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ernment needed a machine tool that was used in that cosmetic plant, under this provision, you would not be able to take that tool.

Senator CHANDLER. I want to give Senator Austin an opportunity to offer his amendment.

The CHAIRMAN. Just a minute, we will hear Senator Thomas of Utah.

Senator THOMAS. Senator Austin, I would like to talk to you about those words "state of war.” We have gotten into quite a discussion on international relations; you mean actual war, don't you?

Senator AUSTIN. No; I mean a state of war that existed by virtue of a declaration, it might exist even though there was no firing.

Senator THOMAS. Then you mean an actual state of war?
Senator AUSTIN. Actual legal.
Senator THOMAS. Actual legal state of war, not just war.
Senator AUSTIN. No.

Senator BRIDGES. Is there any way you can get by without those words "state of war” and get this whole business out of it?

The CHAIRMAN. Could you not state “the present national emer

gency ?”

Senator AUSTIN. I think that would be a bad thing

Senator BRIDGES. I think it would be wise not to take that out of the first bill

Senator Austin. Here was the idea. If Congress should, tomorrow, declare war then this provision would not take effect and you could not exercise this authority. If it would shut down a plant and you do not want to do that and I do not want to do that, I want to leave the war powers untouched. That is what I want to do.

Senator THOMAS. But the emergency powers you are willing to touch. Senator AUSTIN. Yes. The CHAIRMAN. Senator Downey. Senator DOWNEY. I would like to say a few words, and I am not going to take more than 5 minutes of the committee's time. I might as well get this out of my system so that the committee members will know how I feel.

In the first place, I want to say to you that I am utterly sympathetic with the viewpoints of the man who has the terrible responsibility of producing munitions and running the military machine, and he has to face this problem differently than a member of the Senate.

I have done a great deal of investigation work with Washington economists and they are of the opinion that by next April we will be out-producing Germany in airplanes and tanks; we will be so far ahead that Germany won't even be second.

I have been through our large airplane factories in Los Angeles, and the efficiency there and the power there are tremendous.

I believe Mr. Knudsen said that by January we will be-indeed that with England—we are already outproducing Germany, and by the first of January next we will be outproducing Germany without English production. All that we will have accomplished within 18 months. Now, we are turning over with more and more power. We have double the population of Germany, counting Canada with us. We have five times the per capita wealth of Germany; we have power that is unparalleled in mass production.

· I cannot believe that a nation with a quarter of our wealth and half of our population imperils to such a great extent that we might have to ignore every other social and economic value other than national defense.

O. P. M. has told me that at the present we are producing a billion of goods for military purposes every month; in 1 year we will be produring 2 billion and looking ahead 2 years we will be producing 3 billion, an annual output of 36 billions a year.

Mr. Chairman, that is more manufacturing wealth, 36 billion, than we have ever produced in the United States in our very highest year.

In 1940 we had 10,000,000 people totally unemployed and about 10,000,000 part-time workers. The O. P. M. believes that as a result of the speed-up of our technological processes and machinery that from now on, during this emergency, we are going to be able to increase that efficiency, so that we can produce the same amount of wealth with 2,000,000 less workers a year. We will probably bring into war industries 2 or 3 million women workers, large numbers of Negroes and farm workers—millions in the aggregate. When this war crisis ends, Hitler crashes, or perhaps there is a negotiated peace, why, I say to you, Mr. Chairman, the emergency that we will then face will be very much more terrible and disturbing than anything we have right now, one that we cannot even conceive of.

We dropped in the Hoover panic down to 35 or 40 billion dollars national income, and if we should drop down to that again, we would have not 15,000,000 unemployed as we did during Mr. Hoover's time but we may have 30,000,000 unemployed, and I might say to you gentlemen that that is the viewpoint of almost every economist in Washington today. We are faced with a problem of unparalleled magnitude when this war emergency ends.

Mr. Chairman, for 10 years we have failed utterly to solve the fundamental problems of our economic difficulties.

When this war era is over and we again must deal with our primary economic crisis, hugely aggravated by the secondary war crisis, then, we are going to be in a far more difficult position than we are now.

Our statesmen are unwilling to prepare for war in time of peace. In time of war we seem unable to prepare for peace.

Now, I know this, that if the 0. P. M. should reach its limit of two billion of production in 1 year and three billion in 2 years, I know what will happen in Los Angeles. I have made a study of 15 years of the economics of California and you are going to see one-half of our industries ruined in Los Angeles.

Hundreds of businessmen will be closing down factories employing thousands of men because they are not going to be able to keep those factories open; many of these men will be thrown out of work, many of whom will not be absorbed into war industry.

Now, I am not saying that, in my opinion, this amendment of Senator Austin goes to meet that situation, but I do believe it is a wise and a prudent measure and that it would not hamper the Army of the United States. We are in greater danger from internal collapse than we are from any external attacks and we should prepare our military defense with a consideration of existing business.

Now, I have enough confidence in the American people so that I am not surprised that in 18 months we will be geared to higher arms 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 readingSuch 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 ineans, 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."

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. Senator Austin has another amendment, and we will hear him on that.

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 unayoidable 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?

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