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Senator BRICKER. Mr. Newsom, I want to say frankly to you that you are the first man that has come before this committee with an analysis of this problem. The Secretary of Agriculture says it is unimportant, it makes it easier for us to do the job. The Secretary of Labor says we have got to have this, and the other representatives of the various departments of the Government come in and say that it is not important, it is just for the purpose of making it easier to put the program into effect. I for one am rather skeptical when they come in here from the various departments with a proposal like that, without any real significant meaning. There is something hidden behind it, and I want to thank you for analyzing it for us.
Mr. NEWSOM. Senator, I want to say to you very honestly that in these 6 months I have tried as earnestly as I know how to be strictly impersonal in my approach and my presentation to the respective people here, but I think I would be less than honest with the committee, Mr. Chairman, if I did not say to you frankly that I have been terriby disappointed, and that the only answer I have been able to get in my discussions with Mr. Johnston and others to this proposal is that somebody somewhere along the line has got to be the goat, in effect, I do not think anybody has ever used that exact term, to break this inflationary cycle. I submit to you--
The CHAIRMAN. You will never break it that way because the wheat farmer, the cotton farmer and the corn farmer are going to leave that wheat, cotton, and corn in the loan and wait for the next year, and there will not be any wheat, cotton, or corn to get to the consumer.
Mr. NEWSOM. When I raised these very points with them they always came back with the same remark that the Senator from Ohio just used a moment ago, that it is so little, that it amounts to so little, that surely farmers ought to be willing to give up that much, and I say to you frankly, that this job is too big to be whipped by giving up anything. We must give, but not give up. We must produce and we must assume our individual responsibility.
Senator BRICKER. Frankly, if you had not testified this morning this committee would have had no testimony before us except that this is a relatively unimportant thing and it would make it easier for us to administer the program. That is the testimony we have had before this committee.
Senator SCHOEPPEL. I want to say to you, Mr. Newsom, that when Mr. DiSalle was here and this question was raised I said, “Just wait a minute. I certainly want to take a look at that. I am not convinced that there are not inequities that are not shown on first blush,” and I want to join with Senator Bricker and Senator Maybank and say to you that this is the first realistic and practical look that we have had the opportunity to have before us.
Mr. NEWSOM. I thank you personally, but I confess to you that I am a bit embarrassed on behalf of agriculture that that statement has not been made before this time.
The CHAIRMAN. There has been no agriculture witness, only the Department, the various governmental departments. •
Senator BRICKER. Mr. Johnston took the same position.
The CHAIRMAN. With all respect to those gentlemen in the jobs they are doing, they do not know the problems of the farmer.
Senator BRICKER. I see where Mr. Johnston has bought a farm out here. He will soon learn the hard way.
Mr. Newsom. I doubt if it is necessary, Mr. Chairman, to read this next paragraph, in light of the discussion. I am simply saying to you that to ask tħe agricultural producers of this country to absorb the shock that is necessary in breaking the inflationary cycle in the manner they propose to break it is grossly unfair. It will not serve the national interest well.
The CHAIRMAN. Even if we pass it as a law it will not, because it would just keep the produce on the loan in storage until the next parity price for the next year, because with everything going up they know the parity under the law would have to be raised and the consumer would be the sufferer.
Mr. Newsom. I repeat that the mass of consumers in our mobilization effort would suffer unless we invoked the power of confiscation of property, which disturbs me, frankly.
Senator BRICKER. Those who are supporting this program now and advocating it and driving hard for it are the ones that will suffer the most in the end.
Mr. NEWSOM. That is true.
Senator SCHOEPPEL. There is one thing that should be pointed out, that parity as an index is based upon fluctuations, as we all know, but if they stabilize all the other factors there would not be any necessity for them to fool with this.
Mr. NEWSOM. I have tried as earnestly as I know how to say exactly that. Parity will not be stabilized afterward, but exactly at the same time.
Senator SCHOEPPEL. But in the absence of those other stabilizing influences the injurious effects that you mention come into play.
Mr. NEWSOM. That is exactly right.
Senator SCHOEPPEL. And that is exactly what we are confronted with.
