Mr. DAVIS. NO, Mr. Baldwin, I do not agree with that at all. I think Mr. Hutson will show when he reviews the action there is a continuity of policy in the actions of the Commodity Credit Corporation accounting for the overwhelming volume of our business in the Commodity Credit Corporation. There have been some recent actions which we will be very happy to discuss as they come up, including the one of the Baltimore, Philadelphia, and Washington milkshed which you questioned about yesterday.

But if the committee will be so kind, they were very kind to me yesterday, I would like to clear a few matters up as a foundation for this discussion, which I hope will be very helpful, and I would like to make a statement bringing us down a little more to date.

The CHAIRMAN. The committee will be glad to give you all the time you need, sir.

Mr. DAVIS. I am not trying to duck your question at all, Mr. Congressman, but I would like a little more foundation for it because yesterday I reviewed briefly the legislative and operating history of the Commodity Credit Corporation and what I would like to do today in view of the line of questioning that developed toward the close yesterday is to make the present situation of the War Food Administration as clear as I can. I said yesterday that it is my duty as War Food Administrator to operate under rules that are laid down by the Congress and the President of the United States. You know yesterday I reviewed the various legislative acts that will be put in the record or provided to the committee, that constitute the history of the Commodity Credit Corporation.

Now, I want to read one paragraph from the Executive order issued by the President on October 3, 1942. That is a fact. I mean it is not a theory as far as I am concerned; it is a fact. It is very brief and I want to lay it before this committee.

Under the subtitle "Profits and Subsidies" this paragraph appears. This was the order, if you recall, that created the Office of Economic Stabilization and provided for the appointment of a Director of Economic Stabilization. This paragraph reads:

The Director may direct any Federal department or agency including but not limited to the Department of Agriculture (including the Commodity Credit Corporation and the Surplus Marketing Administration) the Department of Commerce, the Reconstruction Finance Corporation, and other corporations organized pursuant to section 5d of the Reconstruction Finance Corporation Act, as amended, to use its authority to subsidize and to purchase for resale if such measures are necessary to insure maximum necessary production and distribution of any commodity, or to maintain ceiling prices, or to prevent a price rise inconsistent with the purposes of this Order.

Now, I do not read that for the purpose, gentlemen, of debating the question. So far as the Food Administrator is concerned that is a fact. I mean that is one of the rules under which the War Food Administration operates.

I could refer to a more recent order, the "hold the line" order, as another fact so far as we are concerned. Those things together with the various legislative enactments necessarily guide our activities in the executive branch of government. Now, I do not know whether this committee is interested in my own personal views on this general question of inflation control or not.

The CHAIRMAN. We are interested, I assure you.

Mr. DAVIS. Particularly as they relate to food. I repeat I think this discussion is very healthy. These subjects ought to be discussed. They ought to be broadly understood because I think they tend toward the development of national policy on production and prices. That is understood.

Now, if I understood Mr. Ford and Mr. Wolcott correctly in their statements this morning, and, of course, when gentlemen give abbreviated statements probably some of the inferences from them are not completely justified. I would say my own position is somewhere between the two of them. I said yesterday and I want to repeat now I think it is extremely dangerous to outlaw under a legislative label such as "subsidies" or "incentive payments" or anything of the sort, some devices that may be tremendously important in the case of some particular commodities at some particular time if we are going to get the production which after all is the most important thing we face in this country as I see it, and that is to get the production of agricultural commodities.

On the other hand I believe that a general reliance on a program of broad subsidies as a chief implement to prevent inflation is a dangerous delusion, partly for the reason the Congressman pointed out, and that for inflationary control in this country we have to have a broad and coordinated program that involves a great deal more than direct price-control orders or subsidies.

Mr. FORD. Mr. Davis, at that point may I say I was confining my remarks to those articles we asked the Secretary of Agriculture to produce additionally.

Mr. DAVIS. Right; and I was not disagreeing with your position at all.

Mr. FORD. I want to get that clear.

Mr. DAVIS. It seems to me we have got to be very careful in any legislation Congress passes, if and when it extends the life of the Commodity Credit Corporation, not to tie our hands against the course of action that we have taken through the years in support of farm prices, almost every one of which involved such a substantial element of risk of loss that they might have been considered, and I think by any definition would have been considered, subsidy operations. We have been engaged in them for going on 10 years. Now, when I say that there has got to be a coordinated program, I am getting into a field that is this committee's field and perhaps you may think it is not my field as Food Administrator at all. But I think it is fundamental to the success of any long-continued price- or wage-control program. Let me throw a few figures at you. Most of you are familiar with them. The best estimates I am able to obtain indicate that the total of consumer income in the United States in 1943, that is the sum of payments to individuals, will aggregate about $140,000,000,000. The forecast for individual taxes is about $16,000,000,000, leaving disposable income in the hands of the consumers of about $124,000,000,000. At the existing price level with the supply of goods that we have on hand about $82,000,000,000 is about all we can expend for consumer goods without having a substantial rise in prices. And that leaves, and on any estimate of this sort you have got to be willing to take, a billion dollars or so here or there because after all, they are estimates, that leaves about $42,000,000,000 which you might say is available for sav

ings. And under savings I would include insurance payments, normal payments, and reduction of debts and what people are now investing in Government bonds.

