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Secretary PATTERSON. It gives recourse to the owner to establish the true value and get back any remaining excess. It follows in that way, of course, very closely the regular statutes regarding eminent domain, where the Government takes land for a post-office site, deposits the value that the Government fixes, in court, and the judge commonly allows the owner to draw down a substantial part of that value and then establish a higher value if he is able to.
There is nothing novel about that, nothing unique. There is no desire or intent to depart, nor is there any departure in any fashion, from the established procedure.
Senator Hill. Mr. Secretary, as I read the patent laws, so far as a patent granted by the Government of the United States is concerned, the law provides now that irrespective of any emergency, the Government has a right to take over that patent. Of course, that is with payment of due compensation to the owner.
That is so far as patents granted by our own Government are concerned. I think that if you will look at the patent law, you will find that the Government has the right to take over this patent and pay the owner due compensation irrespective of any emergency.
As I say, what you are seeking to do now is to reach these patents that are granted by other governments, owned or controlled by some other interest perhaps than those right here in our country.
Senator DOWNEY. Mr. Chairman, I would like to interpose a question.
The CHAIRMAN. All right.
Senator Downey. Judge Patterson, do you not think that this law would be more equitable if provision were made that any citizen or corporation who had equipment, material, or machinery commandeered by the Government that it was actually using legitimately in production, should not only be entitled to the value of the article seized, but likewise where consequential damages arise from the injury to his business?
Secretary PATTERSON. You suggested that last week, Senator Downey; and I was puzzled. I mean by that, it raised a question that I had not considered before, and that I have tried to give thought to.
I am not sure what the consequences of that would be. You mean. damage to the goodwill and going-concern value?
Senator Downey. More than that, Judge Patterson. You may easily conceive cases which have occurred and probably will occur under this bill under which there may be a going business of a substantial character. The commandeering or seizing of certain machinery of that business might entirely prevent the further operation of that business.
Now, merely allowing the owner of that business the bare market value or reproduction cost of that machinery would be grossly unfair, because the taking of the article could destroy the entire business.
Secretary PATTERSON. There is certainly merit in that. I think that is a departure from what has been the rule in eminent domain proceedings.
Senator DOWNEY. No; I don't think so, Judge Patterson. I know that in California we allow consequential damages when a business is taken over for something of that kind, or for a breach of a contract and the man is damaged as a going business. He is not restricted to merely the actual value of the property.
Secretary PATTERSON. I suppose that in California, just as in all the other States, you take private property for public highways. They all do that. They have to.
I am not sufficiently familiar with what is the standard out there. Í had supposed that it was similar to a case in which a site or a tract of land is taken over for a public building or something like that, where the award is restricted pretty well to the market value of the particular property.
But I am not prepared to dissent from what you say. It just raises a problem to which we are giving very careful consideration.
Senator DOWNEY. Judge Patterson, to take a case that you individually discussed with me: Assume that an automobile manufacturer had 10 particular tools that the Government needed for defense purposes, and maybe the Government required only 2, and that the manufacturer could speed up the other 8 and do the full work. Then there has not been any consequential or substantial damage.
But if the Government would go in and take those entire 10 tools and damage the manufacturer so that his business was entirely disrupted and he could no longer carry on, I certainly think that there ought to be an additional allowance; and I think that the citizens of the United States would be much happier to know that the Government was dealing with them on that basis.
If, as General Rutherford suggests, and as you evidently believe, there will not be very many occasions for the exercise of this summary power, that is all the more reason why the Government could fairly reimburse these citizens.
Mr. Chairman, I do think that there ought to be such a provision in this bill before it is passed.
Secretary PATTERSON. Of course, there could be, if thought wise, a definition of what should constitute, I think the expression is, just compensation such compensation as the President shall determine to be fair and just. There could be a definition of what that expression specifically means.
Senator Downey. I am only referring to the case of a going business.
Secretary PATTERSON. Of course, if the tools or materials were held in storage for specific purposes
Senator DOWNEY. That would be entirely different.
