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are given the privilege of buying on longer terms, they will have more reliable transportation at their command to carry on their work, and I don't believe it will tend to any inflation.
"We also find many of our purchasers selling Government bonds in order to meet the down payment required under the stringent terms, and that does not seem just right. I think we would all be better off if the money remains in the bonds and the purchaser be accorded a little longer time to pay out."
Louis E. Baker, Baker Auto Co., and also treasurer, National Used Car Dealers Association, Providence, R. I.: Stringent requirements of regulation Whave slowed down used-car sales. The rearmament program made this "disaster area" a great production area. Workers need automobiles for transportation to work, also naval personnel need cars to go to and return from Quonset and Newport.
William Plunkett, secretary, Massachusetts State Auto Dealers Association, Worcester, Mass.: "With reference to regulation W, which was set up to limit sales, it is more than limiting sales-it is killing an industry. Further, it is limiting strictly the workingman to driving around in a jalopy, when apparently in the foreseeable future he is going to need dependable transportation to do the job he will have to do.
Philip S. Dunlap, president, New Hampshire Auto Dealers Association, Concord, N. H. (representing 300 dealers): The expected shortage of new cars has not materialized, so that there is no danger of an inflationary situation arising in the automobile industry.
“It is our contention that the regulation should be geared closely to the situation at any given moment. We think that the terms of regulation W should be elastic enough so that, when you get a tremendous inventory situation of used automobiles which are standing idle in dealers stocks."
“A total of 123 New Hampshire dealers reported to the association that they have more than $1,500,000 of used-car stocks. This would mean an inventory of about $5,000,000 for the 300 members of the association, which is greatly in excess of normal.
“We believe that so long as new cars continue to be available in reasonable quantities and so long as there is absolutely no evidence of any overselling there is no point to continuing to restrict the terms to the point where the used-car buyer who needs essential transportation should have to continue to run a vehicle which is not safe.” Removal of regulation W would not cause an increase in prices because of competition in the industry,
James P. Mayo, Pontiac Dealer, Nashua, N. H.: “If regulation W is to control the use of metal in automobiles and restrict production of automobiles, then it is just as sound at 15 months as it possibly could be, but there is no evidence that there is any reduction in the production of new automobiles.'
James R. Johnson, president, Connecticut Automotive Trades Association, Hartford, Conn.: We must have relief from the stringent regulations imposed by the Federal Reserve Board, and increase the maturity payments.
The auto retailer is caught between the squeeze of high new-car production and the inability of the public to buy our products at present prices without extended time payments. We cannot sell our share in a 5,000,000-car year at present prices under restrictive controls.
Larry Stage, Retail Automobile Dealer, La Fayette, Ind.: A survey among Indiana automobile dealers in January 1951, showed an increase in fixed overhead expenses averaging more than 28 percent above the same period of 1950.
As result of regulation W, "dealer inventories of used cars are the highest in the history of the industry, and unless this condition improves dealers will be forced to discontinue accepting used cars in trade.” It is requiring the used-car buver to continue to drive an old, unsafe, unsatisfactory automobile, because he cannot afford to make the payments on a later-model used car.
Arthur Vivian, vice president, Automobile Dealer's Association of Indiana, Indianapolis, Ind. (composed of 1,142 new car dealers): “One disastrous result (of regulation W) is that a high percentage of families which were used-car buyers and many of whom are essential factory workers can no longer buy dependable used cars.
As a consequence, dealers have the highest used-car inventories in their history and unless this condition improves it will be necessary for dealers to discontinue taking used cars in trade.” Regulation W has decreased used-car sales by 30 percent.
Orville R. Harrod, president, Kentucky Automobile Dealers Association, Frankfort, Ky.: Legitimate dealers want to finance sales on a sound basis. However, the 15 months' limit on payments is not flexible enough to meet reasonable demands. There should have been some difference made in the term of payments
on late model cars and older cars. This would have been equitable and fair. Credit restrictions as they stand now are unfair to a lot of purchasers. Some sensible changes should be made in regulation W.
