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production than was Germany at the end of 7 years. I know we have the ability to defend this hemisphere against all aggressors. But I do dread the day of economic reckoning which awaits and for which I fear we will be totally unprepared. Now, gentlemen, I apologize to you for my vehemence; I am through.

Senator CHANDLER. Mr. Chairman, I think that I have clearly outlined the changes I have made in the bill, and I have also stated my reasons for my objection to the amendment, and I hope the committee will not agree to the amendment.

The CHAIRMAN. Is there anybody else who wishes to be heard before we take a vote on this?

Senator HILL. It seems to me that the bill, in the provision reading

Such need is immediate and impending and such as will not admit of delay or resort to any other source of supply, and all other means of obtaining the use of such property for the defense of the United States upon fair and reasonable terms has been exhausted.

Most of that language is Senator Austin's, and it is probable that if you take that out of the bill you will have a piece of legislation that will not be worth anything.

Senator KILGORE. Mr. Chairman, I got in late, and I would like to know what amendment you are considering now.

Senator AUSTIN. I will give you copies of them.

Senator CHANDLER. This is the one we are considering now. Senator THOMAS. Senator Austin, I would like to ask you a question about the practical application of your amendment and its workings. How would you determine "necessary and unavoidable consequence thereof"; would it be the cessation of the business of such a plant?

Senator AUSTIN. That is what I have in mind. It might be possible by putting on extra shifts to keep a plant in operation if there were more than one key tool, for example, and one of them was to be taken.

My idea would be that it would be necessary for a person who claimed exemption under this to show that he could not, by any means, keep his plant in operation. If he could keep his plant in operation by the employment of more men and the same tools, for example, than this would not be a bar to the exercise of the power of any bill. In other words, the proposition is to try to keep the plant alive and prevent the taking out of men who are employed in those plants; that is the idea of it.

Senator KILGORE. I would like to ask Judge Patterson what his interpretation would be of these words, "and all other means of obtaining the use of such property for the defense of the United States upon fair and reasonable terms have been exhausted." Would that mean if it was plant equipment, say in subcontractors plant; is that the interpretation you would place on that language in the War Department?

Judge PATTERSON. If it were fair and reasonable, I think so; yes. Of course, it really means, Senator, that you would have to make a tender of either a purchase or arrangement for a lease, and I think you might also have to show that the making of a subcontract is not feasible where it was not practicable to move the property from the plant without destroying the business.

Senator KILGORE. I understand that. In other words, it would be necessary to show that it would not be feasible to let a subcontractor do the work that was done in that plant of some parts, if the equipment were to be commandeered or requisitioned. That is, they have an opportunity to show to any agency the facts that they had no opportunities offered to them, but that someone came in and said, "We want your press, and we will give you $10,000 for it," and he says, "I do not want to sell my press.

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Judge PATTERSON. It is contemplated that this would only be done by the President or his delegated agency. Gentlemen, we are having excellent cooperation from the industry, and we believe that 9 out of 10 of them will do their share on a voluntary basis. Now, we have found a few who are recalcitrant

Senator KILGORE. That is just the point I am getting at; shall we treat anybody who does not have a contract as recalcitrant, or is it just his misfortune?

Judge PATTERSON. Well, I have gone for months thoroughly into this subject of subcontracting. Take the automobile business. They are equipped to turn out, primarly, automobiles, and their assembly lines, in general, cannot turn out anything else.

At the same time they have a great many universal tools, standard tools, that, with very minor adjustments are available for work on airplane engines. We cannot make a subcontract with them to take that plant and put out airplane engines without submitting to a couple of years' delay. Now, that is a fact.

Senator LEE. Well, Judge Patterson, judging from the World War, the actual use of the power in the bill would very likely not have to be called into operation very often, would it?

Judge PATTERSON. No; not often.

Senator LEE. The bill itself would serve as a gun behind the door. Judge PATTERSON. That is what we want it for.

