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DEFENSE PRODUCTION ACT AMENDMENTS OF 1951

FRIDAY, JUNE 1, 1961

HOUSE OF REPRESENTATIVES,
COMMITTEE ON BANKING AND CURRENCY,

Washington, D. C.
Members present: Messrs. Brown, Cole, Buffett, and Betts.
The committee met at 10 a. m., Hon. Paul Brown, presiding.
Mr. BROWN. The committee will come to order, please.

Our first witness this morning is Mr. John J. Riggle. Will you come around, Mr. Riggle, and identify yourself for the record?

STATEMENT OF JOHN J. RIGGLE, ASSISTANT SECRETARY,

NATIONAL COUNCIL OF FARMER COOPERATIVES

Mr. Riggle. Mr. Chairman, my name is John J. Riggle, assistant secretary, National Council of Farmer Cooperatives, with offices located at 744 Jackson Place NW., Washington, D. C.

This statement is made in behalf of the National Council of Farmer Cooperatives, a national organization of farmers associations marketing farm products and purchasing farm-production supplies and serving more than 2.6 million farm families.

At the last annual meeting held in January 1951, at Chicago, the following resolution was adopted by the delegate body.

The National Council of Farmer Cooperatives pledges its all-out support to defending and strengthening the ideals and institutions which constitute the economic aspects of our country's strength.

It believes that fundamental conflict between free and enslaved people through their greater initiative, resourcefulness and incentive to sacrifice, provided they maintain, strengthen, and use these advantages to the full.

It believes that at this critical juncture all segments of our society in and out of government should use to the fullest extent our proven methods toward:

1. The wisest possible diversion of manpower and material resources to the defense program to accomplish its objective;

2. Maximum production of essential items;

3. Most effective use of residual resources toward supplying other demands;

4. Minimum expenditures by Government on services not vital to the defense program;

5. Attaining through taxation as close balance as possible between consumer spending power and the supply of goods and services available to consumers.

To this objective the National Council of Farmer Cooperatives pledges its facilities and its cooperation with similarly minded groups and with agencies of Government.

In line with this policy, the national council has, through its representatives participated in activities calculated to maintain in agriculture sufficient manpower to attain the high production goals necessary for the defense effort. It has participated with other farm groups in a service to assure for agriculture necessary materials, supplies and equipment to man the farm plant of the Nation at a high-production level; has participated in private and governmental consideration of essential expenditures in the Federal budget; and has consistently proceeded on the premise that as the defense situation continues to develop, the spending power of the Nation and the goods and services available should be kept in a workable balance.

Our members feel that the greatest contribution that agriculture can make to the defense effort is all-out production of foodstuffs and fiber and other necessary materials. They have devoted their efforts to providing an increased volume of production supplies and in many cases increased facilities for processing and distributing the increased farm production of its members, such as cotton gins, feed mills, storage plants, and vegetable oil procesing equipment.

And now the prospects for 1951 are that if cotton production equals or exceeds 1951 production goals, and weather is average for the Nation, total agricultural production for sale and home consumption will reach a new high, in the face of a reduced farm labor force of perhaps 300,000 workers,

This is in continuance of an increase at the end of World War II of approximately 22 percent per worker in farm output since 1939, due to mechanization and better production methods, fostered by more adequate income and substantial capital plow-back.

Our people were considerably encouraged when soon after their appointments the Director of Defense Mobilization and the Director of Economic Stabilization stated before congressional committees in effect that the various sections of the defense production program would be conducted in such a way as to maintain incentives to business, agriculture and labor in order to attain a high production level; and in order that industrial and farm production capacity should keep pace with both defense and civilian demand in the degree of mobilization then contemplated and now actually under way.

In the first quarter of 1951, defense expenditures had risen to an annual rate of 8 percent of our total national output. By the end of 1951, defense expenditures are expected to account for 15 percent of national output, and to reach a maximum rate of 20 percent of national output sometime in 1952. During the height of World War II 45 percent of the national output was involved in war activities.

In the face of this probable diversion of national production and output to defense projects the national council delegate body, at the January meeting said that “such all-out production is the very best means of keeping prices of agricultural commodities within reasonable limits.” Further, they said, “For those reasons price controls on agricultural commodities through governmental action are premature at this time and, based on previous experience would result in black markets, unequal distribution of food and fiber to the consuming public, and higher rather than lower prices.

