Mr. BARUCH. I think I expressed my opinion at the end of my statement on that, and I will let that stand without making any further answer.

The CHAIRMAN. There is one thing that perhaps I should not discuss, because it invites such a wide range of considerations. There is one thing to which, it seems to me, we have never attached particular importance, but which deserves attention, and that is the problem of debt. You know, a lot of our people contracted debts in that period following the war when prices were so high. They found themselves experiencing a decline in the value of their products and labor, and they have never been able to discharge those debts, and they never will be able to unless there is such a rise in the value of their products or of their labor that it will give them a sufficient margin above what they have to spend, to pay those debts. Mr. BARUCH. I hope, Mr. Chairman, that those who can get the ear of the workers and the farmers will try to show them two things: One thing, to limit their purchases and second to get out of debt. I would like to see the farms of this country paid for. I was brought up in a farming district, as you know, down in South Carolina. I would like to see the farmers own their farms. I also would like to see the workers own their homes. If they do get an advantage, if they do get an increase for their products and for their toil, I do not want to see them bidding against one another for the very limited quantity of the things that are available, and which they will be able to buy cheaper later on. Unless that is done the debt will be piled so high you will have to debase the purchasing power of the dollar.

The CHAIRMAN. Prices continued to rise after the termination of hostilities in the World War, did they not?

Mr. BARUCH. I will tell you why. For instance, let us take steel schedules. I happen to remember those. We got ship plates down from 20 cents to 34 cents, I think it was overnight, by a price-fixing schedule. There was a tremendous dearth of ships all over the world, as there will be now; ships, airplanes, whatever the modern method of transportation will be. There was a temporary rise in prices. because of the demand. Uncontrolled prices, of course, went up more than controlled prices. There is bound to be a huge, temporary demand all over the world after this war, too. It has been so from the beginning of time, after the marauding of animals and after the icebergs came down from the north, and after the volcanoes had finished their destruction-people came back to their homes and tried to rebuild them.

After this terrible scourge, this world madness-because that is what it is, a world which has lost its sense-after that is over, one by one they will start to rebuild their homes; all of these cities which have been destroyed and countries that have been ravaged, will try to do something about it. You will have a demand.

If we have a lower price structure, the President-I have not discussed it with him-can sit down at the peace table and try to carry out the objectives which he has in mind. In my opinion, the most effective aid to post-war reconstruction is the lowest price structure that you can have.

The CHAIRMAN. I think I understand fully the conditions that followed the World War. What disturbs me a whole lot more than the

existing condition, with reference to any legislation that we may attempt to pass, is what will follow this conflict, and the suffering that may come, if we permit runaway prices.

Mr. BARUCH. I said that there will not be any finish except over the precipice.

The CHAIRMAN. I think we should safeguard that so far as we can. But I have always believed that the debacle that came after the last war was not brought about entirely as a result of what had gone before, but it was accentuated by what I have always thought was a very unwise and destructive policy on the part of those who administered the financial agencies of the Government. The wholesale foreclosure and restrictive policies followed by the Federal Reserve System and land banks accentuated the difficulties that were already bad enough and unavoidable. If that folly confronted us again I would have less hope of being able to accomplish what we desire by this legislation. I am hoping by that time, if not before, we will have learned the lesson of the other mistakes.

I do not want to take up any more of your time, Mr. Baruch. Mr. SPENCE. How far do you think monetary control enters into this picture, Mr. Baruch?

Mr. BARUCH. A great deal. It ought to be right in it.

Mr. SPENCE. There ought to be something in this bill with relation to it?

Mr. BARUCH. I do not think you need to write it in this bill, but there ought to be coordination between Mr. Henderson, the Treasury, the industrial mobilization people, the Federal Reserve.

I saw a splendid article by Mr. Eccles; it had a heading that was misleading. It said, "Price Control Not Enough." If there were no ladies present, I would say, "Who the hell ever said it was?" But I shall not say it, because there are ladies present. [Laughter.] I think Mr. Eccles has made a very good point. Those things ought to be brought together.

During the World War the Treasury, under McAdoo, set up a capital issues committee. Securities could not be sold with which to buy things until the War Industries Board had passed upon whether such purchases would interfere with the war program.

