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Statement by the President Upon Signing the Defense Production Act Amendments.

July 31, 1951

I HAVE reluctantly signed S. 1717, the Defense Production Act Amendments of 1951, which was passed by the Congress yesterday. Unless this measure had become law, the powers necessary for carrying out our defense program would have expired tonight. This new act continues, with little change, the Government's authority to control production, channel materials, and aid business in the interest of national defense. To some extent the new act strengthens these powers, particularly with respect to aids for small business. The act also continues rent control, and permits recontrol of rents in certain critical areas. The production and rent provisions of the act are thus relatively adequate, though they do not meet all our needs.

But the inflation control provisions of the act are gravely deficient. If these had been the only provisions of the act, I would have vetoed it. We will not be able to hold down rising prices under this act, and I am going to ask the Congress to amend it to give us adequate controls.

This act will do great harm to our price and wage controls. The full extent of the damage cannot be determined until the executive agencies have had sufficient time to study the legislation in detail. Many of the new provisions are complicated and vague, and it has not been possible, in the brief time since Congress passed the law, to estimate fully all of its effects on present price ceilings and on the administration of price control.

But it is already clear that the principal effect of the new amendments will be to raise ceiling prices for the manufacturer, the wholesaler, and the retailer. Moreover, the act prohibits further rollbacks in the price of beef, and makes effective rollbacks on other vital cost-of-living commodities practically impossible. In general, the act will roll price ceilings forward from their present levels, pushing them up to heights that we cannot yet foresee. Furthermore, the act greatly increases and complicates the administrative difficulties of price control. As a result, even after prices have reached the new and higher levels which the law requires, we may not be able to keep them from going still higher.

One of the worst provisions of the act, the Butler-Hope amendment, wipes out slaughter quotas on beef, thus encouraging the return of black markets.

Another provision of the act which will operate against the interest of the American people is the Capehart amendment. This complicated amendment will force price ceilings up on thousands of commodities, clear across the board. It is like a bulldozer, crashing aimlessly through existing pricing formulas, leaving havoc in its wake.

If we are to prevent the weakening of our economy, we must change these provisions and others just as bad. As soon as the executive agencies can complete their study, I intend to urge the Congress to revise and strengthen this law, point by point, to give us the tools we need to fight inflation.

I understand that several members of the Congress, recognizing the deficiencies of this act, have already introduced legislation to restore authority for slaughtering quotas. This is certainly a step in the right direction. But it is only one of the respects in which this law needs immediate improvement.

In future months, as our defense production takes a larger and larger share of our output, we have to expect that pressure on prices will increase. Only a tremendous drop in private investment or consumer spending could keep rising expenditures for defense from bringing on new pressures toward higher prices. And these pressures could be aggravated, at any time, by a change for the worse in the international situation.

To the extent that this act permits prices and the cost of living to rise, it will be necessary to allow reasonable adjustments in wages. We cannot ask the working people of this country to reduce their standard of living just to pay for the higher profits this act provides for business. And then we would be caught in another price-wage spiral.

If we are to prevent a serious drop in the purchasing power of the dollar, we must have a good, strong price control law to help us through the period ahead. Without that kind of law we cannot protect ourselves from the frightful damage of renewed inflation.

S. 1717 is not that kind of law. It is a law that will push prices up. It is a law that will increase the costs of business and the cost of our defense program to the taxpayer. It is a law that threatens the stability of our economy in the future. Moreover, it prevents us from giving any further price relief to the millions of consumers already penalized by the price rises in the fall of 1950.

We should never forget that more than half the families in this country had no increases in income during 1950; some of them actually had their incomes reduced last year. To all these people, inflation is not a theoretical problem for the future, but a real problem and a terrible deprivation right now.

These families, and all our other families, need real protection against inflation. The Government will not be able to give them such protection unless and until the Congress repairs the damage done by this new riot.

Note: As enacted, S. 1717 is Public Law 96, 82d Congress (65 Stat. 131).

See also Item 199.

Harry S Truman, Statement by the President Upon Signing the Defense Production Act Amendments. Online by Gerhard Peters and John T. Woolley, The American Presidency Project https://www.presidency.ucsb.edu/node/230507

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