Mr. BRENNAN. Yes, sir. I give credit, of course, to the officials and employees who have been in the office for years, and know the work.

Because of the last pay act increasing salaries, and in order to pay the automatic within-grade Meade-Ramspeck promotions, $87,865 will be required for the fiscal year 1948. No additional employees have been allowed in this budget. The increased appropriation in 11 years results from the creation of one employee whose present compensation is $3,522.60 per annum and the operation of law in granting increases in basic salaries and within-grade promotions under the Mead-Ramspeck Act, and reallocations authorized by the Civil Service Commission amounting to $1,920 since July 1, 1936. The increase in basic salaries of approximately 30 percent was based on salaries in effect several years ago and not those in effect in 1937.

Senator CAIN. Let me interrupt you just a minute.

Mr. Fowler, at the time your pay bill was passed, was a presentation made by any one that we would like to have money for employees generally, but we would like to go on record now as saying we are not going to be able to pay additional pay increases without additional tax revenue from somewhere?

Mr. FOWLER. Senator, when this pay bill was before the Congress, we had nothing to say whatever. It was universal, as far as the Federal departments were concerned.

Senator CAIN. But it must have been immediately obvious to you gentlemen down in the Commission, that the pay bills were going to result in a terrific financial problem.

Mr. FOWLER. It was so obvious, we immediately recommended that a tax committee be appointed to review the tax structure. The significance of the 40-hour week, time and a half, and the night differential, would vitally affect us.

Senator CAIN. It will result in just what confronts us this morning. Mr. FOWLER. Just what happens now. We knew it years ago. Senator CAIN. Not that I get satisfaction out of my question or your answer. Nobody testifies but what they tell me of these pay bills. I wish in the future that all witnesses would cease referring to the pay bills, as such, and assume that we take that for granted.

Proceed, sir.

Mr. BRENNAN. At this point, I would like to call attention to the fact that during all the war years the added work of handling priorities, allocations, rationing, and so forth, for all District departments was absorbed without any increase in personnel. Congress did allow, however, one new position to assist the purchasing officer in the procurement of surplus war property. There has been a substantial increase in procurement services required in the past 10 years due to equipping and furnishing new buildings, such as Glenn Dale Sanatorium, Calvin Coolidge High School, new Police Precinct Station No. 2, the new Municipal Center Building and the new courts buildings in Judiciary Square. With the start of the war, a new department of civilian defense was established which called for the procurement of air-raid sirens, medical supplies, food supplies, uniforms, auxiliary stand-by equipments, and so forth. The purchasing officer also served as a special purchasing agent in purchasing civilian defense supplies paid for from donations of the Central Labor Union here.

The testimony that has been presented to your committee in the past several days, supports the indisputable fact that costs have risen in

the past 10 years. I would like to point out that there are certain inflexible budget items such as food, fuel, medicine, and drugs which must be obtained, in most cases, regardless of cost. I do not mean to imply, however, that some judgment was not used in the purchase of food supplies more advantageously priced and in more ample supply than the scarcer and more expensive items. All during the war years substitutes were used so far as possible, such as meat extenders and the purchase of greater quantities of eggs and fish when meats were so scarce. During the fiscal year 1946 approximately 41 percent of the total expenditure of $6,300,000 was for food, fuel, medicines, and drugs. Important city services had to be maintained, and where normal items could not be procured substitutes were used or were improvised. Strict conservation measures were made effective through application of the principles of preventive maintenance of all types of equipment, office machines and so forth.

According to the McGill Commodity Service, Inc., and based on an index in 1926 of 100, the all commodity index in August 1939, of 63.7 had risen to 165.9 on March 14, 1947. The index on industrial commodities has risen in this 8-year period from 70.9 to $150.

Weekly Commodity Indices

[1926 equals 100]

Prepared for the National Association of Purchasing Agents by McGill Commodity Services, Inc., (Released March 19, 1947)

During the week ended March 8, 1947, the Bureau of Labor Statistics weekly index of commodity prices reached 148.7 of the 1926 average, the highest level since late 1920; 11 percent below the May 1920 all-time peak.

According to Prof. Irving Fisher, of Yale University, the purchasing power of the dollar, on a 1926 basis, as of March 14, 1947, was 62.10 cents.

A few typical cases of price increases the District has had to pay are as follows:

Cast-iron water pipe, 8-inch, December 1941, $1.19 per foot; December 1946, $1.81 per foot.

Pig lead, grade A, June 1943, $0.072 per pound; September 1946, $0.1138 per pound.

Cotton felt batting, August 1943, $0.135 per pound; January 1947, $0.2025 per pound.

Premixed concrete, 1942, $6.85 per cubic yard; 1947, $8.30 per cubic yard.
Portland cement, 1942, $0.57 per sack; 1947, $0.69 per sack.

Ten-inch terra cotta sewer pipe, 1942, $0.345 per foot; 1947, $0.60 per foot.

Commerce Department officials, in appraising the price situation, expect price drops by next fall on a number of items that, in the Department's opinion, have advanced too much. It believes foods, cotton goods, shoes, lumber, paint, drugs, leather, fats, and oils are in line for substantial corrections. It is understood that the Department also expects smaller declines for automobiles, consumer durable goods in general, woolens and worsteds, furniture and house furnishings, iron and steel products, paper, pulp, grains, and livestock.

Some economists believe that as far as retail prices are concerned the best hope is that they will come to rest 20 to 30 percent higher than what used to be considered "normal."

We are still in a pronounced seller's market in most commodity categories, especially consumer durable goods. Prices continue high and deliveries are, in most cases, long delayed. Our purchasing policy has been on a hand-to-mouth basis for most commodities excessively priced, and, on a number of occasions, we have rejected bids because of excessive prices, or because of absence of a firm price that is reasonable under present market conditions. No volume purchases are being made on the current chaotic market. We are not only price conscious but also quality conscious. Typical of this policy is the office circular issued by the purchasing officer to all departments in the matter of procurement of lumber. Lumber prices are fantastically high, and no doubt some buyers are responsible for this price strength. Prices today on some plywoods are three times as high as the prices were under OPA controls. Most seasoned hardwoods are at a premium and are very scarce. We agree with the monthly letter of the National City Bank of New York, which advocates:

The remedy for price increases that threaten stability is to buy less, not to do things that will push them up further.

Here is the circular, No. 959, that was issued on March 14, 1947. I would like to submit that for the record.

(The circular is as follows:)

GOVERNMENT OF THE DISTRICT OF COLUMBIA,
PURCHASING DIVISION,
March 14, 1947.

CIRCULAR No. 959

Subject: Purchase of lumber.

To Heads of Departments:

Lumber prices are fantastically high, and no improvement in the present situation is indicated in the near future. Some buyers are partially responsible for this situation, as payment of premium prices strengthens the market and keeps prices high. Some plywoods, for example, are selling for three times the price under OPA.

We suggest a studied buying policy. Only purchases on a "hand-to-mouth" basis to meet important needs, which can be justified, should be considered for the time being. This applies to all purchases of lumber, whether coming under the heading of purchases under $100 or otherwise.

R. M. BRENNAN, Purchasing Officer, District of Columbia.

Mr. BRENNAN. I am prepared to furnish any additional details the committee would like to have as to the various commodities the District buys.

Senator CAIN. That is a very worth-while statement, Mr. Brennan, and let me ask: Do I understand correctly that the statute under which you are able to operate limits the personnel you can employ? Mr. BRENNAN. No; it does not.

Senator CAIN. I just misunderstood and I wanted to get that straight.

Outside of your purchasing problem, which confronts all of us in America, you have no difficult problems at the moment? Your appropriations, requested, which are generally larger than they were a year ago, and only for the reason of these pay increases, is your only problem?

Mr. BRENNAN. Well, I do have one problem. It deals with a matter that the committee probably cannot help on. It has to do with certain reallocations.

