Most of the other major provisions of the Selective Service Act, as it now stands, would expire on the day that Congress proclaimed the termination of hostilities. The desirability of continuing this major piece of legislation is, of course, now under consideration by the Congress. Again, the Army is using a large amount of Government-owned silver in the atomic energy plant at Oak Ridge. The act of June 12, 1943, which permits such use provides that the silver must be returned to the Treasury within 6 months after the cessation of hostilities. I am informed that removal of this silver in the near future would completely disrupt the complex machinery at Oak Ridge. These are some of the matters of major policy which are now linked with the issuance of a declaration of the cessation of the hostilities. In addition there are a number of other statutes which, though they do not embrace matters of major impotrance, nevertheless deserve to be continued and should not be struck from the books at this time. For instance, provisions of the Hatch Act, prohibiting the dissemination of political propaganda by any person in the Federal Government to members of the armed forces and prohibiting the censorship of political communications sent by other persons to members of the armed forces, would expire 6 months after the termination of hostilities is proclaimed. These provisions should remain in effect as long as substantial numbers of voters in the armed forces are stationed far from their homes and away from normal channels of political discussion. Then, too, there is the act of March 23, 1943, which permits the tax-free export of tobacco and cigarettes for the use of our military forces. Another act permits members of the armed forces to send home gifts, up to $50 in value, without payment of tariff duties. The act of March 24, 1943, extends vocational rehabilitation benefits to members of the armed services who serve prior to the termination of hostilities. We are still calling men into the services. Certainly they, too, should be extended the benfits of vocational rehabilitation. I shall not take the time of the committee by reviewing here all of the statutes for which there remains a continuing need. Representatives of the agencies which administer the statutes which we feel should be retained are here and prepared to discuss them in detail with the committee. There is no reason, however, for continuing on the statute books the emergency laws which are no longer needed. Orderly revocation of these statutes would be in the public interest. The reports submitted to the committee by my office list a number of statutes in this category which in our judgment may be repealed without jeopardizing the national security or welfare. Continuous review of the war statutes will be maintained and periodic reports recommending repeal of statutes no longer necessary will be made. I want to emphasize also that it is the desire of the administration, and President Truman has so informed the Congress, to declare a termination of hostilities just as soon as circumstances throughout the world will justify it. This is in accordance with the over-all adminis-. tration policy to end wartime controls as rapidly as it can safely be done. The administration has demonstrated throughout the past months its sincere desire to carry out this program of abandoning wartime powers. We will do it in this situation as swiftly as conditions permit. Mr. Chairman, I have devoted most of my time to discussion of the proposal to proclaim a cessation of hostilities. You have before you, also, suggested legislation which would declare termination of the emergency and a termination of the war. For the reasons I have already given it seems to me clear that these steps should not be taken at this time. I need not elaborate upon this point. For example, a declaration of the termination of the war would require the Army to return to the United States within 6 months all troops we now have abroad, other than those in the Regular Army. Practically all men not in the Regular Army would revert to civilian status. It would be folly to do this before the terms of the peace have been agreed upon and while occupation of conquered lands remains necessary. A number of other steps equally difficult and unwise from the standpoint of national policy would be forced upon the country by an illtimed declaration of the end of the emergency or of the war. I believe it is clear that it would be ill-advised to adopt such a resolution now. There are, however, certain statutes dependent upon the termination of the emergency or the termination of the war which are no longer necessary and may safely be repealed. Here again I recommend to the committee that individual consideration be given to the orderly revocation of statutes in this category. Recommendations for repeal of a number of these statutes are embodied in the reports which have been submitted to the committee. Permit me to reiterate once again that the administration does not wish to retain the authority extended by any one of these emergency wartime statutes one day longer than is absolutely necessary in the public interest. But a blanket termination, resulting from passage of a resolution declaring a cessation of hostilities or an end of the emergency or the war, would in our judgment seriously prejudice the national interest at this time. Mr. HOBBS. Mr. Snyder, you, of course, are familiar with the extension of the Second War Powers Act which this subcommittee has the primary responsibility for. Mr. SNYDER. Yes, sir. Mr. HOBBS. And the report which was unanimously adopted. Mr. HOBBS. In which we emphasized and specified the appreciation of this committee for policies which have been adopted, which have been carried out very largely by the five major agencies using these powers, and the lifting of the restraints that had been exercised by