The contribution it has made to the stability of the cost of living and the protection it has afforded to war workers in crowded centers and to the families of servicemen near Army camps cannot be over emphasized. In many areas rent control was introduced upon the urgent request of the armed forces and the managers and executives of war industries, harrassed by labor turn-over. They tell us it is not possible to place a value upon the contribution which rent control has thus made directly to war production. That there is deep satisfaction with rent control on the part of tenants goes without saying. What is the case with landlords? While rent control has not been easy for landlords to take, it has worked no hardship upon the great majority. Foreclosures are at an all-time low. A recent survey covering 25 cities discloses that after 1 year of rent control net operating income of apartment houses, before interest and depreciation, is up 27 percent from the level of 1939. For small structures, the corresponding rise is 45 percent. Figures are not available for net income after all expenses. However, because interest and depreciation charges are stable, net income must necessarily have risen even more. In large part this has been due to the practical elimination of vacancies and to diminished renovation. Of the 14,000,000 rental units subject to maximum rent regulations, no less than 2,800,000, or 20 percent, have received individual treatment by the rental area offices. When one considers what is involved in the individual consideration of 2,800,000 rentals, this stands out as a remarkable operation. RATIONING ACCOMPLISHMENTS The rationing operations of the Office today embrace the following commodities, listed in the order in which they were brought under control. Coffee has been dropped from the program, as the committee is aware. Each of these programs is in itself an operation of very real magnitude. This follows from the fact that every one of them reaches into every community in the land. Taken together they directly affect every man, woman, and child in the country and impose a gigantic work load upon the agency. On the occasion of the registration for these programs the volunteer staff of the agency has been swelled to a total of 325,000. These rationing programs are today operating smoothly, and this in spite of the fact that in all cases it is not possible to treat everyone on a uniform basis. For example, in the gasoline program there are 16,000,000 B and C books which not only must be "tailored" to match individual need, but must be reviewed and reissued every 3 months. The improvement in the administration of these rationing programs after our 2 years of hard experience must be as evident to the members of this committee as it is to us. The early barrage of complaints have dropped to a minimum. In a recent survey, 93 percent of American housewives stated their belief that food rationing is being administered in a manner fair to all. The rationing job is essentially a job for the local rationing boards, staffed almost completely by volunteers. I spent 2 years with these men and women in the State of Connecticut, and I know how greatly their tact and understanding, their unselfish devotion, have contributed to this end result. Needless to say we are not satisfied that even today the programs are functioning as smoothly as we would wish. The operations of the local boards are being continually reexamined and every effort is being made to diminish the burden of rationing, not only upon the consumer, but upon the merchants. Our ration banking system is being continuously improved and we have recently introduced tokens, which will greatly facilitate both change making and coupon accounting. This will save millions of hours for hard-pressed merchants and clerks and materially reduce the shopping time of American housewives. Mr. Chairman, I appear before this committee to ask that the pricecontrol statutes be extended substantially as they stand today. While I have been frank to say to you that the administration of the law has been faulty in many respects, the progress we have made in administration bears considerable promise for the future. But regardless of past and even future errors, the past stands at that. Under the statutes as written by Congress and with the powers granted by them we have carried out the mandate of the Congress to stabilize prices and rents. For the past 11 months the cost of living has been held without any net increase whatever. In the course of these hearings you will undoubtedly hear many complaints of hardship under our regulations. When you hear these hardships, which I know exist, I hope you will bear in mind that these hardships today, in time of war, are fewer in number than they ever were in times of peace and that industry and agriculture are in general more profitable than at any other time in our history. And I would ask this committee to remember that, to the limit of our manpower, we are seeking to alleviate these hardships. In the course of these hearings you will learn of specific annoyances and irritations, of occasional rudeness and occasional arbitrary exercise of power. I know that these, too, exist. I hope that as you hear of them you will bear in mind that the Office of Price Administration numbers in paid and volunteer staff, 161,000 men and women, that every week we make or receive 41⁄2 million telephone calls and write 21/2 million letters. Now the most reasonable of us are on occasion arbitrary, the best natured among us have our moments of irritability. In every large number of people, no matter how carefully selected or how frequently weeded over, there will be some who will be inconsiderate, thoughtless, or rude. Indeed, I think it fair to say that for every complaint you hear there are hundreds which you do not hear. But let me add that for every witness you will hear making such complaints there are tens of thousands who would bear witness if they could to the courtesy and the fairness of our staff as a whole. Some of the witnesses who will appear before you will suggest amendments to the statutes. I hope that later, before these hearings are concluded, you will give me opportunity to comment upon such suggestions and give you my best judgment on how these proposed amendments would affect our operations. If the powers as they exist today are continued, we shall do our utmost to hold the cost of living and the price structure in general at their present levels. To do this it will be necessary to continue to use the various techniques which have been developed through trial and error over the past 2 years. These include subsidy payments. This committee has recently heard my views on the use of subsidies and since that time Congress has expressed its disapproval of the subsidy program. Let me again emphasize this all-important point. For the past 11 months the cost of living, for the first time since it began to rise, late in 1940, has been held to a net increase of exactly zero. I will not say that this result is entirely attributable to the use of subsidies, but I would remind the committee that in spite of firm price control after the spring of 1942 and even firmer price and wage control following the passage of the Stabilization Act, the cost of living continued climb month by month. If the cost of living had continued to increase during the past 11 months at the rate at which it was increasing in the months prior to April 1943, today it would stand 9 to 10 percent above its present level. to This would have already cost consumers 8 to 9 additional billions in higher retail prices for goods and