confidence in the Secretary of Agriculture and we believe that he will exercise the necessary controls economically, effectively, and with an appreciation of the realities of the situation. We are, of course, keenly aware of the risks which we are taking as sugar beet growers and beet sugar processors in recommending the continued price and rationing controls on our products in an economy which otherwise is almost wholly unregulated. The costs of the things we buy are still increasing and labor is seeking still higher wages. We believe that the Secretary of Agriculture will make the adjustments that will undoubtedly be required from time to time. I might say that this committee print which was handed to me this morning, which contains these changes, has our endorsement, and we recommend its early enactment. Senator FLANDERS. Thank you. Senator Bricker? Senator BRICKER. How much would the supply have to increase before rationing and price control could be taken off entirely? Mr. SHIELDS. Well, I think the most competent people to speak on that have spoken. I think their figures are from eight to eight and one-half million, Senator." Senator BRICKER. If that is reached by October Mr. SHIELDS. Yes, that is the reason we like the revised bill which provides specifically for a redetermination at that time. Senator SPARKMAN. Mr. Shields, were you formerly with the Department of Agriculture? Mr. SHIELDS. I was. Senator SPARKMAN. What was your position? Mr. SHIELDS. I was with the Production and Marketing Administration and the Commodity Credit Corporation. Senator SPARKMAN. Do you recommend this transfer of functions to the Secretary of Agriculture? Mr. SHIELDS. Not only recommend it, but if that were to be opposed, I think we would oppose controls. Senator FLANDERS. Apparently those who have been in the Agriculture Department and left it are more enthusiastic about making this shift than those who remain in the Department are. Mr. SHIELDS. You know, when people are in the Department, and the President sets a policy, everyone in the Department stays with the stated policy. Senator FLANDERS. Thank you. Mr. SHIELDS. Thank you, sir. Senator FLANDERS. Now, I have one other witness. I will ask Mr. McMillan to come to the chair. STATEMENT OF C. M. MCMILLAN, EXECUTIVE SECRETARY, NATIONAL CANDY WHOLESALERS ASSOCIATION, INC., WASHINGTON, D. C. Mr. MCMILLAN. Mr. Chairman and gentlemen of the committee, I am C. M. McMillan, executive secretary, National Candy Whole salers Association, Inc. My association represents over 1,600 small wholesale distributors of candy located in all of the 48 States, the District of Columbia, and the Territory of Hawaii. For your information, more than half of all candy produced in this country is distributed through small wholesalers, many of whom are one-man firms depending almost entirely on their confectionery volume for their livelihood. There are some 8,000 of such firms in the country, serving approximately 200,000 retail outlets. Therefore, though we are not users of sugar in the production of products for commerce, we are very much concerned with the effect decontrol may have upon us as distributors of candy. I am authorized to say for the 1,600 wholesalers we represent that we are in favor of continued controls on sugar in line with the recommendations of the Sugar Committee of the Food Industry Council. We are in favor of such continued controls because: First, we have confidence in the committee and the exhaustive study it has made and the conclusions it has reached. Secondly, we know that if the absence of controls should create inequitable distribution of sugar among the manufacturers it would result in inequitable distribution of products and hardship among the wholesale distributors because all distributors operate on an allotment basis calculated on their 1941 purchase, and no wholesalers have records of purchases from all manufacturers. The whole relationship of manufacturer-wholesaler would be upset, creating endless confusion that would be reflected in the candy counters of the thousands of small retailers throughout the country. Thirdly, the skyrocketing of prices on sugar which followed World War I and which would undoubtedly follow premature decontrol now would be reflected in wholesaler and retailer prices being thrown completely out of balance, creating new consumer units of sale such as 6-cent, 7-cent, 10-cent, 12-cent items. These reduce the sale of the products and add to the consumers' cost of this much-needed energy food. We are just as anxious as anybody to see all wartime controls removed, but we do not feel that the best interest of either the wholesaler, the retailer, or the consumer will be served by removing controls at this time. Senator FLANDERS. Thank you. Any questions? This concludes the hearing for this afternoon. We will have another Monday morning for opponents of this legislation. In order to give plenty of time, though we do not know how many will appear, we will set the time for the hearing a half hour earlier than usualat 9:30. And if there is any time left after the opponents have had their say, we will give added opportunity for proponents, closing at about 11:45. We will adjourn at this time. (The following were later received for the record:) Hon. JOHN W. BRICKER, INTERSTATE CREAMERY CO., INC., Cleveland 14, Ohio, February 21, 1947. Senate Office Building, Washington, D. C. DEAR SENATOR BRICKER: As a small businessman engaged in the production of dairy products and dependent upon sugar for our main line of production, sweetened condensed milk in 15-ounce tins, I want to bring to your attention some recently proposed legislation which, if passed, would do great damage to all small businesses which are industrial users of sugar. The legislation I refer to has been introduced in the Senate by Senator Robertson of Wyoming. It is styled Senate Joint Resolution 58. A companion bill has been introduced in the House by Congressman Hale, entitled House Joint Resolution 112. I am writing you about this matter since I understand the Senate bill has been referred to the Senate Banking and Currency Committee and, hence, will come to your attention as a member of that committee. I am a resident of Akron, Ohio. Our main bsiness office is in the Union Trust Building in Cleveland and our plant is located in Michigan. I have no objection to the general purpose of these bills which is to extend the powers and authority with respect to sugar rationing and price control of sugar. I have strong objection, however, to that portion of section 1 of the resolution which reads as follows: "(2) Sugar may be allocated without regard to the provisions of title II of the War Mobilization and Reconversion Act of 1944 (58 Stat. 787).” May I call to your attention the fact that this sentence in any bill passed extending sugar rationing would have the effect of removing from all small businesses dependent upon sugar the protection which the Congress in 1944 saw fit to provide in connection with the reconversion period. You will recall that one section of this title II of the War Mobilization and Reconversion Act of 1944 (title 50 U. S. C. A., App. sec. 1659) provides that in allocation of short products on a restricted basis by any executive agency "the restrictions imposed shall not be such as to prevent any small plant capable and desirous of participating in such expansion, resumption, or initiation of production for nonwar use from so participating in such production." The section goes on to provide that "Whenever such agency allocates available materials for the production of any item or group of items for nonwar use, it shall make available a percentage of such materials for the exclusive use by small plants for the production of such items or groups of items." Other provisions describe how this policy is to be applied. In my opinion, the provision of this proposed bill which would remove that protection from small businesses insofar as sugar rationing is concerned might prove disastrous to small businesses dependent upon sugar or at leat leave their existence up to the whim of the rationing agency. The recent experience of my company wil serve as an illustration of just how important it is for Congress to maintain the legislative policy contained in title II of the War Mobilization and Reconversion Act. My company manufactured sweetened condensed milk in tins under Government contract from February 1943 to September 1, 1946, during which time the complete production was sold to the Government for war use. During this period, the big companies in this industry by and large refused to undertake that job, preferring to maintain their own commercial markets. My company received its sugar for that production for war use from the Department of Agriculture. When those contracts were canceled and I attempted to secure an allocation of sugar from the OPA on September 1 to enter the civilian market, the OPA continuously refused to make such an allocation on the ground that my company had not been in business in 1941 and, according to the rationing regulation, did not have a "base period" as a "historical" producer. The effect of this action was to leave the field of sweetened condensed milk for commercial use to the two or three large dairy producing companies and eliminate my com. pany as a new entry in competition in the field despite the fact that we had Acquired equipment, employees, and sources of supply to serve the war needs. After some months of effort involving the invocation of this very provision of the War Mobilization and Reconversion Act, the present administrative authorities at OPA have finally issued a regulation, which, as of April 1, will permit my company to resume its production of sweetened condensed milk in 15-ounce tins on a limited basis. This regulation, which is amendment 37 to Ration Order 3, is a long-needed remedy for the situation which has confronted the new small business entries who require sugar for their operations. I would be very apprehensive if the Congress should repeal title II of the War Mobilization and Reconversion Act and thus signal the OPA that, insofar as sugar rationing is concerned, the OPA need not concern itself with either the plight of small business or new entries into this area of our economy. I do not want to be understood as charging the OPA authorities with bad faith in taking the recent remedial action which I have referred to above. But, very much doubt whether or not the policy that has prevailed with the issuance of amendment 37 would be continued in the face of the pressure from the old and larger established concerns if the bill extending sugar rationing specifically excluded that function from the purview of the War Mobilization and Reconversion Act. For your information, my company employs approximately 75 persons in the area of Cedar Springs, Mich. We have started a new business which provides an outlet for the milk of some 1,500 farmers in that vicinity. We want to continue in this business in competition with the older and well-established concerns. Without sugar we will be forced to close down. Without the protection of