Manufacturing-Continued

Senator ELLENDER. Let him go through with some of those. I would like to ask him some questions.

The CHAIRMAN. Yes, but I think he ought to go through all the industries, one after another, so as to have them at one place in the record.

Senator TAFT. Can I ask one question about this delay question? This is a permanent bill. I can't quite see why, if it is inflationary today with price control, it isn't even more inflationary 2 years from now with price control off. I don't quite see why something that can't be justified today can be justified 2 years from now. I don't see the logic of that.

Mr. BOWLES. Well, the inflationary condition you get, it seems to me, is a rise in your general price level; and, hopefully, by a year and a half or a year from today, we are going to have a lot of prices that are going to start dropping away from those ceilings.

For instance, you have got lots of items in the building field which are artificially high. When those drop, I think stumpage is going to drop. I don't think it will hold up to those levels. When those drop, you will have other compensating decreases that will tend to keep your general level the same. I personally think when you get rid of price control you are going to have some higher prices on some items; they will pop up. My opinion is not to pull price control off at a time when the pop-up is so dangerous

Senator TAFT (interposing). I am only raising the point that I don't see why 5 percent will be any less inflationary a year from now than it is today. Probably there will be no price control 2 years from today. When the price control goes out

Mr. BOWLES (interposing). Obviously some prices are going up and some down, and it doesn't seem to me, as Senator Pepper said earlier, that we ought to fix a higher price here and there in order to

Senator MORSE (interposing). As to postponing the effective date in some industries, I think it is grossly unfair to the workers concerned to say to them, in effect, "You subsidize this industry now for the benefit of all the people in the country by accepting a wage which we all recognize is a wage so low that a standard of decency and health can't be maintained under it."

It seems to me instead of taking that approach, if we can start with the major premise that these wages are too low and that 65 cents is a fair and decent wage as a minimum, as a matter of principle, then the Government had better proceed and do a little subsidizing, and not the worker.

Mr. BOWLES. Certainly that is a very proper stand, and I agree with it. If that is, however, an element here that might keep this from going through, I would accept that, I think, say in one or two industries for a period of a year rather than see it not go through. Senator PEPPER. Mr. Bowles, could you go along, now, and sort of list these industries and give a little summary?

Mr. BOWLES. Here is lumber and timber-54 percent of the workers are employed at less than 65 cents an hour. The introduction of a 65-cent minimum-and this is without your compensating factors for those over 65 cents-would increase pay rolls by $67,000,000, or 9 percent.

Here, at first glance, the possibility of absorbing the cost increase would seem somewhat more doubtful. I think it is very doubtful,

personally. There are some areas in lumber that could, but after all, you can't squeeze those prices down past a certain point if you are going to get production, and we have got to get production. In many cases we are not using our industry earning standard, we are not going to the full limit in absorbing because we want to get that production.

Senator TAFT. Lumber is something that peculiarly responds to price because of so many little sawmills all over the place.

Mr. BOWLES. Yes.

Senator AIKEN. They pay anywhere from $3 to $8 per thousand for stumpage in Maine, and you can't get much below that.

Mr. BowLES. There are these auctions that shove the price up and up and up, and that tends to set the price of stumpage for everything around that area.

Senator ELLENDER. Most of that highly paid stumpage goes in the black market. I heard about it when I was down home for the holidays.

Mr. BowLES. This is our worst black market, because you have lost your allocations that you had last fall, your L-41 allocations are going out of here, and I am trying to get them back.

If you take a comparison of the lumber industry now with its prewar profits, you have really got a pretty unfair picture because in that industry, outside of a few highly efficient operators, prewar profits were very, very low indeed. I think there is some room to absorb some of that in there, but my feling is that if you are going to get production you probably wouldn't do it. If that occurs, you would have probably a 4 or 5 percent increase in lumber prices, something of that kind.

I wouldn't want to see that happen now. I would either like to see it subsidized in some way or delayed.

Senator PEPPER. Excuse me just a minute. That enters into the whole construction picture, and it is part of the problem we have got to struggle with anyway, as to whether we are going to subsidize or whether we are going to reduce prices. We probably are going to have to subsidize construction anyway for a time.

Mr. BOWLES. Well, I think you are unless you want to just build in all these artificially high costs we have got now, and then try to run your low-cost housing program on that basis.

On textiles it is 47 percent of the workers, without an adjustment for those who would have to be paid a little higher in the upper brackets.

Senator TAFT. That is all at the 65-cent rate?

Mr. BOWLES. Yes. That would be $105,000,000 a year increase in the cost of the textile industry, which would add 6 percent to the wage bill. Now that industry is, over all, very, very profitable, but there are certain sections of it that are not so profitable. It is spotty all the way through. But if you put the whole thing right through, let it go through to the department stores which, heaven knows, can take it, you would have only a 11⁄2 percent increase in your textile bill at the department-store level. If you put it on through to the public and let them step margins up on it, it would be about a 1 percent increase. But you could easily absorb that at the wholesale and retail level.