Mr. REGAN. But now you have put a ceiling of $65 on all. What I would like to get clear is why it would be better to have a $63 floorthere is a floor and ceiling-a $63 floor and a $65 ceiling.

Mr. EWING. That is right.

Mr. REGAN. Why would the mines that were profitably operating at $27 per unit be given the advantage of $63 a unit and ones that were just making a bare profit at $63 would be given a possible $2 advance. Wouldn't it be better, in your opinion, if we returned to the premiumprice support of these metals rather than to

Mr. EWING. I recommended a premium-price plan on tungsten. I felt it was the only answer to it. I don't think that a $65—I recommended a premium price, but a premium-price plan would probably have taken 6 months to get into operation. They need that tungsten now. For that reason we went along with the $65 price. Mr. Boyd thought that that would probably get the maximum production.

Mr. REGAN. Were you convinced that it would take 6 months to get such a program in operation when we had a program well worked out during World War II that seemed to be a satisfactory formula to operate under?

Mr. EWING. You see, it isn't our responsibility, Mr. Regan, to set up that, and we had to ask the other agencies about how long it would take to get this premium-price plan.

Mr. REGAN. That is one of the things we are trying to find out. Who are these agencies that have a definite program, but it was your opinion that a premium-price support would be preferable to the floor ceiling?

Mr. EWING. I felt that it would be. I doubt if we could have gone along on as low a price, however, for any one mine at $28. I don't think that that probably would have worked because they are going to be working lower-grade ores to increase their production. It seemed to me that if we were to hit a price and take the four or five large operators, set a price that was profitable for them, you would have to adopt a premium-price plan for these smaller operators. I still maintain that you will have to do that, to get the maximum production. Mr. REGAN. Mr. Ewing, this committee is very much concerned about carrying out its duties and the law passed in September 1950 to secure if possible the strategic metals and minerals needed in this country.

We thank your staff for coming. We will probably not ask you to reappear until sometime in the course of the next 30 days. Just before adjourning, Mr. Saylor had a couple of questions he would like to ask.

Mr. Saylor, of Pennsylvania.

Mr. SAYLOR. Mr. Ewing, since your name is rather unusual are you any relation to Oscar Ewing?

Mr. EWING. Well, I will tell you, my only thought on that

Mr. SAYLOR. Yes, or no.

Mr. EWING. I don't know.

Mr. SAYLOR. I am interested in a member of your staff that you have there with you, Mr. Lipkowitz.

Did you appoint him?

Mr. EWING. No. Mr. Lipkowitz actually works-he was brought in, I believe, by Mr. Gardner Atlee and Mr. Grif Johnson. The

staffing of the agency on economists has been done by the economic advisers to Mr. DiSalle and to Mr. Eric Johnston.

Mr. SAYLOR. Yes. Now, do you know whether or not Mr. Lipkowitz sought this job himself?

Mr. EWING. I have no idea. I think he was drafted. I think he was asked to come over and help.

Mr. SAYLOR. Do you know who asked him?

Mr. EWING. No; I don't.

Mr. SAYLOR. Did Mr. Lipkowitz have any access to secret information with regard to our Military Establishments?

Mr. EWING. I don't believe that we have any access to any of that in our office.

Mr. SAYLOR. After his term or leave of 3 months expires, is he going to go back to the organization?

Mr. EWING. I couldn't answer that. You would have to ask Mr. Lipkowitz.

Mr. SAYLOR. You don't know?

Mr. EWING. I don't know.

Mr. SAYLOR. Do you know whether the Soviet Union or any of its satellites are represented on the organization that has given him a leave of absence?

Mr. EWING. As a matter of fact, I know very little about the World Bank. I wouldn't be qualified to answer that question.

Mr. SAYLOR. In other words, you don't know much about some of the people that are on your staff that are in very key positions.

Mr. EWING. As far as I am concerned, Mr. Lipkowitz' service to us has been very satisfactory.

