In that field you have a shortage of labor. All foundry work is hard work. We have now gotten production up to 27,000 tons, approximately. We have got to get it up to 50,000 tons. Mr. WIGGLESWORTH. How have you done it? Have you written letters to the plants? You cannot control the labor force. You cannot control the OPA maladjusted ceilings. Just what do you do in this field? Mr. SMALL. We have gone out to individual plants. There are 54 of them. Part of them, almost half of them, were shut down completely. We have worked with the local organizations, the local people, to try to get the plants reopened. In some cases it is a question of finances which the local people can cure for them. In other cases it is a lack of management a fellow that went to war and has not come back yet. In other cases it is a lack of material, pig iron and scrap. The fellow has not been able to operate at capacity because he cannot get his pig iron. We go around to the steel mill and see to it that he can get his orders placed and get delivery. In other cases it is a lack of equipment. They cannot get the needed lift trucks or conveyor systems or machinery of one kind or another. The backlog on the manufacturer may be 8 or 10 months, and we step in and give the man a priority to get delivery in a month so that he can get production quickly. Every one of these cases is an individual case. Mr. WIGGLESWORTH. You are talking about priorities now? Mr. SMALL. No. I say that priorities is one of the tools that we use. Every case is an individual one, and you have to take whatever steps you can, getting a price from OPA so that a fellow can operate, or giving him a permit to give a wage rate that will attract people. We have managed to double the production of cast-iron soil pipe. We have to double it again. It must be doubled if we are going to meet the program. Mr. WIGGLESWORTH. You are acting as a mediator for OPA? Mr. WIGGLESWORTH. You do not supply the labor. You approach OPA if the ceiling is wrong. Mr. SMALL. Yes; and the United States Employment Service if it is a lack of labor, or the union if there is some difficulty in the plant, or the steel mill if it is a lack of material. Mr. WIGGLESWORTH. You really function in a mediation and advisory role? Mr. SMALL. And in an expediting role also; yes. Mr. WIGGLESWORTH. Of this $20,600,000, how much are you going to use in this particular field of work? Mr. SMALL. I do not think that it is possible for us to break down the cost of each function. LIMITATION ON MANUFACTURE OF PRODUCTS FOR WHICH MATERIALS OR FACILITIES ARE INSUFFICIENT Mr. WIGGLESWORTH. You have seven functions all told here, including the housing program. Your second function is entitled “limiting the manufacture of products for which the materials or facilities are insufficient." That will take care of itself under present conditions, will it not? Mr. SMALL. No. ! Mr. WIGGLESWORTH. If the facilities are insufficient, the manufacturers will limit themselves accordingly, will they not? Mr. SMALL. He will limit himself to whatever he can get, but it very frequently happens that you get the wrong thing, or the fellow produces the wrong thing. He might produce shower curtains instead of something else we badly need. CONTROL OVER ACCUMULATION OF INVENTORY Mr. WIGGLESWORTH. Another function is that of controlling the accumulation of inventory to avoid speculation. How much of an undertaking is that? Mr. SMALL. It is a very important one and a very big one. If you will recall what happened after the last war when all controls were lifted-official and unofficial-we had a very rapid price rise, a precipitous price rise, caused in great part by inventory hoarding and a subsequent deflation that was a catastrophe. Mr. WIGGLESWORTH. I am trying to get at the amount of work involved. What do you do to control inventory? Mr. SMALL. I am trying to explain. We have a number of different rules having to do with inventories. One of them says that you shall not have an inventory greater than the minimum practical working inventory. That is very flexible wording, but, nevertheless, it is based on the historical record of the plant or company, and it is a meaningful term. In addition to that, on particularly scarce items, we say that you cannot have more than a 30-days' supply, or you cannot have more than a 45-days' supply. We get this every day-the fear of people that materials are being hoarded by these big companies. For example, take refrigerators, or vacuum cleaners, or almost any one of the industries. There are a few companies that are the major users. Twenty percent of the companies will use 80 percent of the scarce materials. We go into the plants to those individual companies and check their inventories and check the orders that they have received for forward delivery. If they are evading the inventory regulations we take that up with the Department of Justice and take appropriate action. Mr. WIGGLESWORTH. Has there been any action of that character? Mr. SMALL. Many of them. Mr. WIGGLESWORTH. Through the Department of Justice? Mr. SMALL. No. We found we could handle them by administrative action through our compliance division. Far more valuable than that weapon of taking it to the Department of Justice is the feeling on the part of these companies that they do not want to be publicized as being an evader of the inventory regulations. The fellow who hoards is preventing employment elsewhere; he is preventing the production of other things elsewhere, and it is not good advertising for a company to have it known that they are up on a charge of willful violation. As a matter of fact, industry by and large has demonstrated that it is pretty honest and pretty willing to go along and play ball. Mr. WIGGLESWORTH. That is what I would assume. That is why I am trying to get at the work you