"(e) to discourage monopolistic practices, preserve and strengthen the competitive position of small business; "(f) to foster the wide distribution of surplus commodities to consumers at fair prices; (g) to effect broad and equitable distribution of surplus property; and "(h) to realize the highest obtainable return for the Government consistent with the maintenance and encouragement of a healthy competitive economy." Briefly, the bill would establish a Surplus Property Administration headed by a Surplus Property Administrator who shall "have general supervision and direction over (1) the care and handling and disposition of surplus property and (2) the transfer of surplus property between Government agencies"; also, it would (1) create a Surplus Property Board composed of specified heads of executive departments and other Government officials, or persons designated by them, to advise and consult with the Administrator; (2) provide for disposition of property by an owning agency under certain conditions (section 8); (3) provide that the Administrator shall designate one or more Government agencies as disposal agencies (sec. 9); (4) provide for transfers of property between Government agencies (sec. 10); (5) authorize donation of property to Governmentsupported institutions or educational or charitable organizations, or the destruction of property, under specified conditions (sec. 11); (6) outline policies governing the disposition of surplus property (sec. 12); (7) retain the effect and applicability of the antitrust laws as they may be applicable to the acquisition of property under the proposed legislation (sec. 13); (8) prescribe special requirements relative to the disposition of Government-owned plants for the production of synthetic rubber or aluminum (sec. 14); (9) authorize the Administrator to prescribe regulations to effectuate the provisions of the act (sec. 15); (10) provide for disposition of the proceeds from any transfer or disposition of property under the proposed legislation (sec. 17); (11) authorize the use of appropriated funds in the disposition or acquisition of surplus property (sec. 18); and (12) provide that the proposed legislation shall become effective from date of enactment and, unless extended by law, shall expire 3 years after the end of the present war. war. There are not apparent to this Office any serious objections to the provisions of the bill H. R. 5125. Although it would bestow on the Administrator a rather large measure of discretion, such discretionary authority appears appropriate to the situation foreseen with respect to surplus property after the end of the present The proposed provisions relative to the use of appropriated funds and the disposition of proceeds from any transfer or disposition of property are thought to protect adequately the interests of the United States, with the possible exception of the language of subsection 17 (b). Said subsection apparently is intended to authorize the owning agency to deduct from the proceeds of the authorized transfers or dispositions only such expenses incurred for the care, etc., of the involved property as may have been paid from or as may be chargeable to appropriated moneys-such deduction being for the purpose of reimbursing "the fund or appropriation bearing such expenses"-and not to authorize the use of such proceeds to pay expenses incurred for the care, etc., of property which would not in the first instance be payable from appropriated moneys. To avoid the possibility of an interpretation which would permit the owning agency to receive the proceeds of property and pay such proceeds out directly as expenses without being reflected in the pertinent accounts as receipts and expenditures of Government funds, I suggest that there be inserted in lieu of the words "and may" in line 10, page 18 of the bill, the following words "the amounts so deducted to be used only to." If so amended, the said subsection 17 (b) would require that all such proceeds be shown as receipts of Government moneys and all expenses for care, etc., be shown as expenditures of Government moneys, thereby insuring that the proceeds of all such transactions would be subject to audit as Government moneys. Other than as above suggested, I have no recommendation to make relative to the enactment of the bill H. R. 5125. Sincerely yours, LINDSAY C. WARREN, Comptroller General of the United States. STATEMENT BY VICE ADMIRAL EMORY S. LAND; CHAIRMAN, UNITED STATES MARITIME COMMISSION, RELATIVE TO H. R. 5125 This is in response to your request for comments on the bill, H. R. 5125, regarding the disposal of surplus Government property and plants. In general, the bill appears to be highly satisfactory and designed to permit the disposal by the agencies best qualified therefor of surplus war property in accordance with the coordinated plan. Details of the general provisions of the bill have been discussed at length by the Surplus War Property Administrator and I feel that little can be added to his comments. I should, however, like to comment particularly on two aspects of the bill. Subsection (a) of section 7 of the bill would apparently permit the Administrator to determine what property was surplus to the requirements and responsibility of any agency of the Government, including the War and Navy Departments and the Maritime Commission. Thus the Administrator rather than the various heads of Departments would be in a position to determine what equipment and supplies should not be held for the purposes of national defense. Such provision would