We have organized the presentation in the Office of Price Administration, covering all phases of the work, which will give you, of course, a complete opportunity to ask questions on all subjects having to do with it.

Mr. Bowles' statement, which follows, made use of a series of charts. These are reproduced in the appendix. In the interests of greater clarity to the reader of this volume a box insert appears before reference is made to each chart. This insert describes the chart upon which the statement which follows it is based.

I would suggest, if agreeable to the members of the committee, that it might be well to allow me to go through with a presentation of the organization, since its beginning, which I will make reasonably brief, going through some of the problems in the development of the agency. I will show some changes made in the last 6 or 8 months, and indicate about where we stand today on price control and rationing. I will be glad to try to answer any questions any member of the committee wants to ask as I go along. I may lack consistency in presenting these charts, and some of them are pretty rough because they were made hurriedly, a good many of them at night. However, I think they will give you a picture of the whole thing in clearer form if I set them up on this easel and go through them with you.

THREE WARS-BUYING POWER OF THE DOLLAR. -Mr. Bowles presented, at this point, a chart showing the buying power of the dollar after the inflationary periods of the Revolutionary War, the Civil War, and World War I. See chart 3, appendix, page 1486.

This first chart shows what happened to the buying power of the dollar in three wars. In the War of the Revolution the dollar dropped from $1 at the start of the war to 33 cents at the end of the

war.

After the war the value of the dollar practically disappeared. In the Civil War, at the start of the war the dollar represented $1, and dropped to 44 cents at the end of inflation. World War I, at the start of the war, the dollar represented $1, and wound up at 40 cents in 1920, at the end of the inflationary period.

Senator CAPPER. Mr. Bowles, what did you say about 40 cents?

Mr. BOWLES. The purchasing power of the dollar dropped to 40 cents. In other words, you could buy about 60 percent less with your dollar at the end of those three wars, as compared with the beginning.

WHOLESALE PRICES IN WORLD WAR I.-Mr. Bowles next chart showed the rise in wholesale prices during the war and the rise which followed the armistice, reaching a peak in May 1920. See chart 4, appendix, page 1487.

I should like to examine that a little bit more in detail. Here is a chart which shows what happened to wholesale prices during the First World War. Between the outbreak of the European War ancl the armistice wholesale prices rose 102.5 percent. Between the armistice and the peak of the inflation in May 1920 prices rose to 148.5 percent above pre-war levels. A third of the total rise took place after the armistice.

RISE OF COMMODITY PRICES-WORLD WAR I INFLATION. -This chart showed the prices of separate commodities at the beginning of the war, at the end of the war, and at the time they reached their peak. See chart 5, appendix page 1488.

Here are some price increases during the last war; and I think the most of you are familiar with them, but I will name a few. Bread. 1-pound loaf, was 6.2 cents at the beginning of the war, and the price at the end of the war was 9.8 cents, and at the end of the inflationary period was 11.9 cents. A pound of round steak was 24.4 cents at the start of the war, and the top price was 45 cents. One pound of sliced ham was 27.4 cents at the start of the war and went up to 60.4 cents. One pound of butter at the start of the war was 34.2 cents, and at the end was 78 cents. A dozen eggs was 30.2 cents at the beginning of the war and wound up at 92.4 cents. One pound of sugar at the start of the war was 5.2 cents, and wound up at 26.7 cents. A yard of percale was 12.9 cents at the start of the war and wound up at 52.8 cents. A ton of bituminous coal was $5.46 at the beginning of the war and went up to $12.53. A ton of anthracite coal was $7.60 at the beginning of the war and went up to $16.22. A pair of cotton blankets were $3.13 at the beginning of the war and wound up at $6.49. Sheets were at the beginning of the war 81 cents each and went up to $2.81. These are the general increases during the war.

Senator MALONEY. Mr. Bowles, may I inquire: What do you call the end of the inflationary period?

Mr. BOWLES. 1920, at the top prices.

WHAT HAPPENED TO A $2,000 FIXED INCOME. -Mr. Bowles now presented a chart showing the decline in real value of a fixed income as a result of the World War I inflation. See chart 6, appendix, page 1489.

This next chart shows what happened to a fixed income of $2,000. It was this big in 1914; $2,000. It dropped and was worth only $960 when the inflationary forces got through.

PRICE INCREASES WHICH RAISED WAR COSTS.-The following chart shows the prices of various war materials in July 1914 and November 1918. See chart No. 7, appendix, page 1490.

The next chart shows price rises that increased war costs and that affected the amount of the national debt. In the price movement prices rose sharply for all of the steel and other things that went into the war effort. Steel plates went up 187 percent, copper 93 percent, zinc 73 percent, anthracite coal 65 percent, bituminous coal 135 percent, lumber 67 percent, tin 156 percent, coke 171 percent, cement 80 percent, petroleum 200 percent, and lead 106 percent.

