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What is really taking place under this so-called lend-lease program which the Congress legalized against the will of a large majority of our people? It would appear that it is bringing to rapid consummation the dreams of Cecil Rhodes and Andrew Carnegie. Remember, Cecil Rhodes left his huge estate for the sole purpose, according to his will, of founding: a secret society in order
to have the whole continent of Africa settled by Britons and also the whole continent of South America, the Holy Land, the Valley of the Euphrates, the islands of Cyprus and Candia. the islands in the Pacific not heretofore possessed by Great Britain, the Malay Archipelago, the seaboard of China and Japan, and, finally, the United States. In the end Great Britain is to establish a power so overwhelming that wars must cease and the millenium be realized.
If any of you think that Rhodes was just a British dreamer, consult å world map printed prior to the start of the present European war and you will change your ideas About the only portion of that dream then not completed was conquering the seacoast of Japan, and finally the United States.
But Andrew Carnegie was even more explicit in the British dream of world empire. In his book Triumphant Democracy, privately published in Edinburgh in 1893, he too spoke of the return of the giant child to Britain and wrote: The only course for Britain seems to be reunion with the giant child or decline to secondary place and then to comparative insignifi
reunion, and Britain takes a new lease on prosperity, decline is arrested and increase begins. I doubt if even Carnegie dreamed of such a thing as lend-lease, let alone what is proposed in this property seizure bill.
“The richest market in the world is open to Britain free of all duty at the stroke of a pen,” he wrote. “It would mean prosperity for every industry in the United Kingdom.” Apparently that stroke of the pen was the one that signed the lend-lease bill. If not, will it be the one that signs this property-seizure bill, S. 1579 ?
In testifying against the so-called lend-lease bill, we called the attention of the Congress to the similarity of dictatorial powers granted under that bill and those given Hitler under his dictatorcreating bill of March 23, 1933. We now wish to call your attention to the similiarity of what is proposed under this bill and apparently comparable action taken by Hitler starting in 1934.
About that time Hitler began placing selected technical experts of the Nazi Party in key positions in the major industries in Germany. They remained in those positions for 4 years, closely studying the actions of company executives. At the end of 4 years, these Nazi Party experts had acquired sufficient knowledge of the operation of those companies to permit Hitler removing all of the company executives, taking over the industries and all without any interruption in the flow of production.
With this Hitler action and the Rhodes-Carnegie plan in mind, we ask you to consider what is going on here. Hundreds of so-called technical experts are arriving regularly from England. For what? We are reliably informed that the British Embassy is leasing accommodations for them on a 5-year basis. Why? Will refusal to permit these English technicians to assume key positions in our major industries be classed as noncompliance with the national-defense program and cause for property seizure if this bill, S. 1579, becomes law ?
Let me quote you what Congressman Eugene E. Cox, of Georgia, said of this bill on the House floor last June 4:
Mr. Speaker, I would like to say to my colleagues if they have not read the property-seizure bill introduced in the Senate on Monday last, they should do so immediately and weep over what is proposed should be done to their country. It presupposes that the people not only do not have the capacity, but the right, to rule themselves. It is the most astounding bid for dictatorial powers that has arisen since the signing of the Declaration of Independence. Pass this bill and you give the final kiss of death to free government in America.
Gentlemen, the women of this country refuse to accept that kiss of death. If you do not kill this bill, you sound the death knell of our Republic.
Therefore, we ask, not only that you reject this socialistic bill, but as a real national-defense effort we urge that you join with those in both Houses who are considering repeal of the lend-lease bill before it completely returns us under guise of union now or world democracy to colonial status in the British Empire.
The CHAIRMAN. We thank you very much, Mrs. Curtis, for cooperating with us and for your statement.
Mrs. Curtis. Thank you very much, Senator Reynolds.
The CHAIRMAN. This will conclude the hearings. We have been engaged on these hearings for possibly 2 weeks. We have endeavored to provide everybody with an opportunity, who wanted to, to be heard. We have heard many witnesses during the course of those 2 weeks.
This will close the hearings, after which the testimony will be printed, and a copy will be provided to each member of the Committee on Military Affairs. Then during the latter portion of next week I shall call a meeting of the full committee for the purpose of considering in executive session the subject before us. That will have provided time for all the members to have read completely the hearings.
(Whereupon, at 11:30 a. m., the hearing was concluded.)
PITTSBURGH, PA., June 18, 1941. The CHAIRMAN, COMMITTEE ON MILITARY AFFAIRS,
United States Senate, Washington, D. C. SIR: The Patent Law Association of Pittsburgh is unable to be represented, by reason of short notice, at the hearings on S. 1579. It takes this medium, therefore, of respectfully submitting its views thereon to your committee.
