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Actually: The schedule calls for construction of only 770,000 tons, costing $210,000,000, this year, and 1,760,000 tons, costing $480,000,000, in 1942, and 2,970,000 tons, costing $810,000,000, in 1943. The first ship to be delivered under the emergency program is scheduled for November of this year. To date, actual expenditure of cash on this emergency program is less than $10,000,000. * * *

Ordnance:

This is the field of tanks and guns and ammunition. It is a field in which $5,000,000,000 already is available for spending and in which huge new programs are taking shape. Yet the record of actual production is not impressive. It is represented by an outlay of $750,000,000 in the past year.

The goal, in tanks alone, is 30,000. Light tanks now are being produced at the rate of 15 a day. First real production of medium tanks will start in October. A heavy-tank program still is in the blueprint stage. The British are in crying need of tanks of all or any kind. Yet the American tank program has been seventh on the list of military priorities and has tended to coast along.

An even less impressive record is found in other heavy ordnance. Almost no modern antiaircraft guns have been produced in a year of effort. * * *

There aren't enough shells to supply guns in the relatively few tanks on hand and being built.

It's the same story concerning antiaircraft weapons for warships. They simply are not available and are not being produced in quantity. The ordnance bottleneck still has to be broken. * * *

Aid to democracies: This country is setting out to become the "arsenal of democracy." As an arsenal, the United States must be prepared not only to produce for its own needs but to produce enough to meet the needs of the British, the Chinese, the Dutch, and the Latin-Americans who may be in search of weapons.

There is $7,000,000,000 available as a start in building the arsenal. President Roosevelt is prepared to ask Congress to appropriate further funds.

Yes; during its first 90 days of effort as democracy's arsenal, the United States succeeded in providing $75,000,000 worth of aid to the British and Chinese. This included $65,000,000 worth of equipment already on hand and $10,000,000 worth of newly produced equipment. The war goods that the United States provided to the democracies in these 3 months represented less than 2 days of production for Germany's Europe. * * *

Stock pile building: The United States is short of some vital raw materials that are required in war and in preparation for war. This country, through the Reconstruction Finance Corporation, set out a year ago to accumulate stock piles of these needed raw materials so that there would be no chance that the arms industry would get caught short in a period of crisis.

This business of buying up raw materials is one of big figures. The Reconstruction Finance Corporation has committed itself to buy nearly $1,000,000,000 worth of rubber, tin, copper, manganese, wool, antimony, chrome, mica, tungsten, zinc, and asbestos. It actually has brought into this country less than $200,000,000 in materials of all kinds.

For example: The Reconstruction Finance Corporation rubber stock pile is about 120,000 tons, with annual consumption running at 800,000 tons. The antimony stock pile is 7,000 tons, that of chrome ore 24,000 tons, and tin 36,000 tons. Delivered and in transit are 107,000 tons of copper and 238,000 tons of manganese ore, as well as 24,000 tons of wool. There is no zinc and no tungsten trioxide and no mica.

Considering the vast quantities of raw material that war consumes, these stock piles are very unimpressive.

Many details are given, and the conclusion reached :

Absence of direction : One year after this country started in earnest to arm there still is no over-all planning and direction of that effort.

A further conclusion we reach is:

Workers in munitions plants and all defense industries, even if paid fair wages, have a just grievance against a Government which decrees "work or fight” for labor, but politely "requests” owners of plants to agree to make America an “arsenal of democracy."

The article quoted states:

There was a loss of 3 months' time between June 1940 and September 1940, when industry and Government were arguing about tax laws as they affect new plant and equipment built to fill defense needs.

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It was really longer—but there was no "arguing” over registering for the draft, and being drafted.

The defense of our coasts and of bases that we have acquired, means antiaircraft, guns, bombers, cruiser, destroyers, aircraft carriers, and equipment for mining. On all these we are short.

We want to make three specific suggestions with reference to this pending bill.

We are well aware that the President has had full power to do practically everything that this bill authorizes him to do; and we are glad that the Congress of the United States now wants to assert. or reassert its interest in defending America.

Let us call attention to this fact: That if war be hell, postwar is going to be heller. This emergency won't be over, no matter when the war stops. The emergency won't be over for a decade. We make these three suggested amendments:

First, strike out that provision about authorizing the President. Give him orders. Direct the President to take over every war industry, every other basic industry-natural resources, and, of course, banking, and covering transportation and so forth.

Second, protect yourself against what happened in the last war. You see, I was here then most of the time.

We took over the railroads and paid them a rental. The late Senator A. B. Cummings, from the State where I went to college, Iowa, said the Government paid the railroads a rental which would shock the moral sensibilities of mankind.

