Miss SUMNER. I think the way that that tax bill goes it is so confused and there are so many loopholes in it.

I won't take any more of your time on any more questions.

Mr. SMITH. Mr. Baruch, you are asking that all this power be delegated to the President. In England the price control is lodged with the Board of Trade.

You cannot blame a great many people for being a little afraid of dictatorship, especially in this country, where we have economic conditions and financial conditions and the monetary conditions that are fertile soil for creating a dictatorship; and I am wondering why we could not here lodge this authority in some such body comparable to that of the Board of Trade in England.

Mr. BARUCH. They have a permanent Board of Trade over there, you know. They are civil servants. The top men come and go, but the majority are permanent.

Mr. SMITH. That is right.

Mr. BARUCH. I don't think much of the English system of handling the war, their whole conduct of the war. I don't want to say anything unpleasant, because they are in a lot of trouble. But I don't want to follow them. We had a great many disagreements during the World War. They are great people, very able, but I couldn't

Mr. SMITH. Don't you think that might be of some value to them, though, after the war?

Mr. BARUCH. You mean to have a permanent board of trade?

Mr. SMITH. To be a little more democratic about this and safeguard the rights and liberties of the people. Aren't they possibly looking ahead a little bit?

Mr. BARUCH. You mean in having the board?

Mr. SMITH. In not leaving it in the hands of one person, as you are suggesting here.

Mr. BARUCH. If you are talking about peacetime, all right. But in wartime I want one fellow with the final decision. That has been my experience.

We have these interminable delays. You have to talk to one fellow and another fellow and another fellow. You go crazy. Somebody has to make the decision. That is why we have a Commander in Chief.

Now, we have elected Mr. Roosevelt as Commander in Chief. I don't know what you call this that we are in, but we are in it. We have this lend-lease bill that Congress voted. I am going to back the President in it. I never wanted war, but I am going to go along with my country in whatever it does.

In order to conduct this thing you must have centralized power. The Commander in Chief has power over all of our troops of our Army and our Navy.

Mr. SMITH. In wartime; yes. In wartime that is correct. But we are not supposed to be at war now.

Mr. BARUCH. If we want to have price control and stop inflation, you have to take action and let some fellow have the responsibility. If you have a board, you are going to have one man saying one thing and another man saying another. Then they all discuss it. There are three or four of them. Then somebody else comes in. Pressure is brought upon them. Then you won't get any decision.

I want you to have what we had in the World War. That is all. Mr. SMITH. Regarding this question of regulating wages-Mr. BARUCH. Putting a ceiling over wages.

Mr. SMITH. Placing a ceiling over wages, frankly, I am a little skeptical about your position there.

Mr. BARUCH. I don't think it is perfect, but I don't know anything that is better.

Mr. SMITH. I frankly think that there must be some reservations. I don't see how you are going to regulate and put a ceiling over wages and at the same time not prohibit strikes. What do men usually strike for?

Mr. BARUCH. For wages. But also for other things, for certain rights, women in labor. They have been more that than fights for wages.

Mr. SMITH. But that is not specific. You don't bring that out specifically, that the right to strike should pertain only to those things.

I am wondering, suppose there is a wave of strikes and they become pandemic, as often happens. What becomes of the price-control machinery and the price-control bill?

Mr. BARUCH. You would have the same trouble if the public would not follow you in any of your prices. The labor situation is fraught with grave difficulties and great dangers.

Mr. SMITH. You agree that there is a little bit of color there. It is not just as clear as it ought to be?

Mr. BARUCH. Well, I don't know of any better way of putting it. I think that if you should deny the right of men to strike, I would be a picketer. I don't think that you want to deny men the right to strike in private industry where they are working for profit. Mr. SMITH. I would not.

Mr. BARUCH. It is perfectly apparent that control is going to come, because the earnings of people are limited and the prices of everything are going up. What is the answer to it? The answer of the manufacturer will be we have to increase the price. What is going to be the answer for all of these people here who are civil employees and clerks and war veterans? What is the answer for them?

