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Secretary PATTERSON. I am unable to say. A few weeks at any rate.
Senator DowNEY, General, have you your own opinion as to the extent to which military defense production should be stepped up within a year or 2 years on a monthly basis?
General RUTHERFORD. There is no limit to the extent to which it should be stepped up. The only limitation is the possibility of doing it. We are endeavoring to exhaust every resource to make it possible to increase our production. I don't think that anything we can possibly do will be too much.
Senator DOWNEY. You do not mean by that, General Rutherford, that to the fullest extent that it could be done every civilian industry should be curtailed? General RUTHERFORD. Oh, no, indeed. That is not practicable.
I might mention that, in connection with our subcontracting, there is a great deal that can be accomplished by subcontracting to smaller and smaller people. But you reach a point where you are really losing time instead of gaining time, because there are many of these subcontractors that cannot read drawings, and you have to send a skilled man over there to tell them how to do it and check up periodically as to how they are getting along.
An example came in just the other day, where 500 pieces that were going into some munitions were turned over to a subcontractor, with the fixtures in which they are held, for machining. It is an extremely simple operation. And yet he spoiled every one of those 500 pieces. He does not know yet how he spoiled them. It just shows that there is a limit to the distance that you can go.
Senator DOWNEY. I understand that, General. But let us take a specific case, one that has been discussed most, the automobile industry. Is it your own opinion as a representative of the Army that we should curtail automobile production to, say, 50 percent of what it is now or 25 percent of what it is now? What have you in mind definitely?
General RUTHERFORD. There is no definite figure so far as I could say, Senator, that could be placed on that.
The way that it is working is that we are placing more and more orders on the automotive industry, and it is requiring more and more of their labor and just as much of their equipment as can be utilized. As they do that work, they automatically will have to curtail on their automotive production.
Now, the extent to which it will go depends on how successfully or how rapidly you can give them work to do. There is not much point in throwing an industry out of work hoping that something will come along later that will fit into the defense picture, except as they may be using vital materials that make that course inevitable.
Senator DOWNEY. Suppose, just to carry out some hypothesis that over the next 2 or 3 years we would gradually adapt the entire automobile industry to the production of military trucks, tanks, airplanes, and other military equipment, so as to entirely utilize the resources of the present automobile industry in defense equipment. Do you think that that ought to be done? Is that your idea?
General RUTHERFORD. I don't believe that we will ever get to that end, Senator.
Senator Downey. To what end do you think it could be done?
General, let me put it this way: The Government is here asking a bill that will at least implement the Government to destroy as far as possible all present civil production in favor of military defense production. Now, to what extent do you think it should be the policy of the Government to curtail civilian production in favor of military production-and I am asking you specifically about the automobile industry?
General RUTHERFORD. I haven't any answer to that, Senator. I don't know. If the first two methods that have been mentioned of getting this job done were successful, the third method would not be used anywhere near to the extent to which it might under the other circumstances.
Senator DOWNEY. But the first two methods might entirely wipe out present production. It is a fact that the production of the United States at the present time is only approximately what some of the military men say we should have in military production; that is, around thirty or forty billion dollars a year.
Now, I am trying to find out for the benefit of the Senate of the United States what is in the minds of the Government representatives under this bill and under other legislation. To what extent would you, as a representative of the Government, one of the distinguished representatives of the Army, believe that we should curtail the present production in favor of military production? Is there no way in which you can express your idea on that?
General RUTHERFORD. You can obtain some idea of it, Senator, by considering what some of the other countries are doing. For example, Canada, we know, is utilizing about half or over half of the total productive capacity of the country for defense purposes.
Senator DOWNEY. Well, General, what I am interested in is to know what our Government representatives think we should plan on doing for the United States under existing conditions.
General RUTHERFORD. I cannot give you any figure, Senator; but the thought is that we should do what is necessary and go to the extent that is necessary to get this equipment in the earliest practicable time.
Now, whether it amounts to curtailing our normal production by 50 percent, 60 percent, or 40 percent, or maybe 17 percent, as we are doing today, it is extremely difficult to say; and I freely admit that I do not have the answer.
Senator DOWNEY. Mr. Chairman, if I may intervene, just one comment to make my position clear to the General.