We wish to make it clear that this association would do nothing to hamper the national-defense program, and it recognizes that under existing world conditions many private interests must be sacrificed if our present Government is to be assured of continuance, and further that to the same end unusual powers must be conferred upon the President. This association therefore has in mind the best interests of national defense, and neither it as a body nor its individual members would foster any use of patents detrimental to the defense program. However, it is the considered opinion of this association that there is no need for a law such as S. 1579 represents, that enacting the bill into law would do more to weaken than to advance national defense, and that everything necessary to avoid interference with the defense program by patents is available under an existing act, or could be accomplished by extremely simple amendment of that act.
Under this bill the President, or his authorized representative, could seize and dispose of patents. There is no present need for such seizure, or condemnation, of patents because the Government has at present the right to make use of any patent. That is, the act of 1910, as amended (35 U. S. C. A. 68) authorizes the Government and its contractors to use patents, and no condemnation or seizure is necessary for that purpose. So there is no necessity for this bill because any need of the defense program, or any other governmental need, can be supplied through use of any patent under that act.
There should be borne in mind in connection with any proposal for condemning patents the peculiar property rights that a patent represents. It is unlike real and tangible properties because it is a mere right of exclusion. If the patent be condemned, every right is gone, while if the Government simply exercises its rights to use any patent, the owner's rights are unimpaired except as against the contractor who uses for the Government.
Leaving aside the question of adequate compensation for such seizure as provided for in the bill, and difficulties and delays encountered in suits against the United States for such compensation, as reflected by cases in the Court of Claims growing out of the last war, the provisions of this bill are far broader than can conceivably be necessary in the interest of national defense: in fact, they are so broad as actually to wholly undermine our patent system-a system which is responsible for much that is vital to national defense and which can by its strength or weakness be responsible in future for success or failure in maintaining the existence of our country.
Nothing in section 1 of the bill restricts it to the seizure of patents used by their owners to prevent attainment of the national-defense program. Nothing restricts the seizure of patents under the bill to the continuance of the national emergency, it being possible to seize patents permanently. Nothing restricts the seizure to particularly designated patents for under the bill it would be possible to seize all patents in any given industry or all patents owned by any given party. Nothing restricts the seizure of those patents necessary to national defense. Το the contrary, the right to seize applies where the President “deems” the seizure in the interest of national defense, and such mere opinion is not subject to review.
Patents may be seized and sold, presumably to private interests having no relation to the original owner, which is indeed strange when the purported object
of the bill is, we assume, primarily to permit the Government freely to use patented inventions. There might be less objection to a bill such as this one if the Government were merely to condemn to itself the right to use inventions which, as noted above, is unnecessary—for national-defense purposes. But this association can see no reasonable argument that national defense requires the permanent seizure of patents which are not being used adversely to national defense, or on what basis the Government should need the power to take patents from one private interest and sell them to another.
It is thought that if such a law had been in force in the past industries and facilities vital, or at least important, in the present emergency would not now be available. Many of those industries have been based on patents, and many of those facilities are available or have been expanded because of them. Numbers of products and processes important to the defense program have grown, to state it otherwise, from our patent system, and more will appear in the future provided that system remains as it is—the strongest and best in the world.
It seems certain that the industrial position of the United States today is in large part the direct result of the establishment of a strong patent system early in the history of our country. It seems equally certain that anything which strikes at the fundamentals of that system will inevitably and more or less quickly result in a failure to produce inventions, wit the result th whatever may be done by way of national defense may be inadequate. Statistics show that a great many millions of dollars are spent in this country each year on research. Those expenditures could not be justified if the discoveries growing out of them were freely available to competitors ; they can be justified primarily on the protection which patents offer for discoveries growing out of the research. Thus new businesses are founded, existing manufacturing operations are improved, and the materials and tools available in industry are widened and rendered more effective. All of this results in turn in strengthening our position for national-defense purposes.
To render patents subject to seizure under the terms of S. 1579 would directly cut off the incentives to research and to expansion of productive capacities, which clearly would be adverse to national defense. Thus, what incentive would there be to spend money in creating a new industry that would depend on patents for its start where there would be the danger of having those patents seized permanently and given to another, as is possible under this bill? Such provisions of the bill strike at the very roots of our patent system, for a patent is of no value unless the owner can rely on it to protect the investment back of or based on it. And unless patent owners can continue to have such reliance it can be expected that scientifically and industrially retrogression will follow.
