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Source: Council of Economic Advisers, Economic Indicators, May 1951, p. 23.

TABLE IV.-Analysis, plant, and equipment accounts, General Electric Co.,

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Source: Fifty-fifth, fifty-sixth, fifty-seventh, fifty-eighth, and fifty-ninth annual reports and yearbooks General Electric Co. (1946 to 1950, inclusive).

(The following was received from General Lawton in response to Senator Benton's request for comment on Mr. Carey's testimony :)

Hon. BURNET R. MAYBANK,

United States Senate.

JUNE 6, 1951.

DEAR SENATOR MAYBANK: I have read the transcript of the testimony given by Mr. Carey before your committee on May 30, 1951, on the Defense Production

Act amendments of 1951, which was sent to me for comment at Senator Benton's request.

The gist of Mr. Carey's testimony is that between 35,000 and 45,000 workers in the radio-television industry are now unemployed because of a decline in production brought about, among other things, by existing credit controls and the slowness of the defense production program in finding its way into the defense production line.

The Signal Corps, of course, has no function with respect to credit control. Whenever necessary to assist producers to increase their production of signal matériel, we do what we can to give them financial assistance; we do this without regard to the size of the contractor. In placing contracts with industry, the Signal Corps has proceeded with the utmost of dispatch in an effort to place industry in a position to proceed with expeditious performance of contracts. In the present procurement program, we have issued 870 letter orders in the amount of about $1,000,000,000 in order that manufacturers could proceed promptly with necessary production planning and subcontracting, without having to await execution of definitive contracts. You will recognize that it takes more time to plan the production of complicated signal equipments which have never been built before than it does for production of broadcast receivers and TV sets.

In some instances large procurements have been placed with the larger manufacturers; but in such cases this was necessary to ensure efficient production and prompt delivery of equipments not susceptible of production by small business. In many other cases, procurements have been directed to smaller manufacturers because they were most suitable for production of the material involved. Mr. Carey would like to see enforced subcontracting. The Signal Corps accomplishes the same end by strongly encouraging subcontracting by its prime contractors to as large an extent as is possible and still produce well-made signal equipment. Also, by negotiation of its contracts, designated portions of an equipment are required by contract provisions to be subcontracted. Senator Schoeppel commented, during the course of Mr. Carey's testimony, that he thought negotiating contracts instead of letting them out for bids was responsible for concentration of procurement in the hands of a few contractors. It has been the experience of the Signal Corps that the opposite is true. Under formal advertising, procuring agencies are obligated to place their contracts with the lowest bidders, other factors being equal, irrespective of whether the successful bidders are large or small. On the other hand, by means of negotiation, procuring agencies are in a position to direct contracts to those small business concerns able to manufacture the required equipments and components. Also by negotiation the procuring agency may provide in its contracts for subcontracting.

With respect to the issuance of tax-amortization certificates, the handling of which Mr. Carey calls generally "scandalous," the Signal Corps has also been careful in its recommendations. Expansion at Government expense or at the contractor's own expense is not recommended except in cases where this is necessary to obtain increased production of signal equipment.

Mr. Carey has also stated that negotiation of contracts has been limited to a small number of firms; that large contracts have been placed with "paper companies" thereby adding another layer in the levels of the radio-television industry; and that contracts have been placed with patent-holding corporations who have subcontracted in a limited manner to those companies who agree to manufacture according to their patents. The Signal Corps must plead not guilty in each of these instances. The Signal Corps has not limited its negotiation to a small number of large companies. On the contrary, the records show that in the 9 months, July 1, 1950, to March 31, 1951, 76.2 percent of its negotiated procurement actions were negotiated with small manufacturers. This does not take account of the large amount of procurement placed with small business on a formal advertising basis. Signal Corps is proceeding to spread its procurements among small-business concerns because it recognizes that only with as large a productive base as possible can the Armed Forces be sure of receiving the supplies and equipments they require in time. This is not "public relations" material, as the figures I have quoted will show.

