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man has a manufacturing plant and the Government seizes onefourth of his machines and entirely destroys the going value of the factory, and that he is not entitled to compensation for that.
All I can say is that you are just giving the deathblow, by this sort of a law, to thousands of establishments in the United States. You are going to destroy the value of bonds and mortgages held by insurance companies and banks.
Of course, Judge Patterson, if we assume that you are asking for some power here you do not intend to use, if we are all wasting our time on this, that is one thing, but if you are going to exercise this power, and I take it that it will be exercised in thousands of cases, and I would say that in the great majority of those cases the actual value of the machinery would be comparatively slight, compared to the damage to the business as a going concern.
Mr. PATTERSON. I think we are entitled to assume that the power will not be exercised except where necessary to equip the armed forces and in such a case I will defend the priority of the armed forces for their equipment.
We have called the men out. They have been in the field. Are we going to refuse them equipment if there is any reasonable way of getting it?
Senator JOHNSON of Colorado. Could you write that statement into the law in just about that concise language? If you could, if that could be done, I think it would help the bill materially.
Senator LODGE. Used solely for the purpose of equipping the armed forces.
Senator JOHNSON of Colorado. But that is not the way the bill reads.
Mr. PATTERSON. That is the central idea of it.
The language is broad and I have already said that if the same thing can be accomplished by more restrictive language which will relieve the apprehension of people and guard against some abuses, that is all right.
Senator DowNEY. Can you furnish a list of the probable uses you will want to make of this power?
Mr. PATTERSON. I think Colonel Dinsmore would be willing to do what he can toward that.
Senator DowNEY. I am speaking now of the probable uses you intend to make of it in the future.
Colonel DINSMORE. Yes, I understand.
Senator Downey. I think that would be very helpful; you wouldn't care to say anything about it now?
Mr. PATTERSON. Well, I am sure that we ought to have the power in the case of machine tools—I am sure of that.
Senator DOWNEY. Well, that is one thing.
Mr. PATTERSON. If we rely simply upon the machine tools to be made in the future, that is a long, long process.
Senator Downey. In spite of the fact that the machine-tool industry, as I understand it, is doing manyfold the business this year that it did last year or the year before, and are working as hard as they can atit.
Mr. PATTERSON. But we want to be able to tap the idle ones.
The CHAIRMAN. I understand Senator Downey has in mind, for instance that there is a machine shop in California and the Government of the United States deems it necessary, in order to properly
equip these men that have been drafted, to seize that man's plant in order the equipment for that man may be secured and that that really is the purpose of the bill to provide equipment.
Mr. PATTERSON. To expedite production.
The CHAIRMAN. