STATEMENT OF CHESTER BOWLES, ADMINISTRATOR, OFFICE OF PRICE ADMINISTRATION

Mr. BOWLES. I have a brief preliminary statement.

It seems to me that what we have been up against in the past has been that our ability to produce goods has run way ahead of our ability to pay for the goods that we can produce. I think some of your figures for the 1920's are very interesting.

Senator PEPPER. You mean before the war period?

Mr. BOWLES. Yes.

The CHAIRMAN. Let us have order here. This is very important testimony, and we want to have everyone hear it.

Mr. BOWLES. In the 1920's your labor productivity, output per worker per hour, increased very substantially; between '21 and 29, 43 percent. In other words, each worker was putting out that much more goods per hour. But wages only increased, that is, hourly earnings, by 10 percent. So you had this terrific increase in output per hour, and a relatively small increase in wages, and the result was that you did not

Senator BALL (interposing). Did you have any decrease in prices to take up

Mr. BOWLES (interposing). No, there wasn't. That, of course, is a very proper question. But from the time your prices were readjusted after your nose dive of 1920, after the deflation and the collapse, the cost of living generally ran a percentage point or two from that period on, very stable. That is one of the very peculiar things about that period.

What happened, of course, was a terrific increase in profits, which give you the investment money you need to build up new plants, new factories, and all that

The CHAIRMAN (interposing). Gentlemen, Mr. Bowles had just started his testimony.

Mr. BOWLES. I was just saying that one of your problems in the 1920's was the increased labor productivity, which was very great, running 43 percent over a 9-year period, with a very small increase in wages, and prices fairly stable through that period. The result was a building up of reserves in profits which were used speculatively in the stock market, land booms, and in a lot of new construction, but which got way beyond the ability of the people to buy the goods.

Senator TAFT. Have you any evidence of that at all? I have seen the statistics, and I don't say it isn't so

Mr. BOWLES (interposing). Do you disagree with the statistics? Senator TAFT. Well, the statistics are that the productivity increased somewhat and prices were about the same, but

Mr. BOWLES (interposing). And wages did not increase much. Senator TAFT. That is right, but all the figures on savings that I have seen were savings by wage earners just as much as by anybody else. Savings were not just to corporations peculiarly.

Mr. BowLES. You don't save much money at $800 or $900 a year. Senator TAFT. The figures show they did. I am not saying they didn't.

Mr. BOWLES. Well, you had a terrific increase in profits in that period, and a lot of speculative money, which obviously came from somewhere and got loose, and I think most of your figures today

Senator TAFT (interposing). I agree there was too much savings and not enough spending, but I don't see that there is any evidence that the wages were out of line with prices at all. I don't think there is any such evidence.

Mr. BOWLES. All I say is that wages did not go up to a reasonable degree as productivity went up, so our ability to produce more goods went up rapidly

Senator TAFT (interposing). But where productivity increased, as in automobiles for example, the price of automobiles was cut in half during that period.

Mr. BOWLES. Yes, automobiles did that; but your general manufacturing percentages-you are quite right, automobiles did that; and then, incidentally, didn't go down from that point on, to any great degree. But your cost of living, your price level generally did not move much.

The CHAIRMAN. Gentlemen, I think we could expedite this hearing if we would let the witness make a complete statement first, and then cross-examine him afterward

Senator TAFT (interposing). I don't agree with that, Mr. Chairman, but I am glad to accede to the chairman's desires.

Senator BALL. I think when the witness makes a statement, it is a pretty good idea to develop the basis for it right at that time. Mr. BOWLES. I will do it any way you want to.

The CHAIRMAN. What is your suggestion?

Senator BALL. When a witness makes a flat statement that is pretty important, it is a good idea right at that time to try to develop the basis of it. I don't think it ought to be extended too much.

Senator PEPPER. I think it would be helpful if Mr. Bowles and Mr. Walling, who are two very vital witnesses here, could first give general treatment to this subject. As I understand it, Mr. Bowles has sent in a written communication, but Senator Ellender and others wish to hear his testimony, and I would like to hear a statement from him. Then, after we get a general comment from him on this legislation and what the effect of it would be upon inflation and otherwise, we might go back and examine him. But whatever the committee desires.

