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SATURDAY, JANUARY 18, 1941
HOUSE OF REPRESENTATIVES,
Washington, D. C. The committee met at 10 a. m., Hon. Sol. Bloom (chairman) presiding.
The CHAIRMAN. The committee will kindly come to order.
Appearing before the committee this morning is the Honorable William S. Knudsen, Director General of the Office of Production Management.
Mr. Knudsen states that he has no prepared statement to make and under those circumstances we will start off with questions.
STATEMENT OF HON. WILLIAM S. KNUDSEN, DIRECTOR GENERAL,
OFFICE OF PRODUCTION MANAGEMENT
Mrs. Rogers. Mr. Knudson, we are delighted that you are here. Mr. KNUDSEN. Thank you.
Mrs. Rogers. Mr. Knudsen, you are a great businessman. The first question I am going to ask you is this: What effect do you feel this so-called lease-lending plan, will have upon the business of our country? I saw in the press some time ago where a member of Parliament was jubilant about this bill and stated in the Parliament that after the war was over it would be fine because the British people could be employed making munitions to return to the United States in exchange for the munitions that we would send them under this bill.
Would that not be very bad for the business of this country and keep a great many people out of employment, a great many of our munitions workers?
Mr. KNUDSEN. I do not know. It depends entirely on how the domestic business responds to the adjustments that we have after the war here.
Naturally the so-called munitions that will be returned to us will not be manufactured at the speed that we are manufacturing for England, consequently the return will be possibly spread over a long period.
Our problem here would be to get our facilities employed on domestic production after the crisis is over.
Mrs. ROGERS. Would it not seem to be a great pity to not employ our own people, who are employed in making munitions, over here, after the war is over?
Mr. KNUDSEN. On those who would not be needed? We cannot estimate what that need would be. But, the effect of the program on domestic business depends entirely on the time factor when you get the plant. You see what I mean, if it took 5 years or 6 years the effect would not be the same as trying to meet it in 1 year. You understand
. what I mean. We must make it in 2 years now; we must make in 2 years what is needed. I have not heard any statement to the effect that we would get it back in 2 years.
Mrs. ROGERS. Are you satisfied with the progress of the defense program?
Mr. KNUDSEN. You mean over here?
Mr. KNUDSEN. Well, I think we are doing as well as could be expected.
The CHAIRMAN. Will you kindly keep your voice up, Mr. Knudsen.
Mr. KNUDSEN. I think we are doing fairly well. But of course a real show will not start until tools are finished. We are starting; from now on the earlier tools will be going into production and some of the heavier tools will come later on. I expect a gradual increase from now on.
Mrs. Rogers. Have you any figures you could give the committee as to the extent of the progress on the program? You have said before very emphatically that there was a lag in production.
Mr. KNUDSEN. Mrs. Rogers, there was a lag on our estimate in the airplane production, and that was what I was talking about at that time. We are talking about airplanes, and there was a lag there.
Mrs. Rogers. Do you not feel, Mr. Knudsen, it would be wiser for getting immediate production to take our idle plants and welltrained men in the localities where they now are established and put those skilled employees to work rather than building new plants in new localities where there would be the necessity of having new men and women. It takes a long time for people to become skilled workers.
Mr. KNUDSEN. There are certain things you have to build plants for, Mrs. Rogers. Take an airplane assembling plant, it is a very large plant and we do not have any such plants, so there we had to build.
Machine shops, of course, we can utilize as many of the facilities as possible.
I brought along, perhaps for your benefit, a statement on that, giving the information which you have been anxious to receive.
Mrs. ROGERS. I have been very anxious to secure information regarding the progress of the defense program and employment for skilled workers, and you have been very helpful, but I wish you could do more.
Mr. KNUDSEN. I brought along a specific instance to show you. I have taken an airplane motor plant, which is in your section of the country, and I had them give me a statement of how much of the cost was handled outside and how much was handled in the plant, and it shows that from the total materials purchased, rough and finished, 61 percent of the cost is bought outside, leaving 39 percent for labor and overhead in the mother plant. That is an illustration which you asked about sometime ago.
Mrs. ROGERS. I am very anxious to have our idle plants and idle employees put to work.
Mr. KNUDSEX. If you are able to proceed on that basis your wishes are going to be fulfilled, I hope.
Mrs. ROGERS. Mr. Knudsen, if this bill becomes the law, how long a period of time would be required from its enactment to provide any definite articles of defense, in sufficient amounts to be helpful to Great Britain ?
Mr. KNUDSEN. I have not as yet gotten the final schedules on that. We have only gotten a sort of general quantity list, but we would not be able to get any great amount until the later part of 1941, unless we take production out of existing facilities, like the small arms, ammunitions, where we have going concerns. We could take a portion of that while we are adding to the present plants.
Mrs. ROGERS. You feel that we ought to continue on our own program.
Mr. KNUDSEN. Absolutely.
As a manufacturer of extreme ability, and as a businessman, do you not believe the people of the United States should finance the supplying of war materials to Great Britain without some definitely earmarked collateral or specific security ?
Mr. KNUDSEX. Mrs. Rogers, I am not in the finance business. My job is to make things, and I have to depend on other people to decide what is right; as far as I am concerned I think the materials should be made. And eventually the money comes from the people, as I see it.
Mrs. ROGERS. Yes; but my question was, so far as Great Britain is concerned, do you not feel that we should have something as collateral perhaps something such as tin and rubber and aluminum, the supplies that we need.