Now, we propose as a second amendment that you stipulate that in taking over these industries and enterprises the Government shall not bale out fictitious capitalizations; but that you shall stipulate that no payment, for instance, be made to the United States Steel Corporation for the $700,000,000 write-up which they put in when they were merged back thirty-odd years ago; to stipulate that they shall be paid only for bona fide prudent investments, and not a red penny, either in purchase or in rental, not a red penny for profiteering due to monooply of natural resources—which a merciful providence has put here for all of us, and not for a few—to tariffs, to monopoly of credit, or to patents.

You have got to give that to a man who invents something. You have got to give him his payment. But not the corporation that capitalizes that patent or suppresses it. There is all the difference in the world. I followed Mr. Barlow's presentation with great interest. I think basically he is right. And we are not suggesting that we deprive. the inventor, but the fellow who manipulates the invention.

Then, third, in order to put Dr. Haake at rest, we don't propose that you let any politicians run these industries. Frankly I admit that production for politics is just as dangerous as production for profits.

But in this article by David Lawrence—it is in his magazine, so I assume that he wrote it—where it says that industry held up the Government for 3 months—it was nearer 6-it was not the technicians, it was not the production engineers, in these various industries—airplanes, bombers, machine tools—that held it up. It was the private owners.

We suggest for the enlightenment and the relief of the present owners and, let me add, for the relief of the mothers of America, that the better mechanized defense we have and the quicked we have that mechanized defense—and I think Colonel Taylor agrees with me on this the less we need defenders in uniform

Therefore we suggest that it be made specific that these industries, when the Government takes them over, are not to be operated by any politiciansfrankly, I watched some of these so-called braintrusters down here. I wouldn't want them to run the show. I want the best technicians and production engineers that you can get put in every enterprise. And there are a lot of them there now who would be producing if they had their way and were not held up by the nonpatriotic owners.

Those are the three amendments that we suggest, which we think are practical.

Personally, I would like to have this made permanent. But we are not going back to anything that we have had for the last 20 years after this war, I am pretty sure.

If we put it for the period of the emergency and stipulate that the ownership shall be vested in the Government or complete control, for the period of the emergency, I think that is going to last until several of us have been gathered to our Father. I would like to make it permanent; but if we want to have an election on it, well and good.

But, answering the other point of Dr. Haake's, that you will put men in power by this measure, that you are keeping men in power, my mind goes back to 1918. I was here. Woodrow Wilson, who had great powers, appealed to the country to elect a Democratic House. They turned around and elected a Republican House.

As long as we have the free ballot—and God grant we may keep it, and also that we may get a little more sense in using it—but as long as we have the free ballot, we don't need to be afraid of any party perpetuating itself in power unless it delivers the goods to the American people. And if it does, it is entitled to stay in power.

Thank you, Mr. Chairman.
The CHAIRMAN. I believe that that is all the witnesses.

STATEMENT OF DR. A. P. HAAKE–Resumed
Mr. HAAKE. May I answer a point that Mr. Marsh just made?
The CHAIRMAN. Yes.

Dr. HAAKE. He made the point that after the last war we had an election of the Republican House due to the fact that we have the free ballot.

I think that the argument of Mr. Marsh falls, as that situation in 1918 and 1920 in many ways was vastly different than it is today.

In other words, we called them free elections. But when you have placed the economic life of the country in the hands of a relatively small number of men, and when you have millions of people dependent directly or indirectly upon the bounty of the Government, the thing that we call a free election begins to fade into the distance.

If I wanted to be a dictator, I should ask no surer step than that which lies before anyone who wants to make himself a dictator now. You give me the Federal Reserve Board and its control over the

banks, you give me the W. P. A., you give me the S. E. C., you give me the various agencies which the Government now has, and I will undertake to elect my Government again, and again, and again. Mr. MARSH. I also wish to urge the repeal of the poll tax.

The CHAIRMAN. I have before me a letter under date of June 24, 1941, addressed to me by the Under Secretary of War, Mr. Robert P. Patterson, as follows:

WAR DEPARTMENT,
OFFICE OF THE UNDER SECRETARY,

Washington, D. C., June 24, 1941, Hon. ROBERT R. REYNOLDS,

United States Senate, Washington, D. C. DEAR SENATOR REYNOLDS: The stenographic minutes of the hearing before the Military Affairs Committee on June 18, 1941, carries the statement of James E. Emery, general counsel, National Association of Manufacturers. In the course of his statement Mr. Emery said that I admitted that the North American Aviation plant was taken over without authority. This appears in the following questions and answers:

“Mr. EMERY. No, sir; there is not, and I challenge the production of one. I heard the Secretary here, if I understood him rightly, saying that the property in southern California was taken over without authority.