James L. Paddock, Pontiac Dealer, Louisville, Ky.: Regulation W has hurt used-car sales tremendously.' “Regulation W is going to eventually cripple the man who is going to work."
F. 0. Rice, president, Arkansas Automobile Dealers Association, Pine Bluff, Ark.: As a low-income, agricultural State, Arkansas is dependent upon automobile transportation. Arkansas is forty-seventh State in per capita income, so credit controls affect it more seriously than other States.
Alton Farris, president, Atlanta Automobile Dealers Association, Atlanta, Ga. (representing 520 dealers in Georgia Automobile Dealers Association): Most dealers derive the major portion of their profits from the top 10 or 15 percent of their sales, so a decline of that amount in sales affects them drastically. Essential workers are finding it difficult to purchase cars needed for transportation.
J. C. Downing, vice president, National Used Car Dealers Association, Atlanta, Ga.: "During recent weeks the used-car business has been almost completely fenced in by Federal price and credit controls. By October 16, 1950, the date on which the 15 month rule was announced, used-automobile prices had already dropped 9 percent below the August 1950 level. Yet that regulation was tightened while prices were declining and without consulting the industry as intended by Congress.” Regulation W, "penalized most of the men who contributes least to inflation-namely, the wage earner who must buy his transportation on a pay-asyou-go plan.” Credit and price controls over the industry are unnecessary “because of the unprecedented rate of new-car production and because of the small proportion of the consumer's dollar accounted for by automobile purchases."
O. C. McAllister, Studebaker dealer, Albuquerque, N. Mex.: The essentiality of the automobile as a means of transportation is accentuated in sparsely settled
In such communities the defense worker must rely chiefly on the automobile to bring him to his work. “Regulation W must be amended to permit longer credit terms,” in order that essential workers can secure transportation to defense plants.
Tom Blundell, Tom Blundell Motor Co., Dallas, Tex.: The operation of present credit controls is felt primarily by the low-wage earner. Because of these restrictions the old prewar cars have taken an advance in price, since they can more easily be purchased on the 15-month basis. As a result, the average wage earner is obtaining less value for his money. He should be permitted to buy more up-to-date transportation commensurate with his income. “Instead of helping the defense effort loss of time and manpower is caused, by faulty and dangerous transportation; to and from work.
R. J. Price, new car dealer, Dallas, Tex.; Prior to the imposition of regulation W, the average monthly income of the automobile term buyer was from $280 to $310 a month. Since the 15-month restriction this same transportation is being purchased by individuals with an average income of $480 to $490 per month. "What we have done is to cut out the man who was making a below $450 or $400 a month from buying necessary transportation.”
Carl Cox, new car dealer, McKinney, Tex.: The 15-month payment plan is not within the reach of the average wage earner. “Regulation W is discriminating against these people
*.” A recent survey points out that the automobile is more essential to the wage-earning class than to any other group.
These figures show that, 27 percent of all new cars were purchased by skilled and unskilled workers (and) 68 percent of all used cars were purchased by this same class of buyers.
William J. Cleveland, Ford automobile dealer, Crowley, La.: The restrictedcredit provisions of regulation W preclude the sale of a motor vehicle to those of moderate means. Since the adoption of this order, “the volume of new-car sales in Louisiana has been reduced by more than 15 percent and the volume of usedcar sales has been reduced by some 50 percent.”'
A. Stoessel, Moore-Stoessel Motor Co., Crowley, La.: Inventories of new cars are increasing because of the limited number of buyers who are able to meet the financing under regulation W. This constitutes an extreme hardship on dealers, many of whom are suffering actual losses.
David E. Castles, Castels-Wilson Buick Co., St. Louis, Mo.: Current restrictions are more drastic than the situation demands. The objective of the Federal Reserve Board could be met with more lenient terms of down payment and length of time for payment. Such a plan of action would eliminate the hardship
presently imposed on the vast majority of car purchasers as well as the automobile dealers.