Mr. SMITH. Now, Mr. Baruch, did I understand you to say that we are no longer in a competitive economy?

Mr. BARUCH. Yes, sir.

Mr. SMITH. We are not in a competitive economy?

Mr. BARUCH. No. Not as long as you have priorities.

Mr. SMITH. Would you say that any legislation enacted in the last 6 or 8 years has had anything to do with taking us out of that

economy?

Mr. BARUCH. I don't think so.

Mr. SMITH. I am thinking of your article in the Saturday Evening Post on the gold standard several years ago.

Mr. BARUCH. Yes, sir. I still stand on that.

Mr. SMITH. You still stand on that?

Mr. BARUCH. Yes.

Mr. SMITH. I am glad to hear that.

Mr. BARUCH. I was opposed to the change when they wanted to do it. But we cannot always have what we want. Many times what we want is not always right.

Mr. SMITH. Just one more question. From what I have heard you say it is indicative to me that you are basing your idea of abandoning this price control at some future date, at the termination of this strange thing which we call emergency, on conditions which obtained during the World War period. Is that correct?

Mr. BARUCH. Yes, sir.

Mr. SMITH. Do you think that the conditions we are under now are comparable to those during the World War?

Mr. BARUCH. The strain upon your economy is.

Mr. SMITH. As much now as it was then?

Mr. BARUCH. Yes.

In order to get ready our defense which Congress has voted, in order to get ready the lend-lease, which Congress voted-and we cannot go back on them now. That is the law of the land-here we are struggling every day. You have to meet the same conditions as in war.

You can call it what you want to, an emergency or anything else. We have to go into the markets and take everything from everybody right away quick. If we had the element of time

Mr. SMITH. I don't believe that you understand me.

Mr. BARUCH. I think I do.

Mr. SMITH. During the World War we had no public debt, or practically no public debt.

Mr. BARUCH. Yes, sir.

Mr. SMITH. We started in this time with a public debt of———
Mr. BARUCH. Forty-three billion dollars.

Mr. SMITH. Roundly, $43,000,000,000. We were on the gold standard then. We are now on a paper-money standard. Our financial condition and our monetary condition are certainly altogether different than they were then. Isn't that true?

Mr. BARUCH. Yes, sir.

Mr. SMITH. So, therefore, would you say that the conditions which now exist, upon which we must base any future contingency or hope or wish, are valid as a comparison with the conditions which existed in 1917 and 1918?

Mr. BARUCH. I just don't know if I get the import of your question. Human emotions are the same under the same strains. I don't know anything else to recommend except what has come out of my experience.

Mr. SMITH. Has it occurred to you, Mr. Baruch, that we may be now at the end of orthodox financing permanently and may be going into a totalitarian system of financing exactly like Germany is in, like Russia is in, and like Italy is in?

Mr. BARUCH. A great many people think so.

Mr. SMITH. I am one of them.

Thank you very much.

Mr. KUNKEL. Mr. Baruch, Congress passed a bill recently to requisition private property for Army and Navy supplies. But if you have a price control bill, won't it fundamentally be necessary to requisition property for civilian supply also-to have that power, not necessarily in this bill, but doesn't it flow from the passage of the price control bill?

Mr. BARUCH. I don't think so.

Mr. KUNKEL. Suppose a man failed to sell at a fixed price. How could you force him to?

Mr. BARUCH. If he failed to sell for the Government, you would commandeer it. You have that right now.

Mr. KUNKEL. For Army and Navy supplies.

Mr. BARUCH. Yes.

Mr. KUNKEL. But not for civilian needs.

Mr. BARUCH. No. But if a man didn't agree to the price and the conditions, we would certainly commandeer it from him."

Mr. KUNKEL. In other words, it actually does flow from a pricecontrol bill? Your answer is that we already have that control? Mr. BARUCH. The commandeering power goes very far.

Mr. KUNKEL. How are you going to meet the immediate civilian needs? Will you explain how you are going to distinguish there? Mr. BARUCH. You have to do it by licensing. It is going to be a very difficult job. That is the reason I am advocating a stiffer tax program-so you won't have all the buying power you now have. We ought to stop building and stop a lot of other things to reduce demand.