Mr. NEWSOM. That is exactly right.
Senator BRICKER. When this law was first passed you had a constant running attack on that particular provision, as you know, from certain sources in this country. It was spread over the newspapers and the radio, unfortunately.
The CHAIRMAX. They have been misled. They did not understand it. It is a highly technical thing that only a farmer or one who has been in the farming business for years and years understands. Tom, Dick, and Harry, with all due respect to them, do not understand it. The people in New York City do not understand it. Most of the hue and cry comes from there that I get, but they do not understand it. It will hurt them because the farmer will keep his goods and not sell unless, as you say, they pass a confiscation law here to confiscate the fellow's wheat or eggs or whatever it is, and we are not going to do that.
Mr. NEWSOM. We hope not, but the power to requisition and condemn is provided in this bill.
As a possible method of breaking the inflationary cycle without any resultant injustice or inequity which does not already exist, we have proposed to the President and to the Mobilization Committee a three-point program as follows:
1. Recognition that the provisions of the Defense Production Act of 1950 with respect to agricultural prices are just and equitable. If all products rise to parity it will result in raising the cost of living less than 2 percent.
Senator BRICKER. That is an amazing statement. From the reports we have read and the criticisms—and I think we were cautious and careful in considering that aspect of it—you would think that that was the all-important factor in the cost of food, in the rise in cost of food.
Mr. NewsOM. Senator, that thing has been so grossly magnified, in my honest judgment, by some people, for political reasons more than anything else, that it is really pathetic. I am trying to say to you
The CHAIRMAN. I will say to you that there are more than politicians. The newspapers, the city newspapers, some of the newspaper people that I know, and they believe—and they are honest, honorable, good people—but they just do not understand parity, and to hear these wild statements that it causes the cost of living to rise and we have to freeze parity or all these things are going to happen-well, you are a practical farmer; you farmed all your life and my family has farmed all their lives, I know it will not. I know it is all wrong and I wish we could get some publicity, based on what you have said, to explain to the people that they are the ones that are going to be the losers. The farmer is not going to lose. He is not going to sell. He will wait until next year.
Mr. Newsom. The plain truth of the matter is that the maximum justifiable adjustment in wage rates that can possibly be based upon that completely 100 percent successful rise to parity, if it should take place, would amount to only 3.4 cents an hour. I do not want to get into Mr. Johnston's camp or anybody else's camp by saying is not that awfully little, but I am saying that that in turn- I am reliably advised-would amount to an inflationary wage adjustment of $2,300,000,000.
On this matter of breaking the inflationary gap, which is the thing that is causing all of the loss of sleep, I propose that we break it at the level of government where we can all have a hand in absorbing the shock and make the necessary tax adjustment, if you please, to the wage payers of this country to account for that $2,300,000,000 and then let us attack the problem of level of profits, tax liability, and so forth, on their merits, divorced from the discussions on this matter of breaking the cycle itself. Let us do one thing at a time and get the job done and go on to the next job. That is what I am trying to say in this three-step program. The only criticism that has been offered, constructive criticism, in my judgment, that has been offered to this, our Grange proposal to break the cycle, is that it breaks it at a slightly higher level.
I say to you that if it is the problem that has been posed to us to be, then we are justified in that approach to get it broken and stopped. We just simply cannot afford this strife and contention between groups in America when we must unite for the common cause. I could cite figures to you that I think I can prove, to the effect that if the agricultural producers of this country had enjoyed the same return for their wages in 1950 that industrial labor received, if we had enjoyed the same return on our investment as other industry got, our
prices would have had to average 190 percent of parity. Our net income would have had to have been three times what it was. I think I can prove that, but I do not believe America can afford that kind of an argument now. I do not think we could win it, in the first place, and I just do not think that America can afford it.
I think we must proceed with the job that is at hand.
To summarize our position with respect to the proposed bill we would point out that the Grange recognizes that:
1. The mobilization effort requires priorities and allocations of materials;
2. Under some circumstances authority to requisition and condemn property may be needed in the national interest;
3. The abnormal requirements of our mobilization effort necessitates unusual provisions for expanding productive capacity and supply to meet the mobilization requirements.