The CHAIRMAN. Certainly.
Senator DOWNEY. I am very positive of this—that if our steel manufacturers and our other large manufacturers can carry out their policy of restricting as much as possible production to the present capacity, and if our military authorities are allowed to turn their production to the extent of these desired military materials and equipment, we will produce an industrial dislocation and agony in this country that will put us in as bad a condition as poor Europe is today. That is my opinion.
All I am trying to find out now is what his idea is as a representative. To what extent would you plan, would you want, or do you believe that the Government should go in utilizing this power to curtail civilian production?
General RUTHERFORD. It certainly should be used so as to cause a minimum of hardship. If our taking a substantial portion of the steel would create a very severe hardship on the civil population, that would not be right.
Senator Downey. But, Mr. Witness, that is just a generality. That means nothing to this committee.
Let us take some specific industry. Let us take steel, if you please. We now have a capacity of about 90,000,000 tons. The industry does not want to expand any more and is fighting vigorously against increasing the present capacity, as we all know who read the newspapers.
Now, to what extent do you think civilian production should be curtailed in the use of that steel in order to allow that steel to be used for the Army and the Navy and other defense materials? Merely to indulge in generalities and say that we should do it at a minimum hardship or do it like Canada or Germany does not mean anything. What is going to be the outcome of this legislation to the businessmen and the workers of America and the citizens of America ? That is what I am trying to get at.
Mr. Chairman, if you will excuse me for my extensive comments. The CHAIRMAN. Yes. Certainly. Senator DOWNEY. I have no desire to argue, but I would like to get into something that is concrete. I haven't heard anything yet that is. There might be somebody in the Government that can come up and tell us definitely how the Government plans that this thing is going to work out—what is going to be the definite outcome.
The very able gentlemen here say that we want to produce two billion or three billion dollars' worth of defense material a month. Do they know what is going to be the effect upon the manufacturing industry and the businessmen of America? How is it going to be done?
General RUTHERFORD. The Office of Production Management, of course, is very much more interested in that particular phase of it than we are, Senator. I know they are working on the problem, but whether they have reached the point in their studies where they could give you a definite answer is beyond my personal knowledge.
The CHAIRMAN. A few moments ago Judge Patterson brought to our attention that during the Seventy-sixth Congress there was passed a bill quite similar to this; and we shall at this time, for the benefit of the record and for the benefit of the Senators who are not here at this time, call your particular attention to the opening paragraph of the substitute bill offered by the Secretary of War; and I respectfully ask your very careful attention to this that I am about to read in conjunction with this bill that was approved and which we passed on October 10, 1940. (Reading:]
Be it enacted by the Senate and House of Representatives of the Inited States of America in Congress assembled, That during any period of national emergency proclaimed by the President, the President is authorized, when he deems it essential to promote the national defense and to overcome shortage, (a) to requisition and take over for the use of the United States or in its interest any military or naval equipment or munitions, or component parts thereof, or machinery, tools, or materials necessary for manufacture of such equipment or munitions
And this portion of it is in addition to the act of October 1940— or any patents, plans, designs, or rights controlling the production of such materials or supplies and (b) to use on such terms as he shall deem satisfactory, or to sell or otherwise dispose of any materials so requisitioned or taken over, or any right or interest therein, pursuant to the provisions of this Act.
Now, section 2 of the proposed substitute bill excluded anything about patents, which subject is not carried in the bill of October 1940. But in reference to patents, we have before us now an amendment that has been suggested by the gentleman who represents the New York Association, which, I understand, was acceptable to the War Department, therefore eliminating section 2 insofar as a comparison of the substitute bill pertains to the bill of October 1940, Seventysixth Congress. I will read the bill that we passed:
AN ACT To authorize the President to requisition certain articles and materials for the use of the United
States, and for other purposes
Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That whenever the President determines that it is necessary in the interest of national defense to requisition and take over for the use or operation by the United States or in its interest any military or naval equipment or munitions, or component parts thereof, or machinery, tools, or materials, or supplies necessary for the manufacture, servicing, or operation thereof, ordered, manufactured, procured, or possessed for export purposes, the exportation of which has been denied in accordance with the provisions of section 6 of the Act approved July 2, 1940 (Public, Numbered 703, Seventy-sixth Congress), he is hereby authorized and empowered to requisition and take over for the said use or operation by the United States, or in its interest, any of the foregoing articles or materials, and to sell or otherwise dispose of any such articles or materials, or any portion thereof, to a person or a corporation of the United States whenever he shall determine such action to be in the public interest. Any moneys received by the United States as the proceeds of any such sale or other disposition of any such articles or materials or any portion thereof shall be deposited to the credit of that appropriation out of which was paid the cost to the Government of the property thus sold or disposed of, and the same shall immediately become available for the purposes named in the original appropriation: Provided, however, That nothing in this section shall modify or repeal section 14 of Public Law Numbered 671, Seventy-sixth Congress, approved June 28, 1940.
