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EMERGENCY PRICE CONTROL ACT

WEDNESDAY, DECEMBER 17, 1941

UNITED STATES SENATE, COMMITTEE ON BANKING AND CURRENCY, Washington, D. C.

The committee met at 10 a. m. pursuant to adjournment on Tuesday, December 16, 1941, in room 301, Senate Office Building, Senator Prentiss M. Brown presiding.

Present: Senators Brown (presiding), Bankhead, Hughes, Herring, Clark of Idaho, Downey, Tobey, Danaher, Taft, and Ball. Senator BROWN. The committee will be in order.

We will hear this morning from Dr. Nystrom.

STATEMENT OF DR. PAUL H. NYSTROM, PROFESSOR OF MARKETING, COLUMBIA UNIVERSITY, AND PRESIDENT, LIMITED PRICE VARIETY STORES ASSOCIATION

Senator BROWN. Will you please give your full name to the reporter, Dr. Nystrom?

Dr. NYSTROM. Mr. Chairman, my name is Paul H. Nystrom. I am professor of marketing at Columbia University, and I am the president of a trade association known as the Limited Price Variety Stores Association.

Senator TAFT. What is that association, Doctor?

Dr. NYSTROM. That is an association that includes in its membership about 60 percent of all the 5-and-10-cent and $1 stores in the United States, and includes as many independent stores as chain stores. We have all the chain stores, and we have about half of the independent stores, the other half being made up of stores so small that we have not been able to reach them. It is unique in that it reaches both chains and independents. It serves the purpose of research and exchange of information primarily, and through the association it is possible for the variety trade to present its viewpoints wherever there may be a proper occasion.

Senator TAFT. By variety stores you mean a large number of stores handling a large number of items?

Dr. NYSTROM. The term "variety trade" is well known in the retail business. It is a kind of trade that offers a wide cross section of all kinds of merchandise that may be sold for 5, 10, 20, and 25 cents and so on up to a dollar.

Senator TAFT. What was your academic training in the field of marketing?

Dr. NYSTROM. I am a farmer by birth and upbringing. I finished my work in normal school in the State of Wisconsin and then the University of Wisconsin, from which I obtained three degrees. I have been a teacher in the University of Wisconsin, in the University of Minnesota, and for the last 16 years in Columbia University, in New York.

Senator BROWN. Have you studied, Doctor, Professor Ely and Professor Commons?

Dr. NYSTROM. I have. I have had all of their courses.
Senator BROWN. Professor Ely is retired?

Dr. NYSTROM. Yes.

Senator BROWN. And Professor Commons?

Dr. NYSTROM. Professor Commons is emeritus, I think. He comes

up and gives a lecture or so each week; that is all.

I am interested in what you say. Are you from Wisconsin?

Senator BROWN. No; I come from Michigan, but I know that Professor Commons is particularly a leader on labor questions. Dr. NYSTROM. Particularly labor economics; that is true. Senator BROWN. Professor Ely wrote a very good textbook that we used.

Dr. NYSTROM. It is very widely used.

Senator BROWN. Go ahead, Dr. Nystrom.

Dr. NYSTROM. Mr. Chairman and gentlemen, I do not have a prepared manuscript. I came here at the invitation of Senator Taft.

I have gone over the bill that you have under consideration with considerable care. If you wish, I shall be glad to point out three or four things that seem to me to be worthy of consideration, and then afterward, if there are any questions, I shall be glad to try to answer them.

Senator BROWN. Are you referring to the House bill, the bill that passed the House?

Dr. NYSTROM. House bill 5990.

Senator Brown. There are several of them by that number. Does

yours say that it passed the House?

Dr. NYSTROM. Yes; H. R. 5990.

Senator TAFT. Do you have the committee print, too?

Dr. NYSTROM. This is the committee print.

Senator BROWN. Do you have the bill which, on page 21, says, "Passed the House of Representatives, November 28, 1941"?

Senator TAFT. I sent him a copy of the committee print with the Henderson amendments.

Senator BROWN. All right.

Dr. NYSTROM. Gentlemen, I know that at this late stage there is no need to take up time to discuss the necessity for price control. I think that the need that is self-evident and that everybody who has followed these proceedings must agree that such price control is necessary. The second point is that the sooner it can be passed, the better. There are, however, some details that might perhaps bear consideration at this late date. I would like to ask your attention very briefly to the statement of the purposes.

It seems to me, gentlemen, that the expression of purposes is rather too inclusive. I would like to ask whether it seems necessary to you, gentlemen, to include such a purpose as is indicated in No. 3, on page 2 of the committee print:

to prevent economic disturbances, labor disputes, burdens upon interstate and foreign commerce, interference with the effective use of the Nation's resources for defense, and impairment of national unity and morale, which would result from unwarranted increases in prices, rents, and the cost of living;

* * *

I think that that is rather far-reaching. We have had several other labor measures intended to prevent labor disputes, and it would seem to me to be unnecessary to repeat this objective every time we have a measure of far-reaching economic significance to the public. I would doubt that this bill achieves that result unless many other things cooperate with it.