Mr. BOWLES. I can make my statement pretty brief.

It seems to me that one of our big problems here is to be sure that we are creating enough purchasing power to buy the goods that we are going to be capable of producing. I think as much as possible it would be my idea that the thinking ought to be divorced from the present period we are in. We are in an inflationary period now, which makes the timing of this very important.

One, as I pointed out, is to accept the method they have used in New York State. There they have established a 52-cent minimum for retail clerks in New York, and it is to go into effect on January 1 of next year, 1947. There is to be a further 3-month period which industries are given to adjust to it, which means that the effective date of it would be March 31 or April 1, 1947. In other words, they have used that device to get the consequences out of this period.

Personally, I would think if you exempted-just touching on the New York situation-if you exempted small grocery stores and small stores of various types, certainly it seems to me the bigger stores are well able to pay higher wages.

Senator TAFT. Don't we have a still more difficult problem, that is, of dividing between big stores in New York City and a little store in Wichita Falls, Tex., where conditions are entirely different? We are trying to make a uniform rule that applies to all of them.

Mr. BowLES. That is Governor Dewey's rule of law up there. Senator SMITH. The difference is even less within a State like New York, than between New York and Nebraska and some of the Western States.

Mr. BOWLES. One way you could do it is that you could take the bill you have now-personally, if I were doing it, and I am a thoroughgoing outsider, I would expand it. I think the Wagner Act calls for a coverage of any firm affecting commerce in general. Now I think the NLRB has ruled that a large department store, a good sized store, or a big laundry, for instance, does affect interstate commerce, but a small grocery store or small hardware store or small laundry doesn't. I think they made that determination. So if you wanted to consider bringing in a wider area of retail clerks and laundry workers, I think you can use the language of the Wagner Act and exclude the small owner, the family grocery store and the small hardware store, by the use of this same language. I am not competent to testify on that, but I think you will find that that is the way they handled it. I personally would do that.

Senator ELLENDER. Could you suggest any manner in which we could cover in the bill the pensioners and the school teachers and the municipal, parish and county officials, because they will certainly be affected should prices rise.

Mr. BOWLES. They are affected indirectly by it, that is correct. Senator ELLENDER. Of course.

Mr. BOWLES. I would hope they would be.

Senator ELLENDER. Under this bill, as I pointed out on many occasions, the Congress is trying to set a pattern for the whole country when labor leaders themselves, since they have been organized, have had differentials in different parts of the country.

Mr. BOWLES. Well, didn't you do that when you established your 40-cent minimum in 1938? You take your 40-cent minimum, and assuming that that was a good act, your cost of living officially, BLS figures, is up 30 percent. They have used the figure of 33 percent, which is someone's effort to determine the amount of shoddy merchandise that is going in to pull that still higher. That would give you, roughly, 13 cents more if you just compensate now for the cost of living.

You have another fact, though, that in 1938 people with low incomes-40 cents, I think I am correct, would give a family or an individual less than $850 a year, about $830 a year, working a 52-week year. That is all he would have at 40 hours a week.

Now the people that lived on that kind of money, if they happened to be married, lived on very shoddy, bargain-basement merchandise that nobody else would take. They were always around at the bargain counters watching for the very low sale prices; they were in the

grocery stores on Saturday night, just before they closed, to pick up fruits and vegetables or meat that were likely to spoil by Monday morning, and grabbing those off and getting them out.

Those bargains and that kind of living are not available to those people today, and I hope it never will be, for the benefit of the retailers as well as the rest of them.

If you accept my point there and I think it is a very valid oneyour adjustment normally, on a percentage basis, brings this up to 53 cents, and certainly you have got a very different situation as far as the way these people were able to live in 1938 and the way they are able to live today. You don't have these bargain basement operations. The stuff sells at the ceiling prices. And also, you don't have the spoilage. You will find very few fruits and vegetables and meats. going on sale at Saturday night for low prices at these grocery stores. Senator TAFT. As far as I am concerned, it is all a question of degree, that is all. It seems to me obvious that there is a point of a minimum wage beyond which you can't go. We had the very clear example of the application of the minimum wage law, more or less by accident, to the Puerto Rico needlework industry, and it wiped it out; there wasn't any. That was too much. I only bring that up as an instance of the fact that there is a point too far.

