upon. As the Secretary of War previously outlined in some cases, it was for the original cost of the article, and in other cases it was the cost of selling to citizens. It went from 100 percent, to 20 percent.

BRITISH POTASH AND BORAX PLANTS IN UNITED STATES

Mr. DITTER. I have two or three questions I would like to address to the Secretary of State and ask him, first, whether in his reason and judgment an answer to the question that was asked or the type of questions that were asked by Mr. Scrugham off the record would in any way be embarrassing or inimical to our interests?

Secretary HULL. I think I made clear that our Government should give all practical attention to those matters.

Mr. DITTER. Then would it be disturbing, Mr. Secretary, if Mr. Scrugham were to reframe those questions and have you answer them with reference to the specific financial interests to which ne referred?

Secretary HULL. I think Governor Scrugham would want to confer with these people

Mr. WOODRUM. Do you want that on the record, Mr. Ditter?

Mr. DITTER. Yes; I should like it on the record. I cannot see that it would in any way be embarrassing.

Secretary HULL. I think you would want to discuss it with the people who will deal with the contracts relating to production and distribution and the business relations that are involved between us and Great Britain. I deal with the diplomatic phases only.

Mr. SCRUGHAM. May I inject an observation, Mr. Ditter? I presume the point you wished to emphasize there was the fact that the questions I asked showed that the potash industry and the borax industry in the United States, was largely owned by British interests, and which, in my opinion, the United States Government should control instead of the British Government. Their value, which I estimate to be $20,000,000, should be applied as a payment on this seven billion advance of money.

Secretary HULL. As I say, there is almost an infinite number of relations of a commercial nature between us and the British Empire and we have been untangling some of them and, if this trouble had not come on, I think we would have been making more progress still; but everything has been interrupted and we have chaos, disruption, and dislocation in our whole international and economic structure, and it has taken an awful lot of time. I notice my friend Joe O'Mahoney spent 2 years here carrying on investigations in just a few phases of a similar or another situation and, as I say, there is almost an infinite number of questions like these that will be up, and we naturally should, and I hope will, amply take care of our interests as these developments are reached and action is taken on them.

TRANSFER OF COAST GUARD TO NAVY

Mr. DITTER. Now, I should like to ask a question of the Secretary of the Navy: Mr. Knox, is it anticipated at this time that the Coast Guard is to be transferred from the Treasury Department to the Navy?

Secretary KNOX. Not at this time; no, sir.

Mr. DITTER. In other words, nothing has been done toward that end?

Secretary KNOx. No, sir; except that we have the plans all ready, in case of war, whereby the Coast Guard will become a part of the Navy. That is a part of the law.

Mr. DITTER. Yes; that is part of the law; but it is not anticipated, under the present emergency rather than actual war, that such a transfer will be made?

PROPORTION OF MATERIAL TO BE ACQUIRED THAT WILL BE USABLE BY UNITED STATES

(See p. 13)

Secretary KNOx. There is no present plan for it.

Mr. DITTER. Then I should like to address one question to the Secretary of War. Mr. Stimson, during the course of your statement to the committee, you emphasized that a very considerable part, in fact I think you said 95 percent, of these things that are to be bought could be utilized by our Army. Is that right?

Secretary STIMSON. Yes, sir. standards.

More than that they are to be of our

Mr. DITTER. And I suppose the emphasis was laid on that in order to show that, if necessary, the funds that are presently being appropriated could be used for our own Army, rather than being transferred to those that we seek to aid?

Secretary STIMSON. What I meant was that if by the misfortune of fate we should be compelled to be drawn into a war to defend this hemisphere, we would find in these weapons means with which we could arm ourselves for that purpose.

Mr. DITTER. Well, has any attention, then, been given to the limitation placed in the Constitution with reference to the time within which appropriations may be made for the armies?

Secretary STIMSON. No, sir; because these are not being made primarily for the armies, or at all for the armies, except in such an unpredictable contingency as I just mentioned. They are made for the purpose which is stated in the bill, namely, for the reason that the defense of these democracies is vital to our defense.

Mr. DITTER. Is it contemplated that any of the funds that are being presently appropriated will be used either for the expansion or emplacement of facilities or plants in any countries other than the United States?

Secretary STIMSON. Not so far as I am aware, at all.
Mr. DITTER. That is all.

AGRICULTURAL PRODUCTS

(See pp. 13, 32, 35, 39, 51)

Mr. CANNON. May I ask Secretary Hull one more question? Mr Secretary Hull, the Budget recommends $1,350,000,000 for agricultural, industrial, and other commodities and articles. In a broad way, what proportion of the industrial commodities will be food and what proportion will be raw materials?

Secretary HULL. That is a matter with which I am not very familiar. As I say, I am supposed to keep up with all of the conduct of our foreign relations and to trace the relationships that have led up to this condition of danger and to make that as clear as I can, without going into the production and distribution side of the situation. I had left that to the Army and the Navy and the Treasury and the Budget people, because it did not really come within the function of our foreign affairs over at the State Department, and I apologize for not being able to answer your question intelligently now. But I do hope, on account of my interest in the agricultural situation, to familiarize myself thoroughly with every phase of it at a very early date.

Mr. CANNON. I wonder if either Secretary Stimson or Secretary Knox could give us any information as to what proportion of the agricultural products provided for in this item will be in the form of food and what will be in the form of raw materials?

Secretary STIMSON. I think the Director of the Budget can answer that question.

Mr. CANNON. Let me ask one question of either of the Secretaries: Will such foodstuffs as are contemplated be for the civilian population, or for the armies?

Secretary KNOX. I do not know.

Secretary STIMSON. I do not know, either.

