the past 5 years the budget has been balanced. The point Senator Maybank is bringing out is that now we are faced with the necessity of spending all this money to make ourselves strong.

Now, if your responsibility was the strength of the country, to defend our freedom against communism, you might have to deal with astronomical figures, too, Mr. Lawson.

I didn't want to let that pass, because I was quite sure you didn't mean it quite the way I took it.

Mr. LAWSON. I would like to say one thing, Senator:

I would like to get this back down to simple arithmetic, as I mentioned before. I think this defense program is just exactly like a family when somebody has a serious illness. You don't stop to question the cost of the doctor, or anything else, you want to get the person well.

Senator MOODY. Precisely.

Mr. LAWSON. But in the meantime, sister may want a new dress which we will have to do without, and the rest of the family might like to take a trip; they will have to do without that. They have to do without the luxuries and necessities until the debt to the doctor is paid. Unless we do that, we can't pay the doctor.

Senator MOODY. That is right; and anything which you can show this committee which will aid us to follow out the suggestion you have made, any waste in the Government that you can specifically point to, I for one-and I am sure every member of the committee-would like to have you do it. We are looking for that, too, you know.

Mr. LAWSON. It would take me a long time, there is so much of it. The CHAIRMAN. Well, it doesn't amount to such a great deal in dollars and cents as compared with the military. Of course, there is waste and extravagance to some extent in all Government agencies, whether a municipality or the Federal Government.

Mr. LAWSON. Senator, I think that some chickens are coming home to roost from the eggs that were laid about 15 years ago.

The CHAIRMAN. Well, we have to carry out the laws that are passed. The Veterans' Administration is practically a defense activity. There is not one nickle in that appropriation bill this year, as it has been written up, for Korean veterans, or any aid to those Korean casualties. Of course, we did pass a bill letting them get into hospitals; that is the first bill we had.

Senator MOODY. I want to say in view of the fact that Mr. Lawson feels there is so much waste, I hope he will let us have some specific examples of where he thinks it is. That would be a real help to Congress. That sort of statement, when it is backed up, could be very helpful, but when it is not backed up, it isn't very constructive, and therefore I hope you will come in with facts.

Mr. LAWSON. Senator, I am not making any statements here I can't back up.

Senator MOODY. Fine: I will be looking forward to your details. Senator CAPEHART. Mr. Lawson, I suggest you save your time, because until you get an administration and get Senators and Congressmen to control this Congress who have a will to reduce and cut expenditures, they will never do it. The present Congress and the present administration have no intention of doing it. You would be just wasting your time if you do it.

Senator MOODY. I think the Senator might speak for himself on that and not for others

Senator CAPEHART. I will let the record stand for itself on what has been said here this morning, and let the record stand for itself over the past 20 years. I don't have to speak for anything, just let the record stand for itself. Expenditures today, and the national debt today, and what is going on, and the attitude of what has been said here this morning; that it is impossible to cut expenses.

It is not impossible to cut expenses, and this Congress ought to cut expenses; they ought to cut the military expenses. They ought to cut out all the frills, and they can do it if they want to do it, but they do not want to do it.

They don't want to do it; they are not going to do it.

Senator MOODY. Who said it was impossible to cut expenses?

Senator CAPEHART. I will let the record speak for itself in that respect. I don't need to answer that at all. All you need look at is the appropriations, the amount of money that is being spent and has been spent.

The CHAIRMAN. I may say this: I was chairman of the subcommittee handling the independent offices bill. We cut that to the bone. Senator CAPEHART. Of course you did, but the big figures are the military spending.

The CHAIRMAN. I was one that voted not to bring the Marshall plan bill out the last time.

Senator SCHOEPPEL. I think something has been done by way of pointing the way to where a lot of constructive things could be done. All I need to say is take the history of the committee headed by Senator Byrd, and look at that blueprint, and have anybody come up and tell the Congress of the United States, and the American people, that that doesn't furnish a blueprint for something practical and down to earth. I think we can follow that to a definite degree, and that report shows there is not very much that is going to be hampered or hindered under the defense program, but it does point out the way to us if we have the courage to do what we want to do. Watch my vote, and you will see where I stand on that.

