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Data for housefurnishings goods prices available
through March 1951; data for television prices
available only through February 1951.

Prepared By

Consultlag Economist

New York, New York

(Schedule for exhibit 9) Indices of wholesale prices of television sets and of housefurnishings goods, January

1948 through March 1951


99 100 101 101 102 103 103 103 103 103 102 101 101 99 99 99 99 99 100 100 100 101 101 101 102 103 107 110 113 116 118 121 121 124

December 1950-January


December 1951-January

February March.



Source: (1) Radio-Television Manufacturers Association. (3) U. S. Department of Labor, Bureau of
Labor Statistics, Wholesale Prices bulletins.

Mr. Brown. Thank you very much for your statement.
The committee will stand adjourned to meet at 10 a. m. Monday.

(The following statements were submitted for the record:) STATEMENT OF THE AMERICAN BANKERS ASSOCIATION TO THE HOUSE COMMITTEE


The American Bankers Association is deeply concerned with a proposed amendment to H. R. 3871 to amend the Defense Production Act of 1950 which would create a new organization, Small Defense Plants Corporation, with broad powers to assist small business. Congress already has enacted suitable legislation to enable small-business concerns to participate in the defense production program of the country and to assure them ample financing.

The association is opposed to the creation of another Government corporation because it is unnecessary, it duplicates substantially the objectives of other governmental agencies, and it increases the burden on taxpayers without any commensurate benefits.

(1) The amendment to H. R. 3871 is unnecessary, for adequate funds are available for financing small business from private financial institutions. Under the voluntary credit restraint program sponsored by the Board of Governors of

the Federal Reserve System, banks are diverting their lendable funds primarily to the production, distribution, and servicing of goods needed for the national defense and for essential civilian requirements in this emergency. This proposed Corporation could impair the anti-inflation program now operating effectively.

The existing RFC, now undergoing a reorganization, likewise is in a position to supply needed financial assistance to small business.

To aid small business in obtaining the maximum credit needed for the defense program, Congress has passed the following helpful legislation:

(a) Amendment to the Assignment of Claims Act of 1940 and provision in the Renegotiation Act of 1951, which clarify the position of a lender accepting an assignment of a prime contract or a subcontract as collateral for a loan.

(b) Section 301 of the Defense Production Act of 1950, which made possible the reactivation of the V-loan program that proved so useful during World War II in helping banks supply needed funds, particularly to the smaller contractor or subcontractor, for performing Government contracts or subcontracts.

(c) Sections 302, 303, and 304 of the Defense Production Act of 1950, which make available Government funds for the expansion of capacity, the development of technological processes, or the production of essential materials, now being handled by certain designated governmental procurement agencies through the RFC.

(d) The Revenue Act of 1950, which makes possible for business concerns to charge off within 5 years against earnings for tax purposes all or part of the cost of the acquisition or improvement of facilities and plants.

(2) The amendment is unnecessary, for Congress in recent legislation has taken pains to safeguard the interest of small-business concerns. For example, in the Armed Services Procurement Act of 1947, it is stated that: “It is the declared policy of Congress that a fair proportion of the total purchases and contracts for supplies and services for the Government shall be placed with small-business concerns." As result, the armed services are attempting at this time to channel business to small concerns.

(3) The amendment is unnecessary because at this time the Office of Small Business of the Department of Commerce is doing an outstanding job in providing technical and managerial aids to small-business concerns. It also is helping small business through all of its field offices in securing contracts, subcontracts, and needed material. Under this amendment, it would be possible for the President to transfer this office from the Department of Commerce to the new Corporation, with possible detriment to its operation and danger of its being terminated with the expiration of the powers granted under the Defense Production Act of 1950.

(4) The amendment would impose an additional burden upon the taxpayers. of this Nation by creating a Corporation which would duplicate and compete with both governmental and private agencies. The association believes that economy should be stressed in the activities of our Federal Government. In the national emergency, it would seem unwise to set up another governmental agency which would drain a sizable number of employees from a tight labor market and create an additional expense to the Government. Existing facilities, if effectively used, can accomplish substantially the objectives of this amendment. This would be in conformity with admonitions given to the citizenry to use wisely and more effectively what they possess already rather than incur additional unnecessary expenditures.

(5) The amendment would, in effect, concentrate in one governmental agency broad powers which are of such nature as to wield dangerous influence or control over an important segment of the Nation's economy. The Corporation in part would be given the power to assist small business by extending credit for various purposes, by selling or leasing land, plants, machinery, materials, and supplies, by awarding subcontracts, by supplying technical and managerial aids, by certifying small-business concerns to Government procurement officers with respect to their competency and their capacity and credit; or to withhold this assistance for justifiable, political, or other reasons.

The association believes that such centralization of powers could have only a disturbing effect upon the economy of the country. The American Bankers Association is opposed to this amendment providing for the establishment of a Small Defense Plants Corporation as it is not needed, will duplicate substantially services performed by private and governmental agencies, add to the labor shortage, increase the expenditures of the Federal Government, and make possible an undue concentration of powers over a large segment of the economy described as small business.

Present governmental agencies and private financing institutions are in a position to supply the constructive aid to small business needed to achieve the objectives of the Defense Production Act of 1950.

The association, therefore, urges that this amendment to H. R. 3871 be not adopted.