Senator LEE. And in most cases by far, it would never have to be used, because judging from the World War situation, when there actually was a war, under the broad use of the emergency powers of the Government, according to Mr. Baruch, they never actually did have to use the power except in two or three very exceptional cases, and that, I believe, was the final step, and he said that the threat of the use of this was all they had to do, and so I believe in this case the actual use of this power will never be called into force, and if we authorize the Government, give them this authority, it is like a loaded gun behind the door, and it will do the work.

Judge PATTERSON. Of course, the first people on machine tools that we have to treat with are the second-hand dealers, who, in many instances, are holding second-hand machines at higher prices than new machines right now. That is my information, but that is the first place to look.

Senator HILL. Well, Mr. Secretary, even this bill, if I interpret it correctly ordinarily will take care of the second-hand dealer. We know that the reason that he holds onto this second-hand stuff that the Government needs as badly as we do, that is these tools-even without this registration, we can take care of them. I can well understand why they might be asking more today for second-hand stuff than what the stuff originally cost.

Judge PATTERSON. Well, I am in sympathy with the thought behind this amendment and of course, if we could get this authorization, we would only take them where it would do the least harm to other concerns and other civilian firms, but I do hope that our hands will not be tied because we may have an extreme case where it might be the one machine that was needed, and if we were not given this authority, we could not take it.

Senator LEE. Well, when we have the power to draft men, I do not remember any amendment in that law saying that in case we took this boy and it would disrupt his business that he, therefore, would be excused. I remember that in a few cases some men did come to me and say that by their going to the army they would lose the business that they had built up, and I could not say to them that we would pay them for it, and neither did I feel called upon to go to the exemption board to exempt them, I left that entirely to the board. The CHAIRMAN. Gentlemen, in view of the fact that Senator Austin must, of necessity, leave this committee room at 3:30, and in further view of the fact that he has another amendment which he desires to offer, if you are ready for a vote on this one, we will take it. Do you want a record vote?

Senator AUSTIN. No; that is not necessary.

The CHAIRMAN. Those who are for the amendment will please do so by saying "Aye.”

Those opposed.

It seems that the amendment is defeated.

another amendment, and we will hear him on that.

Senator Austin has

Senator AUSTIN. It is in the same place, and it is in the following language:

Provided, That during such time as a state of war does not exist by virtue of a declaration by Congress thereof, no manufacturing plant whose operation depends upon any article or articles to be commandeered shall be rendered incapable of operation, as a necessary and unavoidable consequence of the exercise of the authority hereby conferred, without just compensation for all of such plant being ascertained and paid in the manner provided for by the act of October 10, 1940, Public, No. 829, Seventy-sixth Congress, third session.

I have only a word to say, and that is, it is my idea here to include in the damages here, the severance value or the severance amount of injury to the property if the removal of a machine or machines cut down the plant, which is the direct approximate result of the act and would result in the destruction of the whole plant, and it is for that damage that this is provided.

Senator GURNEY. Could you not include just compensation for the plant, or just compensation for the loss of operations.

Senator AUSTIN. No; I think that is something that we have never done in eminent-domain proceedings. We have always, so far as I know, taken into consideration severance damage in taking real property or in taking personal property from real property. I have never had to do with a case of taking personal property, but I do know that in property they include a consideration of the severance damage, and that is all that is intended by this amendment.

Senator HILL. Mr. Secretary, in the World War statutes were passed operating similar to parts of this bill. Did we provide for any award of damages?

Judge PATTERSON. No, sir; not that I know of. I think it was always the fair value.

Senator CHANDLER. I will say to my friend from Vermont that I know that the War Department is not going to take out anything they do not need, and they could take it under the general property clause, and they would not take any materials or machines out of a plant if it would destroy the operation of the plant, unless it was absolutely necessary to defend the people of the United States. Mr. Secretary, have you ever envisioned a situation where you would take anything out of a plant unless it was needed in the help of the defense of the country?

Judge PATTERSON. No; I do not.

Senator CHANDLER. I do not envision a situation like that, and under 829 I do not think there is any place where the United States would do that except for the defense of the country, do you?

Senator HILL. I think that would be similar to the situation where we take these men and put them in the Army, we pay them $21 a month and we made no provision to pay any damage for any loss because he had to leave his business, and he might have been making $150 a month, and you are only going to pay him $21 a month.

