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could be utilized here or would be utilized-one quotation I might read is as follows, on page 3. We were speaking about a number of different companies that held monopolies.
On the contrary, it would appear in some instances at least that they were bludgeoned into such limitations of commercial development by threats of having patent suits on their hands for the rest of their lives if they didn't agree to arrangements dictated by foreign interests.
I quote another sentence: Every commercial agreement which a German company makes is made at the dictation of the German Government.
If the committee would like, I will leave this as a part of the record. I don't want to burden the committee with too many extracts from this. But it goes into a discussion of magnesium and the extent to which the manufacture of magnesium is tied up with foreign relationships and the desirability of having the right to take over those patents and patent rights and use them entirely free of these agreements that had been made beforehand.
I would like to go on further with this extract of a great number of cases that I have taken out of the World War records where the requisitioning authority was availed of. I can summarize in a few sentences at the start their general effect, and then I will go back into detail.
Nearly all textiles needed were commandeered to keep plants from diverting facilities to more profitable business. The output was taken under a program at fixed prices. There were about 2,000 orders under this category.
Caustic soda, sodium nitrate, and bleach, 30 percent chlorine, account for about 100 commandeering orders. Heavy equipment to replace material taken to France, that is, cranes, locomotive cranes, and construction equipment, account for about 50 orders. Secondhand brokers usually asked about 50 percent above the replacement price in case they were asked to sell this second-hand equipment.
Machine tools, particularly for aircraft production, account for about 100 orders. Some are in this—the "are” refers to the World War experience—some are in foreign or neutral hands, some in bankrupt receivers’ hands, and some in the hands of speculators. All are held for fancy prices.
The range of materials is large. Typewriter ribbon silk is taken to make balloons. Blueprints for the J.D. Peterson device for converting the 1903 rifle to a semiautomatic rifle were requisitioned; 225,000 pounds of tapioca flour were found just in time to save the handgrenade program, for which it is an essential.
Senator Hill. Who had that flour? Do you know, General? General RUTHERFORD. I have the particular case in detail here. I think it would be wise to leave the names out of the picture. They might be embarrassing.
Senator Hill. I would not want to embarrass any concern. It was an American concern, was it?
General RUTHERFORD. Yes, sir.
Senator Hill. How were they selling that flour? What were they going to do with it if we had not taken it?
General RUTHERFORD. Use it for food purposes. But it is used for nitro-starch. It is a component of nitro-starch, that is used in making up the explosive that is used in the hand-grenade. The process had been developed around that. They just ran out of material, and just happened to find this in time. It was being held for other purposes, so it was requisitioned.
I have already mentioned the requisitioning of typewriter ribbon cloth. I think the total quantity that was requisitioned came from a considerable number of typewriter manufacturers.
I have already mentioned the tapioca flour. That went to the Trojan Powder Co. to make the explosive for the hand grenades.
There was one case where 2,600 tons of nitrate of soda, which were covered by contracts to 13 commercial fertilizer plants, were taken over because the company could not sell it to the Government. It had contracts that called for delivery. So this was in the nature of a friendly requisition to enable that company to do what the Government wanted it to do.
There was a case where a 15-ton locomotive type crane held by a speculator, who wanted $5,000 more than the replacement value of a new crane, was taken over.
There was another case where a company had a 25-gallon jacketed copper still that it could not use for our purposes because of restrictive legislation limiting the use of distilling apparatus. This was in the nature of a friendly suit to take over that distilling apparatus. The same company used it and went ahead with our work instead of using it for the purpose for which it was designed.
I don't know how many cases this committee would like to hear, but I have a great volume of them here. I am just picking out a few of them.
The CHAIRMAN. I would like to ask you a question here, if it won't interfere with you. General RUTHERFORD. All right.
The CHAIRMAN. Senator Downey seems to be speaking about this question that the Government perhaps in some instances may make a seizure or may condemn certain machine tools, the property of independent manufacturers who are manufacturing goods not being utilized for the national-defense program. Do you know of any instance at the present time where it would be necessary for us to make immediate seizure of any machine tools of any independent manufacturer who has not a subcontract under any of the prime contracts?
