order of the President, and is making good progress, but there is general agreement that Congress itself determine the policy under which he should operate rather than leave it to the Administrator alone. While the problems are not acute right now because there is not a great deal of surplus property to be disposed of, at the same time property is being disposed of every day and, of course, as soon as the war comes to an end there is going to be a tremendous amount of surplus property. Its disposition will have considerable effect on the economy of the country for many years to come. That is why the Post-war Committee thinks it is very important that legislation of this kind be enacted now and why it is necessary to have proper principles and policies laid down by the Congress. It is You might be interested in some estimates we have obtained of the size of this problem that will have to be faced after the war. very difficult, of course, to get any accurate facts as to how much surplus property there is going to be when the war is over. Very careful estimates have been made by Dr. Kaplan, which are given in his book recently published. He estimates the total amount will be somewhere around $60,000,000,000. That is a tremendously large amount but there are many things involved that will not find their way into commercial channels. About half of the supplies will be aircraft and ships, and about onefourth ordnance, and guns, tanks, and various things of that sort. So that those three items alone, ships, aircraft, and ordnance, amount to about three-fourths of that total. That leaves about $15,000,000,000 of materials which ordinarily might go into commercial channels. It is estimated that about half of that will be abroad and it is a question of whether much of that material abroad will find its way back to this country. Mr. BENDER. That is half of that figure? Mr. FOLSOм. Half of the $15,000,000,000. The principal groups included in this estimated $15,000,000,000 of miscellaneous stocks are clothing, textiles, and other soft goods; motor vehicles; foodstuffs; stock piles of raw materials; machinery, tools, and equipment of wide variety. He estimates that the amount of these supplies which could be merchandised in the domestic market would probably be about $6,000,000,000. This total which would include raw material as well as finished goods compares with the normal monthly retail sales of $4,000,000,000 in the country as a whole before the war. In this great variety of commodities left over at the end of the war there will, however, be many items in quantities representing a number of months' supply. The disposal of these items offers many difficulties and great care must be taken to prevent disastrous effects upon employment and industry. I have much more detailed figures which I will submit to the committee later, but that in general gives you the picture, Mr. Chairman, in connection with the over-all problem as to surplus supplies. Mr. BENDER. Do you not think it would be a good idea for us to invest a little money in that book? Mr. FOLSOM. I will see if I cannot get some copies for the committee. I think you will find it is a very worth-while book. The Liquidation of War Production. Mr. RANDOLPH. Mr. Chairman, I might add that the August 4 issue of the United States News has a very splendid article, which I think will be helpful, on this very subject matter. It is a publication that comes to our desks and I mention that because some of you may have overlooked the article in the August 4 issue of the United States News. Mr. FOLSOM. When it comes to surplus plants, it is estimated the cost of the Government-owned plants is about $15,000,000,000, in the following broad classifications: Government-owned war plant 1. Explosives: ammunition assembling and loading 2. Shipways_ 3. Aircraft: Frames, engines, parts. 4. Iron and steel_ 5. Nonferrous metals (mainly aluminum and magnesium). 6. Chemical operations: Synthetic rubber, high octane gas and other petroleum products, other chemicals. 7. Ordnance other than explosives: Ammunition, shells, bomb cases, etc., guns.. 8. Machinery: Motor vehicles, combat and other; metal-working equipment; machinery and electrical equipment; miscellaneous manufacturing equipment-- Total Original cost $2, 850, 000, 000 2, 000, 000, 000 3, 110, 000, 000 1, 200, 000, 000 1, 350, 000, 000 1, 400, 000, 000 1, 900, 000, 000 1, 290, 000, 000 15, 100, 000, 000 Mr. HOPE. Do you know whether consideration has been given as to whether it could be used for the manufacture of fertilizer? Mr. FOLSOM. They are perhaps located in places that would make it very difficult to operate them economically: there might be some, but as a whole we cannot expect to realize a great deal out of them. Mr. COTTON. Mr. Chairman, I think we will all agree that Mr. Folsom is making a very interesting statement in reference to the situation that is going to confront us, but, in the interest of saving time, I feel the situation that confronts us now is not the question of how much surplus property we are going to have on hand, but the method to be used in disposing of that property. Mr. FOLSOM. I wanted to give the committee some idea of the problem it is going to be confronted with before you undertake to pass legislation to dispose of it. Mr. BENDER. This record will be made available immediately, as I understand, and I wonder if you cannot include the figures you have in mind in the record. The CHAIRMAN. Without objection he may include any statement he wishes. Mr. FOLSOM. The aircraft plants represent the biggest single item: We know we are going to have those plants, and the disposition of those plants will involve a considerable problem. Under this bill, general authority is given to an administrator and he in turn will depend upon the individual agencies to dispose of the materials. He, as administrator, will not actually dispose of them. Under present regulations, issued by the Administrator, certain agencies, such as the Treasury Procurement, are now disposing of the consumer goods instead of having each of them dispose of their surplus supplies in competition with other agencies. This bill gives the Administrator the authority to continue that practice. 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. 21 |