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 refrig

erators.

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.

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If a

fellow could buy a jeep for $100 from the Procurement Division and sell that for the ceiling price it might be $800. Could you not provide in a case where a commodity sold for 10 percent of its value that a person who bought it could sell it for not more than 20 percent? Mr. CLAYTON. We can provide that.

The CHAIRMAN. That instrumentality could be used for discouraging speculators from going into the surplus property market. Mr. CLAYTON. We can impose a condition of that kind.

The CHAIRMAN. I want to ask you a question about war plants. We have some enormous plants owned by the Defense Plant Corporation, such as the bomber plant at Marietta, Ga., and several others. Those buildings are too large for most small business concerns, or even large business concerns to purchase. I wonder if any thought has been given to the possibility of selling those buildings to individuals by sections, so many square feet to an individual, partnership, or corporation.

Mr. CLAYTON. We are making a very careful study of the idea of in some way dividing up these big plants for use by a large number of small manufacturers.

Of course, that principle has had some small development in this country as, for example, the Bush Terminal, the Amoskeag Mill in New England, which was a very large plant which was developed in that way, and the Furniture Mart in Chicago. There have also been several examples in England.

We are studying those things and trying to work out some scheme for making use of these very large plants in that way.

The CHAIRMAN. Operated, preferably, by local operators.

Mr. CLAYTON. Yes, sir. As to whether these should be sold in sections to remain in place, or whether the property should be leased to different operators or some central service agency to supply heat, light and other services, we have not gone far enough yet in our investigations to determine which is the best method.

The CHAIRMAN. It seems to me that the airplane plant at Marietta, Ga., would be large enough to manufacture all the planes we could use in this country in peacetime.

Mr. CLAYTON. That is a very big plant.

The CHAIRMAN. There is an enormous amount of machinery that might not be used by people who would buy such plants. Does this bill authorize you to sell such machinery?

Mr. CLAYTON. Yes, sir; we have already worked out a price policy for machine tools, of which the Government has several hundred thousand costing about two and one-half billion dollars. We have worked out a price policy for that.

The CHAIRMAN. Is any study being given to the use of a lot of these large plants for storage facilities?

Mr. CLAYTON. Yes, sir, we have a lot of that kind.

The CHAIRMAN. So we do not have to rent a large amount of warehouse space?

Mr. CLAYTON. Yes, sir.

The CHAIRMAN. What about your part facilities near large cities? Have you given any thought to the possibility of holding these port facilities and letting the cities have the use of them for a nominal sum, or selling them outright to them, with a clause in the contract providing that if we were to get into another war we could reacquire those

facilities and pay the city for any necessary improvements to the property, plus the original cost to the city?

Has any thought been given to that?

Mr. CLAYTON Very little consideration has been given to that aspect of the matter. We have not reached that as yet.

The CHAIRMAN. I have understood that one warehouse at one port of embarkation, for example, which we had in the last war, cost the Government about $20,000,000 and we sold it for $2,000,000. I think provision ought to be made so we would be able to buy it back for $2,000,000 if we find it necessary to take it over again, and I am wondering if you have given consideration to incorporating an idea of that kind in a sales contract.

Mr. CLAYTON. We certainly will try to avoid any such unprofitable transaction.

The CHAIRMAN. That is all I have at the moment.

Mr. RANDOLPH. Mr. Clayton, I want to direct your attention for a moment to section 14 on page 14. I am sure we can all understand the designation of a special formula for disposition of Governmentowned plants in the manufacture of synthetic rubber and aluminum. I am wondering, however, if the specific treatment which is set forth in section 14 should not conceivably apply to other Government-owned plants of certain types of materials.

Mr. CLAYTON. It might. We could not think of any other that had the same aspects as synthetic rubber or aluminum. As you say, the reasons for that occur to all of us as being obvious. I do not think the same reasons would apply to a magnesium plant or an aircraft factory or a steel plant. Those two products were the only ones that we could think of that had those particular characteristics.