Mr. SAYLOR. But you don't know much about his background other than given right here?

Mr. EWING. Not in complete detail; no.

Mr. SAYLOR. Is your organization going to be one of the key or ganizations with regard to the minerals and metals which will be strategic to the defense of this country, if we have an all-out war! Mr. EWING. That is correct.

Mr. SAYLOR. That is all.

Mr. REGAN. Our time is way past due.

Mr. BUDGE. Could it be agreed that these witnesses, both of them, will be available to the committee at a later date?

Mr. REGAN. I think that was the understanding of the statement that the Chair made. We might want to call them back and other members of your staff at a later time in the month, but for the present at least we will just excuse you and your staff.

Mr. EWING. Thank you.

STATEMENT OF MICHAEL V. DISALLE, DIRECTOR OF PRICE STABILIZATION

Mr. Chairman and members of the committee, title IV of the Defense Production Act of 1950, which defines the extent of, and limitations upon, our authority to stabilize prices and wages, contains no provisions pertaining particularly to minerals and metals. By this, I mean that Congress did not include in the act any specific pricing instructions with respect to minerals and metals, like those set forth for agricultural commodities, and our authority to control prices of the former is no different than that which we may exercise with respect to most other commodities.

The act sets forth certain criteria with which we must comply in carrying out our price-stabiliaztion responsibilities. So far as practicable, we are obliged

to ascertain and give due consideration to comparable prices which we find to be generally representative of those prevailing during the period from May 24 to June 24, 1950. In the event that there were no such prevailing prices or that those prevailing were not generally representative because of abnormal or seasonal market conditions, then we may consider prices prevailing on the nearest date on which, in our judgment, they are generally representative. We are also required to give due consideration to the national effort to achieve maximum production in furtherance of the objectives of the act.

In determining and adjusting ceiling prices, we must take account of such factors as are determined to be of general applicability in respect to the materials involved, including such matters as speculative fluctuations, general increases or decreases in costs of production, distribution, and transportation, and general increases or decreases in profits earned by sellers, subsequent to June 24, 1950, and we must make such adjustments as we deem necessary to prevent or correct hardships or inequities. Finally, our regulations must be such that they will be generally fair and equitable and will effectuate the purposes of the stabilization program.

Obviously, these are rather general standards which must be given content and applied in the light of the particular circumstances affecting each commodity for which ceiling prices are established. As you gentlemen undoubtedly know, on January 26 of this year we issued the General Ceiling Price Regulation which froze prices for all commodities at the levels prevailing during the period from December 19, 1950, the January 25, 1951. Admittedly, this is a stopgap measure designed to halt the general rise in prices which had been steadily gaining momentum since the outbreak of the Korean crisis in June 1950. We are fully aware of the inequities and administrative problems inherent in such a general freeze and we are proceding as rapidly as possible to replace the general regulation with specific regulations tailored to meet the needs of particular industries or industry groups.

In formulating a tailored regulation under the general statutory standards which I have outlined, we would go through something like the following process. We would look at the prices for the commodity involved prevailing during the base period specified in the act—that is, the period from May 24 through June 24, 1950-and we would consider the level of such prices in relation to the level of production in the industry and the level of prices and production in our economy as a whole. We would also determine what has happened pricewise and costwise in the industry since June 24, 1950. Upon the basis of this information, we would formulate a level of ceiling prices, perhaps by reference to those prevailing in the statutory or some other base period. We would, of course, keep in mind the necessity of maintaining production, and, in view of the strategic importance of most minerals and metals to our national defense program, it would appear that this factor would have to be given considerable weight.

The authority to stabilize wages and prices embodied in title IV of the Defense Production Act of 1950 was vested directly in the President, who, by Executive Order 10161, dated September 9, 1950, created the Economic Stabilization Agency and delegated to the Administrator thereof the functions conferred upon him by title IV. The Administrator, in turn, redelegated these functions to the Director of Price Stabilization with the limitation that they shall be performed by him subjec to the supervision and direction

of the Administrator."