Senator KILGORE. They would not have any consequential damages then.
Secretary PATTERSON. No. Not in such cases.
I think that whatever the administrative agency would be, it could be counted on to exercise what power it had in the fairest way. They surely would go to idle tools before they would go to tools already busy. They surely would go, if there were no idle ones, to tools that could be spared without damage to someone's going business before they would go to tools that were indispensable to the entire operation of the business, which would be a highly arbitary thing for them to do.
The CHAIRMAN. Suppose that in southern California there was an independent contract to be given out as a subcontract originally to one of the prime contractors, and you found that that independent company, who is not engaged in the manufacture of goods for national defense, had, say, for example, six tools, and some prime contractor needed, say, two of those tools. Would you not look into the question as to whether or not that independent contractor could speed up his independently produced goods by increasing his shifts?
Secretary PATTERSON. I would assume so.
The CHAIRMAN. And by more man-hours in operation of those tools, so that consequently it would not interfere with his independent orders?
Secretary PATTERSON. I would assume so.
And yet I can show you gentlemen that the operation of the Priority Act right now involves far heavier responsibilities than the operation of an act like this. It is capable of doing infinitely more damage than an act like this. It will be exerted day in and day out. There is no question about that in my opinion.
Senator Hill. The fact is that as a practical proposition we know that the operation of that Priority Act is inevitably going to do a very considerable amount of damage.
Secretary PATTERSON. It will render tools now busy idle tools, if I am not mistaken.
Senator Hill. Yes. There is no question about that.
Senator DownEY. You might say that not only it could do that, but is doing it right now. I know that there are thousands of businessmen right now in my own State who are already now beginning to suffer very great agony because of the priority.
Secretary PATTERSON. My information on that is that most of it is still threatened and not actual. As you get in and analyze the complaints, the grievances that come in, most of them are still in the future. But I am not trying to diminish their importance.
Senator DOWNEY. They cannot make contracts for sales ahead. They cannot make leases. We are already seeing the beginning of a tremendous dislocation through the exercise of the priority rights. And I am not criticizing them. I am not saying, Judge Patterson, that these things are wrong. I am merely asking you to realize that they are in a pretty serious situation.
Secretary PATTERSON. Of course, they are serious. There is no question about that. They are serious. But I think that the situation is serious.
The CHAIRMAN. Senator, have you any questions of the witness?
Senator Hill. Not except along the lines that the Secretary suggested. My thought is that any damages from this act would very likely be very limited and would be very inconsequential compared to what they are suffering from the act which we have already put on the statute books, to wit, the Priority Act.
Secretary PATTERSON. That is one of the most potent acts that was ever passed in this country.
Senator HILL. I think this act will be more used as a shotgun in the long run usually, although we may anticipate exceptional cases, sueh as those cited to us here this morning, exceptional cases just like we had to pass this act of October 10 to meet. That was an exceptional situation.
So I cannot see how really and truly, having swallowed the Priority Act, we should now scream so much about this act. I may be wrong, but that is my opinion about it.
General RUTHERFORD. Admiral Land and Admiral Robertson are present representing the Maritime Commission and the Navy Department.
The CHAIRMAN. We will be glad to hear them right now. But I want to make inquiry of Senator Downey and Senator Kilgore if they have any further inquiries of these witnesses.
Senator DownEY. I have no further questions right now.
Senator KILGORE. I have no questions.
STATEMENT OF ADMIRAL E. S. LAND, CHAIRMAN OF THE UNITED
STATES MARITIME COMMISSION
The CHAIRMAN. Admiral Land, we are considering S. 1579. We would be glad for you to make any statement that you care to.
Admiral LAND. I notice particularly in the beginning of this bill that two things are essential before it becomes effective-(a) national defense and (6) requisition by the President.