I think we had this same question up in the Commerce Committee, about requiring our ships to operate under warrants under the Government, and the shipowners and everybody admitted there is more business than there are ships to carry on that business, but under the system under which we are set up now, under the law, a ship to operate now has to have a warrant from the Maritime Commission, and under that warrant, a ship has to operate along the lines that the Maritime Commission designates. These ships do not get the business, but a ship might make more profit by going someplace else than operate along the lines laid down by the Maritime Commission, but we did not award the damages to them. Of course, the owners of those ships said they ought to be paid damages, because they could make more money going to other lines than the lines they had to go, but we turned them down. If we are going into this field of consequential damages for property, ships, men, where will we be?

Mr. JONES. A trawler that is taken and converted over into a mine layer that is in the fish business, and it is practically impossible to determine the consequential damages and future profits, but you can only have the value of the trawler—

Senator AUSTIN. Mr. Chairman, may we have a vote?

The CHAIRMAN. Gentleman, if there is no further discussion we will have the vote. You do not want a regular vote, do you?

Senator AUSTIN. No.

The CHAIRMAN. All those in favor of this second amendment for the embodiment of this amendment in the bill, please let it be known by saying "aye." Those opposed.

The "noes" seem to have it.

Senator DoWNEY. I should like a division.

The CHAIRMAN. All those in favor of the amendment please rise.

(Three members rose.)

The CHAIRMAN. All those opposed, please rise.

(Eight members rose.)

The CHAIRMAN. The amendment seems to be defeated.

Senator CHANDLER. Now, Mr. Chairman, if there are no further amendments, or any further discussion on these amendments, may we have a vote on the bill? Is there any further discussion on the bill, gentlemen?

The CHAIRMAN. Does any other Senator have any amendments? Senator KILGORE. I want to say something to Judge Patterson in retrospect. I do not believe I made myself perfectly clear before. I am still trying to force some subcontracting out of these time contracts of contractors who are trying to enlarge their factories at the Government's expense. We have a lot of plants in the United States who are already overflooded because the prime contractors will not subcontract some of this work, but are trying to build up their plants at Government expense. Now, as to that word "recalcitrant," I have tried to regard the word "recalcitrant" as being applied to a manufacturer who did not want to cooperate, and who is stifling production by their failure to participate

Judge PATTERSON. May I say that the President is under the impression, and I am sure the correct impression, that the entire industrial power has not been thrown behind this effort to regard his policy that all work must be subcontracted out to the limit of efficiency and that only in cases where you cannot take the work to the machine should you take the machine to the work. Now, that is the policy that we are endeavoring to carry out, and I am sure that you will agree that that is a proper policy.

Senator KILGORE. That is the only policy that I am after. I am trying to see that that policy is followed and not let these people have any false ideas that they can build up their plants at the expense of the people.

The CHAIRMAN. I think that Captain Jones wants to submit a few ideas, and we will be glad to hear him.

Mr. JONES. I want to say, Mr. Chairman, that we are bending every effort and realize the necessity of this subcontracting work, and we have set up a Nation-wide organization in the Navy Department in every district in the country under our supervision, and we have instructed the inspectors of naval material and the commanders of navy yards to designate the district liaison officers to ask for the national-defense contract service in that district, to utilize all of the outlets of subcontractors.

Senator GURNEY. I notice that in this bill there was nothing about the inventions and patents. Mr. Secretary, have you anything to say about that?

Judge PATTERSON. That is true; we dropped that for the sake of simplicity. I, myself, know of no instances of any patent abuses. That was included in the original bill because the Department of Justice had told us they had some, but I have not yet any specifications, and it seemed to me to be in the interest of simplicity that we might well drop that and wait until such time as the need may arise.

Senator LEE. Well, I read in the papers, and heard considerable about patents owned by companies that had a mapority of their stockholders German citizens which were stopping certain Government processes because we could not get the use of those patents. Now

Judge PATTERSON. All I know is what I read in the papers, the same as you, but we were stripping down here, and having the bill carry as

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