General RUTHERFORD. As Secretary Patterson has pointed out, there is a very great shortage in all machine tools
The CHAIRMAN. I understood the Secretary to say in reference to that matter that it was going to be very difficult to spread the hours over all of the three shifts. General RUTHERFORD. Yes.
The CHAIRMAN. And he attributed that to the fact that we are lacking in men able to do that sort of expert work, trained for that purpose; and that as a result of the lack of trained men to handle those tools or that machinery it was going to be very difficult to increase the number of shifts in the second and third categories.
General RUTHERFORD. That is correct. But I think the difficulty is being met to an appreciable degree by the training programs that are now under way. I think that we will be able to utilize more and more shifts as the training program goes on, because of the men being trained. So we are not missing any opportunity to use that first method that the Secretary spoke of, namely, the second and third shifts.
The CHAIRMAN. You mean that the increase in the number of trained men as they are prepared for this particular work will bring about a greater hourly utilization of these machines? General RUTHERFORD. Yes.
The CHAIRMAN. And if that continues, do you think that there will . be any necessity to take over any of these properties?
General RUTHERFORD. Yes, sir. I do. In spite of our possible use of the first and second methods, that is, more shifts and more subcontracting, there will still be cases where this will be necessary. There will be no other way to do it.
As Secretary Patterson said, we are utilizing the first two methods to every possible extent. But there still remains the necessity of using certain machine tools or certain materials that we cannot get in any other way.
The CHAIRMAN. Suppose that the Government deems it necessary for the defense of this country to take over certain property. They would use a considerable amount of discretion in taking over that property, I assume?
General RUTHERFORD. By all means. · The CHAIRMAN. And if a man is manufacturing goods for the defense program, of course, if possible, he will not be interfered with. General RUTHERFORD. That is right.
I think probably we have not made it clear that the smaller manufacturer is not the one that would suffer most. If a small manufacturer has only one tool of a particular kind in his stock, and by taking that tool you just ruin his whole productive capacity, that is the very last step which would be taken.
What we are aiming at is these larger manufacturers that may have a thousand tools of the same kind. By taking one or two, and by forcing them to work their second and third shifts on the remaining tools, they can still meet their production schedules and no one will be harmed. It is not aimed at the small man who will be put completely out of business by taking a key machine tool out of a plant when he has only one of them.
Secretary PATTERSON. Might I interpose for a moment?
Secretary PATTERSON. Senator Downey wanted specific instances of what we conceive to be the need for this act today. One has occurred to me while General Rutherford has been speaking.
I have today right now on my desk an instance of an improved weapon that has been designed by some people. We want to place an order, experimentally at any rate, for a limited quantity of that for thorough test.
The people who control it want a price that my production people tell me exceeds the cost of producing the article by more than 100 percent. So far, after some weeks of dickering, we have not ordered that article, because we refuse to pay the price that is asked, believing it to be exorbitant and unreasonable.
I think that is purely a military weapon. I think that we should clearly. have the power to requisition, if you like, the plans and specifications, and pay a fair price, including all the development cost and a reasonable profit over and above it.
But we don't have that power, in any way that I know of, at any rate. That is a problem that is current right now.
We are continuing to dicker and try to get them to take what I am sure is a fair price according to all of the ordnance people and all who have worked upon the problem and who are quite familiar, I think, with the cost of the article and the development cost of the inventors or the people who have promoted this improved device.
It seems to me that the interest of national defense warrants us in saying that we ought to have power to do that. If we have it today, I am unaware of it. No one has suggested to me that we have it.
Senator DowNEY. I should like to make an intervention right there. • The Chairman. Very well.
Senator DOWNEY. You have the power today to force any manufacturer to take a defense contract at a reasonable price, have you not?
Secretary PATTERSON. These people are not manufacturers.
Senator DoWNEY. It is not these patents; it is the invention that you are seeking?