We therefore support those sections of S. 1397 providing, priorities and allocations, authority to requisition and condemn and expansion of productive capacity and supply, subject in the latter case, however, to an amendment to prohibit subsidies for the purpose of providing for prices at the market place at levels lower than those provided by section 402 of the Defense Production Act of 1950.
We also recognize that the rising level of mobilization orders and production will result in a restriction of certain consumer goods and an increase in purchasing power at least for a temporary period; and that the Government has failed to control purchasing power adequately through measures enumerated above.
We therefore urge that the section providing for price and wage stabilization be amended to provide for rationing at the consumer level and to prohibit direct price control except in conjunction with rationing
The proposal to prohibit the reflection of parity, or cost changes, and to thus ignore the importance of farm storage and orderly marketing, is totally unsound and the striking of this amendment is imperative.
The present situation may well be another example of need to delegate vast and comprehensive power to our executive branch of government in order to effectively and speedily meet emergencies. The delegation of power in this instrument is, however, so complete and so vitally significant to the freedom and very life of every American that we are pleased to note that those provisions for termination of the act or any section thereof by concurrent resolution of the Congress and for the provision of a Joint Committee on Defense Production are retained.
We doubt whether the Congress has a right to delegate such comprehensive power without retaining and exercising responsibility insofar as sound administrative process will permit.
We urge the committee to consider, therefore, the possibility of amending section 712 to provide that:
1. The members of the joint committee shall be chosen:
2. Authorize adequate funds for a competent staff for efficient functioning of this committee.
I am trying to say to you, gentlemen, as I endeavored to say a moment ago, one of the most frightening dangers of any control program is that its operation, of its very self, tends to call for more controls. I think the greatest care in the world should be exercised, even though we concede that there are potent reasons for providing this sort of control, at least on the shelf, to see that they are so administered as not to perpetuate their need.
The CHAIRMAN. Since you spoke about the joint committee, Senator Bricker and myself, at this end of the Capitol, have done as well as we could, and I know that the Grange and the other organizations of this country realize that this program was late in commencing. As a matter of fact, the beef roll-back, which was the main issue, only came about within the last 2 weeks. In other words, we had nothing before us. All during November, December, January, and February
Mr. NEWSOM. I understand that, Senator, but I think there is one flaw in the present provision before this committee. As a staunch advocate of balance of power within the Government in the first place, and as a believer in the responsibility under our two-party system, with the major responsibility on the majority party, I think it is fundamentally sound, if it is administratively possible, and I hope it is, that party members in each of the Houses have a hand in this selection of the personnel for the joint committee. That is point No. 1. Point No. 2 is that we, I believe are reliably advised, that the present appropriation is perhaps inadequate to provide a competent staff. I am trying to say to you
The CHAIRMAN. That I admit and I think we would have asked for more money if we had had the opportunity to have done so. But what happened was we started these hearings before anything much had been done. For instance, the steel roll-back of 35 percent has just come about. We started these hearings 2 weeks ago. The beef rollback came about after we started and it was for that reason we had not asked for money. I do not know whether Congress would have given us more money or not, but you are absolutely right. The staff is not adequate for what we see ahead.
Mr. Newsom. I am very happy that you recognize it. There is an inherent danger that the very operation of controls will perpetuate the necessity for controls, and the greatest reliance that we can put upon the Congress, as our most direct representatives in this situation to safeguard that possibility is of major concern to us.
This important battle of attacking inflation is a tough one. There just is not an easy way to do that job. There is no easy way to defeat communism in what I have referred to as a world-wide revolution. I think that is what we are in, at the present time. I have tried to say to you that, only to the extent that we are willing to work harder and longer and produce more, will we be able to head off an inescapable decline in our living standard in this country.
In closing, if I may, I would like to borrow a remark that a very prominent economist made just a few days ago in a discussion on this very subject. I thought it was tremendously potent. He said, “Gentlemen, we may be putting entirely too much emphasis on direct stabilization,” and he meant price control, I know that. He said, “Let us remember that it is the propellers that drive the ship and not the stabilizers."