The CHAIRMAN. The gentleman has stated that does not come within the purview of his department. He does not know anything about it; his job is to make things. So far as being on the dollar exchange or securing collateral, the witness knows nothing about that.
Mrs. ROGERS. But Mr. Chairman, I think the witness is a most expert
The CHAIRMAN. You can ask him his own personal opinion, but he has stated he knows nothing about that.
Mrs. ROGERS. I think, Mr. Chairman, Mr. Knudsen is too modest and I believe we are entitled to get his opinion.
The CHAIRMAX. All right.
Mrs. ROGERS. And I know the country would like to hear his opinion; and that is especially true, Mr. Chairman, since the matter
The CHAIRMAN (interposing). Proceed in the regular order, Mrs.
Mrs. Rogers. I believe she can get tin and certainly rubber. And, I think England could make aluminum; and I understand you have stated your department is suffering a shortage of aluminum.
Mr. KNUDSEN. Well, England could not make much aluminum for Mrs. Rogers. I mean when I say England, the British Empire. Mr. KNUDSEN. Are you talking about after the war?
Mrs. ROGERS. I mean right now, as collateral in exchange for the materials that we furnish them.
Mr. KNUDSEN. I would have to have a statement of resources before I could give you an answer to your question, Mrs. Rogers. Naturally it is nice to have collateral, but are we not a little bit beyond that at this time?
Mrs. ROGERS. I feel we ought to do all we can to protect this country financially. You are a great businessman. I am very much worried and I believe you must be worried as to the ultimate cost if we are going to try to police the world. Do you not believe that if this bill is enacted, plus the President's message, that we would be embarking upon a policy of policing the world?
Mr. KNUDSEN. No.
Mr. KNUDSEN. I feel that the protection of this country is the primary thing we have got to think about.
As far as I am concerned, whatever we get here, it is for American goods for defense material, that is to be made up for the protection of this country; whether we do it directly or indirectly I do not think is the question for me to answer. But I think any article of war should be made at the American standard and can be made for the protection of our own country.
Mrs. Rogers. Yes; but my point, Mr. Knudsen, is that in doing so are we going to police the world; we are making commodities in order to police the world, all other democracies.
Mr. KNUDSEN. I do not think it is to police the world, Mrs. Rogers; I think it is just simply to take care of ourselves, our own country, and our own borders.
Mrs. Rogers. But in doing so it seems to me--and am I not correct-it may well lead to policing the world?
Mr. KNUDSEN. To me that is so abstract; I feel that it is to protect the United States, and that is what I am going to try to do.
Mrs. Rogers. I know we are all tremendously interested in that, Mr. Knudsen.
Mr. Knudsen, how much do you think-of course, you cannot give the exact estimate, but you can give us an approximate estimate of the cost of making these commodities for Great Britain?
Mr. KNUDSEN. You mean those that are in process?
Mr. KNUDSEN. No; I have not been furnished with enough quantities to be able to give you an intelligent picture. We know, of course, what our present program is, what is needed, being about $11,000,000,000. But I do not have any figures from the British yet except some general over-all statements. They say they want so many planes, but we do not know what types of planes, and consequently I cannot estimate the cost of them.
It is a sizable program. Mrs. Rogers. Do you not feel, Mr. Knudsen, that it would be helpful to us to ask the British Defense Commission to come before the committee as it did,
Mr. JOHNSON (interposing). I object to the question.
Mrs. Rogers. Do you not feel, or will you state, Mr. Knudsen, apart from airplanes, what commodity we need the most!
Mr. KNUDSEN. You mean what articles of war?
Mr. KNUDSEN. I think machine guns, powder and its ingredients, and shells. I would say then, of course, ships. We have recently, as you know, been told to get ready to build 200 cargo ships. They will be built to standard patterns.
Mrs. Rogers. Do you feel that both industry and labor are cooperating in this program
Mr. KNUDSEN. Yes.
Mrs. Rogers. And are you finding the War Department and Navy Department cooperating with you?
Nr. KNUDSEN. Yes; they have given me everything I have asked for, Mrs. Rogers, since I came here.
Mrs. ROGERS. And Congress is giving you all you need ?
Mrs. ROGERS. Have you gone into the aspect of the bill as to whether the convoying of ships would be allowed under this bill?
Mr. KNUDSEN. I feel the Secretary of the Navy should have know). edge of that rather than I.
Mrs. ROGERS. You would rather not answer that question ?
Mrs. Rogers. Mr. Chairman, that is all, if I may be permitted to ask one or two other questions later on.
The CHAIRMAN. You had better ask them now, I think Mrs. Rogers.
Mrs. Rogers. Well, I will conclude. I can ask those questions of Mr. Knudsen in his own office, but I should like to have the whole committee have the benefit of Mr. Knudsen's testimony.
The CHAIRMAN. That will give you a very good opportunity to do so.
Mrs. ROGERS. Thank you.
Mr. CHIPERFIELD. Mr. Knudsen, so far as continuing the aid to Great Britain is concerned, the difficulty is lack of dollar exchange, is it not? In other words, they do not have the dollar exchange to continue purchasing their share of the materials that they need.
Mr. KNUDSEN. I think that is so.
Mr. CHIPERFIELD. Why cannot we then overcome this lack of dollar exchange by repealing the cash provision of the Neutrality Act, and then allow them to purchase materials over here, but perhaps by barter or trade, and so on. Why could we not do that?
Mr. KNUDSEN. Of course, you could do that, but are you any better off in doing it?