Secretary PATTERSON. I don't think it is a patent. It is a device. We want the plans and specifications of some article in existence. I don't think we have any power to compel them to produce it. They do not have a manufacturing business.
Senator DOWNEY. What is it that they have which you want to acquire? What you want is an invention, is it not?
Secretary PATTERSON. I don't know whether there is a patent covering it at all. What we need is either the article which they can have manufactured and which we can buy on a voluntary basis at a reasonable price, or the plans and specifications so that we can go out and make it ourselves.
Senator DowNEY. I assume that their plans and specifications are secret and that you do not have access to them?
Secretary PATTERSON. That is right.
Of course, I suppose that after months and months of delay you could work out something, some way to get it.
I would not want to go into details, because I don't think that would be right. But there will be some of those cases coming up all the time. There is no doubt of that at all.
Senator Downey. It is the manufacturing rights that you want to get hold of, then.
Senator KilGORE. May I ask General Rutherford a question?
Going back into the period of 1917 to 1918, are there any instances in there of confiscation or commandeering of actual operating plant equipment? General RUTHERFORD. Yes, sir. Senator KILGORE. That is what I am thinking about. General RUTHERFORD. There is an example of that right here. A certain company ordered nine lathes complete with motors from the Westinghouse Co. They had a priority
Senator KilGORE. Let me amend my question, to use the words "plant equipment in use by a plant at the time of commandeering."
General RUTHERFORD. I will see if I can find one. Yes. Here is a case where a company had no Government contracts. It had two 12-inch by 6-foot Hendy Norton lathes with metric transformation and taper attachment. They were urgently needed by Slocum, Averum
& Slocum, who were manufacturing range quadrants for the Ordnance Department of the Army. They were requisitioned from that company and taken over and given to the other company. And I have other examples of that here.
Senator KILGORE. That was what I was asking about.
Here is one on a little different line. The Quartermaster Corps had made an arrangement with the National Canners Association by which 10 percent of the total pack of tomatoes would be kept for the service. One of the canners refused to live up to that agreement.: He wanted to hold his part of the pack for considerably higher prices. Under the requisitioning act as they used it in the World War, those were commandeered and taken over for the service.
There was another case where a certain number of lathes were ordered from the Westinghouse Co., that is, the motors for those lathes were ordered from the Westinghouse Co. under a priority contract. There was a priority on that contract. The order was canceled for cause; but when the company that had the order was asked to give up the motors that they had in stock, they refused to do it. Those motors that they got from the Westinghouse Co. were urgently needed for other purposes, and they were requisitioned by the Chief of Engineers for use on other lathes.
There is another case where 20 tons of sharp silver sand were needed by the International Arms & Fuse Co. for polishing projectors, that is, for polishing certain parts of projectors. There was only one source of supply, and they refused to sell. We had no defense contracts for that material, and that material was commandeered and turned over to the International Arms & Fuse Corporation.
There was another case where the Signal Corps on their aircraftproduction program needed 200 million feet of spruce timber from a certain company in Oregon. The company refused to sell the spruce alone, and wanted to sell the whole stand of timber. No agreement could be reached; so they commandeered the spruce alone.
There is also the case that I mentioned in passing a few moments ago where the Chief of Ordnance requisitioned for the Government's use all drawings, tracings, blueprints, models, and manufacturing rights of the J. D. Peterson device for converting a United States rifle to a semiautomatic rifle.
Senator Hill. We have a case in point right now on Secretary Patterson's desk. General RUTHERFORD. It is the same thing exactly.
I have many, many others where they requisitioned materials of all kinds—tin, tungsten, chrome-all of the materials that are on our strategic list; and we are in quite a critical situation on them at the moment.
Senator Hill. General, could you tell us offhand how much delay has been caused because of the fact that the inventor of this new weapon of which you spoke, the one on Secretary Patterson's desk, has been unwilling to go forward and do business with the Government?
General RUTHERFORD. I am not familiar with the details of that case. I don't know whether Judge Patterson has any further information or not.