Another point to which I should like to call attention in the statement of purposes is No. 9. There the purpose is expressed:

to prevent a post-emergency collapse of values;

* * *

That, gentlemen, with all due respect to the authors of the bill, it seems to me, is more or less a pious hope. There are many things that are likely to happen before the end of the emergency. The expression of this purpose is perhaps harmless, but many things might happen to cause a collapse entirely beyond the scope of this measure. Senator BROWN. I rather took it, as you say, that that was a hope based upon the general thought that if we could prevent a rise in values now and in the years to come during the emergency, that might be the main way to prevent collapse.

Dr. NYSTROM. Well, I would agree with you on that. That is the hope. But it is going to be rather difficult to use this act as the sole means of preventing such a collapse in case it is on the way.

The third point to which I should like to call your attention along that line is No. 7, which states:

to obtain the maximum necessary production without undue profits to low-cost producers;

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I thought we had other measures that would reach the profits of low-cost producers; namely, income and corporation taxes. In other words, this is an unnecessary slap at business concerns that are operating efficiently. Unless there is a reason for it that I cannot understand, it would seem to me that No. 7 would be complete in itself if it merely stated:

to obtain maximum necessary production.

If you will pardon me for being so bold as to put it this wayafter all, I am here for the purpose of expressing an opinion, and I will do this the best I can. I think these statements of purposes could undoubtedly be simplified and made more definite and specific as to what the bill is intended to accomplish.

It seems to me that the first and most important thing that it can accomplish is to obtain the maximum necessary production to win the war. The second one, I should say, which is a part of No. 6 here, is to conserve the buying power and credit of the Government; that is, to get reasonable value for the money expended. That goes with No. 1 and seems to me to be a very important purpose of the bill.

The third objective, it seems to me, is expressed in No. 4, and that is:

to eliminate and prevent profiteering, hoarding, manipulation, speculation, and other disruptive practices resulting from abnormal market conditions or scarcities caused by or contributing to the national emergency; *

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If the bill will do those three things and also a fourth, namely, to protect the public against unwarranted increases in prices, then I think it will have accomplished its sole purpose. That is something to which the entire public should be willing to give its acclaim and approval.

Senator SPENCER. Don't you think that under (9) that is one of the main purposes, to prevent a post-war collapse?

Dr. NYSTROM. It is a very fine objective, but whether this bill can accomplish it by itself is a matter, I believe, for grave doubt.

Senator SPENCER. Of course, the bill might not accomplish many of the things we want it to do, but, in my opinion, that is one of the prime purposes of the bill, if the public are willing to have a pricefixing bill, in order to prevent collapse after the war.

Dr. NYSTROM. Well, we are all hoping that there will be no such collapse. There is no one whom I know of who has testified before either this committee or the House committee that this bill or anything like it will prevent increased prices. It will put a brake on them, but it will not prevent price increases. There has not been a nation in the world so far that has been able to prevent price increases. I think it is worth while trying, and I have no objection to its being put in, but I should think it is an objective that is very far reaching in hope, without offering any absolute promise that it can be accomplished.

Senator BROWN. You would have every power that can be exercised by the Price Administrator if you entirely eliminated section 1. It is not a necessary part of this bill at all. It is a question of what it is hoped will be done; and whether it should be stricken out entirely or should be left in there, I do not know. I do not object to the expression of the hopes that we have for this bill.

Senator TAFT. In my amendment that I offered I simplified it very much. I did not include the production question-the question of assuring adequate production-which Dr. Nystrom suggests; but otherwise I cut it down to a very simple statement of prevention of price increase and the reason for it arising out of the war.

Senator BROWN. But the bill really starts at section 2, on page 3. Dr. NYSTROM. Then, gentlemen, I shall be glad to proceed to the next point I have in my notes.

Section 2 provides for the appointment of a Price Administrator, and it gives this Administrator in fact dictatorial powers subject only to review by a specially created emergency court of appeals.

I may be a bit old-fashioned, but I think that it would be better and that the Administrator himself would be helped if the quasilegislative functions of his work were separated and placed in the hands of a board-a board of five, if you please-such as has been discussed. Such a board would determine, first of all, what commodities should be subjected to price control; and secondly, what the price formula should be for those commodities.

I happen to know Dr. Henderson personally. I have very high regard for him. I have the utmost confidence in him and in his ability to administer this bill. But he might not be able to carry this through to its conclusion. I don't know who would come after him. I would suppose that even Dr. Henderson himself would be helped if he had such a board to pass more or less impartially on the commodities on which price control should be enacted and also on what those prices should be, within the confines named in this act.

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