mitted to me some figures on the buildings trades and the printing trades.

You will notice that all the printing trades in 1917 received an average wage of about 47 cents; in 1918, 51 cents; in 1919, 62 cents, and in 1941, $1.20. The building trades received an average in 1917 of 52.9 cents; in 1918, 58 cents; in 1919, 67 cents; and in 1941, $1.36. I merely wanted to leave this thought with you, that in the things that the farmers buy, labor and taxes are perhaps two very great factors in what determines the price the farmier must pay, and he has not so much to say about the price he receives. When you compare the last World War prices in agricultural products, you will find they are about two and a half to three times higher than at the present time in some products and, in other products, a lesser amount, while the trend in labor has been in the opposite direction.

I am not here to make an antilabor speech; I merely want to submit this to you for what it is worth, with this suggestion: I do not know the extent of your bill; I have not seen it. I simply am here hoping that you will not be too hard on agriculture.

Mr. WILLIAMS. You may insert your statement in the record, Mr. Curtis.

Mr. PATMAN. It is a very fine statement, too, and I congratulate you, Mr. Curtis.

(The following statement was submitted for the record by Mr. Curtis :)

STATEMENT OF REPRESENTATIVE CARL T. CURTIS, OF NEBRASKA, BEFORE THE BANKING AND CURRENCY COMMITTEE IN REFERENCE TO PRICE CONTROL

Mr. Chairman, it is not my purpose at this time to make a technical discussion of any bills now before this committee. I am fully aware of the intricacies of the problem and I am agreed that it will be a difficult matter to bring forth any legislation that will accomplish the desired ends.

However, for your guidance, I want to submit a few facts and figures which have been prepared for me by the Department of Agriculture and the Department of Labor. These facts speak for themselves.

First, I would like to submit a table showing the price of corn, wheat, oats, barley, cotton, tobacco, hogs, eggs, butterfat, and poultry for the years 1917, 1918, and 1919, and for the year 1940 and the first 9 months of the year 1941:

TABLE 108.-Average annual farm price1 for specified commodities, United States, 1917-19, 1940, and average month price, 1941

3 Nov. 15 price. Average of 12 monthly prices not available prior to 1934; 1940 average of 12 monthly prices is 14.0 cents.

Division of Statistical and Historical Research, Bureau of Agricultural Economics.

It will be noted that during the last World War period corn and wheat were about two and a half to three times as high as they were in 1940, and the first 9 months of 1941. The same was true of barley and oats, or nearly so. All of the other farm products, hereinafter listed, were much higher during the First World War period than they have been at this time.

Now, Mr. Chairman, I would like to submit some figures in reference to labor. I have not tried to incorporate herein wages for very many types of work. I made a written request to the Department of Labor to submit to me figures from one or two lines of trade that would be significant of the wage trend, so that a comparison might be made between the last World War period and the present time. The Department of Labor has submitted to me comparisons of wages in the printing trades and in the building trades for these two periods of expansion. They are herewith submitted to the committee:

It occurs to me that the objective of government in a situation like this would be to establish and maintain a just and fair ratio between agriculture, labor, and industry. The Federal Government has no right to legislate for the special advantage or disadvantage of any single group. I think we should strive for an equal balance of economic opportunity for all groups.

It would be well for this committee to take judicial notice of the fact that the American farmer has been unjustly treated in many ways. Our goodneighbor policy with its trade agreements with Central and South America has been at the expense of the American farmer. We have attempted to buy friendship by surrendering the markets that rightfully belong to our own American farmers to foreign farmers. Imports of farm products continue to pour into the country in ever-increasing amounts.

As a group, the farmers will pay a greater share of the tax burden of our Federal Government than any other group. It is elementary that business and industry must pass taxes on to the consumer. In the ultimate analysis the rank and file of the people of America pay the taxes. In this passing-on process that occurs when we levy taxes, everyone who can raise the price of his articles or his services does so. Wholesalers and retailers must charge more. Labor demands more wages and gets them.

How about the American farmer? He has to pay all of these increased costs that come by reason of our tax program. He pays more for his farm machinery, his shoes, his overalls, his shirts, his gloves, his furniture, his freight, his gasoline, his medicine, and everything that he buys. You never heard of a farmer passing on any of these added costs to anyone else. He can't go to the grain elevator and demand more money for his products because he has to pay more for the things he buys. He can't go to the livestock market and demand a few cents more for his cattle and his hogs. It just doesn't work that way. The farmer takes what he can get. He assumes all of the increased costs of things and passes on no part of the increased costs to the next fellow.

Mr. Chairman, I hope that whatever is done in regard to reporting out a price-control bill will be done after you have pondered well the case of the 30,000,000 American people who are engaged in farming.

Mr. GORE. While we are waiting for Mr. Voorhis, I ask consent to read three or four sentences for the record. In view of the fact Mr. Henderson has this afternoon issued a long statement trying to explain why Canada has adopted the general control and discarded a selective control, I would like to read a few sentences as to why Prime Minister Mackenzie King says he did it.

Mr. WILLIAMS (presiding). You are reading from the record, are you not?

Mr. GORE. Yes, sir.

Mr. WILLIAMS. You would not want to put it in the record again? Mr. GORE. Yes, sir. He says:

*

To continue to attempt to control the rise in prices, piecemeal, might only serve to augment the very evil it is desired to avoid by occasioning through fear of the future a precipitate rise in the prices of those commodities which are not already controlled. The problem is a general problem and it calls for general treatment. It has spread just as the war has spread.

The Government has, therefore, decided to halt the rise in the prices of all goods or services sold in Canada by imposing a general ceiling on prices.