In my judgment those are the only safeguards necessary under present emergency conditions. I mean, I am at a loss to understand the fears that some of the gentlemen and some of the press accounts express, when you have the background of the Merchant Marine Act of 1936, in which you not only are authorized to, but do, take away a ship from a man in the United States who owns an American ship under the American flag; and, if it is under a foreign flag, you also take it if it is owned by an American citizen.
That causes hardships. That has been on the books for years. It is being put in operation. It causes suffering, suffering to every coastal port and every seaport of the United States. We are up against the real thing. We are suffering from that right now.
So far as the workings of this bill are concerned, it would have been of value, if it had been on the statute books, to the Maritime Commission in our expansion of the yard at Chester, Pa.; and in the expansion of the yard at Baltimore, in which the Pullman Co. was involved; in our expansion of the yard at Los Angeles, Calif.; and in the expansion of the yard in Portland, Oreg.
We have, as was mentioned, the right of eminent domain. But it is a slow process. It runs into litigation of years standing in many instances.
Therefore in my judgment this is a proper bill, as amended, to put on the books in times of emergency under which we exist, when more serious contingencies are in prospect.
In my judgment, further, this is a potential bill, not a kinetic bill. It is a psychological bill. It says "Boys, you play ball.”
I also believe that it will be administered from a utilitarian point of view, the greatest good for the greatest number, and that the small businessman and the small machine man will be the last hurt and the least hurt.
I feel sure that in the administration of this act there will no doubt be exceptions. We all make mistakes. We are all human beings. But I have no fear that there will be any abuse of this authority on the part of the Government organizations concerned when you give consideration to the all-out national defense effort.
That, Mr. Chairman, is all that I have to say on the bill.
Senator DOWNEY. Admiral Land, in the case of the condemnation of a piece of property under eminent domain the Government has the power to immediately go into possession of the property, has it not?
Admiral LAND. In theory; yes. In practice it is a pretty difficult proposition. We are struggling with it right now in a number of
And time is of the essence in this effort. I am not concerned about what happens in 1943 or 1944. I am interested very much in 1941 and 1942.
Senator Downey. I did not know that there were any technicalities of any very extensive nature that prevented the Government from going into property under eminent domain within a few days. All they have to do is file a suit and get an order from the judge, is it not?
Admiral LAND. That is all you have to do in theory, but it is a long, slow process of getting it into actual practical effect.
We are working on a contract at Chester, Pa., in which the people have a contract. They went in there on eminent domain. You are an expert lawyer and I am a layman. But I am telling you, the working out of the mechanics of it on eminent domain is a slow and painful process to get business done in an emergency.
The same thing was true of the Pullman plant over in Baltimore. They were willing to get out, but they had their definite things to do first. They had to refer it to their board of directors and to their general counsel. We ultimately got it, but time was lost.
We are all human. We all have the pocketbook nerve. You have to put some pressure on people, whether it is the Pullman Co. or the Morgan Line. I am talking about the big companies not the little ones. We can handle the little ones. It is the big ones that you
have to put the screws on.
Senator DOWNEY. Admiral Land, I understand that under this bill as amended by Judge Patterson now the right to take possession of real property is out. Is that not right, Judge Patterson?
Secretary PATTERSON. Under the amendment there I submitted to you this morning, in response to the suggestions made last week by members of the committee, real estate is not covered. What we rely upon is the existing law on real estate.
Senator DOWNEY. Mr. Chairman, I certainly would agree with Admiral Land that in the case of the taking over of real property by the Government for defense purposes the action of the Government should be made easy and facilitated in every possible way. I have very great sympathy for the tremendous burden of detailed work and harassment that the Maritime Commission is subjected to. I admire very greatly the wonderful work that Admiral Land has done in furthering our shipbuilding program. I have the same sympathy and admiration for Admiral Robertson.
I want it clearly understood that nothing that I am saying is critical of what these Governmet agencies have done. And certainly, if the present law of eminent domain is not satisfactory to Admiral Land, I think that whatever difficulty there is should be cleared away for the most expeditious action on it.