With this exception, there are no agencies which may directly affect the policies, procedures, or actions of the Office of Price Stabilization through instructions or directives, either oral or written. We do, however, consult with, and seek the advise of, any Government official or agency which may have an interest in, or information concerning, any of the serious problems which we face. While such consultation was directed by the President in the Executive order referred to previously, I can assure you that I would have followed such a course of action even without specific instruction. We have adopted the policy of requesting interested agencies to send representatives to our meetings with industry groups, and have profited immeasurably by their cooperation. This cooperation is, of course, reciprocal; and we have been invited to, and attended, many of the meetings of other agencies.

The administrative problems which we face in setting up the stabilization program for minerals and metals are fundamentally the same as those we are confronted with in other areas. Perhaps the most serious of these has been the securing of competent and qualified professional and technical personnel,

but I believe that, largely through the efforts of Mr. Ewing, we are well along toward solving this difficulty. We have, or will have shortly, men who are well versed through training and experience in each of the various segments of the minerals and metals industries, and with their help I am certain that we will be able to carry out our responsibilities.

With reference to the problem of pricing marginal production, referred to in your letter, I do not feel I can add much to the material contained in Mr. Ewing's statement, which I have approved.

STATEMENT OF G. GRIFFITH JOHNSON, ECONOMIC ADVISER TO THE ECONOMIC STABILIZATION ADMINISTRATOR

My name is G. Griffith Johnson and my present position is that of economic adviser to Mr. Eric Johnston, Economic Stabilization Administrator.

The Economic Stabilization Agency has as a major function the effort to stabilize prices and wages. One of the heavy pressures now exerted on the economy arises from the scarcity of many strategic and critical minerals and metals. For that reason we are very much interested in the problem of the exploration, development, and production of these minerals and metals from domestic sources. We believe it is essential to have high domestic production from the standpoint of the stabilization program as well as the defense mobilization, since expanded production is one of the strongest weapons we have with which to combat inflation.

The Economic Stabilization Agency has no direct power or authority over the production phase of the mobilization program. Those powers are centered largely in the Defense Production Administration and the other production agencies. In particular, the authority to administer sections 303 and 304 of the Defense Production Act have been delegated to the Defense Production Administrator by Executive order.

The present extent and limitations of the authority of the Economic Stabilization Administrator, in reference to decisions affecting the mining, minerals, and metals industries, are identical to the extent and limitations of his authority with respect to commodities generally under title IV of the Defense Production Act of 1950. Thus the Administrator, under the standards set forth in the act, may establish ceiling price regulations which are generally fair and equitable and may make such adjustments as he deems necessary to prevent or correct hardships and inequities. The Administrator operates under the authority delegated to him by the President in Executive Order No. 10161, subject to the supervisory responsibility of the Director of the Office of Defense Mobilization, as set forth in Executive Order No. 10193. Insofar as I am advised, up to the present time there have been no instructions, orders, or directives issued to the Economic Stabilization Administrator which directly affect his policies or decisions relating to the domestic mining, minerals, and metals industries.

Under General Order No. 2, issued January 24, 1951, the Economic Stabilization Administrator created within the Economic Stabilization Agency the Office of Price Stabilization. He redelegated to the Director of Price Stabilization the functions with respect to price stabilization which had been delegated to him by Executive Order No. 10161. These functions are performed by the Director of Price Stabilization subject to the supervision and direction of the Administrator. Subject to such general supervision, the Director of Price Stabilization is responsible for the administration of price controls, including those affecting the mining, minerals, and metals industries.