Saying that that type of savings is $25,000,000,000, that leaves $17,000,000,000 knocking loose in the economy, much of it in the possession of people who want to spend it. Many of them never had so much money to spend before in their lives. That creates an inflationary condition. That makes direct price controls very difficult to handle. It seems to me the answer to that is the answer that should have been taken a long while ago, that is by stiffer taxation and withholding at the source and a much broader program of investment on the part of the people who have this money in Government securities than we have ever had in this country. That would lay a kind of foundation against which we could brace ourselves with price controls and operating programs.

Just to sum up, I want to say that I hope the committee and the Congress won't divide itself into two hostile camps; one saying "I am for incentive payments" and the other saying "I am against incentive payments.' One saying "I am for subsidies" and the other saying "I am against subsidies." Let us get the philosophy established for a coordinated program on inflation, of which this is a part, and then give us a chance to use some reasonable common sense in their administration.

Thank you, that is what I wanted to tell you.

I want to ask the gentlemen of the committee, when Mr. Hutson comes before the committee to give him the same courtesy you have extended to me and let him make a statement in advance.

The CHAIRMAN. The committee will be happy to have him do that, and we are glad to have you do so. It is helpful and it helps to bring about an understanding of your views, and we are glad to have your statement this morning.

Now, in view of the program in the House, I think the committee would rather adjourn.

(Whereupon the committee adjourned to Thursday, May 20, 1943, at 10:30 a. m.)

CONTINUANCE OF COMMODITY CREDIT CORPORATION

THURSDAY, MAY 20, 1943

HOUSE OF REPRESENTATIVES,

COMMITTEE ON BANKING AND CURRENCY,

Washington, D. C.

The committee met at 10:30 a. m., Hon. Henry B. Steagall, chairman, presiding.

The CHAIRMAN. Let the committee be in order. We have before us for further consideration this morning H. R. 2725.

Before hearing Mr. Hutson I think for the orderliness of our procedure there is one thing that should be clear in connection with the statement of Mr. Davis and that is the matter of the authority of the Commodity Credit Corporation. I am not familiar with every phase of that inquiry and I am sure that is true of other members of the committee. I had asked Mr. Davis day before yesterday to supplement his statement at that point by giving us the technical situation with respect to the powers and authority of the Commodity Credit Corporation. That should come in connection with his statement, and it is one of the first things we really need to clear up in this discussion before we go into the details of the operations and various activities of the Corporation. I am wondering if we might not follow up Mr. Davis' statement, if you are prepared to do it, by supplying the committee with that information and let it be incorporated along with his statement and preliminary to your further discussion of this legislation.

Mr. SHIELDS. Mr. Chairman, I might say on that subject that we have collected together all of the Executive orders and statutes specifically relating to the Commodity Credit Corporation from the beginning up to the present time so that they can be made part of the record.

The CHAIRMAN. I have that compilation before me. What does it cover?

Mr. SHIELDS. It begins with the Executive order creating the Corporation.

The CHAIRMAN. That is when you began with the $3,000,000 fund supplied by the President and the Corporation was established under that Executive order?

Mr. SHIELDS. That is correct, Mr. Chairman. And then there follows the certificate of incorporation and the bylaws and all the laws that relate specifically to the Commodity Credit Corporation from 1933 to the present date.

The CHAIRMAN. And the President's order is in this?

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Mr. SHIELDS. Yes, sir. And I thought it probably would be better to discuss questions with respect to the authority of the Corporation after that was convenient and available to the committee in the printed record but I have submitted this compilation to be inserted in the record in accordance with your wishes.

The CHAIRMAN. I don't care to proceed at length with a discussion of those powers but I did think they should be incorporated in connection with the testimony of Mr. Davis.

Mr. SHIELDS. Yes, sir.

The CHAIRMAN. Now, you have supplied a copy of the Executive order as well as the charter?

Mr. SHIELDS. Yes, sir.

The CHAIRMAN. And the bylaws?

Mr. SHIELDS. Yes, sir.

The CHAIRMAN. And the various acts of Congress?

Mr. SHIELDS. Yes, sir.

The CHAIRMAN. In other words, everything relating to the Commodity Credit Corporation from the beginning down to the present time?

Mr. SHIELDS. That is correct, Mr. Chairman, and there is included the Steagall amendment and the laws authorizing the mandatory loans and the laws authorizing the annual audit and all the laws from

1933 to 1943.

The CHAIRMAN. And that embraces such legislation as has been passed under the jurisdiction of the Committee on Agriculture? Mr. SHIELDS. Yes, sir; as well as this committee.

The CHAIRMAN. And it embraces all the legislation pertaining to the powers and authority of the Commodity Credit Corporation? Mr. SHIELDS. That is correct.

The CHAIRMAN. Now, let me ask in that connection in order to follow that up to its finality, do these various acts and orders to which you have referred cover all the powers exercised by the Commodity Credit Corporation?

Mr. SHIELDS. In my opinion they do; yes, sir.

The CHAIRMAN. They do? And that includes the Executive order of the President?

Mr. SHIELDS. Yes. It includes the Executive order and charter and then the specific legislative acts. We have also included for convenience such reference as Mr. Davis made yesterday to Executive Order 9250 relating to the subsidy authorization of the President. The CHAIRMAN. That is in this too?

Mr. SHIELDS. Yes, sir.

The CHAIRMAN. And, of course, that leads up to the further inquiry respecting the powers upon which those orders are predicated. Mr. SHIELDS. That is true.

The CHAIRMAN. I suggest that this information be incorporated in connection with the former testimony in its proper place. And then, as you suggest, after we have discussed the various activities inquiries can be made by members respecting that part of the testimony.

Mr. SHIELDS. The compilation of Executive orders, charters, bylaws, statutes, and so forth, is as follows: