Senator ADAMS. That indicates the money that is made available? Mr. KNUDSEN., Yes, sir.

Senator NYE. That is not inclusive of this pending bill?

Mr. KNUDSEN. No; not inclusive of the pending bill. This shows the contracting that has been done, up to here [indicating], and this is the productive curve that has been planned against it. when we get up to here [indicating], we hit the 50 billion.

Senator ADAMS. The red or dotted line is the danger line?

You see,

Mr. KNUDSEN. No; that is what we think we can do before June 30, 1943. In other words, it takes us to June 30, 1943, to absorb funds up to here [indicating].

Senator ADAMS. Is this dated?

Mr. KNUDSEN. Yes; by the fiscal year. When we get to July 1, 1943, we will have absorbed 50 billion of the 54 billion appropriated. The 4 billion are items that will have to go over, because they might be battleships and things like that which take a longer time to make and which we couldn't possibly make in that period.

Then we come to the second lend-lease bill, and the only way we can handle that is by superimposing it on that curve here [indicating], which is what we propose to do.

TOTAL AMOUNT MADE AVAILABLE FOR DEFENSE PURPOSES

Senator THOMAS. When this bill is passed, what will be the total appropriations made available by the Congress for defense purposes? Mr. KNUDSEN. Taking the full amount of it, it will be about 60 billion dollars.

Senator THOMAS. It will be about 60 billion dollars?
Mr. KNUDSEN. Yes, sir.

NEED FOR ADDITIONAL FUNDS IN FUTURE

Senator THOMAS. Has your group made an estimate as to how much more will probably be required to complete the program you now have in mind?

Mr. KNUDSEN. I haven't any more program than is covered by this; but I know the War Department is working on a supplemental appropriation for the next fiscal year, for which they have asked me to work on production curves.

Senator THOMAS. You don't think this bill will be the last bill that will have to be considered?

Mr. KNUDSEN. No; I am quite sure it will not be.
Senator THOMAS. Thank you.

ADDITIONAL FUNDS TO BE CONTRACTED FOR BY FEBRUARY 1942

Mr. KNUDSEN. This, of course, is being worked on (indicating on chart), and these contracts will all be placed in 60 days. After we get the second appropriation of the 4 billion, we propose to place it before February 1942 and have it out in the field before February 1942, and then simply superimpose on this curve to raise that up to here (indicating).

63857-41-pt. 1-5

DISTRIBUTION OF ARTICLES PRODUCED

Senator ADAMS. When the articles are produced through your organization, which might be tanks

Mr. KNUDSEN. Yes.

Senator ADAMS. And you have them in production, with a certain number coming off the production lines, who makes the distribution as between those retained in this country and those that will go abroad? Mr. KNUDSEN. The Army and Navy.

Senator ADAMS. That is not part of your problem?

Mr. KNUDSEN. No; I finish the tanks, and where they go after that is not up to me. I don't know the details of it and I have no knowledge

of it.

Senator ADAMS. That is, you don't make the plans as to how many are to be produced. You don't make the original program, but you are engaged in the productive side, that is, the intermediate part.

RATE OF TANK PRODUCTION

Mr. KNUDSEN. On tanks, I am told we want, say, 25,000 tanks of the medium size, you see, and "At what rate can you get them out?” So I started, at 200 a month, 400 a month, then 1,000 a month-and now I am told it is to be 2,000 a month. In other words, when I get an order to do that, you gentlemen know it is quite a job; but we can handle it, I am quite sure. In fact, I am quite willing to make the statement that if this 4 billion is granted, in the second lend-lease, it can be superimposed on this curve (indicating), and you can raise that curve.

Senator NYE. So that that program could be culminated as you plan the culmination of the present program?

Mr. KNUDSEN. I am asking for another 6 months.

Senator ADAMS. That is, to January 1, 1944?

Mr. KNUDSEN. Yes, sir. I am going to try to get it here (indicating), but I am not sure we can get all the items. Some of them are not even specified yet.

Senator MCKELLAR. Will you be able to get all the tanks that have been authorized?

Mr. KNUDSEN. Yes, sir. We will have to go out and get some more armor plate and build some electric furnaces in a hurry; but I think we can meet it.

You are not interested in the difference between the 6 billion and the 4 billion, are you?

Senator ADAMS. Yes.

Mr. KNUDSEN. All right. There are certain items I don't enter into, you see.

Senator ADAMS. I know there are some agricultural items.

ITEMS OTHER THAN MANUFACTURED ARTICLES

Mr. KNUDSEN. There are agricultural items and miscellaneous items, supplies for the Near East, some 32 million dollars, of which I don't have the details. There are miscellaneous items of 93 million. They are not manufactured articles, you see. Then there are spot purchases, meaning stuff you can buy in the open market, amounting to $55,000,000, to which I haven't paid any attention.