Dan Coppin, Dan Coppin, Inc., Jefferson City, Mo.: Dealers in a precarious financial position as they do not have capital surpluses to safeguard their businesses against hardships confronting them. Personnel are being released, because of the dealers inability to keep sales up under present restrictions.
Walter Tufford, DeSoto-Plymouth dealer, San Diego, Calif.: The freight differential problem for west coast dealers has not been taken into consideration in the issuance of regulation W. The same type of car sells on the west coast for $260 to $300 more than it costs in an eastern city. This works a very definite hardship on individuals who need low-cost transportation.
The action of the Federal Reserve Board in promulgating this order without first conferring with members of the industry emphasizes the arbitrariness of their decision.
John E. Raine, Automotive Trade Association of Virginia, Lynchburg, Va.: The individual who is presently operating a car 10 to 15 years of age is unable to replace such a vehicle with a newer model under regulation W. This order “forces monthly payments on the lowest priced new cars above a hundred dollars a month” which is substantially above what the person of average income is able
W. T. Robey, Jr., automobile dealer, Buena Vista, Va.: Regulation W would be acceptable if it fell with equality on all dealers alike. However, no consideration is given to the size of the unpaid balance on a term-purchase plan, with the result that the higher priced cars are in an unfavored sales position in comparison to those in the low-price ranges.
H. H. Rutrough, Rutrough Motors, Roanoke, and Lynchburg, Va.: Dealers in the higher priced cars are particularly handicapped by credit-control restrictions. Dealers are going into debt in order to carry trade-ins they are unable to sell. Unless relief is granted soon many will be forced to liquidate.
T. A. Williams, North Carolina Automobile Dealers Association, Greensboro, N. C.: The restrictions of regulation W have done little to halt inflation. On the contrary they have forced the public to dissipate their savings in order to provide themselves with essential items, such as the automobile.
Sales of higher priced cars have been substantially curtailed by the regulation.
Mr. PATMAN. I would like to present any member of our committee who would like to make a statement on the bill at this time.
Mr. Multer is here. Mr. McKinnon, Mr. Curtis, of Missouri, is here.
Mr. Curtis, would you like to make a statement?
Mr. Curtis. No, I think the statements have been very satisfactory.
Mr. Patman. Does any other member of the committee want to make any statement?
Mr. McKinnon. One thing that should be borne in mind, I think, Mr. Patman, by this committee, is this: While the NPA has tried everything possible, and while the military procurement services have subscribed to very fine ideals as to what should be done for small business, we find that often they don't have the real power to implement that, and this bill transfers good intentions into real legislation, that can make possible a valuable tangible help to small business. That is why legislation is necessary, rather than a preamble of good intentions.
Mr. NICHOLSON. Mr. Chairman.
Mr. NICHOLSON. Has it come to your attention, Mr. Patman, that the Department of Defense or other departments, negotiate contracts without putting out bids?
Mr. PATMAN. Yes, sir, that has grown worse. It has grown worse, the negotiated contracts situation.
Mr. NICHOLSON. Is there something that could be done about that?
Mr. Patman. That is what we hope to correct with this amendment. It is a long step in that direction. For a while, the small concerns were asked every day for bids. But at once that not only diminished, but they were almost entirely cut off, and all contracts were being made by negotiation as the gentleman suggested.
Mr. HALLECK. Might I supplement that by saying also that apart from this proposed legislation, one of the functions of the Small Business Committee is to bring things like that to the attention of the procurement agencies and exert such influence as we can to try to break it down.
Now, obviously, if you are dealing with secret data, or secret weapons, secret airplanes, probably you can't advertise all those detailed specifications, and there you would need to negotiate.
But there have been too many negotiated contracts with respect to shoes, bed springs, and all manner of articles about which there could be no danger as a matter of security at all, and it is in respect particularly to those things that we had hoped that we could have more of the published bids, that would give the little fellow a chance to come in and get some of the work.