In view of the critical importance of these industries to our defense production program, there must obviously be a continuous and effective liaison between the Economic Stabilization Agency and the various production agencies such as the Defense Production Administration, the National Production Authority, and the Defense Minerals Administration. On a day-to-day basis in current operations, such liaison is carried on directly between the appropriate divisions and branches of the Office of Price Stabilization and their counterparts in the production agencies. The Economic Stabilization Administrator and his staff become involved in matters of this kind to the extent that coordinated policy decisions may be required, that disagreements at lower levels necessitate resolution between the Economic Stabilization Administrator and the Administrator of the Defense Production Administration, or that assistance might be useful in guiding or expediting operations in important fields.

For example, as noted above, the authority to administer sections 303 and 304 of the Defense Production Act has been delegated to the Defense Production Administrator. Among other things, these sections authorize the carrying on of certain purchase and resale operations with respect to metals, minerals, and other raw materials. Such programs would in many cases obviously have a direct bearing upon the administration of price controls for the materials affected. There have been, therefore, preliminary discussions between the Administrator and the staff of the Economic Stabilization Agency and the appropriate officials of the production agencies with respect to the policies which might be followed in the event that programs of this nature were initiated for domestic metals and minerals production.

In the case of vital materials, important problems from the production side flow up to the Vital Materials Coordinating Committee in the office of the Defense Production Administrator. I serve as the Economic Stabilization Agency representative on that Committee. Where production problems presented to this committee involve matters of price policy or operations, the Economic Stabilization Agency representative is in a position to become informed of their nature. Up to the present time, with one exception which has been taken care of, no important price problems have been raised to my knowledge in connection with domestic production programs in the mining, minerals, and metals industries.

Your committee has requested that I present a brief statement of my background. From April 1949 to November 1950 I was chief Economist and Assistant Chief of the Division of Fiscal Analysis, Bureau of the Budget. In 1948-49 I was Director of the Economic Stabilization Division of the National Security Resources Board. For 1 year ending December 1947 I was associated with Nathan Associates, Incorporated, a firm of consulting economists. From July 1940 until November 1946 I was employed by the Office of Price Administration and predecessor agencies in various capacities, including Chief of the Steel Mill Products Section, Price Executive of the Solid Fuels Price Branch, Special Assistant to the Deputy Administrator for Price, and Assistant Director of the Consumer Goods Division. Prior to July 1940 I had been employed by the Department of Commerce and the Treasury Department. I have received A.B., A.M. and Ph.D. degrees from Harvard University.

(SUBCOMMITTEE NOTE.-The above statement by Mr. Johnson was presented in response to the following letter from the committee chairman:)

LETTER TO THE ADMINISTRATOR, ECONOMIC STABILIZATION AGENCY, REQUESTING APPEARANCE OF HIS ECONOMIC ADVISER AT HEARINGS AND INFORMATION DESIRED HOUSE OF REPRESENTATIVES,

Mr. ERIC JOHNSTON,

COMMITTEE ON PUBLIC LANDS,
Washington, D. C., March 27, 1951.

Administrator, Economic Stabilization Agency,

Washington, D. C.

DEAR MR. JOHNSTON: The Subcommittee on Mines and Mining of this committee has scheduled hearings on the defense minerals production program for April 4, 5, and 6. The purpose of the hearings is to determine, among other things

(a) What has been accomplished and is being done or proposed under the Defense Production Act of 1950 to stimulate the exploration, development, and production of strategic and critical minerals and metals from domestic sources; (b) The reasons for the delays in executing the necessary programs; (c) The authority and responsibilities of each unit of the Government having any jurisdiction over various phases of the defense minerals production program; and

(d) The policies formulated and decisions rendered by each unit of the Government in reference to such program.

The stabilization program of the Economic Stabilization Agency can be expected to have a considerable effect on the mining, minerals, and metals industries and the type and degree of assistance that may be rendered these industries by the Defense Minerals Administration under the Defense Production Act of 1950. Therefore, it is respectfully requested that your economic adviser, Mr. Griffith Johnson, appear at the hearings to be held in room 1324, New House Office Building, on the morning of April 5 to furnish information desired by the subcommittee. Mr. Johnson will not be heard before 11: 30 a. m. In fact, since