TITLE TO DEFENSE ARTICLES

(See p. 39)

Mr. O'NEAL. Is it determined, or has it been agreed upon as to when title will vest in England or any other country getting materials of this character? Is it upon delivery from this country some place else, or when contracted for?

Secretary STIMSON. Not when contracted for, that is, not when the construction is contracted for, and not until after the construction is completed. After that, I do not think there has been any commitment.

Mr. O'NEAL. In other words, when you make a contract today or agree to do something for so much, the title remains in this country until after delivery takes place either at the point of manufacture or some other point?

Secretary STIMSON. That is as I understand it. Title, of course, in case the article was loaned, would never vest.

Mr. O'NEAL. Yes; I understand.

Mr. LUDLOW. Mr. Secretary, I understand the initial distribution is to be to Great Britain and Greece. Can you give any information as to what other countries you think are likely to be finally included in the distribution?

Secretary HULL. I wish I knew. Nobody knows, over there in some parts of the Balkan area, what may happen any day, or any hour.

PROCUREMENTS IN FOREIGN COUNTRIES

(See pp. 40, 42)

Mr. DITTER. I would like to ask one question of the Secretary of War: Mr. Secretary, do I understand this, that expansions or emplacements would take place in foreign countries under the terms of the bill, in your opinion?

Secretary STIMSON. Original emplacements?

Mr. DITTER. Do you say that original emplacements or facilities for plants cannot take place outside of the United States?

Secretary STIMSON. I do not think the bill authorizes that.

Mr. WOODRUM. Let me quote section 8 of the Lend-Lease Act on that point:

The Secretaries of War and of the Navy are hereby authorized to purchase or otherwise acquire arms, ammunition, and implements of war produced within the jurisdiction of any country to which section 3 is applicable, whenever the President deems such purchase or acquisition to be necessary in the interests of the defense of the United States.

Mr. DITTER. That is the reason I asked the question, whether it is contemplated to purchase matériel that might be made in plants outside of the United States, or whether funds provided in this bill would be available for making the original emplacements or expansions of any such plants.

Secretary STIMSON. That is a provision for most unusual situations and that the Department does not contemplate of creation of any such facilities, is, I think, evidenced by the fact that I have forgotten that such a provision was in the act.

Mr. DITTER. It is a matter that the committee should have given some consideration to.

TUESDAY, MARCH 13, 1941.

STATEMENT OF GEN. GEORGE C. MARSHALL, CHIEF OF STAFF, UNITED STATES ARMY

GENERAL STATEMENT

Mr. WOODRUM. General Marshall, do you have a statement you would like to make?

General MARSHALL. I do not have any prepared statement. I am here at your disposal.

Mr. WOODRUM. General, from what you know of this bill, please tell us what you think about it.

General MARSHALL. Mr. Chairman, since hearing the testimony that has already been given this afternoon, I believe there is little I can add except to repeat what Mr. Stimson, in particular, has already made to clear to you that there are definite complications involved in the consideration of this bill, because it concerns a nation that is actually at war. As you know, in making our own estimates for matériel, everything is kept open and aboveboard. Lists of the actual matériel for which appropriations are desired are printed in the record with quantities and approximate cost-all available to the public. In this bill, the matériel is listed as concisely as possible, with barely enough details to permit intelligent consideration; nevertheless it involves the possibility of adverse effect on Great Britain if it discloses all her needs, and these are very apparent from the deficiencies which you are considering today. In other words, we must avoid statistics which are completely revealing.

As Mr. Stimson stated, we have followed a very careful procedure in preparing this list. Á great many conferences have been held, A

not only with the British but also within our own staff, to determine how best to put these estimates on the same carefully considered basis as our own. Then, in cooperation with the Under Secretary of War's Office and that of Production Management under Mr. Knudsen, we considered the production demands involved and the possibility of interference with our own program. As a result of our investigations we arrived at a determination of the amounts of the several items you now have under consideration.

Mr. WOODRUM. General, you are thoroughly familiar with the items in this bill and their purposes?

General MARSHALL. I have gone over the various break-downs of the matériel involved.

Mr. WOODRUM. Are you able to say to the committee, from your knowledge, having made an investigation of them, that you think these items are vitally and critically necessary and should be included in the bill?

General MARSHALL. Yes, sir; very much so.

Mr. LUDLOW. General, I want to ask whether, in your opinion, providing these articles in aid to Britain will in any way endanger our own defense?

General MARSHALL. No, sir; on the contrary I think that as we now have matters arranged, the result will be to our advantage. Our own actual resources will not be diminished until the finished products come off the production line and are ready for shipment. Increased production will add to our strength until the time for distribution begins. I will go further and say this-that I would be a much happier man today if I thought we had reached a point in our production development where we actually had more capacity than we required. That would be the most favorable situation possible for us, in view of present conditions.

Mr. CANNON. General Marshall, these estimates have been made on the basis of definite inventories, apparently, and I presume you have some data as to the cost of each class of matériel.

General MARSHALL. Yes, sir.

Mr. CANNON. How do these costs compare with costs of matériel in similar classifications during the World War?

General MARSHALL. I will have to ask someone else to answer that.

Mr. CANNON. In a general way, are we paying more or less, than was paid for similar matériel during the last war?

General MARSHALL. Probably the only specific item susceptible of that comparison is the Springfield rifle. The cost of this rifle is less today than it was during the last war. In this instance, manufacturing facilities already existed when we resumed production recently. Most of the other equipment involved, particularly antiaircraft matériel and tanks, is so entirely different; so new; and so much more complicated than corresponding items used during the World War, that no accurate comparison can be made. For example, the tanks used in the World War were "tin lizzies" compared with what we have today.

Mr. CANNON. What determines the price? Are they manufactured on the cost-plus-fixed-fee plan, or through negotiation? Do you contract for them, or do you manufacture them yourself?