SEC. 2. Whenever the President shall requisition and take over any article or material pursuant to the provisions of this Act, the owner thereof shall be paid as compensation therefor such sum as the President shall determine to be fair and just. If any such owner is unwilling to accept, as full and complete compensation for such article or material, the sum so determined by the President, such owner shall be paid 50 per centum of the sum so determined by the President and shall be entitled to sue the United States for such additional sum as, when added to the sum already received by such owner, such owner may consider fair and just compensation for such article or material, in the manner provided by sections 41 (20) and 250, title 28, of the Code of Laws of the United States of America: Provided, That recovery shall be confined to the fair market value of such article or material, without any allowance for prospective profits, punitive or other damages.
SEC. 3. The authority granted in this Act shall terminate June 30, 1942, unless the Congress shall otherwise provide. Approved, October 10, 1940.
In the bill of October 1940 it only permits the delivery of 50 percent of the estimated value, whereas this bill before us appears to be more liberal, in view of the fact that the amount so delivered is 75 percent.
That is the act to which the Secretary of War referred a moment ago, is it?
Secietary PATTERSON. Yes, indeed.
The CHAIRMAN. Now, in reference to paragraph 2 of the substitute bill, at this juncture I would like to call the attention of the Secretary of War to a matter that arose here the other day. I don't know whether the Secretary was present at the time that the gentleman from New York representing the New York Lawyers Patent Association appeared before this committee.
Secretary PATTERSON. That was Mr. Byerly?
Then I asked him to read for the benefit of the record his suggested amendment relating to patents, and he read it as follows:
Add at the end of the first section the following paragraph:
“Provided, however, That if, within ten days after the requisitioning under this Act of any property other than tangible personal property, the owner of the property shall file with the President a written declaration and consent that the property may be used by or for the Government for national defense or other governmental purposes on the basis of compensation to be determined in accordance with section 2 of this Act, the title to the property shall not be taken over or disposed of under the provisions of this Act unless the owner refuses to execute such leases, licenses, or other grants to the United States as may be necessary to give effect to the declaration and consent which he has filed."
That is the amendment that I spoke personally to you about at the War Department on Saturday, I believe, Mr. Secretary.
Secretary PATTERSON. I have not made any study of the phraseology of that. It sounds reasonable enough.
The CHAIRMAN. I assumed that it was from what you said. Secretary PATTERSON. It does, as I understand, make available to the Government or in its interest any patented process or patented invention without disturbing the title, but giving the Government a license...
The CHAIRMAN. You see, what Mr. Byerly has in mind is the interest of the owners of American patents. Perhaps it would not be applicable to the owners of foreign patents. . Secretary PATTERSON. No. What we have in mind particularly here are United States patents owned abroad. They are United States patents controlling production and manufacture here in this country, but held, controlled, or owned by foreigners.
We do not plan, of course, any confiscation of those rights. That would be intolerable. They would have to be paid a value just the same as if they were Americans.
Everything that we propose here is, of course, to be taken with fair compensation. I have heard the bill described as a confiscation bill. It is not that. Confiscation implies forfeiture. You confiscate illicit liquor or something like that. There is no confiscation feature in this bill whatsoever. It is properly called a requisitioning bill.
The CHAIRMAN. Insofar as compensation is concerned the present substitute as suggested by the Secretary appears to be more liberal in its terms.
Secretary PATTERSON. It permits a drawing down of 75 percent. The CHAIRMAN. And the bill of October permits 50 percent.