Senator BENTON. May I make an observation, Mr. Chairman, since everybody else seems to be making observations? This may be of interest to Mr. Lawson's associates:

Not long ago, at a meeting of the Committee for Economic Development, of which I have been a member of the board of trustees since its inception, I heard the president of the CED make a statement along this line about cutting expenses. I am deeply sympathetic with this objective, but I believe the business community as a whole greatly overlooks the relative power of the administration on the one hand, and the Congress on the other, from the standpoint, one, of getting it done, and, two, the possibility of getting it done.

Last year, my first year in the Senate, I saw the administration send up bill after bill which would have greatly cut expenses, in line with the recommendations of the Hoover reorganization proposal, and I saw those bills knocked right out by Senators of both parties, and until the business community discovers that it is the Congress primarily that is responsible for the waste and inefficiency and extravagance by the Members of the Congress in both parties, it is not going to make any progress in being effective, and in bringing influence to bear in getting costs down, and that is a very important point, and it is completely misunderstood by the business community.

Republican Senators Taft, Milliken, and others, who were running for office last year, voted for expenditure after expenditure on vote after vote, and Senator Byrd himself didn't stand up on the President's veto of the Congress on the Spanish-American War veteran bill when the Congress whooped it through to give free medical service to everyone who ever served in the Spanish-American War. The President had the courage to veto that bill, and only three Members of the United States Senate, all Democrats, supported him. I give that only as a quick illustration to show the problem.

Senator CAPEHART. It is pretty tough to sit and vote to deny American people a few dollars and at the same time vote to give away billions to foreign countries-spread it over the world.

Senator BENTON. I would like to see all the trade associations make a study of this problem, Mr. Lawson, because I believe they could be extremely effective if they would reward the Representatives in Congress who fight for economy, and punish those who stand up for extravagance.

Until our businessmen are willing to do that intelligently and constructively, they are going to serve no purpose in coming before these committees saying, "Let's cut down expenditures."

Senator MOODY. Mr. Chairman, following up the splendid statement by Senator Benton, I would like to mention one thing that seems to be not understood by many in the business community and some outside the business community. The real decisions regarding spending, Mr. Lawson, are actually made not so much in the Appropriations Committees, as when the budget itself is acted upon, as when the fundamental, underlying laws providing for the spending of the money are passed.

Now, as Senator Maybank has pointed out, the Appropriations Committees of Congress do a very painstaking and hard job in trying to reduce the budget, but to the extent of many billions of dollars, the expenditures of the Government are set when the underlying law is passed.

I will give you one instance-not necessarily criticizing the law but pointing it out as an example:

Your cotton community in this country has a price support. Cotton prices are supported, as are the prices of other agricultural commodities.

When that law is passed the Government, the administration, the men working for the President that I believe you are criticizing, have no alternative but to spend the Government's money without any ceiling to support a price of a certain amount.

That is the policy of the Congress. I am not here criticizing that policy. I am merely pointing out that the money is spent actually when that law is passed. When the budget comes up for the Department of Agriculture there is no way the Appropriations Committees of this Congress or the Congress itself can go behind that mandatory law without changing the law. It is entirely impracticable and even misleading to the public-some people have misled the public by saying that that budget, for example, can be cut down, when, as a matter of fact, it is an open-end law, calling for mandatory spending over which neither the President or the Congress have control so long as that law stands. That isn't the only such example. There are a num ber of open-end laws which underly the budget. If the Congress

wants to cut expenditures, it has to change the laws. It can't do it after the law has mandatorily ordered that the money be spent.

In line with what Senator Capehart says, I too believe money can be saved. But I think the great amount of saving that can be made will be when Congress stands up to the proposition of changing these underlying basic laws.

If you think when we are spending billions of dollars on military expenses that we can't have the dress can't support the price of cotton, you should come in and tell us that.

I am not saying that we can't. I am simply saying that is one of the things that Congress might look at if you really want to save money. Mr. LAWSON. Senator Moody, you haven't spent any money in the support of price of cotton. The price of cotton has held itself, and they made a good profit.

Senator MOODY. Sometimes supporting cotton has cost money and sometimes it hasn't.

