Special Message to the Congress on Extension of the Second War Powers Act.

To the Congress of the United States:

During the past eighteen months the Nation has almost completed its great task of reconverting from all-out wartime production to a peace-time economy. As reconversion has proceeded, we have found it increasingly possible to dispense with many controls that were essential during active hostilities and immediately thereafter. We can now foresee the day when no further use of these powers will be necessary. But it has become apparent that the effective completion of reconversion will, in a few instances, require the continued use of powers granted by the Second War Powers Act after March 31, 1947, the expiration date of this law.

I stated to the Congress in my recent State of the Union Message that after the termination of hostilities was proclaimed on December 31, 1946, there were two groups of temporary laws that still remained, namely, those which were to last during the "emergency" and those which were to continue until the "termination of the war." The study of these two groups of laws is proceeding and I shall submit recommendations on them in the near future.

This present message is directed solely to the Second War Powers Act because the powers existing under such Act expire on March 31, 1947.

Since the fighting ceased, it has been my avowed policy to terminate all emergency controls that were no longer necessary or workable. By November 1946, we had removed all manpower and wage controls, and all price ceilings except those on rent, sugar and sirups, and rice. Almost all the priority and allocation regulations based on Title III of the Second War Powers Act have been eliminated. As early as last May, the Senate Committee on the Judiciary, in reporting out the last extension of the Second War Powers Act, made the following findings in this connection:

"The record clearly shows that there has been a rapid lifting of the controls which have been exercised over our economy during the war, and a progressive abandonment of the rigid provisions of the original War Powers Act, evidencing what your committee regards as a sincere purpose and intention by the Office of War Mobilization and Reconversion, by the Civilian Production Administration, and by all the other agencies concerned, to return as rapidly as possible to the normal processes of our economy."

The House Committee on the Judiciary in its Report also referred favorably to the record of reductions in controls by the Government.

Speedy decontrol under the Second War Powers Act has continued since these reports were made. From a wartime peak of about 700 orders and schedules, the Civilian Production Administration (Office of Temporary Controls) by January 27, 1947, had in effect only 24 orders and 3 schedules, and this number will be still further reduced in the immediate future. The Department of Agriculture had left by January 27 only 19 war food orders, of which 9 are merely administrative or procedural, and still further reductions are planned by the Department between now and March 31. The Office of Defense Transportation has eliminated all but 3 transportation orders, and the Office of Price Administration (Office of Temporary Controls) now rations only sugar.

After March 31, 1947, moreover, it will be possible to dispense entirely with the use of the broad powers granted by Title III of the Second War Powers Act. Thenceforth only a few controls coming under this title will be needed, over a progressively diminishing list of commodities of which the supply is seriously deficient, both domestically and throughout the world, and the affected final products are critically important to industry or the public. Power to allocate under the Second War Powers Act is requested only for the specific cases described in this Message and for national emergencies declared by the President.

The few orders that would remain be limited to clearly manageable controls in an economy freed of most emergency restrictions. They afford positive aids to business and the public which we must not withdraw prematurely, and they assist us in meeting international understandings and obligations.

The first area in which I believe continued authority is essential is in connection with foods still in critically short supply throughout the world. I consider that current import and export controls must be kept after March 31 to assure this country a proportionate share of the commodities in which we are deficient while carrying out our international food allocation arrangements. In a subsequent communication to the Congress I shall state whether there will be any need for continuing the Export Control Act beyond June 30, 1947, its present expiration date. We must also continue some controls on domestic use and distribution of grains and grain products, rice, sugar and edible molasses.

Grain: World cereal supplies are still far short of essential needs. Stated world import requirements for grain total about 38 million tons. Only about 24 million tons will be available from all exporting countries. This deficit will become most serious in the next few months. The most careful allocation of the available supplies, including those from the United States, which is the largest exporter, will be essential to avoid extreme hardship in the war-devastated countries. The United States has, in addition, a special responsibility in Germany and Japan, where heavy imports are required to maintain food supplies at least at a level sufficient to prevent disease and unrest. If this is not done, our troops would be jeopardized and our policy of encouraging the growth of democracy in these occupied countries would be endangered.

The United States has announced an export goal of at least 10½ million short tons of grain and flour. To reach this target, controls may continue necessary after March 31 to insure the movement of the grain to seaboard and to insure economies in the nonfood uses of cereals in this country.

Special controls may also continue to be necessary on rice. World export supplies are even more short than other grains, and the United States has export responsibilities to areas of particular concern to us, such as Puerto Rico, the Philippines and Cuba.

Sugar and Related Products: Because of our heavy dependence on imports, the world shortage of sugar and related products is of outstanding concern to the United States. Total sugar available for shipment to the United States, Canada and all western European countries in 1947 is expected to be only about 7 1/2 million tons compared with average net imports before the war of about 8 1/2 million, and 1946 imports of 6 3/4 million.

