Mr. CLAYTON. In the case of all used trucks and cars, and new cars, too, for that matter, our regulations provide that they are to be sold only to dealers, The CHAIRMAN. In other words, under your regulations a farmer or a sawmill operator could not buy one of those trucks? Mr. CLAYTON. Not directly. In view of the great need by farmers for those trucks we arranged that if a farmer would get a certificate of necessity, which he could do by establishing his need for that truck, he could arrange for the dealer to get it for him. Many of them have been disposed of in that way. We have made trucks available where crops were in danger of being lost because of lack of transportation, such as in the Georgia and Arkansas peach areas and in the southern Texas wheat area. But we have found, Mr. Chairman, that the only sure way isn which we could dispose of property of almost every character is through the regular channels of trade. It would be impossible under present critical manpower conditions for the Government to build an organization of sufficient size and scope to deal directly with its 130,000,000 citizens. It could not do it. And I seriously question the advisability of doing it, if it could, because it would be setting up a number of Government organizations to compete with private organizations that now exist. Of course, in connection with this particular point to which you refer, where the bill provides that "Any owning agency may dispose of any property which is damaged or worn out beyond economical repair," I take it that means salvage or scrap operations. The CHAIRMAN. Of course, they might sell some things that, to the operating agency, may seem to be damaged or worn beyond economical repair, but which somebody may be able to use. Mr. HALE. Paragraph (2) relates specifically to waste, salvage, and scrap, so there must be some difference there. Mr. CLAYTON. Paragraph (2) relates to "Any waste, salvage, scrap, or other similar items," and by "scrap" is meant property that is generally understood to be what is commercially used as scrap. automobile might not be considered commercially as scrap, although it may have been worn or damaged beyond economical repair. Mr. COCHRAN. Take paragraph (3). That includes food, does it not? Mr. CLAYTON. That could include food; yes, sir. It would be only food grown by an agency, as, for example, something which the Department of Agriculture might produce on an experimental farm. That refers to things like the power which is produced by T. V. A. If we did not have that clause there T. V. A. would have to declare their power surplus and dispose of it through the R. F. C. Mr. COCHRAN. You do not mean, in paragraph (3) to cover all such products where you say: Any products of industrial, research, agricultural, or livestock operationsMr. CLAYTON. If you will read all of that together Mr. COCHRAN. It also says: or of any public works construction or maintenance project, carried on by such agency. "By such agency" restricts that paragraph to the agency in both cases? Mr. CLAYTON. Yes, sir. The CHAIRMAN. In reference to a provision on page 10, section 10, for transfers between Government agencies, I have noticed that in some of the catalogs sent out the Government agency has 20 days, I think from the date when surplus is declared, to purchase the surplus. That is, the agency has a priority of 20 days over ordinary civilians. Mr. CLAYTON. Yes, sir; 20 days from the date the announcement. goes out of the availability of the surplus. The CHAIRMAN. Is that done under the Executive order or under some statute? Mr. CLAYTON. I do not think there is any statute; I think it is done by common consent. Mr. COCHRAN. Yes; there is a statute. The Procurement Division of the Treasury Department is set up for that purpose and nothing can be sold even as surplus by the Procurement Division until the head of that division has circularized other Government agencies to determine whether they are in need of such articles. I know that the Budget Bureau gets a statement from the Procurement Division in reference to that matter and it acts accordingly on the budget of that particular agency which takes over that surplus property. In other words, it ties up part of their appropriation. Mr. CLAYTON. Yes. Mr. COCHRAN. They have been doing that for years and years. Before you can sell any desks or typewriters, or anything of that kind in normal times you have to determine whether another agency needs that, and when any new agency is set up they always let the new agency go to the Procurement Division to see if they have any material that the new agency needs. That is the law today and always has been the law. Mr. CLAYTON. Then I was just mistaken. I recall now there is such a law, and I recall that the Procurement Division has been acting that way for a long time. Mr. COCHRAN. They have a very efficient organization. Mr. CLAYTON. We find that to be true. Mr. COCHRAN. They separated what used to be the Supervising Architect's Office from Procurement, and they put in charge of Procurement Admiral Peoples who