* *

* * It is obvious that the prices of finished goods cannot be controlled successfully unless the cost of production is also controlled. Wages are a large element in the cost of producing the manufactured goods required by consumers. That is why the cost of living cannot be controlled unless wages are also stabilized.

* * *

I thought that would be appropriate as his only explanation of why Canada did it.

STATEMENT OF JERRY VOORHIS, A REPRESENTATIVE IN

CONGRESS FROM THE STATE OF CALIFORNIA

Mr. WILLIAMS. Mr. Voorhis, we will hear you now for a limited time. We have another witness from the Treasury Department, the Assistant Secretary of the Treasury will be here on an important matter, and our time will be limited, but we will be glad to hear you. You can insert any statement you want in the record later.

Mr. VOORHIS. Thank you, sir, I will do the best I can. I did not know that I would be called today.

Mr. WILLIAMS. I will say to you that we are closing the hearings tomorrow, and this is the last opportunity.

Mr. VOORHIS. I appreciate the committee letting me know.

I expect some of the things I want to say are things that the committee may already have heard. It seems to me that if we are trying to deal with a problem of inflation it is important first of all to realize that inflation is a condition where the production of goods available for sale is not keeping pace with an increase in the volume of purchasing power being made available for their purchase; the same as deflation is a condition where the volume of available purchasing power is not increasing fast enough to create a sufficient draft on the means of production and the possibility of production.

I want mainly to say that if we are to successfully deal with the problem of inflation, we have got to deal with its causes and not with its symptoms. In other words, while I do believe that it would be entirely proper for us to expect good results from legislation which would empower a Government agency to put a ceiling on particular prices which got out of line with the general movement of prices as a whole, I doubt very seriously whether we can successfully, by means of governmental regulation or fiat, control an entire price level, simply by attempting to regulate prices.

I do not believe that the price as a whole can be controlled unless we operate in the monetary field and in the tax field.

One cure for an inflation would be to substantially increase the output of consumer goods, and if I had much more time than I know I have this afternoon I would like to make a proposal as to a means by which I think something might be accomplished along that line. We do have, however, at this very moment, a situation which is inherent in our present monetary system which is a most important factor if not the basic factor. In March of this year the Federal Reserve Board informs me there were $6,300,000,000 of excess reserves in the banks.

In August of this year there were about $5,017,000,000 of excess

reserves.

What happened in the meantime? One billion three hundred million dollars of those excess reserves were eliminated, which means, since reserve requirements are approximately $1 of reserves to every $5 of deposits, that five times that amount of new loans were made by the banks by the process of their creating that much credit and lending it at interest.

In other words, $6,500,000,000 of new credit was put into circulation as a result of the operation of the fractional reserve system between March and August of this year. There still remain some $5,000,000,000 of excess reserves. The new proposal of the Federal Reserve Board for increased reserve requirements will wipe out about $1,200,000,000 of those excess reserves, leaving $4,000,000,000, which will still make possible an additional $20,000,000,000 of bank credit which can at the will of the banking system be created and loaned out at interest, and my judgment is that this committeeMr. PATMAN. It is more than that.

Mr. VOORHIS. On the ratio of the gold base, that is right, but I am just considering the existing reserve problem.

Now it was only a couple of months ago that we were worried about deflation and trying to overcome it, and gentlemen, believe me, unless we are farsighted, we will some day in the future, when

1

peace is restored, confront a problem of deflation which will be tremendously more serious as a crisis for this country than any inflationary danger we may face today, because after all, deflation is the disease that feeds upon itself, whereas a great nation always has a chance to catch up with inflation, once it can get back into production again.

I am not trying to belittle the danger that lies in inflation, for it is very real, but if we would establish at this moment a requirement of dollar for dollar reserves behind demand deposits we would have done more to make this impossible, both inflation and deflation, than we can do in any other way.

Price control, which means simply fiat of the Government, if we are attempting to control the entire price level without taking steps to control the creation of money, on the one hand, or to increase production on the other will, it seems to me, inevitably lead to further and further extension of direct Government control of the economic order. I cannot see how it can be otherwise. I think it will require rationing and many other things of that type.

I think that we have got to attack fundamentals.

I said in the beginning that I would support legislation and I think it is necessary, to empower Mr. Henderson's office or whoever it is going to be, to put a ceiling over prices that get out of line with general price movements, but I would hope that we would attempt to use the two proper mechanisms, first, congressional control of the money-issuing power, and second, our tax programs, and a sound taxation system as a basic means of controlling inflation and deflation. Now, gentlemen, that is very inadequate compared to what I had hoped to do, but those are the main things that I wanted to say. Mr. PATMAN. You made a very fine statement.

Mr. WILLIAMS. That is a fine statement; and if you have a prepared statement you can submit, it will go in the record.

Mr. FORD. You will have some time to do that if you have not yet prepared the statement; you may insert your statement in the record if you get it in before the record is ready for print.

Mr. GIFFORD. You accentuated a suggestion about the rate of production.

Mr. VOORHIS. I will include with my remarks at this point a suggestion along this line in the form of suggested amendments to the bill.

The proposal here is not one for which I wish to assume credit. It represents the work of certain men in the Antitrust Division of the Justice Department. The proposal, in brief, is this: That positive effort be made to secure adequate and increased production of certain basically essential things-important foodstuffs, clothing, housing, and supplies necessary to health. Specifications would be worked out for a standardized product in all these necessities and then producers would be offered opportunity to bid upon the production of not less than a stated quantity of such commodities. Bids would simply be in the form of agreements on the part of producers to turn out agreed quantities of goods and sell them for not more than a certain price, which would, of course, have to be a reasonable one. On its part the Government would agree to give priority to such producers for the obtaining of necessary materials