do in this connection under the $20,600,000 requested. Mr. SMALL. But there are always a few in any problem of this kind who try to beat the game. By our constant checking up to be sure that we are not having any violators, people are reassured and are willing to go along and continue to play ball, but if they felt free to hoard with no check on them whatever, I think that you would have a lot more hoarding that is going on today. Mr. WIGGLESWORTH. You have another function, priorities to break bottlenecks. That is self-explanatory, I suppose. RELIEF AND OTHER ESSENTIAL EXPORT PROGRAMS You have the function of facilitating the fulfillment of relief and other essential export programs. That goes hand in hand with the priority function, does it not? Mr. SMALL. That is right. Mr. WIGGLESWORTH. As a matter of fact, what is the policy there as between export and domestic allocations Mr. SMALL. The policy is that we try in every way we can to limit the export of these critically short things to a proportion which is not an undue drain on our own country. Some export of these short items is essential. A great many things that we import are in world short supply. To get those things-tin and rubber being typical examples, and also burlap, which is needed for agricultural bags-we have to go into barter. We cannot get whatever it is unless we can give them something. We have to give cotton textiles to the natives of Malaya. They will not work for dollars. They want trade goods, shoes and cotton print cloth. They want flashlights, bicycles, and things of that kind. In some cases it has to be production equipment that we have to give them. I think that we have speeded up the getting back to normal in tin by a full year by giving them equipment that they needed for dredging. CLASSIFICATION OF EXPORTS Mr. WIGGLESWORTH. Will you give for the record a table that will show by classification what has been exported during this present fiscal year and what percentage of the domestic supply the exports represented in each case? Mr. SMALL. We can get that for you on the critical items. Records are kept by the Department of Commerce for all exports. We do not keep the actual details except for the critical items. (The information requested is as follows:) SUMMARY OF CPA ACTIVITIES IN CONNECTION WITH EXPORTS Since the end of the war, the CPA has followed the same policy with respect to decontrol in the exports field that it has followed in the domestic field. In the case of materials and equipment which have continued in critically short supply and which appear likely to be exported in excessive quantities, it has been considered necessary to exercise strict export controls. The same is true in cases where there is serious maldistribution, from the standpoint of outside needs, of shipments from this country. An illustration of this last point is tinplate, which American mills, in keeping with past trade patterns, ship voluntarily to Latin America and certain other markets, but refuse to ship to European and Far Eastern markets where there is a very acute need arising from the world food situation. Where, however, there is not a clear-cut and sound justification for limiting or directing the course of export, the CPA has followed a hands-off policy. We have considered that through the use of export controls we interfere with normal business activity in exactly the same way in which we interfere with normal business activity when we exercise domestic controls. Aside from the export houses, many industrial establishments themselves place a great deal of emphasis on. export business. Like its domestic operations, export business contributes to a company's long-run prosperity and its ability to maintain employment. In many cases it determines whether a company succeeds or fails. Subjecting manu facturers or export establishments to crippling restrictions, and telling them that they cannot ship more than this quantity or can ship only to this or that area, delays and interferes with the return of a free economy just as the domestic use of allocations, priorities, "L" orders, etc., delays and interferes with the return of free economy. The development of a greater volume of trade between this country and other areas has been a principal concern of both the Government and the American business community for many years. It would obviously be a matter of grave importance if the CPA arbitrarily interfered simply because the volume of trade appeared large. It not only would mean a loss, from the long-run standpoint, to American business, but would jeopardize the reestablishment of world economic stability. As pointed out above, however, this does not mean that the CPA is permitting overseas shipments to result in an undue drain on materials and equipment which are essential to reconversion and which are in critically short supply in this country. In case of items in this category, we have consistently taken the position that we have no choice but to exercise restraints over export. All such are under export control, and quantities going out of the country are being limited to the amount necessary to fulfill commitments of this Government to prevent disease and unrest abroad, or to prevent injury to the essential civilian economy of free foreign nations, or to the amount necessary to support the production and shipment to this country of supplies (e. g., tin and crude rubber) to our reconversion activities. Prior to the end of the war, there was established in the WPB a Joint Committee on Export Controls. This committee was charged with the responsibi ity for reviewing, item by item, all products which were then subject to export restrictions. The committee was to decide, on the basis of analysis of the United States supply situation, which products might be freed from export controls without