was a very efficient man and he was in charge of that for years. They finally took Public Buildings away from that Office and put that under Mr. Reynolds in the Federal Works Agency. The Procurement Division is operating under an existing statute and has operated that way for years and is also the purchasing agent for every executive agency. It so happens that I do the purchasing for the House and everybody has had to purchase through the Procurement Division since I have been the chairman of that committee. Mr. CLAYTON. Yes, sir. The CHAIRMAN. Under paragraph (b) of section 10 it is provided that The disposal agency responsible for any such property shall transfer it to the agency acquiring it at the fair value of the property as fixed by the disposal agency under regulations of the Administrator, unless transfer without reimbursement or transfer of funds is otherwise authorized by law. Suppose the War Department were to transfer to the Department of the Interior $100,000,000 worth of surplus property. How is the Department of the Interior going to pay for that? Mr. CLAYTON. It would have to have an appropriation to pay for it, and it would pay for it out of the appropriation at the values fixed by the disposal agency. The War Department would not transfer it direct to the Department of the Interior. They declare the property surplus to the disposal agency and that agency would arrange the transfer. The CHAIRMAN. Would that $100,000,000 be turned over to the War Department or deposited in the Treasury, in the general fund? Mr. CLAYTON. It all goes to the Treasury in the general fund, as provided in this bill. Mr. COCHRAN. You ought to say $100,000 instead of $100,000,000, because nobody will give a department $100,000,000 with which to buy supplies. The CHAIRMAN. The general impression seems to exist throughout the country that that can be done under existing law, but the money must be appropriated by Congress for purchases by any Government agency. Mr. CLAYTON. That is right. The CHAIRMAN. They cannot augment an appropriation already denied by Congress by transfer from one department to another department. Mr. CLAYTON. No. The CHAIRMAN. I wanted to get that cleared up. Mr. CLAYTON. Section 17 (a) of this bill reads: All proceeds from any transfer or disposition of property under this Act shall be deposited and covered into the Treasury as Miscellaneous Receipts, except as provided in subsections (b), (c), (d), and (e) of this section. Those relate to expenses. There are no relevant exceptions there. The CHAIRMAN. I knew that was correct, but I wanted to get that clear in the record, because a lot of people are under the impression that that can be done. After the last World War we sold to the French Government a lot of surplus, or the French Government was given credit by us, but never paid for it. We sold them blankets, trucks, and other things like that, and then the manufacturers in France went to the Government and said, "If you are going to sell those things to the people, how will we be able to give jobs to returning veterans?" The French Government sold that property to American brokers for a very nominal sum, and then the American brokers sold it to the American people in competition with our manufacturers and sold that same property at exorbitant profits. Is there anything in this bill that would prohibit a recurrence of such transactions? Mr. CLAYTON. There is nothing in this bill that sets up machinery to prevent the reimportation into the United States of surplus property sold abroad. The CHAIRMAN. Can it be done administratively? Mr. CLAYTON. I doubt very seriously if it can be satisfactorily accomplished by statute. We appointed a committee to study the various problems relating to the disposal of surpluses abroad, and that committee has had this question as one of the matters it was to consider and report on. I have not yet received, officially, the report of the committee, but I understand that it will advise that no law be passed, or any device be set up to prevent the reimportation of goods of that character into the United States. You may be interested to know that a very careful investigation of what happened after the other World War shows that about $150,000 worth of that property came back to this country. It may have come back in a form that may have been changed, but it could not be identified. Less than $150,000 of such property was reentered into the United States. Mr. COCHRAN. Did not the French Government sell most of that property to countries in Europe, and instead of paying us, put that money in their pocket and never paid us for it to this day? This is the first time I have heard that it was brought back into this country. We would know if it came back because it would be subject to duties under the tariff law. The CHAIRMAN. Under this bill is it not true that the Foreign Economic Administration could have turned over to France, Italy, or Tunisia, we will say, 200,000 woolen blankets that probably cost us a minimum of $7, and then, if they wanted to, they could sell those blankets