"Senator JOHNSON of Colorado. In the North American Airplane case?
"Mr. EMERY. Yes.
"Senator JOHNSON of Colorado. He did say that?
“Mr. EMERY. Yes.
“Senator DOWNEY. Yes; he said that.”

Mr. Emery did not hear me make any such statement. What I said was that when we took over the North American plant we did not rely upon the President's power under section 9 of the selective-service law, wherein the President is authorized to take over a plant which refuses to produce under an order for equipment. I certainly made no statement we lacked authority. My testimony was as follows:

"Mr. PATTERSON. We had to take over the North American plant last week. Someone said that section 9 of the Selective Service Act did not cover the case; covered only a refusal to produce. There was no refusal on the part of people to produce.”

Mr. Emery, and possibly Senator Downey as well, evidently misunderstood this to mean that we had no authority whatsoever.

The fact is that the President acted under his constitutional power as Commander in Chief. It was my view, and as I understand it, also the view of the Department of Justice, that his power as Commander in Chief warranted the taking over of the plant in an emergency. Very truly yours,

ROBERT P. PATTERSON,

Under Secretary of War. A copy of that letter was sent to Mr. James E. Emery, general counsel, National Association of Manufacturers, 600 Investment Building, Washington, D. C.

I have here another letter from the Under Secretary of War, dated June 27, 1941, addressed to me as chairman of the Committee on Military Affairs. The reporter will incorporate that letter in the record at this point, with the enclosures.

WAR DEPARTMENT,
OFFICE OF THE UNDER SECRETARY,

Washington, D. C., June 27, 1941.
Hon. ROBERT R. REYNOLDS,
Chairman, Committee on Military Affairs,

United States Senate. DEAR SENATER REYNOLDS : Pursuant to a request from the Committee on Military Affairs, House of Representatives, the War Department has prepared and furnished to that committee a comparative statement of the phraseology contained in H. R. 4949, a bill "to authorize the President of the United

States to requisition certain property for the use of or disposition by the United States," and in the World War legislation conferring authority to requisition various types of property.

For such value as it may have to your committee in its consideration of the corresponding bill, S. 1579, now pending before your committee, transmitted herewith is a copy of the comparative statement referred to above. The World War statutes therein listed are those cited in the War Department's letter to you dated June 2, 1941, recommending the legislation subsequently embodied in S. 1579. Sincerely yours,

(Signed) ROBERT P. PATTERSON,

Under Secretary of War. One enclosure.

Comparison of phraseology contained in H. R. 4949, Seventy-seventh Congress, a bill to authorize the President of the United States to requisition certain property for the use of or disposition by the United States, and in World War legislation conferring authority to requisition various types of property.

I. WHEN APPLICABLE (H. R. 4949, 77th Cong.): During any period of national emergency proclaimed by the President.

(39 Stat. 731): If in the President's judgment an emergency exists.

(39 Stat. 1193): In time of war, or of national emergency determined by the President by proclamation.

(40 Stat. 182, 183): Until 6 months after treaty.
(40 Stat. 276, 279, 283): During the existence of a state of war.
(40 Stat. 276, 282, 283): Until termination of World War.

(40 Stat. 284): Whenever such action is, in the President's judgment, necessary for efficient prosecution of the war.

(40 Stat. 438, 439): Until termination of World War.
(40 Stat. 535): Same as (40 Stat. 182).
(40 Stat. 550): During the continuation "of the existing war."

(40 Stat. 913, 915): Until proclamation of final treaty, unless in judgment of President, national interests jeopardized, when time may be extended 9 months.

(40 Stat. 1010, 1012): Until 2 years after proclamation of peace.
(40 Stat. 1022) : Same as (40 Stat. 182).
(40 Stat. 1029): During the existing emergency.

II. WHAT MAY BE DONE (H. R. 4949, 77th Cong.): President may requisition and take over, either temporarily or permanently.

(39 Stat. 731): President may take possession, absolutely or temporarily.

(39 Stat. 1193): President may require compliance with order for ships or war material or requisition same.

(40 Stat. 182): President may requisition and take over, take immediate possession, manage or operate.

(40 Stat. 279, 280): President may requisition and take over, or operate, or return property when not essential.

(40 Stat. 282): President may commandeer.
(40 Stat. 284): President may requisition and take over or operate.

(40 Stat. 438): United States Shipping Board Emergency Fleet Corporation may requisition.

(40 Stat. 535, 40 Stat. 182): President may take possession of, or assume control of.

(40 Stat. 550): President may requisition, or acquire by condemnation, or take possession of.

(40 Stat. 915): President may requisition the temporary possession of any vessel, or without taking actual possession requisition the services of any vessel.

(40 Stat. 1010): President may requisition, take over, use, distribute, allocate, sell, develop, operate, store, or shall return property when no longer essential to Government.

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