The CHAIRMAN. We are very glad to have your views. There certainly can be no contrarity of opinion as to the objectives you seek, and I hope something can be done that will make it possible.
Mr. HALLECK. Mr. Chairman, could I make just one further suggestion?
The CHAIRMAN. Mr. Halleck.
Mr. HalLECK. Of course, the NPA expires June 30. I don't know how much longer your hearings are going to go. I read in the paper, in a few places, that maybe we will have a 6 months, or a year, or a year and a half extension of the situation as it is. I don't know. I have been around here long enough to know that sometimes things happen.
Now, I would just make this suggestion: In the event that the committee not consider only that we made these presentations for th proposal as an amendment to the Defense Production Act, but if there isn't an extension of the DPA that would open the door to the consideration of this as amendment, then I would like to have your committee give consideration to reporting this as an independent measure, which might be done, and upon which the House could act.
Mr. MULTER. You have been saying "NPA." You mean the Defense Production Act?
Mr. HalLECK. That is correct.
Mr. PATMAN. Of course, we are not anticipating an interim bill or a continuing resolution. I know the chairman of this committee would like to see this bill passed on June 30 and I join him in his wishes and will work to that end, but in the event it is impossible to have a definite extension by June 30, I join with Mr. Halleck in expressing the hope that the committee will report this bill out favorably, independently of anything else, if we are compelled to have a continuing resolution.
Mr. Rains. You don't want the present situation with reference to small business continue as is?
Mr. PATMAN. That is right. We would like this done anyway.
Again we want to thank the committee for the careful attention, and the sympathetic consideration that you have given to our testimony and to our views.
Mr. MULTER. Mr. Chairman, of course I am very frankly prejudiced in favor of both Mr. Patman and Mr. Halleck, and their very fine statements. I think they are so good that they ought to be put in the Congressional Record now so that all of the Members of Congress may have these matters called to their attention at once.
If you gentlemen have no objection, I will undertake to do that. Mr. PATMAN. It will please me very much and I know it will please Mr. Halleck,
The CHAIRMAN. Call the next witness, Mr. Clerk.
Mr. HALLAHAN. The next witness is Congressman Hays, of Arkansas.
The CHAIRMAN. We are glad to have the gentleman appear, who was always recognized in this committee as an able and conscientious member of this committee for several years.
STATEMENT OF HON. BROOKS HAYS, A REPRESENTATIVE IN THE
CONGRESS OF THE UNITED STATES FROM THE STATE OF ARKANSAS
Mr. Hays. Thank you, Mr. Chairman, it is a pleasure for me to be before my committee. The 8 years that I spent here were very happy years, and I feel that the committee contributed a great deal to me, and I am grateful to you for letting me come today.
The CHAIRMAN. We have missed you, Mr. Hays.
Mr. Hays. I want to talk about the dispersal of industry and the relationship of this problem to the pending bill, with the hope that if the bill should be reported with a provision authorizing the Government to construct defense plants, it will include a mandate that certain criteria be used in determining the location, with particular reference to the security of the Nation and the balancing of our economy.
On the first appearance which Mr. Wilson made before the Joint Defense Production Committee-at which time I was a membersince that time Mr. Rains has succeeded me—I asked about this very problem. I was encouraged by what he said because he promised the committee that weight would be given to these factors in the location of plants under the rather limited power that the agency has, and he pointed to the fact that in this situation we are in much better shape to disperse industry than we were in the early part of World War II.
Without being critical of him, because I feel that on the whole Mr. Wilson has done a magnificent job, and that he is an ideal person to head this program, I must say I am terribly disappointed in the results, and while the failure to disperse industry is probably attributable to the fact that he and his staff have been busy with other matters, and to the fact that the law in its present form may not be clear enough, I feel that Congress is entitled to take a look at the situation and to insist upon these criteria being used.
Mr. Rains brought out, in later examination of Mr. Wilson, that 80 percent of the plants that have been authorized, have been located in the congested areas.