these agencies. We are in thorough accord with that and we are very much interested in the "how" of our procedure from now on. As we understand, your general counsel will be here with us during these hearings. Mr. SNYDER. Yes, he will remain here. Mr. HOBBS. And he can advise us as to the opinion of your groups. Mr. SNYDER. Yes, sir; and I will come back again on short notice. Mr. HOBBS. We are particularly interested in the best possible way to bring about a cessation of hostilities, and appreciate your broad view of the situation that you have enunciated this morning. Mr. SNYDER. Yes, sir. Mr. HOBBS. You may depend upon the committee to give the utmost consideration to the testimony which you have given, and this subcommittee has always, as you know, been unanimous in dealing with these initial maximum emergency problems. We are very grateful to you and we would be glad to receive any supplementary statements from you. We will be glad to have you come back at a later time when we can question you. Mr. SPRINGER. I was wondering, Mr. Chairman, whether Mr. Snyder wanted to remain now for some questioning or preferred to goand make an appointment when he could come back and submit to some questions. Mr. SNYDER. I will be glad to answer any questions right now. If you have any questions I will be glad to try to answer them. Mr. SPRINGER. I would like to ask you this. You mentioned something about some of these powers that are still dependent upon the termination of the war. Are those in such shape that the war could be terminated by resolution and those powers that are necessary to be extended, be extended? Mr. SNYDER. I was at that very point Mr. SPRINGER (interposing). So that the functions which are essential can properly be carried out in the future? Mr. SNYDER. I was discussing it with the chairman just before we started this session. Our only interest is to have those necessary statutes remain in effect that we actually need for a while. As to the method to go about it, we are in accord with this committee's recommendations, whatever they might be. We know that because we have worked with you so closely that we know we will always be thoroughly in accord in the final results. The question comes up whether or not we want to approach it from the point of view of going through and selecting all of the items that ought to be discontinued now and passing a bill discontinuing those and leaving the end of hostilities untouched right now, or attempting to go the other way and passing legislation now retaining those necessary ones until the end of hostilities. Personally I would very much prefer the first course, that is, to go through and wipe off the books those that we are all in accord should be disposed of. I think that retains in this committee the general supervision of all the items we are working with and it gives us a central point to discuss these matters; whereas if we started with the idea of reviewing individual matters, we may get it spread out where we will have to spend a great deal more time in discussing them with the various committees. Then, too, it may be that many of these statutes within a few months or a short time we can drop off as we go along. We can have continuing review. Of course, if you have permanent legislation for some of them, there is a tendency to drag on and hold it for a longer time than many of us feel is needed; and many of these laws that we think are necessary, a few months from now we can say have served their purpose and can be dropped. Mr. SPRINGER. I feel certain, as you do, and as most of us do, Mr. Snyder, that as quickly as they can be eliminated, the better, and it will have a wholesome effect upon the people and the country. Mr. SNYDER. I agree most wholeheartedly on that. There is no doubt about it. It is a question how best to do it so as not to have any harmful effects resulting from the transition. Mr. HOBBS. Are there any other questions? Mr. Michener, have you any questions? Mr. MICHENER. No, sir. Mr. SNYDER. I will be glad to answer any further questions. Mr. HOBBS. Miss Smedley, have you a list of the witnesses who desire to be heard? We might have all those who are here to testify on this general subject to either rise and give their names to the clerk of the committee, or to Mr. Long, committee counsel. STATEMENT OF GEORGE VEST, FEDERAL RESERVE BOARD Mr. VEST. Mr. Chairman, I am George Vest, of the Federal Reserve Board. I have two letters from the Chairman of our Board addressed to you as chairman of this subcommittee with respect to two particular statutes in which we are interested. Mr. HOBBS. Which particular agency is that? Mr. VEST. It is the Federal Reserve Board. I wish to offer those letters for the record or I will state their substance. Mr. HOBBS. We would be delighted to have you file the letters in the record if there is no objection, and we would be glad to have you state, if you want, the substance for our consideration.. (The letters are as follows:) BOARD OF GOVERNORS OF THE FEDERAL SERVICE SYSTEM, Hon. SAM HOBBS, Chairman, Subcommittee No. 4 of the Committee on the Judiciary, House of Representatives, Washington, D. C. DEAR MR. HOBBS: I understand that your subcommitttee has under consideration a proposal to fix the date of cessation of hostilities in World War II for the purposes of various statutory provisions. In this connection, I wish to call attention to the desirability of early action to terminate certain wartime exemptions authorized by the act of April 13, 1943 (57 Stat. 65). This act amended section 19 of the Federal Reserve Act to provide that, until 6 months after the cessation of hostilities as determined by the President or Congress, deposits in member banks payable to the United States and arising solely as the result of subscriptions for United States Government securities (commonly known as war-loan deposits) shall not be included in