If you want me to I can now take up the bill in detail. Would you like me to continue, Mr. Chairman?

The CHAIRMAN. You mean read the whole bill?

Mr. FOLSOM. I can summarize the sections. The objectives are set out in section 1.

Mr. GOSSETT. If I am out of order in making this suggestion I want you to tell me. But one of the things that worries me about this whole problem is how it is going to affect the small businessman. For instance, whether somebody can secure a supply of shoes from the Army and sell them at a price that will put the local merchant out of business.

Mr. FOLSOM. That is the reason we think it is important to have the policy determined by the Congress. One of the policies set forth in the bill is directed against the sale to speculators.

The CHAIRMAN. Do you have any further statement you would like to make, Mr. Folsom?

Mr. FOLSOM. Not unless you want me to take up the bill section by section.

The CHAIRMAN. I suggest that we take up the bill section by section, because one of the important things we want to thrash out is the policy that we are to formulate.

Mr. COCHRAN. Are you in accord with the testimony of Mr. Clayton before the joint committee?

Mr. FOLSOM. Yes, sir.

Mr. COCHRAN. It is in part I, section by section and paragraph by paragraph. I read the whole thing. That is the reason I asked the question whether the suggestions made before the joint committee were embodied in this bill. You say the only new item in the bill that was not contained in Mr. Clayton's testimony is the question Mr. Manasco developed.

Mr. FOLSOM. We have taken into account all the suggestions that came out of this hearing, plus this new change.

Mr. HOPE. Does this bill in its present form contain the suggestions Mr. Maverick made?

Mr. FOLSOM. No; it does not. We changed a word here and there in order to go further along with Mr. Maverick, but we have not made the basic changes that he suggested. Mr. Clayton, in a letter which I have from him, stated that they would interfere too much with the regular disposal of these supplies. I have some statements on that subject that I can present to you when you care to take it up. Mr. COLMER. With apoligies to the gentleman, may I make a suggestion for what it is worth? It seems to me the thing we want to decide here is what our policy of procedure is going to be for these hearings. I wonder if with that in mind, it would not be a good idea to take up this bill section by section, for whatever discussion and questions we might have, and then decide whom we want to hear to clarify these questions?

The CHAIRMAN. I discussed the matter with several members of the committee and they want to hear Mr. Clayton.

Mr. COLMER. I think he ought to be heard.

The CHAIRMAN. And they would like to hear Justice Byrnes to get an over-all picture.

Mr. COLMER. I think that would be splendid.

Mr. COCHRAN. Our job is to pass a bill, after considering the matter, on how to dispose of surplus property. Let us confine ourselves to that, so that we do not prolong the hearings and take up the time of Government officials who have other jobs to do. I do not think Justice Byrnes enters into this picture at all. I do think Mr. Clayton does. In view of what has been said about consumer goods, I think the Chief of the Procurement Division is concerned, because he is selling goods now. But let us confine ourselves to the job that we have to do, the method of disposal; because anybody's guess is as good as anybody else's as to the amount. Nobody knows. Let us confine ourselves to legislation providing for the disposal of this property in an orderly manner. I do not think Mr. Byrnes' time ought to be taken up with that. But I do think Mr. Clayton ought to be here, as well as the Chief of the Procurement Division.

Mr. GOSSETT. Mr. Chairman, I move that such hearings as we have be executive.

Mr. RANDOLPH. I suggest they be open, and so amend Mr. Gossetts' motion.

Mr. CHURCH. I suggest they be open also, and second the amend

ment.

The CHAIRMAN. The question is on the motion of the gentleman from Texas.

(The motion was agreed to.)

The CHAIRMAN. The hearings will be executive. Mr. Clayton will appear before the committee tomorrow. Mr. Justice Byrnes has indicated he would like to appear. Mr. Wickard will be here Wednesday.

Mr. Folson, unless you have any further statement to make at this time, the committee will adjourn to meet tomorrow at 10 o'clock.

(Whereupon an adjournment was taken until Tuesday, August 8, 1944, at 10 a. m.)

SURPLUS PROPERTY ACT OF 1944

TUESDAY, AUGUST 8, 1944

HOUSE OF REPRESENTATIVES,

COMMITTEE ON EXPENDITURES IN THE

EXECUTIVE DEPARTMENTS,

EXECUTIVE SESSION

Washington, D. C.

The committee met at 10 a. m., Hon. Carter Manasco (chairman) presiding.

The CHAIRMAN. The committee will come to order.

Mr. COLMER. Mr. Chairman, with your permission, we have asked some other members of the committee who were not members of this particular subcommittee to sit in the hearing this morning if there is no objection.

The CHAIRMAN. We will be glad to have them.

We are meeting this morning for the further consideration of H. R. 5125, a bill to provide for the disposal of surplus Government property and plants, and for other purposes.

We have with us this morning Mr. Clayton, who is now the Surplus War Property Administrator, and who, I understand, collaborated with the Post-war Committee in the preparation of this bill.

Mr. Clayton, we have decided not to reopen the hearings and invite everyone to come and testify on the subject because we think that the congressional committees have already received about all the information available on the subject and anything that would be brought out would be in addition to something that has already been covered. But we wanted you here this morning to discuss with you certain phases of this proposed legislation, especially the mechanics and any conflict with existing law. Of course we know that any bill that will be passed will have many defects but we want to pass a bill with just as few defects as possible.

Do you have a statement you would like to make to the committee before we start questioning you?