appear to be highly objectionable in that it might allow an agency of the Government which has no specialized knowledge of defense and shipping requirements to require the disposal, as surplus property, of ships, equipment, and supplies which might, in the opinion of the department authorized by the law to make provisions for the national defense or shipping, be needed for such purposes. It is probable that the course of the present war might have been different had the naval and merchant vessels which were laid up prior to the outbreak of the war in Europe not been available for use by our own Government and those of the other United Nations. The importance of the proviso contained in subsection (a) of section 9 of the bill should be emphasized. The disposal of merchant shipping involves problems which differ radically from those in respect to ordinary consumer and producer articles. The chief point of difference is that the United States will probably own, after the war, a major portion of the world's supply of merchant shipping and that such shipping if sold for foreign flag operation will in many instances compete directly with American-flag ships. An important item of the expense of running a line of ships is interest on the capital invested in such ships. If adequate prices are to be obtained for the ships sold by the Maritime Commission in the post-war period some assurance will have to be given to the purchasers that the market will not be later glutted by the huge supply of shipping which the Government will own. No ship operator will be willing to pay, say $1,500,000 for a ship if he thought there was a possibility that a competitor or a prospective competitor might purchase the same type of ship at a later date for a few hundred thousand dollars. This possibility will exist, however, unless a floor is put under the sales price of ships for Americanflag operation. The sale of ships for foreign-flag operation, unless made in accordance with a carefully considered plan, might result in serious injury to the American merchant marine since the ships so sold can compete directly with American-flag ships engaged in foreign trade. Where a production tool is sold abroad the products manufactured by the use of such tool can only compete in the American market with American-made products in those cases where it is possible to manufacture at a cost sufficiently low to enable the inclusion in the sales price of the product of tariff and transportation charges. A ship, however, sold for foreignflag operation may compete in trade between American and foreign ports with American-flag ships on an equal footing. The sale of ships for foreign operation will, therefore, directly affect the competitive position of American-flag operators. The foregoing are merely illustrative of some of the special problems of the disposition of merchant shipping which include not only those of a commercial character but also include questions which will have a considerable effect on our foreign relations. Such problems have been pointed out not for the purpose of recommending any specific legislation but merely to emphasize the fact that the disposition of merchant ships does not fall into the category of the disposition of surplus property. The Senate Commerce Committee and the House Merchant Marine and Fisheries Committee have, over a period of years, given careful study to the problem of merchant shipping and as a result of legislation sponsored by such committees the outbreak of the war found the United States with a nucleus of a merchant marine and shipbuilding industry which proved of invaluable aid in the war effort The House committee is at the present time considering a bill in respect to the sale of Government-owned merchant ships, H. R. 4486. Extensive hearings have been held on such bill at which representatives of industry, labor, and this Commission have been heard. In its present draft the bill establishes appropriate minimum prices for war service vessels with a view to avoiding a break-down of the policy established by Congress under the Merchant Marine Act, 1936. Whether or not such bill meets with the approval of Congress. it is my belief that the disposition of merchant shipping should be the sjbject of specific legislation enacted by Congress after consideration of the economic, defense and international aspects of the problem. STATEMENT RELATIVE TO THE PROPOSED SURPLUS PROPERTY ACT OF 1944, BY E. L. OLRICH, ASSISTANT TO THE SECRETARY, TREASURY DEPARTMENT The Treasury Department, Procurement Division, is now functioning as a disposal agency under the Executive order. If we are so designated by the Administrator under this proposed act, the Procurement Division of the Treasury Department believes it can function effectively and satisfactorily under its framework. The Treasury Department approves this bill in general. The Treasury Department participated in discussions leading to the formulation of this proposed legislation. CHAMBER OF COMMERCE OF THE In re: H. R. 5125. Hon. CARTER MANASCO, Chairman, Committee on Expenditures in the Executive Departments, DEAR SIR: The bill now before your committee by Representative Colmer, H. R. 5125, would provide a basis in legislation for the disposal of great Government-owned war plants and real estate no longer needed for purposes of national defense and of vast quantities of surplus supplies that will occur at the close of hostilities. The Chamber of Commerce of the United States believes that a procedure of orderly and efficiently administered handling