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tion, it has occurred to me that the Congress ought not to permit the work that you are doing there, and I think I may add, doing exceedingly well, to pass out without being finished insofar as it can be of permanent benefit, and that is what I am trying to get you to state to us.

Mr. VINCENT. There is a very large volume of rich and valuable material relating to the productive industries that ought to be utilized. It ought to be supplemented by necessary research that will add to it whatever pertinent data there is. There is much of it in other departments of the Government, and, if necessary to pursue the research further, to include any additional material that may not now be assembled.

Mr. KELLER. You say you would have to have a staff of-how did you express that competent people, at least. Well, have you such a staff at the present time?

Mr. KELLER. You have that?

Mr. KELLER. In other words, if you were enabled to keep your present staff, you could, within the present year, finish that work?

Mr. VINCENT. I would estimate so.

Mr. KELLER. That would include the indexing of the information you now have there?

Mr. VINCENT. Necessarily it would include an analysis, findings of facts, and summaries with appropriate indices; yes.

Mr. KELLER. In other words, if that were done, we would have a permanent record of what the National Recovery Administration accomplished and what it sought to accomplish?

Mr. VINCENT. Yes. These studies, of course, would be studies. that—well, let me describe one of them.

Mr. KELLER. Yes; if you will. .

Mr. VINCENT. In a given instance, not in all instances, as should be done, we are making a survey of the history of the industry, the development of its technology, its manufacturing processes, its raw material sources and raw material markets, its distribution agencies and channels, trade practices, and labor conditions.

In some instances, we are including a study of corporate organizations, affiliations and financial structure.

When it takes that broad scope, the result, if it is done as it should be done, will be an authoritative body of material which, when analyzed and summarized, would be invaluable.

In fact, I would say that Congress, enacting legislation affecting industry, should have just such information to inform in order to enact the most intelligent and practicable legislation.

Mr. KELLER. Would it not also, Mr. Vincent, be of tremendous value to the men who are in the industry themselves, to know thoroughly, from the foundation of the history, growth, and development and results of their own industry?

Mr. VINCENT. Unquestionably.

Mr. KELLER. Would it not be of very great value to the men who are in every industry if every industry should be written up in that manner?

Mr. VINCENT. Yes; as a matter of fact, in a number of instances, representatives of industry have been very much interested in phases

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of our study because the industries, themselves, have not ever assembled, in a comprehensive and thorough manner, basic industrial data and materials.

Mr. KELLER. In other words, in our country here, coming from all sections of the earth, we have done pretty much what the book says about Topsy—“We have just grewed”, have we not, without much regard to background or origin?

Mr. VINCENT. Yes; in a highly individual way, the result being, at the moment, that in many of our important industries the units are too numerous and they are too widely distributed or disbursed to enable them to come together effectively and coordinate their activities into some form of concerted action which will stabilize the industry.

Mr. KELLER. In other words, if each industry itself, had a complete history of its own origin, growth, and development, and general results, the industries could get together much more readily through that intelligence than they could without it?

Mr. VINCENT. I am sure that is true, and I believe, perhaps, another effect would be this; operated as they have been the natural disposition heretofore is for plant management to look upon its problems from the individual plant management standpoint rather than from a broad industry standpoint.

Obviously, in some instances, the decision which a plant management might make is a perfectly sound decision for that individual plant but would be an unsound decision for the entire industry to make.

An example of that would be this; if a plant finds its inventories piling up, because of a slow market, good management properly begins an inventory control by shortening up its production. Its natural disposition is to do that and hold its prices rather than continue to produce and pile up inventories which it may be forced to put upon the market at reduced prices. As an individual plant management decision that is perfectly sound. Self-protection dictates it.

For an industry to make that decision is perfectly devastating in an economic sense, because it means an industry-wide curtailment of production rather than make its price structure respond to the market and help its goods to move by reduced prices to consumers.