congressional policy referred to above, I would doubt our ability to survive during the period ahead. Therefore, I would appreciate your taking into account the situation of my company, which is like many other small and new companies, and standing firm against any change in the applicability of the. War Mobilization and Reconversion Act to sugar rationing. As a lifelong Republican, I believe that it would be inconsistent with our party policy for one of the first acts of a Republican Congress to strike down one of the few legislative protections in specific terms that small business enjoy today. If you would like any further information on this subject, I will be glad to supply you such facts and information as are at our disposal. Very truly yours, INTERSTATE CREAMERY CO., INC. By PERTH K. KILLINGER. Hon. CHARLES W. TOBEY, AMERICAN BOTTLERS OF CARBONATED BEVERAGES, Chairman, Senate Committee on Banking and Currency, Senate Office Building, Washington, D. C. DEAR SENATOR TOBEY: The Executive Board of the American Bottlers of Carbonated Beverages, national association of the bottled soft drink industry representing over 3,950 bottling plants in all sections of the country, has expressed the industry's objection to premature decontrol of sugar in the following Resolution, duly adopted: Whereas the Food Industry Council through its sugar committee has carefully evaluated the sugar supply situation for the current year and holds that decontrol under present circumstances would be disastrous, and Whereas this view has been supported by Secretary of Agriculture Anderson by the Republican Congressional Food Study Committee, by members of the sugar trade, and by organizations representing sugar-using industries; now, therefore be it Resolved, on behalf of the bottled soft drink industry, The American Bottlers of Carbonated Beverages hereby endorses these objections to premature decontrol of sugar rationing and sugar price and urges that steps be taken to avoid the disruption of supply and inflationary price level which appear likely to occur should such controls be abandoned before the sugar supply reaches a satisfactory level.. It is our opinion that the principles of Senate Joint Resolution 58, if enacted, would constitute an effective step in avoiding disruption of the sugar supply and price inflation above referred to as the likely results of premature decontrol. Provision should be made in the bill to restrict controls to those now in effect, except any necessary import-export controls. Accordingly, we urge your favorable consideration of the need for continuation of sugar controls during 1947. In taking this action the association speaks on behalf of the several hundreds of its member plants producing private brands of sugar controls during 1947. In taking this action the association speaks on as Mission Nesbitt's, Orange Crush, NuGrape, Dr. Pepper, Vernor's, Pepsi-Cola, Coca-Cola, Nehi, Royal Crown, Seven-Up, Clicquot Club, Buffalo Rock, and the many other well-known nationally advertised brands. All together, our membership includes the bottlers of well over 90 percent of soft drinks produced in the United States. As an industry consisting predominantly of small bottling plants serving the communities in which they are located, the bottled soft drink industry wishes to have all wartime controls eliminated just as quickly as possible. Unfortunately, in the case of sugar, the supply situation makes continuation of its controls an exception which seems most essential if the serious results of premature decontrol are to be avoided. Very truly yours, JOHN J. RILEY, Secretary. STATEMENT OF JOHN T. TABOR FOR THE SEVEN-UP Co. WHO ARE WE? For your information, this company does not use any sugar in the manufacture of Seven-Up extract, however, we have franchised some 450 bottlers throughout the United States to manufacture and sell finished Seven-Up within their respective territories. These Seven-Up bottlers in the aggregate use a substantial amount of sugar. THE POSITION OF THE SEVEN-UP CO. We wish to state as clearly as possible that The Seven-Up Co. is opposed to: (1) The immediate decontrol of sugar prices, (2) the immediate termination of sugar-rationing controls, and have several times gone on record to that effect to the bottlers of Seven-Up, (3) the shipment of sugar to other lands for political purposes rather than to relieve famine, and (4) any plan to decrease the United States consumption of sugar in order to increase sugar consumption in foreign lands to more than prewar levels. We favor the extension of sugar rationing and sugar price controls through 1947. We therefore favor Senate bill S. 58 which we understand will accomplish this objective. We feel confident that the interest of most of these bottlers and all other small sugar-using businesses lies in the continuation of sugar controls until they can be assured of their respective sugar needs with sugar selling at reasonable prices. THE POSITION OF THE SEVEN-UP BOTTLERS Maybe you have heard of a few Seven-Up bottlers who are campaigning for decontrol of sugar price ceiling and the immediate termination of sugar rationing. We wish to assure you that is not our position and we believe the great majority of our bottlers agree with our position. WHY DO WE FAVOR CONTINUING RATIONING AND PRICE CONTROLS ON SUGAR? 1. Prices of sugar should be kept under control until there is a balance between supply and demand. 2. The price rise would be ruinous. Some may argue for the decontrol of sugar because the resulting increase in the price would possibly bring in some |