THE UNNECESSARY COST OF WORLD WAR I.--This chart shows the amount of cost needlessly added by inflation, $13,500,000. See chart 8, appendix, page 1491.

In other words, the war which cost a total of $32 billion was a war which would have cost 18 billion 500 million dollars if you had had no increase in prices. As it was, we added on 13 billion 500 million because of price increases during the war. And we still have to pay interest on the price-increase part of that debt.

COLLAPSE!-Mr. Bowles turned here to a chart showing the decline from 1920 peak levels. See chart 9, appendix, page 1492.

This chart shows the collapse. Prices took 70 months to rise, but they collapsed in 13 months. Here is your drop in wholesale prices. They reached 248 as a peak above the 1914 level of 100. I mean in 1920 they were at that figure, and there was a drop of 139 points. These are wholesale prices.

Senator CAPPER. Mr. Bowles, are all these statistics based on Government figures?

Mr. BOWLES. Yes; all based on Government figures, Department of Labor, Department of Commerce, and so forth.

CORPORATION PROFITS.-This chart, continuing the collapse theme, shows corporation profits in the deflation period. See chart 10, appendix, page 1493. Here is a chart that shows corporation profits turned to losses. All corporations, after taxes, on 1919 earnings, showed profits of $5,896,000,000. In 1920 the total profits were $4,468,000,000. In 1921 you had an actual loss of $255,000,000. In other words, they actually turned into the red, and the combined figure for all corporations showed a loss.

BUSINESS FAILURES.-The next chart, under the previous theme, shows the increase in business failures. See chart 11, appendix, page 1494.

We had, of course, a great many business failures. In the 5 years following the price collapse in 1920 there were 105,996 business failures, 40 percent more than the total failures for the pre-war period. The majority of these failures were small businesses.

GROWING UNEMPLOYMENT-DECLINING PAY.-Two charts at this point showed the impact of this post-war deflation upon labor through increased unemployment and decreased pay. See chart 12, appendix, page 1495, and chart 13, appendix, page 1496.

Now I am going to show you how we had to face a dilemma. I know that these are things that most of us know. There was growing unemployment. In 1920-21, factory employment shrank 31 percent. Unemployment increased 5,624,000 between 1919 and 1921. We have many more workers today. Then the factory pay rolls were $246,000,000, weekly, and in 1922 they were cut to $136,000,000, weekly. That represents a cut of almost one-half. In other words, factory pay rolls shrank 44 percent.

Senator MALONEY. Mr. Bowles, please let us have that chart again. Are you talking about billions of dollars or millions of dollars?

Mr. BOWLES. No. This chart shows millions.

Senator MALONEY. I understood you to read the chart as representing billions of dollars.

Mr. BOWLES. If that is so, I misread the figures.
Senator MALONEY. All right.

Mr. BOWLES. This chart shows what the collapse meant to industrial wage earners. The weekly take-home pay shrank from $27.50 to $20.70 for those who kept their jobs.

FARMERS WERE HIT HARDEST. The chart used at this point showed the decline in prices received by farmers for commodities which they sell. See chart 14, appendix, page 1497.

This chart shows that farmers were hit hardest that farm prices collapsed. For instance, farm prices collapsed to this extent: Wheat dropped 65 percent in 1920-21; corn dropped 78 percent; oats dropped 71 percent; cotton dropped 76 percent; potatoes dropped 85 percent; beef cattle dropped 57 percent; hogs dropped 66 percent; lambs dropped 61 percent; peanuts dropped 70 percent; rice dropped 79 percent; butter dropped 53 percent; milk, wholesale, dropped 32 percent; eggs dropped 73 percent; poultry dropped 39 percent; and oranges dropped 76 percent. That was in the deflationary period immediately following the inflation period.

Senator TAFT. Are those figures at the retail level?

Mr. BOWLES. Yes, sir. [This was later corrected. See opening statement by Mr. Bowles in afternoon session.]

Senator TAFT. Except milk?

Mr. BOWLES. Except for milk.

Senator TAFT. Thank you.

Senator BARKLEY. These charts as prepared will be printed along

in your testimony, will they?

Mr. BOWLES. They can be.

Senator BARKLEY. They ought to be.

SHRINKING FARM INCOME. Continuing the point of the previous chart this next chart showed the decline in farm incomes. See chart 15, appendix, page 1498.