I think that is quite necessary now. I am sure Mr. Henderson has such a thing in mind.

Mr. HENDERSON. Through priorities.

Mr. SPENCE. How far do you think the powers of the Federal Reserve, if they are properly exercised, can affect the price level?

Mr. BARUCH. I think they can do a good deal by making money rates stiffer and lessening reserves. That raises the question as to how much more the Government may have to pay for its borrowing. It is a very delicate operation.

Mr. SPENCE. You mean by controlling the volume of money? Mr. BARUCH. Yes, sir; velocity of circulation as well as volume. Mr. SPENCE. Do you think the Treasury ought to be hooked in with that also?

Mr. BARUCH. Yes. It is all allied together. It is a part of the war powers of the President.

1 For the full article, see pp. 1284-1291, infra.

Mr. SPENCE. How can we be assured of that action unless we give them some directions in the bill?

Mr. BARUCH. You may put it in the bill, but I am quite sure the President, who has all those powers, must have that in mind. I never discussed it with him, but it is a natural sequel to it. I doubt if this price-control bill is the place for it.

Mr. SPENCE. If the power should be exercised-and you think it should

Mr. BARUCH. Yes, sir.

Mr. SPENCE. It would not do any harm to make it mandatory in the bill that they should exercise their powers in conjunction with price regulation.

Mr. BARUCH. I like to leave the thing to one man and hold him responsible. I am sure Mr. Henderson has in mind that he is going to have associated with him all of these other various departments. Mr. HENDERSON. We do have.

Mr. BARUCH. They do now, as he says. But I do not want to get into that detail as to what you want to put in the bill, except I think that that cooperation is highly necessary.

Mr. SPENCE. They are powers that can affect the purpose of the bill.

Mr. BARUCH. I tried to bring that out in making my statement. I tried to make my statement as short as I could, and you listened to it courteously, but I am afraid it was a little bit longer than it should have been. You have to tax and you have to control the monetary power. For instance, New York City wanted to build some $30,000,000 worth of schools during the World War. I wanted the children to have the schools, but they just could not have them because we did not have the materials.

Mr. SPENCE. You did make the point in your statement, but I wanted you to amplify it a little.

Mr. BARUCH. Yes, sir. I remember a very colorful and a very fine mayor, Olie Olson, I think his name was, from Seattle. I think the poor man is now dead. He wanted some pipe. We could not give it to him. He went to see the President, and the decision of the Board was that he could not have it. When we explained to him why he could not have it he was satisfied. He was very dissatisfied until he found out the reasons.

I have found that always to be the case; when we explain to people the reasons we have to do things, they will follow.

You know, sometimes when a man gets as old as I am-I see that most of you are younger than I am-the past looks more alluring than the present. I saw what the American people did in the last war, and I think they will do it again. I do not know whether I have explained my position. I can go on further, but I know that your time is limited.

Mr. SPENCE. That is all.

Mr. BROWN. Mr. Baruch, I agree with you fully that equality should be accorded to labor and to industry and to agriculture. If that is done, you certainly take the largest profit out of war. That is the Thomas Jefferson doctrine-equal rights to all and special privileges

to none.

You stated a few minutes ago that probably a ceiling should be put on the price and fixed as of January 1. You also stated that you were in favor of parity for agriculture; nothing above parity.

Mr. BARUCH. That is a part of the law, is it not?

Mr. BROWN. I know, but it is not parity now. If you are going to fix the ceiling as of January 1, 1941, then parity should be fixed as of that date. It should be worked out. That is, the things that the farmers buy should be in proportion to the products that they sell, and we should not have to go away back to 1909 or 1914. That would not be fair to agriculture. Do you agree with me on that?

Mr. BARUCH. Yes, sir. I am putting parity as the ceiling. It may not reach it. I do not know whether it has or not.

Mr. HENDERSON. It has not.

Mr. BARUCH. Yes. I helped to fix that parity in the law. As I understand it, parity means that the prices the farmer gets for his commodities should bear the same relationship to the cost of things he buys as prevailed in the base period, 1909-14. As the farmer's costs fluctuate, the dollar-and-cents definition of parity is adjusted. It is the relationship that remains constant under parity.