danger to the American economy. By the end of September 1945 this committee had made arrangements for placing the great majority of items on a "free list." It left, however, all that were then considered critical under control. Since the end of September 1945 the Joint Committee on Export Controls has continued its reviewing process. It has found that many commodities which had been originally left under control could be safely added to the free list as a result of easing supply conditions. On the other hand, in some cases it is found that commodities which earlier had been in sufficiently easy supply to be placed on the free list, had become for one or another reason tight and arranged for reestablishing controls over these items. We expect to maintain the Joint Committee on Export Controls until such time. as the reconversion job is completed. The policy of the Committee will continue to be the elimination of controls as rapidly as possible except where there is clear and sound justification for retaining them. In the case of commodities still under restriction, there are two degrees of controls. All are subject to export licensing by the Department of Commerce. In addition, a number (those which are in exceptionally tight supply or for which the foreign demand is particularly heavy) are under CPA quota limitations. These quotas are ceilings, beyond which exports cannot go. In two instances (cotton broad woven goods and tin plate) they are also guaranteed quantities which shall be made available for export. Quotas are established in the following manner: The Office of International Trade of the Department of Commerce presents to the CPA a statement of requirements which it considers essential to meet the minimum needs of friendly foreign nations. This statement is reviewed and screened by the CPA Exports Division. The Exports Division then recommends quantities which it feels can be allowed for export in light of the domestic supply situation as weighed against the demonstrated urgency of foreign need. These recommendations are submitted to the CPA Priority Policy Committee, which consists of representatives of the CPA, the War Department, the Navy Department, the State Department, the National Housing Agency, the Department of Agriculture, and any other Government agency which has an interest in the problem. Final determination of a quota is made as a result of the deliberations of this Committee. In the case of items which are not under quota the Department of Commerce consults with the CPA as to quantities which should be licensed and as to demands of one country vis-à-vis others. The Department of Commerce invariably follows the recommendations of the CPA. At the present time the following groups of items are under export controls: Lumber; other building and related materials; wheel and crawler tractors; tires and tubes; automobiles and trucks; rosin; tin plate; tin and tin products; crude rubber and products; lead and lead products; all critical chemicals; cotton textiles; fertilizer and fertilizer materials; storage batteries; nylon hosiery; brass and bronze manufactures; mining machinery; conveyor belting; and a wide variety of miscellaneous articles. Given below is a discussion of the situation with regard to the more important of these items: LUMBER In view of the seriousness of the domestic lumber situation, the Civilian Production Administration has considered it necessary to exercise close restrictions on the export of this product from the United States. Foreign shipments are limited through maintenance of a ceiling quota established each quarter by the CPA, and through the exercise of license control by the Office of International Trade, Department of Commerce. All foreign requests for lumber from the United States are rigidly screened by both the Office of International Trade and the CPA and none is allowed which is not of the highest urgency. It is obvious, however, that exports cannot be completely eliminated without serious repercussions. The United States has solemn commitments to the effect that every effort will be made to export such goods as are necessary to prevent disease and unrest abroad and to prevent serious injury to the essential civilian economies of friendly nations. At the same time, the United States is more dependent on foreign sources for lumber than these sources are on the United States. Since the beginning of 1942, this country has regularly imported from two and one-half to three times as much lumber as it has shipped abroad. For the most part, our imports are directly related to exports. The great bulk (85 to 90 percent) of the lumber which we receive comes from Canada, which allows us more than one-fifth of her total supply. If United States exports should be reduced either to Canada or to other countries, it would result in an accentuation of demand for Canadian lumber on the part of the countries which were being deried supplies from this country (particularly the United Kingdom and various Empire countries) and would inevitably lead to a cut in deliveries from Canada to the United States. This would be a particularly important development in connection with United States housing since a far larger portion of the lumber which we import is housing-construction lumber than is the case of the lumber which we export. Despite the urgency of foreign demands for lumber, actual shipments represent an extremely small percentage of our total supply. This can be seen in the following table which gives a summary of the export situation for the year 1945 as compared with both the war and prewar periods and as compared with important trends. United States lumber production, exports, and imports (includes sawn timbers, boards, planks, scantlings, small hardwood, dimension and hardwood flooring), 1935–45 [In thousand board feet] |