic Mobilization (materials prepared by the staff of the Joint Committee on the Economic Report), committee print. (Sale price 25 cents): January 1951. Underemployment of Kurat Families (materias prepared by the staff of the Joint Committee on the Economic Report), committee print: February 1951. *The Economic and Political Hazards of an Inflationary Defense Economy (materials prepared by the staff of the Joint Committee on the Economic Report), committee print. ( (Sale price 25 cents): February 1951. Hearings, January 1951 Economic Report of the President (January 22, 24, 25, 26, 29, 31, February 2), March 1951. 85166-51--3 *Economic Indicators (a monthly publication of the Congress under Public Law 120, 81st Cong., 1st sess.) (Sale price 15 cents a copy, $1.75 a year): monthly. Joint Economic Report (Report of the Joint Committee on the Economic Report on the January 1951 Economic Report of the President), Senate Report 210: April 1951. The CHAIRMAN. You may proceed. Senator O'MAHONEY. Now, one of the questions which was addressed to me arouses a good deal of interest in my mind. The CHAIRMAN. Would it inconvenience you seriously if I asked you a question or two at this point? Senator O'MAHONEY. Not at all. The CHAIRMAN. I just wanted to make it clear for the record that the illustration you gave with reference to the newsprint or paper industry is just one of many such cartels that have control of our econ.omy, is that correct? Senator O'MAHONEY. Precisely. The CHAIRMAN. You only used that as one illustration? Senator O'MAHONEY. That is right, just one illustration. The CHAIRMAN. On this other point raised by Senator Moody with reference to controls, I took the position, and I am sure many others did, that controls should have been applied immediately at the outbreak of the Korean war. Senator O'MAHONEY. That is right. The CHAIRMAN. And all prices, wages, and everything should have been frozen as of that date? Senator O'MAHONEY. That is right. The CHAIRMAN. Congress enacted the Production Control Act, I believe, in September, but then no action was taken on it in that regard until the latter part of January. It was during that period that the inflationary spiral skyrocketed; isn't that correct? Senator O'MAHONEY. The Senator is quite right. I have here in this Economic Indicator a chart which shows wholesale prices. This appears on page 4 of the document. Now, in March 1950, the index of wholesale prices for all commodities was 152.7. In July, a month after Korea, it had risen to 162.9, a 10.2 point increase. In September it went up to 169.5. In April, 183.5. Now, you see, in April finally we began to act. Since April the index has been running by weeks, April and May, May 1 being the last : April 3, 183.3; April 10, 183; April 17, 183.1; April 24, 183.6; May 1, 183.4. A So the record shows that, once action began, as the chairman of this committee and many others of us recommended, then prices began to level off, but not until they had reached a tremendous pinnacle never before reached in World War I or World War II. The CHAIRMAN. How many points had they risen there? I think it is thirty-some-odd points from last June? Senator O'MAHONEY. It is a little over 31. Senator MOODY. I might say that I think you are quite right, and that Senator O'Mahoney is quite right, that it was the delay in imposing the controls which Congress authorized that brought about this rise. I would like to point out, however, that apparently the President's purpose in that delay was an effort to see whether the economy could not operate without controls, and that he was endeavoring to put into effect or to leave in effect the very natural economic forces that these people are now asking that he count on solely after he has finally acted. So I just wanted to make the point since the Senator was so eloquently spelling the situation out that Congress must not let this thing be weakened again, or in my judgment we will be hit very badly by an even worse inflation. The CHAIRMAN. I think this has illustrated to us the necessity of prompt action. Senator MOODY. Yes. Senator O'MAHONEY. Mr. Chairman, to get back to the subject, the sentence in your letter on which I would like to make just a little comment is this: Should the members of the Joint Economic Committee include responsible leaders of both parties so as to strengthen its function of coordinating the activities of the various legislative committees in the economic field? My answer to that is that I don't think it is at all necessary. To do so would in my opinion just be another act of concentration of responsibility. The responsible leaders, so called, that is, the elected leaders of the parties in Congress, have a lot to do by the ordinary procedural duties which are imposed upon them. I think