I have a new technical assistant who, before he came with us, was making around $7,000 a year. He was with a large manufacturer, and being a new man he was released. He took this position in my office and is doing remarkably well.

His classification is CAF-9. I do not know how much longer I will be able to keep him. I did ask for a higher salary, but I was denied it by the Civil Service Commission.

Senator CAIN. We have no way of helping there.

Mr. BRENNAN. That is the only thing troubling me today. I would like to keep this man.

Senator CAIN. I might ask a question there for a point of information. This man works for you?

Mr. BRENNAN. He is the technical assistant.

Senator CAIN. Technical assistant to you?

Mr. BRENNAN. Yes, sir.

Senator CAIN. He is your employee?

Mr. BRENNAN. Yes, sir.

Senator CAIN. How does it happen, therefore, that your Commissioners, if they saw fit, could not approve that?

Mr. BRENNAN. The Commissioners did approve.

Senator CAIN. And then where does it go from the Commissioners? Mr. BRENNAN. To the Civil Service Commission.

Senator CAIN. I presume the reason for that is that this man fills a certain designation. You give him a number?

Mr. BRENNAN. Technical assistant, CAF-9.

Senator CAIN. And technical assistants, under the Civil Service, are paid a salary from a minimum to a maximum, and the figure you have requested is in excess of that maximum?

Mr. BRENNAN. I had asked for a lifting of the grade CAF-9 to P-4, which would put him in the next salary range.

Senator CAIN. Well, I still do not quite understand that. You do not, therefore, appear to have sufficient jurisdiction to determine what you want your employees to become.

Mr. BRENNAN. Well, under the operation of the Classification Act, you file a form and describe the duties of the position and give the present classification and the recommended classification with justification therefore. Hearings are held by the District Personnel Board, and then the papers are transmitted through the Commissioners to the United States Civil Service Commission.

Senator CAIN. And their determination was that the job did not justify the classification request?

Mr. BRENNAN. Yes; after investigation by one of their investigators. Senator CAIN. Yes; well, I would have no comment to make in response to that, for that is not my responsibility.

Mr. BRENNAN. Well, that is what I said.

Senator CAIN. Yes.

Mr. Jackson, do you care to ask any questions?

Mr. Booch, representing Mr. Horan on the appropriations side?
No questions?

Thank you very much.

Mr. BRENNAN. Thank you, sir.

Senator CAIN. It now appears our hour of adjournment, within a minute, anyway.

I am hopeful that Mr. Bates will be back tomorrow morning, for many reasons, only one of which is his desire to listen to the problems of the school system of the District.

Commissioner MASON. I was going to ask, Mr. Chairman, do you want to start with the schools in the morning or the Engineering Department?

Senator CAIN. I think it would be a favor to Mr. Bates were we to be able to start with the schools.

Commissioner MASON. With the schools.

Senator CAIN. And I should be delighted to apologize to the Engineers for a seeming discourtesy which was not intended. We had hoped to get to them today, but I think all of us recognize their testimoney is likely to take some time.

Commissioner MASON. They are all battle soldiers, and they take that in stride.

Senator CAIN. Thank you.

If there are no comments from those in the chamber, we will stand adjourned until 10 o'clock tomorrow morning.

(Thereupon, at 11:45 a. m., an adjournment was taken until 10 a. m., Wednesday, March 26, 1947.)

(Statement later received for the record from the Purchasing Division.)

1939: A decrease of one employee is occasioned by transfer of a position, CAF-3, multilith operator and cameraman, to the Division of Printing and Publications. 1943: An increase of two employees is accounted for by the addition of one CAF-3, requisition checker, and one CAF-2, purchase-order writer.

1944: A decrease of ore employee is occasioned by reduction of the number of employees, CAF-2, operating the purchase-record desk from two employees to one employee.

1946: A decrease of one employee is occasioned by transfer of a position, CAF-9, Chief, Division of Printing and Publications, to the Executive Office.

In increase of two employees is occasioned by the addition of one position, CAF-7, liaison officer, Surplus War Property, and one position, CAF-2, purchaseorder writer.