deposits against which reserve balances must be maintained by member banks with the Federal Reserve banks. It also amended section 12-B of the Federal Reserve Act to provide that, during the same period, war-loan deposits shall not be subject to the usual Federal Deposit Insurance Corporation assessments against deposits in insured banks. The legislation in question was strictly a wartime measure, enacted to facilitate the Government's huge financing program necessitated by the war effort. As a part of that program, it was desirable to encourage banks to accept new war-loan deposit accounts and to increase the amounts of existing accounts. The temporary exemptions from reserve requirements and deposit insurance assessments made by this legislation were designed to accomplish this purpose. The war-loan deposits have fluctuated greatly in amount with each war-loan drive but, as some indication of their size, it may be of interest that, since April 13, 1943, they have ranged from a low of $5,276,000,000, to a high of $24,584,000,000 and, on May 18, 1946, totaled $17,713,000,000. The exemption of war-loan deposits from reserve requirements constituted a departure from sound peacetime policies. The reasons for requiring the maintenance of reserve balances against other deposits are equally applicable to Government deposits. The fact that there is no significant difference between Government and other deposits in this respect was recognized by provisions of the Banking Act of 1935 which made Government deposits subject to reserve requirements. The exemption provided by the act of April 13, 1943, was justified only on the basis of wartime necessity. Since the Government's war financing now has been completed, the need for the exemption no longer exists. Moreover, under present economic conditions, the continuance of the exemption, beyond a short adjustment period, is decidedly unwise. One of the basic purposes of reserve requirements is to provide an instrument to control the volume of bank credit and money. The exemption of war-loan deposits relieves the depositary banks from this control with respect to a very sizable class of their deposits and encourages them to expand bank credit in a manner which increases the inflationary potential and is harmful to the Nation's economy. This gap in the controls is indefensible at a time when every available means of combating inflationary pressures is required. It is realized that, with the existing volume of war-loan deposits, it is impractical to eliminate the exemption immediately because of the possible resultant shock on the banking system. However, there will be a very marked reduction in such deposits within the next few months and the 6 months period following any date which may be fixed for the cessation of hostilities should provide adequate time for necessary adjustments. In the event the declaration of cessation of hostilities is delayed, it is believed that prompt action should be taken to fix a definite date, at or near the end of 1946, upon which the act of April 13, 1943, will cease to be effective. Very truly yours, HON. SAM HOBBS, M. S. ECCLES, Chairman. MAY 24, 1946. Chairman, Subcommittee No. 4 of the Committee on the Judiciary, DEAR MR. HOBBS: It has been brought to my attention that one of the wartime statutes which may be considered by your subcommittee in connection with its study of proposals to fix a date for the termination of the war is section 5 (b) of the act of October 6, 1917, as amended, commonly referred to as the Trading With the Enemy Act. The Board of Governors feels strongly that it would be inadvisable for Congress to take any action at this time which would repeal or terminate the effect of that statute which is the source, not only of important powers of the Alien Property Custodian and of the Treasury Department in its program of foreign funds control, but of the power of the Board of Governors of the Federal Reserve System to combat inflation through regulation of consumer credit. The Board's regulation W, relating to the control of consumer credit, was issued several months prior to the beginning of the war pursuant to authority conferred by the President's Executive Order No. 8843 of August 9, 1941, issued under section 5 (b) of the Trading With the Enemy Act. That regulation, a part of the Government's general antiinflation program, applies primarily to installment credit for purchasing consumer's durable goods, requiring minimum down payments and limiting the maturity of such installment purchases. The need for continued control of consumer credit has been recognized by President Truman. In his message to Congress of January 14, 1946, he made the following statement with reference to this matter: "Continued control of consumer credit will help to reduce the pressure on prices of durable goods and will also prolong the period during which the backlog demand will be effective." Similarly, the Special Committee on Postwar Economic Policy and Planning of the House of Representatives, in its report dated March 4, 1946, declared that "continuance of control over consumer credit" is among the important fiscal and monetary measures which seem to that committee to be desirable. During the war, the volume of consumer credit was naturally reduced as the result of curtailed production of consumers' durable goods of the kind commonly purchased on credit. However, goods of this kind, such as automobiles and household appliances, are beginning to become available again; and, with current demand for such goods enhanced by a higher level of income, further expansion of consumer credit seems certain to ensue. Since expanding production of consumers' goods is likely to fall short of the demand for a considerable time to come, any expansion of consumer credit will tend to aggravate a general inflationary situation. It is during the period while this danger re |