that representative government demands that we distribute the responsibility. There are very many able and patriotic Members of Congress in both Houses, junior Members of Congress, in point of service, who have not, through the seniority rule, risen to places of responsibility, who can take the time to devote to the study and research which is required to develop a public consciousness of the economic facts of life, and for that reason I feel that in the distribution of the load there should not be a rule which would put the responsible leaders of Congress on this committee, because that would have tendency to bring about judgments by the Joint Economic Committee which were prompted by the objectives which the leaders temporarily had to carry out. You want, I think, a free field of study. So I would decidedly recommend against that. It is part and parcel of the suggestion which I have heard come from other sources, that there should be a system of party responsibility by which the members of any party would be expected to adhere rigidly to the rules of the party. I don't need to point out that that suggestion of party responsibility is directly in harmony with the party line of the Soviets. Nobody can disagree. One of the reasons that I am a Democrat, Mr. Chairman, is because we can disagree. we. The CHAIRMAN. Yes; we can disagree with the Republicans, can't Senator O'MAHONEY. That is right. Sometimes we disagree too much. But that is the fault of democracy, and when you have controlled opinions or directed opinions you are getting away from democracy, and you are stepping over to the other line. Mr. Chairman, I have taken too much time, and I have fallen into the error which, of course, is recognized by everybody, that when you come without a prepared manuscript you talk too long. The CHAIRMAN. Not at all, Senator. Senator O'MAHONEY. Thank you very much. The CHAIRMAN. I appreciate particularly your answering the question in my letter because, as you say, that suggestion has come from various sources. While we are making this study we want to cover every aspect of these problems and these suggestions, so that we can take them all into account when we try to write this legislation. Senator O'Conor, do you have any questions? Senator O'CONOR. No questions, thank you. The CHAIRMAN. Senator Monroney? Senator MONRONEY. No questions. The CHAIRMAN. Senator Dworshak? Senator DwORSHAK. I just want to commend our colleague for his splendid presentation, and if time permitted I would like to ask some questions on it. I shall ask one question of my friend from Wyoming, and that is as to whether he does not recognize it as extremely difficult to control or curb inflationary trends at this late hour, when the record shows that for at least a decade we have planted the seed consistently which inevitably would produce the crops which we are now harvesting. We all recognize that, as the Senator pointed out, it would be unnecessary for the Soviets or any other communistic forces to engage in war with this country if they could compel us insidiously to destroy our economy and to bankrupt our Government. I wonder if the Senator does not recognize that, while we talk about doing some of these things, it would have been much better had we actually taken steps to curb these trends, which we recognize now as overwhelming not only our economy and our Government, but likewise have so influenced the thinking of the public that it is very, very difficult, if not impossible, to change our course at this late hour. Senator O'MAHONEY. Well, Mr. Senator, my answer to you is that it is never too late to do right. Let's begin now. Senator DWORSHAK. It would have been much better 5 or 10 years ago. Senator O'MAHONEY. Of course, you will remember there were all sorts of resistance. Senator Dworshak, you know that I have been preaching Federal charters for corporations for 15 years, and I have not gotten anywhere yet, but it is a fact apparent to everybody that only such a remedy will stop the growth of Government and restore economic freedom and economic independence by placing the responsibility for economic freedom upon the managers of organizations. We seem to forget that we are in a collectivist economy, and we are trying to prevent the transposition of our political representative government into a collectivist government. I say that if you want to stop the growth of a collectivist government, you have first got to begin where the cause is, and that is in the collectivist economy. Now, these cartels are collectivistic. The great corporations of the United States are collectivist institutions. Did you read in the papers the other day the great pride of the American Telephone & Telegraph Co. in the fact that the one-millionth stockholder had purchased stock |