Mr. BROWN. I am intensely interested in it because mine is an agricultural district, and it adjoins your State for a hundred miles. And I know your people very well.

The CHAIRMAN. If there is no objection, the committee will recess until 2:30 p. m.

(Whereupon, the committee recessed until 2: 30 p. m.)

The hearing was resumed at 2:30 p. m., Hon. Henry B. Steagall (chairman) presiding.

The CHAIRMAN. The committee will come to order.

Mr. Baruch, we will be glad to have you resume your discussion of this bill. Mr. Crawford wishes to ask you some questions.

Mr. CRAWFORD. Mr. Chairman, before proceeding with the interrogations, some of the members on my side want to know if the committee is to meet tomorrow.

The CHAIRMAN. Of course that is entirely for the committee to say and I am acquiescing in whatever the desires of the members may be. In view of the suggestions just made I think we may announce now that there will be no meeting until Monday morning at 10:30 o'clock. Mr. CRAWFORD. Mr. Baruch, your formal statement impressed me very much and contains a lot with which I agree, but in the crossexamination I became very much confused as to your position and I want to see if I can straighten that up a little bit.

Have you prepared an amendment to this bill setting forth what you would like to see written into the law?

Mr. BARUCH. Not specifically; no.

Mr. CRAWFORD. Do you plan to submit such an amendment?
Mr. BARUCH. I will be glad to do so if you wish.

Mr. CRAWFORD. Would you mind doing that?

Mr. BARUCH. No. But in one of my exhibits you will find an expository draft of my ideas.1

Mr. CRAWFORD. Personally, I would appreciate that very much.

1See pp. 1045-1071, infra.

Mr. BARUCH. It would be simply a statement putting a ceiling on all prices.

Mr. CRAWFORD. Whatever form you want it to take.

Mr. BARUCH. Very well.

Mr. CRAWFORD. Now, here is where I got confused. Your statement is what I would call a straight from the shoulder-categorically setting forth what you believe ought to be done; but when you come back and say that if Mr. Henderson wants to have this bill in the form in which it is here presented-do you think

Mr. BARUCH (interposing). For him.

Mr. CRAWFORD. That throws me entirely on what he recommends. Mr. BARUCH. But I do not change my position one iota. Now, if you want it changed that is entirely for you gentlemen to say. I know where I stand and I do not change from my former position. Mr. CRAWFORD. As stated in your formal statement.

Mr. BARUCH. Yes; and I go right back to my concluding three paragraphs where you will see exactly what I think it should be. Mr. CRAWFORD. Then, so far as the committee and the country are concerned, you want to stand absolutely on your formal statement? Mr. BARUCH. Yes; that is where I stand. Of course, it is for you to determine which you want.

Mr. CRAWFORD. And if he is recommending some other plan, of course, we will have to do what we can with it.

Mr. BARUCH. Certainly.

Mr. CRAWFORD. Now let me refer to another statement, in this respect: In your statement here you recommended that men, money, material, and moral be dealt with.

Mr. BARUCH. Be mobilized.

Mr. CRAWFORD. In the Selective Service Act we are dealing with the men, insofar as their service is concerned, and there is no question about that, and based on the many letters which I receive I think they consider it involuntary servitude; at least, the boys feel that way about it. The discussion that was brought out here this morning caused me to feel that your position is such that you do not want to back up your statement formally with reference to acquiring control over wages, and I want to get that cleared up. Do you wish to say now that you do feel that if legislation is enacted that we should put a ceiling on wages, without regard to the so-called constitutional rights that might infringe in bringing in involuntary servitude, or do you feel that we should leave out of this bill a ceiling on wages and leave that a matter for negotiation?

Mr. BARUCH. You ought to put a ceiling on wages, but I do not think you can write into the bill, and I do not believe you have the power to take away labor's right to strike when the man is working for any private industry. But if a collective bargain imperils the price structure the Administrator should be able to say so. Of course, if he is working for the Government that is another thing.

Mr. CRAWFORD. I agree with you 100 percent with respect to the private property approach and in no way do I recommend the taking away from him the right to strike, but when you fix a ceiling on a man's wages working for corporation A, operating with reference to a project, you do not force him to work; he can step off the job at any time he pleases and go fishing; or he might do something that would enable him to draw $16 a week.