You have to go further. During the World War we restricted the making of shoes to three classes, to be effective July 31, 1919. We had the makers of men's and women's clothing talking about standardization and all that. You have to plan way ahead. You have to do it, if you are going to have a long, hard fight.

Here we are. We cannot back out very well. We have to go ahead. I would rather not have it. But I don't see any other way of spending this money that you gentlemen have voted with any sense of economy.

Talking about saving one or two billion in nondefense expenditures which I, of course, advocate-so much more could be saved if you could stop the runaway prices that force people to make escalator clauses.

Mr. KUNKEL. That is all.

Mr. ROLPH. I have always understood that Judge Gary and Mr. Schwab thought the steel industry did a pretty good job in the World War. All during these hearings we have been hearing about the steel industry. This morning you mentioned the price of ship plates coming down from 20 cents to 314 cents. Will you explain just how you did that, because that is really the worst concrete example that we have had before us, as to how this is going to work.

Mr. BARUCH. It was first under the Advisory Commission, and then. I think it was, the War Industries Board of the Advisory Commission, that President Wilson enunciated that all prices would be alike, for the Army and Navy, for those associated with this Government in the war and for civilians. He said what is a fair price for one is a fair price for all.

That met with my hearty approval.

Then we had to find some way of enforcing it.

We met with the steel industry. After long discussions, in which we went into the costs and profits, we gradually arrived at fair prices. It was a very bitter fight. But after they agreed to the prices, they did a good job. We kept the highest rates of wages going. We never changed them.

Mr. ROLPH. Was there not a very vast difference in the price of steel for domestic purposes or for use in this country as against steel for export? In other words, speculators that were selling steel to foreign countries used to raise the price if they could get an export license. Mr. BARUCH. We had one price for it.

Now, what we tried to do―of course, we were very busy, you know— what we tried to do was to control the exporting, the selling in the world markets, make a profit on that and bring that profit into the War Trade Board to make up for the high price that we were having to pay for manganese or something else. We would work one against the other.

We had to send a man to England to see that they were not exporting steel which they were buying from us at a lower price.

Mr. ROLPH. In other words, we were exporting it from Great Britain after they got it from the United States?

Mr. BARUCH. Yes. We assumed that they got it that way. I mean, I never found any trouble after we brought that to their attention. Mr. ROLPH. Didn't you find that the entire industry of the United States was still cooperating 100 percent?

Mr. BARUCH. After they saw the light. We had an awful bitter fight in the beginning.

Mr. ROLPH. You had a bitter fight?

Mr. BARUCH. Yes. I had a letter from Woodrow Wilson authorizing me to take over the United States steel mills. I showed that letter to Judge Gary. He is a very smart man. I said, "I think we can agree, Judge," and we did.

Mr. ROLPH. Thank you very much. I want to say to you, Mr. Baruch, that I consider it a great privilege to have sat here and heard you.

Mr. DEWEY. I wish to ask you one or two questions about your experience. Was any professional appeals board set up in the last war. By professional I mean official men, drafted and paid a salary to sit as a board of appeals to whom individuals that were not quite satisfied with their local boards or with prices might come and have a hearing before they appealed to the courts. Did you have any such board?

Mr. BARUCH. The Price Fixing Committee fixed prices for every 3 months, and invited anybody who had any criticism to appear before and present their case.

I think it was a good board. I can say that, because I was not a member of it.

There was every opportunity to change any price and to try to correct any injustice or to lessen any hardship. There was a real, honest effort. There was a very remarkable old gentleman who was the head of it, Mr. Brookings.

Mr. DEWEY. Would you give me the composition as to type of that board? Would they have among them manufacturers, labor, and merchants?

Mr. BARUCH. There was an A. F. of L. organizer on it. He was a great man. He got the distinguished service medal for his work, and deserved it.

We had a representative of agriculture on it. That was Governor Stuart, of Virginia.