STATEMENT OF W. L. CLAYTON, SURPLUS WAR PROPERTY

ADMINISTRATOR

Mr. CLAYTON. Yes, Mr. Chairman; I have a short statement. H. R. 5125, which you have before you, embodies with only one substantial change the recommendations made by a committee on legislation representing a number of executive agencies, of which I was chairman. I am, therefore, strongly in favor of the bill, although I have a few suggestions for amendments which I shall be glad to offer at whatever time the committee deems appropriate.

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On June 16 and 20, 1944, most of the members of our committee on legislation, including myself, testified at length with respect to these same recommendations. That testimony was given at joint meetings of the House and Senate Special Committees on Post-war Economic Policy and Planning, to which Chairman Manasco was invited and which he attended for part of the time.

I am advised that printed transcripts of the testimony at those meetings have been distributed to all the members of this committee. In that testimony our recommendations were presented, and the reasons for them discussed at length. They are embodied almost verbatim in the bill which you are considering today.

For that reason I am reluctant to take the time of the committee by going through the bill in detail and giving repetitive testimony about it. With the chairman's permission, therefore, I will merely make a short statement on one or two important subjects, request that the testimony given on June 16 and 20 be considered a part of the record of these hearings, and then reply to any questions which the members of this committee may care to ask.

The first subject I would like to discuss is that of small business. Our recommendations, and H. R. 5125, have been criticized on the ground that neither the policy language nor the mandatory provisions give adequate protection to the interests of small business in the distribution of surplus property. The two most important criticisms in this regard, by Smaller War Plants Corporation and by the House Select Committee on Small Business, appear in the printed transcript of the joint meetings of June 16 and 20, 1944.

I would therefore like to make a clear and unequivocal statement of my views on this subject, so as to give a proper perspective to the question whether particular provisions relating to small business should be put into the statute by amendment.

I believe that small business should have the fullest possible opportunity to acquire surplus war property, and that all steps should be taken toward this end. I believe, however, that the best way to achieve the desired result is to have an efficient, well-administered disposal program which will result in the rapid and widespread distribution of goods in quantities and through channels which will enable all to buy at fair prices. Consequently I believe that provisions which would slow down the flow of distribution, impose burdensome administrative requirements or disrupt markets by setting up competing disposal agencies, would frustrate the very purpose which they seek to achieve.

I believe that under H. R. 5125 as written, an Administrator would be bound to take all steps which would be really useful in getting the goods to small business, and that most of the added provisions which have been suggested are either repetitive or self-defeating.

I assume that the committee will question me if it desires discussion of specific suggestions which have been made. Before leaving the subject of small business for the moment, however, I would like to emphasize one fundamental fact which is frequently ignored in this connection. The Surplus War Property Administrator is going to be hungry for buyers; he is going to be racking his brains to find price policies and methods of distribution whereby he can put into the channels of trade, and get out of Government storage, as much as possible of a large store of goods as fast as possible. He not only can

not afford to ignore any existing or potential market, but he will have to go out and develop markets. In short, there is no reality in the fear that he will in some way withhold property from the small business

man.

The second subject which I would like to discuss is the composition of the agency to be charged with the administration of the act. H. R. 5125 provides, and we recommended, that a single individual be charged with the responibility, with the advice of a board consisting of representatives of all the Government agencies principally interested in the disposal problem. It is assumed that the individual would be a man of business experience.

I understand that various different sources have suggested that the responsible body be a board. Some suggest that it be a board composed exclusively of existing public officials and businessmen. In the latter case it is not clear to me whether the businessmen are expected to work on a full-time or a part-time basis.

I think that Congress would find it most unsatisfactory, in a matter of this magnitude, to be obliged to rely on the collective responsibility of a group of people. This seems particularly true when some or all of those people would be occupied only part time with the property disposal problem and would owe their primary allegiance to another agency or activity.

In addition, a board by its very nature is less effective than an individual in making day-to-day decisions which require rapid action. It would be inevitable that any board would in fact choose an individual, by whatever title they chose to call him, who would be the real executive head of the agency, work at it full time and make the decisions, even though these were submitted to the Board for ratification. That is the only way in which a large business operation like property disposal can be effectively conducted.

If that is the fact, I should think that Congress would want to have the real operating head of the agency responsible and accountable to them, instead of having his responsibility diluted and confused by the theory that the real directing unit was the board.

Congress has already reached a similar conclusion in the Contract Settlement Act of 1944, and I do not think they will regret it.

I will be very glad to proceed by answering any questions the committee may care to put, or in any other manner th chairman suggests. As I stated before, I have a few amendments to H. R. 5125 which I would like to discuss at some stage of the proceedings.

The CHAIRMAN. Mr. Clayton, I have a few questions I would like to ask you. Chairman Ramspeck of the Civil Service Committee called me this morning and asked if it would injure or hamper the activities of the Surplus Property Administrator if paragraph (b), section 3, on page 4, was stricken from the bill. In other words, that subsection exempts the employees of your organization from the Classification Act.

Mr. CLAYTON. Paragraph (b) of section 3.

The CHAIRMAN. Yes; on page 4.

Mr. CLAYTON (reading):

The Administrator may, within the limits of funds which may be made available, employ and fix the compensation of necessary personnel without regard to the provisions of the Civil Service laws and the Classification Act of 1923and so on. The question is whether that could not be stricken from the bill which would then leave the operations of the War Property Administration subject to Civil Service Classification.