of war surpluses is the only one which can be countenanced in contemplation of the huge magnitude of such surpluses and the great need that will exist for the prompt resumption of civilian production on an adequate scale to facilitate our transition from war to peace. These surpluses must be so demobilized as to preserve the stability and productivity of the national economy and avoid unnecessary interference with the maintenance of a high level of private employment. In view of the foregoing considerations the chamber attaches great importance to the content of the legislation to be enacted by the Congress. The chamber has given long and careful consideration to the subject. Its recommendations were developed by a large and representative committee of business and industrial executives following many months of study and discussion. A list of the members of this committee is appended. Some of the chamber's proposals for legislation are provided for in H. R. 5125. Other significant proposals have not been incorporated which the chamber believes should be given serious consideration. The following discussion is devoted primarily to these proposals. ADMINISTRATIVE ORGANIZATION The bill, H. R. 5125, would provide for a Surplus Property Administrator, and he would have general supervision and sole direction over the disposal of surplus property except with respect to the disposal of certain aluminum and synthetic rubber plants. There would be, also, a surplus property advisory board composed of representatives of 15 designated Government departments and agencies. The sole purpose of this board would be to advise and consult with the Administrator. Independent agency. The chamber recommends that responsibility for (1) the interpretation of the policies laid down by Congress in the legislation; (2) the promulgation of procedures to be followed in disposal; and, (3) general administrative action based upon these policies and procedures should be the responsibility of an agency outside of any executive department of the Government and responsible to Congress in the carrying out of the will of the Congress. The problems that will be confronted in surplus property disposal when hostilities cease will be so complex and have such far-reaching effects upon the domestic economy that nothing short of such an independent agency will meet the needs of the situation. The agency recommended by the chamber would be a commission of seven fulltime members to be nominated by the President and approved by the Senate, each member to have had at least 5 years' industrial or merchandising experience. The fact that an independent commission is recommended does not carry with it the implication that every administrative decision would depend upon and await the affirmative vote of the seven members of the commission. In the execution of its functions as a policy-making body the commission would act as a unit. With respect to some administrative decisions of far-reaching effect the commission would also act as a unit. For example, there will be numerous manufacturing plants which cost the Government many millions of dollars. Each case will require careful study before a sound decision can be reached as to whether the plant shall be sold or demolished. Decision with respect to the disposal of these plants would be reached by the entire commission following the study of carefully prepared reports devoted to the engineering and economic factors in volved. With respect to most administrative matters, however, the chairman would be authorized to act upon his own responsibility. He would be empowered also to delegate administrative authority in the same manner as is contemplated by H. R. 5125 which would authorize the designation of "disposal agencies." Advisory board The surplus property advisory board, which would be established by the bill, would not be a satisfactory substitute for the commission which the chamber recommends. The board, as stated heretofore, would be composed of representatives of 15 designated Government departments and agencies. The members of such a board would be officials concerned with the operating problems of their particular departments and thus, in most cases, out of intimate touch with the problems of industry and trade in a peacetime economy. Moreover, the department representatives would devote but a small part of their time to the matters laid before the advisory board. In short, there would be no assurance that such an advisory board would be composed of persons adequately equipped for the rendering of the sound advice that would be needed on the solution of difficult economic problems. It is recognized, however, that there would be a place for such a board composed of representatives of Government departments. Such a board would serve a very useful purpose in connection with the establishment of administrative procedures. Industry advisory committees. The Chamber recommends that specific industry advisory committees be authorized by the act of Congress to be appointed by the commission after consultation with each industry as to their composition. The act should specify that advisory committees must be truly representative of the recognized functions in production and distribution. Its members should be from large and small units with due recognition for geographic considerations. There is no provision in the bill, H. R. 5125, for the establishment of advisory committees. While it is probable that the Administrator would consult with representatives of industry from time to time, the