WASHINGTON, D. C., May 24, 1951. Hon. Ralph A. GAMBLE,

House Office Building, Washington, D. C. In behalf of independent business institutions of this Nation we urge your Committee on Banking and Currency now holding hearings as to the extension of the Defense Production Act of 1950 that your committee take under consideration amending the Defense Production Act of 1950 by adding thereto in the way of an amendment H. R. 1600 the Small Defense Plants Act. From the reports we are receiving from independent business institutions there is an ever-increasing, need for the creation of the Small Defense Plants Act which will permit independent business to share in Government defense efforts. May I request consideration.

Vice President, National Federation of Independent Business.


Washington, D. C., June 8, 1951. Re H, R. 3871 The Honorable BRENT SPENCE, Chairman, House Banking and Currency Committee,

House of Representatives, Washington 25, D. C. MY DEAR MR. SPENCE: The National Savings and Loan League is opposed to any proposal which would extend construction credit controls, or any credit controls, to existing houses.

On May 17, 1951, our board of governors, meeting in Los Angeles, Calif., at the conclusion of our eighth annual convention, implemented the wishes of our delegates by adopting the following resolution:

"Whereas credit controls on existing construction would be impractical, illogical and unnecessary; and

"Whereas the extension of credit controls to existing houses would tend to centralize the determination of property values in some Government agency to the detriment of private business, the welfare of the people and the national economy: Therefore be it

Resolved, That we the members of the board of governors of the National Savings and Loan League, meeting in the city of Los Angeles, Calif., this 17th day of May 1951, respectfully urge the Congress of the United States not to approve any proposal that may be submitted which would seek to extend credit controls to existing homes; and be it further

Resolved, That a copy of this resolution be given to the Senate Banking and Currency Committee and the House Banking and Currency Committee in Washington.”

The foregoing resolution succinctly and adequately spells out the policy adopted by our organization. However, if there are any questions, we shall be most happy to answer them. Respectfully,


Assistant Manager


New York 17, N. Y., June 4, 1951. Re: H. R. 3871 Hon. BRENT SPENCE, Chairman, Committee on Banking and Currency,

United States House of Representatives, Washington, D. C. DEAR SIR: This statement is filed on behalf of the National Association of Mutual Savings Banks. This is a trade association whose membership comprises


519 mutual savings banks located in 17 States. The largest concentration of these banks is on the eastern seaboard but a few of the banks are located in the Middle West and on the Pacific coast. These institutions are nonprofit organizations having no stock ownership and are operated under the supervision of trustees for the purpose of conserving the savings of their depositors, investing their funds in conservative securities and returning a small interest to the depositors.

As of April 1, 1951, these mutual savings banks had slightly over $20 billion in deposits and slightly over $22/billion in assets. Their mortgage holding totaled $8,428 million, representing about 37 percent of their total investments.

Our interest in the bill before you, H. R. 3871, is confined to two sections, the section which would enact a completely new rent-control law covering commercial properties as well as housing properties, and the section which would extend mortgage credit control to the field of existing housing.

We are in accord with the principle of continuing those parts of the Defense Production Act which authorize Government control of mortgage credit for new construction and Government control of FHA and GI credit as anti-inflationary

The Federal Reserve Board has done an admirable job of formulating and administering the now familiar regulation X governing the extension of mortgage credit for new housing construction. The direct regulation of mortgage lending was a new field for the Federal Reserve. We were glad to see that the Board drew upon the experience of commercial banks, the life insurance companies, the savings and loan associations and savings banks at every important step in the formulation of mortgage credit regulations.

Regulation X is working. Credit inflation in the new house field has come under stringent restraint. The housing starts for the first few months of this year were at a rate that might indicate another boom year for 1951--but everyone in this business knows that these housing construction starts were mainly the result of applications for FHA and VA commitments filed prior to the institution of regulation X. These commitments were rapidly running out. Regulation X and the companion FHA and VA regulations along with the fear of further regulation or controls coupled with the new Federal Reserve Government bond policy have drastically contracted the mortgage credit market both for new construction and for existing housing.

In this regard Chairman Martin of the Federal Reserve Board in his statement on this bill before the House Banking and Currency Committee on May 10, 1950, is quoted as follows:

“There are tangible evidences that the availability of bank reserves has been reduced, that banks have become more restrictive in their lending policies, and that the over-all expansion of bank credit has definitely slackened despite acceleration of sending to finance defense production. Further evidences of the effects of the various measures of monetary and credit restraint may be seen in the markets for consumer credit, mortgages, and new capital issues. Consumer installment credit has ceased to grow. New commitments by insurance companies and savings banks to purchase mortgages have been reduced."

It is our belief that there has been a definite change in the trend of mortgage credit. The direction at present and for the near future can only be for shorter and tighter credit. Historically, mortgage credit trends once established are of long duration and are not quickly reversed.

The Bureau of Labor Statistics figures for home building activity in the months of March and April tell the story. Building starts for these 2 months are well below starts made during the months of March and April 1950, but more important, they show that home building activity is declining contra-seasonally that is to say, building activity is decreasing during the time of year when it should be reaching its greatest volume.

This bill would extend Government regulation of mortgage credit to the financing of the existing house without FHA insurance or VA guarantee. We are opposed to this extension on the grounds that it is unnecessary and unwise for the following reasons.

The amount of loan to value in a conventional mortgage loan (a loan without Government insurance or guaranty) has always been lower than the amount of loan to value in a Government insured or guaranteed loan. That was one of the purposes of Government guaranties and insurance to get the lender to make larger loans on lesser security. Since World War II the responsibility for the inflationary aspects of mortgage lending must be attributed to the continually expanding housing policy of the Government. Bill after bill in Congress has proposed steady extension of more liberal terms of mortgage credit. Permanent

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