· If defense preparation continues for any considerable length of time as presently contemplated, technical progress in farming can be stifled or stimulated, production can be scarce or abundant, real food costs and prices can be prohibitive or reasonable, and quality can deteriorate or be improved, depending on whether production efforts are fostered by tested, legitimate incentives, or discouraged by the inequities which are a part and parcel of the controlled economy. Because initial controls breed subsequent controls and more controls in order to correct inequalities in preceding controls, which in a democratic economy iron themselves out under wise leaderships when people are properly informed,

The incentives which lead farm people as well as workmen and businessmen generally to contribute greater personal effort and to employ more resources in increased and improved production are such common motives as the desire for expanding opportunities and interests, the satisfaction of using new processes and equipment, the necessity of modern replacements under the spur of obsolescence and depreciation, the need of meeting the shifting fancies and specifications of the users of the product, and the necessity of maintaining efficiency in organization and teamwork.

The personal incentives can be still further defined in terms of family security, family education, higher standards of living, and personal development. These business and personal incentives are implemented pretty generally in terms of profitable production and adequate wages. In an expanding economy prices and wages move upward as incentives to more production.

Declining prices and wages characterize a contracting economy. They reflect reduced production because of restricted or limited incentives to produce.

The difference between the rising profits and wages of an expanding economy and inflation is one of degree and of stimulation. Inflation is stimulated by fear of scarcity of goods, of the value of the dollar, and of political insecurity, or it is stimulated by a breaking down of the productive system, or excessive use of funds and credit, both public and private.

Everybody is against inflation, but for an expanding economy. But the treatment for inflation in an economic democracy we believe, is not rigid price and wage controls. The answer, along with the other answers in an economic democracy, is an enlightened and informed public opinion under wise leadership.

We believe if the same energy and leadership were devoted to the problems of our inflation threat as was put into, say, the Libery Loan drive of the First World War, the people of this country would respond with a self-discipline and restraint which would be an eye opener to those who have learned to think in terms largely of controls and Government coercion. Housewives, workers, farmers, industrialists, financiers, distributors, and professional people need to be told the related facts about public expenditures, taxes, credit, foodstuffs, materials, supplies, scarcities, and the situation with regard to availability, demands and use in civilian and defense activities; and what they can do about it. Voluntary group organizations could bring the force of public opinion to bear on recalcitrants among their fellows.

I believe we have a demonstration of the effectiveness of this approach in the voluntary committees of commercial and investment bankers which are effectively screening loans and bond issues for productive purposes and inflation tendencies. Other groups also are engaged in effective private anti-inflation activities among themselves on a voluntary basis.

We believe section 402 (a) of title IV could be implemented in this fashion with a portion of the funds appropriated for price and wage regulation through a comprehensive program of voluntary mobilization of the various sectors of the economy against inflation and other problems of the defense effort, with every prospect of success, unless à very extreme situation develops in the future which requires the use of a major part of our manpower and resources in war.

In the present situation we believe the price control and wage stabilization provision of title IV should be allowed to expire June 30, 1951. The authority for use of subsidies to roll back food prices, and to freeze the parity index on an annual basis proposed in H. R. 3871 should be withheld.

The former is definitely inflationary. The latter would demoralize the farmers market at the harvest season, and disrupt the orderly distribution of farm products over the consumption year.

Mr. Brown. Mr. Riggle, did you or any representative of your group appear before the committee last summer when we had hearings on the defense production bill?

Mr. RigGLE. I think some of them appeared perhaps; I do not think anybody from our office appeared; I think probably there was a statement sent up.

Mr. BROWN. What was the attitude of the council prior to the control program on wages?

Mr. RIGGLE. At that time our body had not actually formulated a position. They did not act until January, when they had their annual meeting in January and had not asked a formal hearing on the proposal that was before Congress.

Mr. Brown. You did not appear for the bill or against the bill?
Mr. RIGGLE. No.
Mr. BROWN. And made no statement about it?

Mr. Riggle. I think there was some correspondence about it, but I do not think there was any statement at the hearings or anything of that kind.

Mr. Brown. You did not take any position anywhere with respect to the defense production law, the bill that we considered last summer?

Mr. RIGGLE. No; we had not taken any formal action; no formal consideration by our organization.

Mr. Brown. The organization did not meet and discuss it at that time?

Mr. Riggle. The body meets annually in January.
Mr. BROWN. When?
Mr. Riggle. In January.

Mr. Brown. You mean you did not hold a meeting on this matter, which was so important to your group, before January?

Mr. RigGLE. No; we did not have a meeting at that time.
Mr. Brown. Where do you reside?
Mr. RIGGLE. Here.
Mr. BROWN. Where is your home?
Mr. Riggle. In Virginia.
Mr. BROWN. In Virginia?

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