In effect, the provisions of this bill are similar to the amendments proposed by Mr. Shea to H. R. 3360 (77th Cong., 1st sess.). Hearings were held for many days on that bill and Mr. Shea's proposed amendments, and the views expressed apply equally to the present bill. The consensus of opinion was overwhelmingly to the effect that such a right to seize patents permanently and to deprive the owners of the rights guaranteed by the Government in granting patents would be gravely dangerous. Such were the considered views of industrialists, manufacturers, and technical societies, inventors, lawyers, and others appearing before or submitting written statements to the Committee on Patents of the House of Representatives.
It should be particularly noted that, according to our understanding, in the hearings on H. R. 3360 representatives of the War Department, the Navy Department, and the Office of Production Management stated that they knew of no case in which patents have interfered with the defense program or of any need for a bill such as would be represented by Mr. Shea's proposed amendments to H. R. 3360. The present bill is even broader in scope, so that there is all the less need for it. The hearings showed, we believe, that the act of 1910, as amended, renders condemnation or seizure not necessary, for the reason given above.
The present bill seems not to be directed to correcting evils in the patent laws, but rather to assist in combatting practices which can be taken care of by the antitrust laws.
This association believes that patent owners are single mindedly back of the defense program and will not in any case use their patents to impede it. It believes further that under such circumstances attention might better be directed to governing the extremely damaging effect of labor upon the defense program than to sabotaging the patent system, which is, to repeat, in the opinion of this association, sufficiently important to national defense that it should not be disturbed.
Some argument has been advanced in favor of the right to condemn or seize patents that the act of 1910 is inapplicable to subcontractors. If that be the case, and it is by no means certain that it is, very simple amendment of that act could make it apply so that no patent could be asserted against onyone engaged in defense work.
Finally, it may be said that many persons are of the opinion that the Government cannot take over a patent, once granted, without destroying the grant. That is, when the Government takes over a patent which it has granted, it takes to itself the privileges which it conferred by that grant. There being no one outside of the Government who can enjoy to any degree the patent monop oly, the grant is apparently no longer existent. On this basis there would no longer be a monopoly in the patented invention, and it would avail nothing for the Government to grant licenses under or to sell the patents which it had seized.
This association therefore conscientiously recommends that the Committee on Military Affairs disapprove of S. 1579. Respectfully submitted.
PATENT LAW ASSOCIATION OF PITTSBURGH,
Chairman, Committee on Laws and Rules.
STATEMENT SUBMITTED IN OPPOSITION TO S. 1579 BY THE NATIONAL LAWYERS GUILD
S. 1579 authorizes the President, whenever he wishes, to take over any property which “can be used or is adaptable for use directly or indirectly in any way for national defense” or in making, transporting, or storing anything which is to be used for national defense. It is difficult to see what would be free from requisition under this bill. Radios in the home, private automobiles, crops in the field, as well as factories and banks, became subject to seizure for a compensation to be fixed in the first instance by the President. S. 1579 places in the hands of the President a power such as no inividual has ever possessed in this country before.
On its face S. 1579 seems to be aimed only at property owners, but a study of the circumstances leading to the introduction of this measure reveals that, while the President has no objection to becoming the repository of the tremendous power which it gives him, the bill is aimed primarily at the rights of labor. It is this aspect of the proposed law that we wish to discuss,
Section 9 of the Selective Training and Service Act of 1940 gives the President the power to take possession of any plant equipped to make defense products or capable of being transformed into a plant for the manufacture of defense products, if the owners refuse to manufacture such products when ordered by the Government. It would seem that this law gives the President ample power to deal with companies which refuse to manufacture for defense, and no attempt has yet been made to determine whether such power is adequate, since section 9 has not been invoked thus far.
Why then the need for S. 1579? Section 9 of the selective-service law contains a proviso which states that in event of the seizure of a plant “that nothing herein shall be deemed to render inapplicable existing State or Federal laws concerning the health, safety, security, and employment standards of the employees in such plant.” It would seem that this proviso is displeasing to those who are pressing for the enactment of the proposed law, and that they are attempting to nullify it by avoiding the necessity of proceeding under section 9 of the Selective Service law.
It is obvious that S. 1579 can be used to break strikes, and even in the absence of strikes, to destroy collective bargaining and employment standards. The President is given the right to use any property he may take under the authority of S. 1579. There is absolutely no limitation on this use. Thus the President can step into any strike situation, take over the plant temporarily, use Army troops to disperse the pickets on the ground that they are interfering with Government property, and compel the strikers to resume work or be accused of “striking against the Government." After the strike is broken, the plant can be turned back to its owners with no loss whatever to them. It is true that the President could