The Signal Corps has placed its contracts with bonafide manufacturers or dealers in their respective fields. We do not recognize "paper companies," nor do we find it necessary to place contracts with patent-holding companies. The patent situation in the electronics field is extremely complicated; sometimes, with respect to particular items, it may not even be known when procurement is undertaken. It has accordingly been the policy of the Signal Corps to use

criteria other than the patent situation in determining the sources from which material is to be procured. In cases where we know the patent situation, we investigate the desirability of obtaining licenses. If a claim for infringement of a patent results from production under a Signal Corps contract, it is processed according to applicable laws and departmental regulations. In short, while we respect patents, we do not permit their owners to dictate our sources of supply. You will recognize that the foregoing is limited to Signal Corps procurement. There are other agencies which have dealings with the radio-television industry. We cannot speak for them.

I trust that you will find the foregoing comments to be helpful to set the record straight so far as the relations between the Signal Corps and the radio-television industry are concerned. If there is any further information which you would like to have from me, I shall be more than happy to furnish it to you. Sincerely yours,

K. B. LAWTON, Major General, USA, Deputy Chief Signal Officer.

The CHAIRMAN. Mr. MacKay, will you come up? I understood you wanted to file a brief.

STATEMENT OF A. J. MacKAY, PRESIDENT, QUALITY COURTS UNITED, INC., ACCOMPANIED BY C. EDMUND WORTH

Mr. MACKAY. Mr. Chairman and gentlemen of the committee, my name is A. J. MacKay. I own and operate a tourist court in Florida. I am president of the Quality Courts United organization, all of whom have tourist courts lying from the Canadian border down to Key West, from the Atlantic to the Mississippi River.

I first wish to thank you gentlemen for the extension of the time granted us from your scheduled hearing on May 22. We do not intend to take your valuable time in presenting our views orally, as we agreed if the extension were granted we would merely file our statement. This we have done. I would like only the privilege of introducing our delegation to this committee.

The CHAIRMAN. We appreciate that, because as you can readily realize we are rather rushed for time. I want to make your statement officially a part of the record, and without objection that will be made a part of the record.

Mr. MACKAY. As I make the announcement, I would like the various members of our delegation to stand.

Mr. B. A. Shomaker, from St. Petersburg, Fla.

Mr. Hal Orr, from Rocky Mount, N. C.

Mr. Graham B. Squires, from Alexandria, Va.

Mr. Jack Nelson, from Myrtle Beach, S. C.

The CHAIRMAN. I am glad to have a fellow South Carolinian up

here.

Mr. MACKAY. Mr. George Davis, from Daytona Beach, Fla.
The CHAIRMAN. We are glad to have you, sir.

Mr. MACKAY. Mr. Victor Rogers, from Tuscaloosa, Ala.

Mr. L. Verburg, from Fredericksburg, Va.

I am sorry, Mr. Ornduff, from Terre Haute, Ind., had a scheduled plane, and due to our delay this morning had to leave.

The CHAIRMAN. I am sorry about that. We got delayed here yesterday, running from early in the morning until late in the evening. We had a meeting of the committee before we got under way with the hearing, and had to put the National Cotton Council off until the first

thing this morning. I wish you would tell him that I regret exceedingly that we did delay so he could not be here.

Mr. MACKAY. In addition to that gentleman I have Mr. Edmund Worth, who owns a Quality Court in Tampa, Fla. Mr. Edmund Worth was one of the originators of the Quality Courts United, and, having served as its secretary during the last rent control heard, I brought him in case any of you gentlemen saw fit to ask questions relative to that period as affecting our industry. That is all we have to say.

The CHAIRMAN. I think your statement will pretty well cover that. The committee will have it, and the Senators who are not here will read it.

Senator DOUGLAS. Mr. Chairman, I should like to move that the report by the Defense Production Administration in reply to the questions which we asked be made a part of the record at the conclusion of the testimony here.

I would like also to comment, if I may, to point out that of the 791 certificates of necessity for accelerated tax amortization, which have been granted, in the total amount of $3.8 billions, 231 certificates with a total proposed investment of $2,046,000,000 were for companies with over 10,000 employees. These larger companies comprise 54 percent of the total amounts granted.

There were 80 more granted to firms which employ from 5,000 to 10,000 employees, and they amounted to $466 billion, or 12.3 percent of the total, so that, in all, 66.3 percent or virtually two-thirds of the total amount of amortization approved has been for firms employing over 5,000 employees.

The CHAIRMAN. Without objection that will be placed in the record. (The material above referred to will be found on p. 236.)