Mr. KELLER. In other words, that leads to another question that I want to ask you. I would gather from your last answer that we must view industry in what way, as a State, local, or national matter? Mr. VINCENT. Well

, practically every industry has become national in the sense that the demand for its production is national. The cost of production in one State, unavoidably, affects the price of that product in every market. In some instances, to a less, and in some instances to a greater degree. But where these products of the same type or kind are produced in several different States they are competitive and the cost and prices in one State affects the market and the plant in another State just as wage rates in one State or area directly affect the wage rates in another area. The same is true of material cost.

Mr. KELLER. Well now, we have under discussion here at the present time the Ellenbogen bill, with which I am aware you are well acquainted, at least with the structure of it. I wish you would

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talk to us, first, however, about the general intent and the general result of the National Recovery Administration before we come to the Ellenbogen bill proper, what did it do, what was it intended to do, what did it do, and what could it have done if the unfortunate decision of the Supreme Court had not stepped in?

Mr. VINCENT. That is a pretty big order, but I will attempt to give some information on the subject.

May I first have the record show, Mr. Chairman, that I am testifying as an individual and not as an official. If, in the course of my testimony here, I may express opinions I do not want that to stand as an authorized official attitude.

Mr. KELLER. On the other hand, you are perfectly willing freely to give us your personal opinion in view of your experience?

Mr. VINCENT. Surely.
Mr. KELLER. Thank you.

Mr. VINCENT. I assume that the particular purpose of the National Recovery Administration, under which codes of fair competition were formulated and administered, is fairly well understood.

I think we may say that among the objects were those of establishing maximum, uniform hours within an industry for the purpose of creating a higher degree of fair competition, and for the purpose of spreading employment to relieve the great pool of unemployment that then existed and still exists to a substantial extent.

Another object was to establish a minimum wage to prevent wage income dropping below a minimum sound standard of living.

Another, of course, was to establish uniform trade practices so that members of industry would be enabled to market their products under more standardized market or trade practices.

There were, in some instances, also a utilization of the act and the provision of codes to temporarily limit or control production where excessive production capacity had tended to demoralize markets by reducing prices below living levels.

I think, for the purpose of what further I have to say, that is enough respecting the major objectives. Of course, the object was, broadly speaking, stabilization.

A part of your question asked, in substance, what the effect of code administration was.

Mr. KELLER. Yes, sir. Before you get to that, may I just interject here a question that has come into my mind?

Mr. VINCENT. Certainly.

Mr. KELLER. I wish, in approaching the subject, you would say when the National Recovery Administration was first formed, what was the attitude of the owners of business at that time toward the law and toward the formation of the codes. Were they for it or were they against it.

Mr. VINCENT. I would not be able to answer that with any more definiteness, perhaps, than the ordinary citizen. I was not in Washington except for a brief period, as an onlooker, during the period of code formulation, so that my information is the same as yours, from the public press. I think the impression I got was that industry welcomed an opportunity to obtain what were called codes of fair competition for the purpose of stabilizing industry.

Mr. KELLER. All right, please proceed.

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Mr. VINCENT. On the effect of code administration, I would say that some of the objectives were realized in a substantial degree. In other respects, the period of code administration was far too short for any adequate tests of the Government controls which, for the first time, were applied to industry.

The standardization of work hours, that is fixing maximum uniform hours, did have the effect of spreading employment to a degree. It had the effect of eliminating unfair competition to a degree.

In many industries, working time was not uniform, ranging all the way from 40 to 70 hours, for example. Obviously, the result was unfair to those who were disposed to work a reasonable number of hours.

The establishment of minimum wage rates tended to more uniform labor costs and increased the degree of fair competition between members of industry.

The minimum wage rate also operated in many instances, to very substantially increase the rate of pay and the wage income of large numbers of the lower paid groups of workers.

I think it may be said with accuracy that it was the lower paid groups of workers that received the greatest benefits from minimum wage rates. Those in the higher brackets did not gain the same percentage of increase except in exceptional instances.

The time of code administration was too brief to ultimately determine what the effect would have been in the higher wage brackets.