Mr. BOWLES. This next chart shows how farmer income shrank. Average farm income in 1919 was $1,360, and the average farm income in 1921 was $460. Net farm operating income, after all expenses, in 1919 was $8.799,000,000. Two years later it was $2,990,000,000. In other words, in 2 years there was a drop from $8,000,000,000 to $2,000,000,000.

Senator DANAHER. Again you are talking only of cash income, are you not?

Mr. BOWLES. Net income after the farmers' expenses.

Senator DANAHER. When you talk about expenses are you allowing anything for the rent of the house the farmer occupied?

Mr. BOWLES. I think it covers his real-estate taxes, but not any income tax.

Senator TAFT. What about the farmer's own labor?
Mr. BOWLES. His own labor costs are covered.

Senator BARKLEY. You are not talking about the farmer's own labor. You are talking about out-of-pocket expense to the farmer but not making an allowance for his own labor.

Mr. BOWLES. No; not for his own labor.

Senator BARKLEY. I just wanted that made clear.

FARM MORTGAGE FORECLOSURES.-The final chart in this series gave the number of mortgage foreclosures on farm properties. See chart 16, арpendix, page 1499.

Mr. BOWLES. This next chart shows that in the next 5 years 453,000 farmers lost their farms by mortgage foreclosure.

NO REPETITION OF WORLD WAR I EXPERIENCE. -Three charts were now introduced showing that Congress decided to prevent a repetition of this World War I experience.. Major responsibility over prices was given to the Office of Price Administration to which under the Second War Powers Act was also delegated authority for rationing scarce civilian goods. See charts 17, 18, 19, appendix, pages 1500, 1501, and 1502.

Congress decided that during this war inflation and deflation should not be repeated. It therefore passed the Price Control Act of 1942. This chart shows the powers and responsibilities given to O. P. A. Under the Emergency Price Control Act over here in this left block are shown price-control powers and duties, many of which are complicated, which were given to the Office of Price Administration. Under the Second War Powers Act rationing powers and duties were delegated to W. P. B., or, first, to the President, and he, in turn, delegated them to W. P. B. W. P. B. determines and establishes what we shall ration, how long we shall ration it, and when we shall stop; and

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our power in rationing is delegated from the President, by means of the Second War Powers Act, through W. P. B., to ourselves. Certain of those powers have been delegated to the War Food Administration and the War Production Board.

Senator TAFT. Does not the War Food Administration take the place of the War Production Board?

Mr. BOWLES. That is right.

Senator TAFT. As far as most of your food is concerned?
Mr. BOWLES. All food.

Senator TAFT. They decide what shall be rationed?

Mr. BOWLES. They decide; that is correct.

I am going now to review what the responsibilities given to us by that last chart meant to this organization. I can speak with some feeling about those responsibilities because I started to work for the O. P. A. January 1, 1942, shortly after Pearl Harbor, and I organized the 177 ration boards in Connecticut, put the whole thing together up there, and I know some of the growing pains and some of the almost impossible jobs which were handed to us. So these charts now cover some of the work that we had to try to get done, that I saw first-hand, not here in Washington but out in the field, so-called, where the people live and where the whole thing is going on.

WAR CAME SUDDENLY.--This chart introduced a new theme-the presentation of home-front emergencies demanding quick action. See chart 20, арpendix, page 1503.

War came without warning on December 7. Overnight some great problems were created.

SHORTAGES-RUBBER SUPPLY-TIRES.-The following charts introduced the first rationing emergency-tires. The loss of much of our rubber supply and our Nation-wide dependency upon motor vehicles of all types demanded the quick institution of a rationing program. See charts 21, 22, 23, арpendix, pages 1504, 1505, and 1506.

First of all, transportation. American transportation was dependent on 29,000,000 passenger cars, 4,800,000 trucks, 88,000 busses, all running on rubber tires.

Within 25 days a complete rationing program had to be perfectednot perfected, but at least gotten together-on tires. Forms had to be printed and distributed, and local boards had to begin to actually ration tires. So from Pearl Harbor on-and there was very little work done on this before Pearl Harbor-that whole job of pulling all those boards together, making some kind of regulations, and setting up the local boards to handle it, had to be done by O. Р. А.

Now, that [indicating chart] is a mistake; there were not 8,000 local boards at that time. That figure was probably in the spring. They increased the number of boards substantially as the winter went on. That happened in 25 days in the early first part of the war.

RATIONING EMERGENCY No. 2-SUGAR. -The next chart depicted the problem posed by submarine sinkings and our loss of sugar supplies. See chart 24, appendix, page 1507.

Later we were given responsibility for sugar rationing. As we all remember, the submarines sank a great many ships. At the beginning in that early period, in March, shipping was short anyhow-extremely short. Our supplies were cut off, and a system had to be quickly pulled together that would make it impossible or unnecessary for us