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 571/2 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? 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. Senator SPENCER. There is, I am sure, a place, an efficiency point, after which, when you pass it in production, your unit cost would go up in production, regardless of whether your efficiency did go up. Mr. HENDERSON. That is what I say: it has gone up 7 percent since spring. So, we have to face the situation of an increased cost per unit, and in addition your dislocations due to authorizations from the civilian defense. Then, you face this further question of an increase in the cost of living, which is bound to be the subject of wage negotiations next spring. It is bound to be; you just cannot escape it. Now, Mr. Chairman, I have about concluded, with the exception of rents. When this bill was presented to the House, we had not had much experience with voluntary rent control. We had a unit that was working with local governments in defense areas, trying to work out voluntary means of keeping rents in line. We have had surveys prepared for us by the Department of Labor and by the W. P. A. which would indicate, to my mind, what the need for rent control is, and I assume there is not much doubt about that here. The bill as we originally drafted it and as it came from the House committee included control over rents in defense areas and spelled out the definition; but if we needed any definition at all I think it would be found that all those charts related to different communities. On the left you have the percentage of homes for which rents were found to have been increased, and over here the percentage of increase [indicating on chart 29]. In this big one out here, an area in Tennessee, between March 1940 and June 1941, the rents for over 40 percent of the homes have increased, and it almost doubled the average rent. I would like to have these inserted in the record. Here is San Diego, for example [indicating on chart 30]. Nearly 50 percent of the homes have rent increases, but the increase was relatively small, probably due to what the Government has done in the way of supplying defense housing. Senator DANAHER. Would it be too much trouble when you refer to a chart to ask your assistant to give you the page number in the House hearings where that chart is reproduced? I saw this one at page 268, the one dealing with the San Diego situation. Mr. HENDERSON. I do not want to spend time on these. They cover a number of communities distributed throughout the country. 1 Senator BROWN. I think you ought to tell us in a general way what authority this House bill gives you over rents. Mr. HENDERSON. Mr. Ginsburg can tell you that. Mr. GINSBURG. It provides, in the first instance, that the Administrator will make recommendations to the local community, either the State or the local government Senator BROWN (interposing). In defense areas? Mr. GINSBURG. In defense areas. They are defined in the bill as areas where rents have increased as a result of defense activities. Then, the State or the local government has 60 days within which to take action. If it fails or refuses to take action, then the Administrator may establish rents in accordance with the standards laid down in the bill. 1 Other charts showing surveys of rent increases may be found at pp. 266, 270-272, Hearings before the House Committee on Banking and Currency on H. R. 5479 (superseded by H. R. 5990). CHART 29 RENT SURVEYS OF SELECTED DEFENSE AREAS FOR PERIODS ORDNANCE #WHITE HOUSEHOLDS ONLY. taxes, or other costs. 1940, for any increases or decreases in cost of maintenance in property Then, he is further directed to adjust that rent prevailing in April are not deemed to be defense areas? Senator BROWN. You make no attempt to control rents in areas that sion information with respect to rents being paid. ond, that is the date as of which the Census Bureau has in its possesFirst, it was just before the beginning of the defense program. Secon or about April 1, 1940. That date was chosen for two reasons. Those standards are there: We have as a base the rent prevailing Mr. GINSBURG. No, sir. SOURCES: SURVEYS BY THE BUREAU OF LABOR STATISTICS AND BY THE WORK PROJECTS ADMINISTRATION CHART 30 |