The United States will continue to receive its share of these supplies. Our share in past years has been sufficient to permit us to maintain, along with Canada and the United Kingdom, a considerably higher proportion of our pre-war consumption than other importing countries. Supplies in 1947 will be larger than in 1946. Nevertheless, 1947 supplies for the United States will still be below pre-war per capita supply and even farther below estimated demand.

In this situation, both our domestic and international interests require continuation of domestic and import controls over sugar and edible molasses and sirups and import controls only over other sugar-containing products and inedible molasses.

Domestically, unless current controls are continued, there would be inequitable distribution of the limited supply among various users; much sugar would be held for speculative purposes; and it is probable that sugar would go to a greater extent to industrial users, resulting in a lower proportion for household consumers than they now receive.

The cost of sugar used in the United States during 1947 will exceed one billion dollars. Although the extent to which prices would rise under premature decontrol is uncertain, there is grave danger that this cost might multiply several times, with serious results to consumers and sugar-using industries and eventually to sugar producers and refiners similar to those experienced after World War I.

Internationally, decontrol would make it extremely difficult for us to carry out the understanding under which the United States, since 1942, has acted as agent to buy the Cuban export supply for distribution among the importing countries in accordance with the recommendations of the International Emergency Food Council.

Fats and Oils: Fats and oils are among the commodities in shortest world supply. World import demand for the current calendar year amounts to about 6 million short tons, which is almost equal to pre-war trade in these commodities. However, only about half of this will be available. The production of coconut and palm oils in many parts of the Far East is still far below pre-war levels, and the European production of animal fats is also far below levels of prewar years. As a consequence, all importing countries are forced to consumption levels of from 75 to 90 percent of their pre-war levels. Only by maintaining careful distribution between countries, therefore, will it be possible to avoid serious inequities.

This situation requires the continuation of import and export controls to insure that we and other countries receive a proportionate share of this short world supply.

Other Foods: There are other agricultural commodities over which continued import controls also appear to be necessary as a result of continuing serious world shortages. These controls are necessary to carry out international understandings. The commodities they cover are: meat and meat products, dairy products, peas and beans, canned fish and protein foods.

Imported Industrial Materials: At the same time there are other commodities which we import for industrial purposes over which some form of allocation control will be necessary after March 31, 1947. These are cinchona bark and cinchona alkaloids, rubber, manila (abaca) and agave fiber and cordage, tin and antimony.

Cinchona bark and alkaloids are chiefly supplied by the Netherlands East Indies. Adequate imports from this source are uncertain. The estimated civilian deficiency for the year ending July, 1947, is over three million ounces of quinine and seventy thousand ounces of quinidine. So long as such a shortage continues, the most vital medical uses must be given top priority.

Natural and Synthetic Rubber: Natural rubber will probably continue in short supply throughout the world in 1947. At the same time, it is important to the national defense that a minimum synthetic rubber industry be maintained in the United States pending consideration of permanent legislation by the Congress. Consequently, continued allocation control over rubber, except for import controls over natural rubber, is necessary.

Manila and other hard cordage fibers are of basic importance, because from them are made rope, binder, baler and wrapping twines, paper, and padding. The supply in prospect from all sources for the next twelve months is no more than half our annual requirements. The termination of allocation control over manila would seriously impede agricultural and other essential production.

Tin and antimony are also basic materials which we must import. The supply of tin will not approximate demand until some time in 1948. In the case of antimony, we must wait for resumption of shipments from China, the primary pre-war source. Continued allocation of tin, tin plate and other tin products, and antimony is an important positive aid to our domestic industries and in carrying out our international understandings.

DOMESTIC SHORTAGES

Housing: The allocation powers of the Veterans Emergency Housing Act and of the Second War Powers Act were instrumental in increasing the flow of building materials to which the veterans housing program in large measure owes its progress to date. This achievement made possible the recent reduction in the number and scope of these controls.

During the balance of 1947, I anticipate a further reduction in the use of these powers, but it will be necessary to continue some limits on construction and to continue assistance to the producers of some bottleneck materials.

I understand that voluntary arrangements are being made with a number of producers to meet the needs of the building materials industries so that the use of allocation powers can be held to a minimum. To the extent that formal action may prove necessary, the Congress has wisely provided that materials and facilities for building construction may be allocated under the Veterans Emergency Housing Act until December 31, 1947. Accordingly, Title III need not be extended for the purposes of the housing program.

Freight Cars: There is at the present time an extremely serious freight car shortage. The shortage will increase as the Nation's production increases. The reported average daily freight car shortage now amounts to approximately 22,000 cars. For a number of months car loadings have been heavier than at any period since 1930, including the war years. The American railroads have about 521,000 fewer cars now than in 1930, and about 31,100 fewer serviceable cars than they had on V-J Day. The number of freight cars being removed from service each month because of their being worn out exceeds on the average the number of new freight cars delivered to the railroads.