SPOT PURCHASES

Senator ADAMS. The spot purchase is materia! or equipment that can be purchased in the open market, rather than be manufactured under your direction?

Mr. KNUDSEN. Civilian goods; yes.

Senator MCKELLAR. Both by the Army and the Navy?

Mr. KNUDSEN. Yes, sir. There is provision for facilities and equipment for the naval bases, 50,000,000. Then there are agricultural commodities, 187,000,000; and ordnance and ordnance stocks, unspecified future requirements. I am not given the size of the shells, but we can handle the shells in the plants we have now; we won't need any more shell plants. Then there are unspecified future requirements in tanks, 184,000,000. I think I know what that is. I think it will be the heavy tank.

Senator ADAMS. There is some reference to tanks, on that 184,000,

000?

Mr. KNUDSEN. It is tanks and other vehicles, under that heading. Senator ADAMS. The only list I have, it appears to be for unspecified future requirements.

Mr. KNUDSEN. Yes; I haven't paid any attention to that.

Senator MCKELLAR. If it is a heavy tank, it will take some time to manufacture it?

Mr. KNUDSEN. We have one running over at Aberdeen, and as soon as we can get an approved pilot model, we will start right in and make it.

NEED FOR ADDITIONAL PLANT FACILITIES FOR HIGH EXPLOSIVES

We need some plants, of course, to wind up this program. That is mostly for explosives, TNT and the components that go with TNT. I think the total amount for plants, if I remember correctly, is around 375,000,000, and that will be sufficient.

FUNCTIONS OF OFFICE OF PRODUCTION MANAGEMENT

Senator THOMAS. To what extent are you consulted as to the making up of the plant specifications? Any at all?

Mr. KNUDSEN. Yes, sir. We, of course, have the drawings of the finished article; and where we feel we can make a short-cut by any I change in specification, we have no trouble in getting that through. Of course, you understand we have to test an ordnance item; we make samples and they take them over and fire them, and I think it ought to be done that way, to see if any changes are necessary.

Senator THOMAS. Then your work is dual-first in the planning or in the specifications, and then in the production according to the specifications agreed upon or approved?

Mr. KNUDSEN. Yes, Senator; we are really industrial engineers. We lay the thing out, size the job up, and tell them whether it can be done and how soon it can be done, and try to get it done to the best advantage. That is really our job. I don't know whether you are interested in any statistics regarding it.

Senator ADAMS. Yes; I think we are. This whole bill is a matter of statistics.

STEEL REQUIREMENT 43 PERCENT OF PRODUCTIVE CAPACITY

Senator ADAMS. Someone was telling us in the last day or two, aking of steel, that there was adequate steel, so far as the Army is ncerned, but it meant taking it away from civilian uses.

Mr. KNUDSEN. Well, of course, in steel, sir, the total amount of el we can see being necessary for the defense program, at the top, 43 percent.

Senator ADAMS. Forty-three percent of the present production?
Mr. KNUDSEN. Of the total.

Senator ADAMS. Productive capacity?

Mr. KNUDSEN. Yes, sir. That is what we can see in the offing.

SHORTAGE OF CERTAIN KINDS OF STEEL

But there are certain kinds of steel we are short of. For instance, had no armored steel plate production of any sort until this tank ogram began to get along. The only armor we had before was ttleship armor which was heavy armor and had to be rolled espelly. So we had to set up for the tanks, which is an inch to 24 to inches in thickness. We had to prepare for that.

Then there comes your ship plate. We never had to deal with y such quantities before in that, and we found the total capacity the United States was 500,000 tons a month of which 300,000 tons s five-eighths inch or over which is used in the present ship proam. This month we are shipping over 200,000 tons to shipyards one and the demand is going up. So we had to go out and get ctric-furnace steel and ship-plate steel and high-carbon forging el, because the demands for that have increased so rapidly with e defense program under way.

Senator ADAMS. That is, your shortage wasn't in the pig iron, the sis of the steel, but in the bigh-grade steels and the rolling-mill pacity?

Mr. KNUDSEN. That is right, and that is where we are approaching now. We are taking all these critical items and bolstering them up.

ADEQUACY OF SUPPLY OF IRON

Senator THOMAS. What is the status of the supply of iron, the basis the making of steel?

Mr. KNUDSEN. We have plenty of iron; there is no question of that. e ran short of scrap, of which there is a certain amount in every ton steel, and I went to Mr. Jones and got more pig-iron capacity so at we could use pig iron instead of scrap.

(Discussion off record.)

Senator ADAMS. Isn't it true that there has always been a very tive scrap market in the steel industry and a very active gathering scrap iron?

Mr. KNUDSEN. Yes.

Senator ADAMS. That is, there are certain people making it their siness.

Mr. KNUDSEN. Yes; despite the fact that we are getting 40 percent re scrap than before. We are running short due to the higher proction of steel.