Senator DOUGLAS. I find I was somewhat in error in my memory of what happened. I have searched the proofs of the hearings, and I do not find that the NPA or DPA were requested to report what their policies were going to be in the future about the two points, but I should like to move that they be now requested to reply within a reasonable amount of time as to what the policy of NPA and DPA will be in respect to (a) refusing to grant second requests of companies which have already obtained tax-amortization privileges before others have been granted such similar privileges for the first time, and (b) to inform us what their policy will be in the future in respect to plants upon which construction had been started prior to July 1, 1950. hope that they can come to a decision very quickly; and, if the amendment discussed earlier in the meeting does not include provision (b), I would suggest that it be redrafted to include it.

I

The CHAIRMAN. I will ask the staff to see that that is included, and I will ask the staff also to get the two questions from Mr. Gibson that you asked for.

Senator BENTON. If the Senator will yield, will you add to your motion the point (c), which I was intending to point out-it came up after you left the hearings-on what progress has been made with a view to giving quick, immediate, and higher priorities to the applications from smaller independent businesses?

Senator DOUGLAS. I will be very glad to add that.
The CHAIRMAN. The staff will do it.

Mr. MacKay, let me ask you one question.

Most of the people, what is the percentage of transients?
Mr. MACKAY. Practically entirely, sir.

Mr. WORTH. Mr. Chairman, may I be permitted to say the essential point of our position is primarily tourist courts which has no relation to the cost of living. We do not deal with housing of permanent residents. We deal purely with tourists, motoring vacationists. The CHAIRMAN. You do not have people living in these places who work in the city?

Mr. MACKAY. No. The very economic factors which tend to increase costs in other lines automatically tend to reduce our own prices. In other words, it is a segment of the economy that is not tending to inflate, but tends to deflate with wartime conditions and restrictions, if they are put on. We feel that regulation of rentals in tourist courts is an unnecessary predicate, and has no bearing on controlling inflation.

The CHAIRMAN. I understand that, but the question is whether there are workers who work in industrial plants who live in these Quality Courts?

Mr. MACKAY. No; they are entirely tourist courts. The other point is that, should they be controlled, they should not be regulated by the test period applicable to others, which comes in a season of the year which is neither winter nor summer, but is an off season to all tourist courts.

The CHAIRMAN. Are there any further questions?
(The prepared statement of Mr. MacKay follows:)

STATEMENT OF QUALITY COURTS UNITED, INC., OCALA, FLA.

Gentlemen, this statement is respectfully submitted by Quality Courts, United, Inc., a cooperative association organized under the laws of Florida. Its stockholder members are the owners of some 250 tourist courts situated in the area bounded on the west by the Mississippi River, on the east by the Atlantic Ocean, on the north by Maine and Wisconsin, and on the south by the Gulf of Mexico. A booklet listing most of these members is attached. By requiring of its stockholder members extremely high standards with respect to facilities, cleanliness, service, and operation upon a high moral plan, Quality Courts United Inc., seeks to secure for motoring vacationists the ultimate in comfortable transient accommodations.

It is the position of Quality Courts United, Inc.—

1. That S. 1397 should, by amendment, be made inapplicable to tourist courts. 2. That, if the bill is to remain applicable to tourist courts, it should be amended to require the President, in fixing maximum rents with respect to any tourist court, to give consideration to the seasonal nature of the business of such court.

S. 1397 SHOULD NOT APPLY TO TOURIST COURTS

Rent control is necessary and, therefore, justified only when some national emergency occasions a dislocation of the country's economy to such an extent that the normally operative laws of business competition will not neutralize inflationary tendencies. If the emergency occasions no inflationary trend in one segment of our economy, such segment should not be controlled.

It is submitted that the presently existing circumstances which may dictate necessity for establishment of maximum rents on certain types of housing accommodations will, in and of themselves, tend to stabilize or reduce previously existing rental scales charged by tourist courts.

Though tourist courts possess some of the characteristics of ordinary rental housing and some of the characteristics of commercial hotels, they are different in very substantial respects from both ordinary rental housing and commercial hotels. Tourist courts, unlike ordinary rental housing, cater only to transients; and, unlike commercial hotels, they cater only to transients traveling by private motor vehicle. Persons traveling by train, airplane, bus. or ship do not patronize

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