The load our railways must carry is growing while the facilities for handling the load are dwindling. To cope with this problem with any measureable degree of success requires a provident use of rail transportation facilities. Allocation is therefore necessary if we are to use the railway freight cars and other equipment and facilities that we have at all efficiently in this period just ahead.

Other Shortages: The only other current domestic shortages sufficiently serious to require continued allocation control beyond March 31 are streptomycin, automobiles, and tractors. Limited distribution of streptomycin for civilian use was begun in September, 1946, but it is at present impossible to determine requirements or to plan production of this drug. In the case of automobiles and tractors, it may be necessary for a time to continue to carry out the purpose of the Export Control Act by limiting production in this country of automobiles and tractors designed for export.

Some critical materials and equipment freed from distribution controls will remain short after March 31. In a very few cases this will mean that essential export requirements will not be met unless priorities are used. Priorities assistance should therefore be given, where necessary, to expand the production in foreign countries of materials critically needed in the United States, and, upon certification of the Secretaries of State and Commerce, to meet international understandings and responsibilities.

Because of the distortions and uncertainties generated by war conditions, we may encounter a National emergency that we do not now foresee. The extension of Title III should provide for allocation authority in a National emergency of this kind, but only if there is a declaration by the President that such a National emergency has arisen. Although I do not anticipate that such an emergency will occur, it is imperative that the government should have the power, during the remainder of the reconversion period, to deal with major unforeseen contingencies of this character.

RECOMMENDATIONS

When first adopted, the Second War Powers Act had 14 substantive tides, of which seven have been either enacted into permanent legislation or have been permitted to lapse. Only three of the remaining titles--I, III and V--will be needed after March 31, 1947. Although some of the programs remaining under these titles can and will be terminated during the next few months, it would be unsafe to act on the assumption that this can be done with all of them. I therefore recommend that the Congress extend for one year, to March 31, 1948, Titles I and V, and, in addition, Title III for the limited purposes enumerated in this Message.

The necessity for extending Title III, I have discussed at length. I shall briefly state the reasons for extending Titles I and V.

Title I permits the United States Maritime Commission to operate certain shipping lines and the Army and the Navy to supply local transportation to personnel where public facilities are inadequate. This title will be necessary until the Maritime Commission is in a position to settle with companies whose ships they have taken over and operated.

Title V permits the operation of ships under less restrictive rules as to equipment and manning than would otherwise be the case. This title is necessary for troops stationed abroad, both for their demobilization and the transportation of supplies, and in connection with repatriation programs. Its extension is urged by the State, Treasury, War and Commerce Departments, and by the Maritime Commission. The Navy's vessels are already covered by permanent legislation.

It is unsettling, both for business and for the general public, to be obliged to wait until the last possible moment for decision by the Congress on emergency legislation. I urge the Congress to give immediate and favorable consideration to the limited extension of the Second War Powers Act I have requested.

For ready reference, I attach hereto an Appendix setting forth a summary of the titles of the Second War Powers Act, together with a brief comment on each.

HARRY S. TRUMAN

APPENDIX--SUMMARY OF TITLES, SECOND WAR POWERS ACT

Recommended for extension: Titles I, III and V.

Title I. Emergency Powers of the Interstate Commerce Commission over Motor and Water Carriers. Extended until March 31, 1947. Further extension is recommended.

Title II. Acquisition and Disposal of Property. Extended until March 31, 1947, only as to the disposal of property. Further extension is not necessary.

Title III. Priorities and Allocation Powers. Extended until March 31, 1947 (until June 30, 1947, for building materials and related facilities). This tide establishes priorities, rationing and allocation powers. Further extension is recommended.

Title IV. Purchase by Federal Reserve Banks of Government Obligations. Extended until March 31, 1947. The Federal Reserve Board and the Treasury Department will recommend permanent legislation covering this subject. Hence, further extension is not necessary.

Title V. Waiver of Navigation and Inspection Laws. Extended until March 31, 1947. Further extension is recommended.

Title VI. Power to Requisition. This title has expired.

Title VII. Political Activity. Extended until March 31, 1947. This tide exempts employees serving part time and without compensation or with only nominal compensation from certain restrictions prohibiting participation in political activity (Hatch Act). No recommendation is made for further extension.

Title VIII. Protection of War Industries and Protection of Resources Subject to Hazards of Forest Fires. This title has expired.

Title IX. Free Postage for Soldiers, Sailors and Marines. This title has been repealed and replaced by permanent legislation.

Title X. Naturalization of Persons Serving in the Armed Forces in the United States during the Present War. This title has been made permanent legislation.

Title XI. Acceptance of Conditional Gifts to Further the War Program. This title has expired.

Title XII. Coinage of 5-Cent Pieces. This tide has expired.

Title XIII. Inspection and Audit of War Contractors. This title has been made permanent legislation.

Title XIV. Utilization of War Information. Extended until March 31, 1947. Further extension is not necessary.