Mr. RANDOLPH. I am wondering if we might find it advisable to place a further or qualifying provision in section 14 so that the channels would be open, if such a situation arose, whereby there could be included a type of product, plant or factory that is Government owned that would fall in this special category of treatment.

Mr. CLAYTON. The difficulty about that is that we are likely to have people representing sectional or vocational interests insert quite a few types of plants in that provision, and whenever that is done, why, of course, you hold them off the market just that long.

We are trying to limit this as much as possible, with the idea that we would like to put on the market as many of these plants as we possibly can in order to make them available to industry, get them into private hands, and thereby help in that way to start up commercial activities and afford employment. Under this provision, synthetic rubber and aluminum plants or any other plants that might be added would have to be held off the market for some time.

Mr. COCHRAN. In that event you would have to submit the proposition to the Congress, to give Congress the opportunity to say what disposition should be made and whether you could sell them. Mr. CLAYTON. That is right.

Mr. RANDOLPH. I so realize, and I am in agreement that the Congress will have the responsibility to fix the policy with reference to the disposition of these two types of products. Personally I am against the scrapping after the war, of the synthetic rubber plants which we have built. I have asked the question for information so that the committee might possibly give consideration to the need of some qualifying language in addition to these two items. And, you

• voice an objection which I can well understand, that there would be no doubt be certain sectional interests endeavor to insert other types of plants which might adversely affect the purposes of the bill. Mr. CLAYTON. Yes.

The CHAIRMAN. It is not contemplated that the Government itself is going to continue the operation of the synthetic rubber plants or the aluminium plants, is it? Is it not the purpose that private business take them over when the war is over?

Mr. CLAYTON. Mr. Chairman, that I do not know. I would think that is completely in the lap of Congress, and the question of the use of the synthetic rubber plants following this war is one of the most important questions I think that relate to the surplus property disposal which the Congress has under consideration.

The CHAIRMAN. But this act does not authorize the Government to operate these plants in competition with private business, does it? Mr. CLAYTON. No.

The CHAIRMAN. And if their operation is continued it will have to be under some act of the Congress, which will have to provide the appropriation, and the agency involved would have to come to Congress to get the money.

Mr. CLAYTON. That is right.

The CHAIRMAN. There is a fear in the minds of some people that this bill provides for the operation.

Mr. CLAYTON. No; this bill does not provide for that, except for a temporary period to facilitate disposition.

The CHAIRMAN. I want that made clear because that thought seems to be in the minds of some people.

Mr. HALE. Mr. Chairman, I would like to ask Mr. Clayton one or two questions.

The CHAIRMAN. Yes; Mr. Hale.

Mr. HALE. In reference to the suggestion made in the Chairman's question, Mr. Clayton, we have in my district across the harbor from my city some big shipyards. What is going to be the Government's policy in reference to things like that? Is it the purpose to make sales of such things as an integrated plant or an operating unit, or to scrap them and sell them piecemeal. Or has any definite policy

been established?

Mr. CLAYTON. That is a shipbuilding yard you speak of?
Mr. HALE. Yes.

Mr. CLAYTON. No policy has been arrived at about shipbuilding facilities, but I think we all know that we have a great surplus of them in this country and that it would be impossible for them to continue to operate for the purposes for which they were built, that is, building ships.

Mr. HALE. There is no doubt about that. The question in my mind is this: It would be one thing to sell a shipyard, or to sell a part of the yard to somebody who might use it on a diminished scale, or to scrap the whole thing and sell the cranes, the molds and so forth.

Mr. CLAYTON. Well, obviously I think that if private facilities can be sold to continue in operation in the production of things in which they were engaged during the war it will be just that much. better. But with respect to aircraft factories, aluminum factories, magnesium factories, shipbuilding facilities, we know that the capacity is far beyond any civilian use of those things.