services. In addition, if this increase had spread to other prices and in the light of our experience no other conclusion is possible-the cost to the Government of the war program would have been increased by a minimum of 6 to 7 billions a year. The expenditures we have made in subsidies are dwarfed by these savings. If the powers we now possess are continued, I can promise this committee that the months ahead will witness even greater improvement in the administration of the program than the months that are past. We shall further simplify our regulations, we shall speed up our procedures, we shall improve our staff. Through making businessmen better acquainted with our regulations, we shall reduce vexations to business while at the same time providing real savings to consumers. Our progress in stamping out the black market will continue. Above all, if the powers which we now possess are continued, I can assure the committee that inflation during the war will be prevented and that the Nation will come out of the war with a sound and balanced price structure. I can conceive of no greater contribution than this to the strength and vitality of the American economy, once the war is won. Let me conclude with just a word about changes that may be expected in the programs themselves and in their coverage. All our programs are today being constantly reviewed to determine whether they are essential in every important respect. As this committee knows, one rationing program-coffee-has already been dropped. Discontinuance followed promptly upon adequate improvement of the shipping situation. Similarly, in rent control, changing circumstances have already permitted us to decontrol in the rental areas. The time will come, no one can say how soon, when the present drain on our supplies will be reduced and when new production will be added to the resources of the United Nations. As demand and supply come more closely into balance, first in one field and then in another, the relaxation of price controls will be not only possible but wholly desirable. At the same time, it is, of course, quite impossible to stake out a schedule-much less a time table. What I see, however, is the lifting of controls, first on this commodity or group of commodities and then on that, as the available supplies increase and circumstances warrant. Step by step, and no one hopes more earnestly than I that the steps will follow closely together, we can lift our price controls. In short, we shall find ourselves retracing the route which brought us from selective control of certain prices to general control of all prices. It was rising pressures which made us extend our controls across the board. As those pressures diminish we shall at some stage be able to begin the reverse of the process. The responsibility of preventing inflation during the war and of insuring a smooth transition after victory to peacetime production is a heavy one. I want to leave this committee with the assurance that the agency which I head is fully alive to those responsibilities. As we look ahead our thinking is not only of how effectively we can do our job today. We are preparing to make our contribution to easing the American economy from the restrictions which war makes necessary. We are prepared to do our part in easing the hazards of reconversion until once again-the strength and vitality of its economy safeguarded-the Nation is upon the road of full peacetime production. (Thereupon, at 1 p. m., a recess was taken until 2 p. m., the same day). AFTERNOON SESSION The hearing was resumed at 2 p. m., at the expiration of the recess. STATEMENT OF CHESTER BOWLES, ADMINISTRATOR, OFFICE OF Mr. BOWLES. Mr. Chairman and gentlemen of the committee, I would like to make a correction first of all in the statement I made this morning. I stated these [indicating chart 14, which showed decline in prices of farm products in 1920-21] are retail prices, whereas really, as to the farm prices, these are decreases in the prices at the farm. After the last World War we had a general collapse of farm prices. Wheat dropped 65 percent, lambs 61 percent, and so on, and all those decreases shown here in this chart, those were at the farm level with the exception of milk, which is shown as wholesale price, which dropped 32 percent. Now, I told you this morning largely about the O. P. A. organization, the organizational problem of handling the huge multiplicity of tasks which were assigned to us, and I started to study the record of what has been done under it and to see if it had accomplished what it set out to do, to accomplish. Have we established price control? If we have, has it been at the expense of business or of anything else? I think that is a subject we might inquire into. LIVING COSTS HELD FOR 10 MONTHS. - Mr. Bowles summarized the concluding portions of his morning statement by again referring to the chart showing stable costs of living. See chart 74, appendix, page 1557. There was no increase in living costs for 10 difficult months. The cost of living today stands at the same level as in April 1943. For 10 difficult months, with inflationary pressure piling higher and still higher behind the price-control dam, we have held the line. Wholesale prices are one-half of 1 percent below the April 1943 level. At that point, prices since the outbreak of the European war had risen 13.6 percent. They rose another 12 percent before they were finally stabilized, which was last spring. They have now been stabilized at that point and wholesale prices have also been stabilized. The CHAIRMAN. Have you run into many criticisms of those figures, that method of making calculations? I mean rather serious criticisms, not captious criticisms? Mr. BOWLES. That is being pretty well investigated now by Mr. Will Davis' group appointed by the President, and being quite well investigated. Just off the record, my own viewpoint on the work of that Bureau is that it has done a very good job over the 3 years. It has been a very respectable organization, and I know something about that kind of work. I am sure these people can go into it much more carefully than I can. It provides a constant index. I do want to emphasize again, as I did this morning, that it does not include all information; the deterioration in the quality of clothing, for instance; the wartime shirt only lasts one-half as long as the ordinary quality shirt. The CHAIRMAN. That would apply also to paint, would it not? Mr. BowLES. That is a factor. It applies largely to clothing, and clothing is 12 percent of the cost of living only-only 12 percent. Senator HAWKES. Mr. Bowles, may I ask this question? Does the War Labor Board question the accuracy of these figures? Mr. BOWLES. Mr. Davis, as Chairman of the War Labor Board, undertook to make a study to decide whether in their opinion the figures were proper with relation to the cost of living, and he appointed a committee and the committee is meeting. I assume they will have their own report out soon. Senator HAWKES. I assume he is doing that because of the pressure for increased wages, and my assumption is based on the theory that the figures of the Bureau of Labor Statistics are inaccurate. Mr. BOWLES. I assume so; I assume that is right. These figures include overcharges, which are not generally recognized. This morning I spoke of 4-percent increases in the cost of food. That appears in the cost of living, that 4 percent. The Bureau of Labor Statistics, for instance, will take a house dress at $1.98, and if that is at the bottom of the house-dress group and they cannot find it, they will next take the next lowest cost dress that is comparable. That dress |