Now, for example, there was a law passed on the price of potatoes. That became virtually a national scandal, and a great many people blamed the administration and the President for that. That wasn't the President's fault. He was told what to do by the Congress in the law.

Senator CAPEHART. Will the Senator yield?

Senator MOODY. Yes.

Senator CAPEHART. The President told the Congress to pass the potato bill and all these other acts that you are talking about, sent them up here. They were administration-sponsored bills, and they whipped the Senators and the Congressmen over the back to pass them. Now, let's keep the record straight. All these bills that you say the Congress passed originated at the White House, originated with the administration; they were administration measures, just as they all are. They were a part of the program, and they were sent over here to the Congress to pass, and God pity the ones who didn't vote for them.

Senator MOODY. I know no one is going to whip you over the back, Senator Capehart.

Senator CAPEHART. Nobody at the White House at the moment is going to do it.

Senator MOODY. Well, you voted for the price-support law, didn't you?

Senator BRICKER. What has this to do with the price of cotton? Let me comment on something Senator Benton said:

I made a study of the effect of the reorganization bills under the Hoover Commission report, and there isn't one penny that has been saved yet under the bills that have been passed, submitted by the White House, nor one employee cut off the payroll as a result of the reorganization plans sent down here, and more than half of them have been adopted by the Congress.

The CHAIRMAN. Well, if the committee desires to continue to discuss that, of course, it is quite all right. I voted against a good many of the bills, because the reorganization bills would cost many more dollars. When I told them the bills were going to cost more, they didn't believe it. The one for the Post Office Department has done nothing but increase the cost.

I might say for the benefit of the committee that the 40-percent figure is correct for all steel, for those purposes.

Senator CAPEHART. That is 50 percent for the direct military

Senator CAPEHART. Petroleum, railroads, industrial expenses, shipbuilding, machine tools, and certain other equipment.

The CHAIRMAN. Proceed, Mr. Lawson. I think we had better complete your statement before we discuss economics. That takes quite a while.

Mr. LAWSON. I had in my hand the 1346-inch type. I also have a statement here from a cotton shipper, which shows how easy it is for classers to vary in their estimate of the cotton.

The CHAIRMAN. Do you want to file that statement as a part of the record?

Without objection, it will be filed in the record.

Mr. LAWSON. In the presence of of witnesses he unsealed 26 of these types which you had there, so they represented the samples from 26 bales of cotton, and he put inside a coupon with the number of the cotton on it. He mailed these samples to the Cotton States Arbitration Board in Atlanta for classification against the Government type. The Cotton Sales Arbitration Board settles all disputes between the American Cotton Manufacturers Associaiton and the cotton shippers and is picked for its expertness in classifying cotton. Gentlemen, I want you to bear in mind that the 26 samples sent them were all 1316-inch Government staple standards. The board classed 4 bales 1316 inch, 16 152 inch, one staple shorter, and 6 bales of 1% inch, two staples shorter.

The difference in the value of that was, oh, $25 a bale from the shortest cotton they classed to the longest cotton.

I also have here a classification by the same board where they classed 50 samples of the Government standard 11 inch staple and only three bales were classed 1 inch, and the cotton they were classing was the Government inch and 316 type.

The remainder were shorter.

Here is another instance where the same arbitration board classed 61 bales of cotton under Middling but a cotton mill classer accepted them for Middling. I have here a class sheet from two different classers of the USDA on the same 25 bales of cotton. Applying ceiling prices of the OPS there is a difference of $18.60 per bale in the valuation.

That shows you how classes on cotton would vary.

Before coming to Washington, I sent samples from the same two bales to classers of seven different cotton mills and asked that they class the bales for staple. I have the results here. It is sufficient to say that there was a difference of two staples in their class on the same bales. Now, according to the ceiling price regulation on raw cotton certain price ceilings are set according to grade and staple. Should anyone be found guilty of exceeding these prices he would be subject to 1 year imprisonment and $10,000 fine. Under the administration's proposed amendment his license would be revoked, and he couldn't stay in business.

Gentlemen, what I am trying to get over to you is this: that classing cotton is not exact, but here the OPS have said if I have gone out and

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