I would fully agree to the 13 cents and 53 cents without any question. It seems to me we ought to raise it as much as the cost of living. Now that 33 percent may or may not be permanent, but we can take a chance on that. Maybe it will be a little less than that when we get through.

I also agree on the principle of trying to push it up a little bit all the time, but I don't think you want to go so far that it results in less work and fewer jobs. That is the thing that concerns me, particularly in small towns and in small businesses which are often only able to compete because they do pay somewhat less than others; and, they do that because the cost of living or the standard of living in that town is lower and people are perfectly satisfied with less than they can get in the city.

Mr. BOWLES. To what extent would you agree with my point on the further adjustment needed, just taking 40 cents as a proper base, which was in '38?

Senator TAFT. It was only 35 cents in 1938. It got up to 40 cents in 1941. In a way, we never fully tried out the 40-cent minimum except under war conditions; we pushed up to that at just the last moment. But I wouldn't hesitate to add the 13 cents to that. The question is, How much more than that could you add without perhaps doing more harm than good?

Senator SMITH. You would go to 55 cents, say?

Senator TAFT. Oh, yes.

Mr. BOWLES. In 1939 I was on the Minimum Wage Board in Connecticut, which is supposed to be a high wage State, and on the laundry board, which had then a 25-cent minimum for a 48-hour week. I remember holding out for 35 cents as the lowest point I would go, and being the only one, and having eight people vote for 30. I think it is shocking, 30 cents an hour for a 48-hour week.

Senator TAFT. There is one other argument you made that I don't quite agree with, and that is that this minimum has to be enough to support a family. It is impossible to set such a figure. Sixty-five

cents an hour or seventy-five cents an hour isn't enough to support a family, in a large city, at least. It is in the country, perhaps. But after all, there are millions--something like 10,000,000 unmarried people working

Mr. BOWLES (interposing). Aren't you going to have a hard time? After all, a man wants to get married, and he is a textile worker—what is he going to do?

Senator TAFT. Go on to something better, presumably. If he is worth anything at all he can soon, after a short time, earn more than the minimum. That is my feeling, that these jobs are the jobs for single people. I have a job or two right now here in the Senate, one in my office, and one that pays $3,000, for a lawyer. And I don't want a married man. I want a single man. I don't think a married man can live properly in Washington on $3,000. But I think that you can't hope to put a minimum at a point where it will support a family you can't get a minimum that high without getting really up, trying to establish a standard, a level wage. If you ever get to the average, you are going to average down and up, both. This is a minimum wage to protect against what you might call extreme hardship and poverty.

Mr. BowLES. That is what you are trying to do, and the industries that it hits are tobacco, lumber, and textiles, they are the biggest

Senator TAFT (interposing). I don't agree with that. I think it affects any number of little plants all over the United States. It affects every little store in every little town.

Mr. BOWLES. If those companies can't afford to pay a decent wage, it is too bad.

Senator ELLENDER. We have the case of the Western Union and the independent telephone companies

Mr. BowLES (interposing). I have been collecting my $9 dividend from the A. T. & T. for a good many years, and if they can't pay a decent wage

Senator TAFT (interposing). They do, they are not kicking. The ones that are kicking are the independent telephone companies with less than a thousand stations. Those under a thousand are objecting to the fact that they are going to be raised. Those between 500 and 1,000 stations, which are in very small towns, are objecting to having their rate boosted from 40 cents to 65 or 75 cents. This is really a 75-cent minimum as far as they are concerned.

Mr. BOWLES. Two years from today.

Senator TAFT. Yes; but what is that? We don't know what the conditions will be 2 years from now.

Mr. BOWLES. I think you have got basically the fact that the cost of living is going up, and that certain adjustments are proper to make. That takes it up somewhere around 53 to 55 cents, and it seems to me beyond that you have certainly got a difference in the way those people are forced to live. They can't get the bargains, they can't pick up the low-priced merchandise and the scrap stuff that they lived on.

I wasn't here in Washington, I was very much outside, but I can remember the debates on the 40 cents and 35 cents, and it was said then it was going to squeeze and ruin a lot of people. It probably did squeeze a few people, but by and large it didn't hurt very much, and