bill, as now written, would not require him to take this step. The omission of this provision is unfortunate. In providing for advisory committees in the legislation, it would seem desirable to make provision similar, perhaps, to that contained in the Smaller War Plants Corporation Act of June 11, 1942 (56 Stat. 357), so that members of advisory committees in the exercise of the duties assigned them by the surplus property disposal agency would not be inhibited in the rendering of advice by fear of prosecution under the antitrust laws. BASIC PRINCIPLES AND POLICIES The chamber recommends that the legislation should establish basic principles and policies to guide the commission in the conduct of its operations. The bill H. R. 5125 does not go as far with respect to the statement of underlying principles and policies as the chamber considers desirable. This is particularly the case with respect to principles to be followed in connection with the disposal of government-owned war plants, real estate, and other facilities. Disposal of plants and real estate. The law should require that decision be made at the earliest possible moment as to which plants and equipment, other facilities and real estate must be retained for essential military purposes. The remainder should be earmarked for orderly demobilization to private industry, and such plants and other facilities as are not suitable for such disposal should be scrapped. The disposal of plants and other facilities and real estate should be handled in such a manner as to encourage competitive efficiency on the part of private industry. In this disposal, the welfare.both of the Nation and of the locality should be taken into consideration, but in no case should any particular locality or enterprise be subsidized or given any preferential advantage at the expense of taxpayers generally or in any other manner. It will be a natural desire of communities and of their representatives in the Congress to preserve for those communities great Government-owned manufacturing plants, even though the Surplus War Property Commission may know that engineering and economic studies reveal that the preservation of such plants is not in the public interest. Pressure from any source for the utilization or disposal of Government-owned war plants in a manner which is not in accord with broad public interest must be resisted. It is the belief of the chamber that an independent commission, constituted as described, is the agency which will give the best assurance of unbiased and competent decision. Disposal of surplus supplies in the United States. The chamber believes that the underlying objective in the disposal of surplus war supplies that are located in the United States should be their economic use in this country or their disposal abroad for the ultimate benefit of the American economy. This should be accomplished with a minimum disruption of production and trade and with the least practicable interference with normal employment. Surplus supplies should be disposed of as rapidly as consumers demand such goods during the period which must elapse before normal production can be resumed. On the other hand, the sale of surplus supplies should not be pushed at a time when business generally is uncertain or declining. Such a course might induce or accentuate a depression. Quantities of surplus supplies and materials released for sale should be in lots which will permit participation by small as well as by large manufacturers and retailers, and any price differentials between large and small lots should be limited to actual differences in cost of handling and distribution. So far as practicable, surplus supplies and materials should be redistributed by the industry that produced and distributed them. These recommended principles and policies appear to be adequately reflected in the provisions of H. R. 5125. It is appropriate, however, to refer again to the recommendation respecting industry advisory committees. As has been stated, these committees should be appointed for the various industries with provision for appropriate subcommittees for imprortant branches of each industry. The commission or its individual members should convene industry advisory committees from time to time; lay before the committees all the facts respecting the surplus supplies within the cognizance of the committees, including information as to grades, qualities, condition and locations of the inventories; and solicit the advice of the committees on the manner and time or times of disposal. These requirements might well be stated in the law because, as the chamber believes, the disposal of surplus supplies will then take place in the most orderly and effective manner with the least disturbance to production and trade and a minimum interference with employment. Surplus supplies held abroad. The bill makes no provision with respect to special problems that will be confronted in connection with the disposal of surplus supplies and facilities which will be located in many places all over the world. The surpluses in question are those which are competitive with the products of the United States and not to supplies, notably raw materials, which have been bought for use in the United States. The Chamber recommends that the surplus property legislation should specify that such surpluses be disposed of abroad so far as possible. In the disposition of such surpluses consideration should be given to the economic conditions in particular markets and to the interests and rights of American enterprise in the |