Another affect of code provisions and code administration was to standardize trade practices; terms of sale. For instance, as administered, such provisions effected a higher degree of fair competition.

Mr. KELLER. Do I gather from what you have to say here that this is the first time in the 150 years of our political existence, that we have been compelled to bring all of these questions to the fore and undertake to solve them through governmental action?

Mr. VINCENT. I would say it is not the first time there was a need for some degree of regulation or control. Previous regulatory attempts on the part of Congress have had some effect, of course.

We had, beginning nearly a half century ago, the antitrust law designed to curb monopoly, and prevent monopoly prices and concerted action or agreement in restraint of trade. I would say that the law has not realized its objectives.

We have the experience of other regulations, the Clayton Act, and the Federal Trade Commission. Perhaps the most notable instance is the Interstate Commerce Commission, which I think has been a very effective instrumentality of regulation within certain limitations.

The controls provided by the National Industrial Recovery Act were the first instance of the application of controls to the extent of regulating hours of work, minimum wages, trade practices, production control, and eliminating child labor.

Mr. KELLER. Was there any one particular happening, or the ending of any one period that brought this tremendous pressure out at this single time in your judgment? After all, what was it? Why did we have this tremendous barricading of business and industry just at this period?

Mr. VINCENT. There were too many contributing causes for one to assign to any one cause or any one group of causes exclusive influence in causing the collapse which we commonly date in October of 1929. It is not so difficult to pick out individual contributing factors that were very influential in demoralizing our markets.

I would say that, in the years preceding 1929, we developed technique of production that out ran our development of a technique of distribution. We gave more attention to production than we did to distribution. Mechanical processes of manufacture and other manufacturing aids vastly increased the output per person, reduced production costs, and increased gross and net realizations.

One thing that greatly contributed to the demoralization of our markets was the fact that net profits increased much more rapidly than wage incomes.

Mr. KELLER. That is what I wanted.

Mr. VINCENT. There are several ways, of course, in which industry can keep the markets fed by contributions of purchasing power. The expenditure of interest and dividends, in part going into markets for the most commonly used commodities, but considerable parts of these are, nevertheless, retained for investment.

The most consistent contribution of a large stream of money into the market is by the expenditure of wages and salaries. Productive investments are another. Unless all of these sources of money going into the markets are equal to taking our production, you get an unbalance between production and distribution.

That is what we had in this country, and that is what we now have to a considerable degree.

We must look to a gradual increase of wage and salary and farm income, the kind of money that is largely spent for most commonly used commodities, to support a continuing increase in production.

Mr. KELLER. Do I get this, Mr. Vincent, from what you have said? As I remember it, beginning in 1920 and up to 1935, the 15-year period, the wage increase of the country was 20 percent and, over that same period, the increase of investment, that is interest and dividends, increased 60 percent. I think that is correct, is it not?

Mr. VINCENT. As I remember the data, for about a decade preceding 1930, the increase of industrial wages was only about 13 percent. That does not include, of course, all wages. I am limiting that to industrial wages.

The increase in industrial net profit during that period, if I remember correctly, exceeded 70 percen

Mr. KELLER. Well, that I am glad to have you bring out. I know that some months ago—3, 4, 5, or 6 months ago-possibly, in the Journal of Economics, a Mr. Krebs, I think, of the University of California, wrote an article on that subject in which he says that, taking the whole country on the earnings and wages—Dividends, I think, was the title of the article-he says of the period from 1920 to 1935 that the wage earnings had increased 20 percent over that 15-year period for the whole country, all wages included, and that the dividends and interest, in other words, profits of industry, had increased 6 percent. Now, you make it still stronger, and I thank you for it.

Mr. VINCENT. I am limiting it to a 10-year period preceding January 1, 1930.

Mr. KELLER. It might well have been that.

The thing I want to bring out is this; what we are really driving at economically in this country, especially, is to increase the proportion of income of the men who produce the wealth over the returns

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