to a broker in France or Italy for $1, and in turn that broker could send them here and pay the tariff duty on the dollar and not on the $7, and sell those blankets in the American market much cheaper than they could be manufactured in this country. Is not that true under the provisions of this bill? Mr. CLAYTON. Theoretically it is, but actually I do not think it is, because one of the advantages of centralizing this whole problem in one agency is to coordinate the selling policies of this property all over the world. The Administrator of this agency would be responsible, and as I see it, the selling policies and selling prices of this property would be so closely related that it would not be possible, to any serious degree, for any of this property sold abroad to flow back to this country in competition either with current production or with sales of surplus property located here. It would be our duty so to fix the selling policies of these goods, and the geographical and transportational difficulties involved in the movement would become a great problem. We would not sell blankets for a dollar apiece in France if they were being sold at $5 here because we would know it would be possible for them to flow back here and affect our manufacturers here. It would be our duty to prevent that. Mr. GOSSETT. Suppose some broker in this country wanted to buy 100,000 blankets. Suppose the War Department had that number stored in some quartermaster depot; would they sell them to any transient agent that came along? Mr. CLAYTON. You ask if the War Department would have them stored in some depot abroad? Mr. GOSSETT. No, in this country. Mr. CLAYTON. No, the War Department is not Mr. GOSSETT. The thing that small merchants are afraid of is somebody setting up a second-hand store and selling Government shoes, blankets, and other articles at a fraction of what the local merchant can sell them for in any established business in competition with them. Mr. CLAYTON. Neither under the present Executive order nor under this proposed bill would the War Department be authorized to make any sales whatever of those blankets. If the blankets were surplus to their needs, they would so declare them and the Procurement Division of the Treasury would sell them under our supervision and under our regulations. Mr. GOSSETT. You spoke of these things being handled through regular channels of trade. Would you attempt to put those blankets and those shoes and other things of that kind into the regular channels of trade, or would you permit anybody who came along to buy them? Mr. CLAYTON. We do our best to see that these surpluses are distributed through the regular channels of trade, by which we mean through individuals and firms regularly established in merchandising the particular commodity we are trying to sell. We have not made an inflexible and unvariable rule. I gave this example in my testimony before the Senate committee on June 16 that the Procurement Division of the Treasury Department had some refrigerators to sell. They were rather cheap refrigerators. The best offer they could get from people regularly in the business of distributing refrigerators was less than $45 a box, and some man came along who, so far as they knew, had never distributed refrigerators. He offered $55 a box, and they took the $55, because I do not think we can go to an extreme in trying to protect this principle. There is always a danger if we say we will not sell to anybody except people regularly in the business. There is the possibility that those people might get together and divide the business among them so that the Government would not get the real value. So we try always to sell to people regularly engaged in the business, but we do not say we will not sell to somebody else. Mr. McCONNELL. If the regular channels of business did not want a certain product, that would not deter you from selling to somebody who would want it. Some speculator might come along; would you sell it to him? Mr. CLAYTON. Yes; we would; I mean we would not say we would not sell them to him. We would examine very carefully all the conditions surrounding the situation before we traded with him. We are opposed, in principle, to selling this property in big blocks to people who obviously are looking for an opportunity for buying surplus property. We have regulations respecting the sale of this property which provide that it will be sold in small quantities. In connection with the sale of trucks, the regulations provided that a man could buy a single truck and there was a limit on the total number he could buy. I have forgotten what that was, but it was moderate. So all of our policies are patterned to try to make this property available to everybody who has a right to engage in the distribution of the property. The CHAIRMAN. You could not limit the resale price? Mr. CLAYTON. We have in some cases. Of course, the O. P. A. limits that in most cases. The CHAIRMAN. As I understand it they have placed a general ceiling on trucks, that is, trucks sold to individual dealers. If a 62395-44- -5 |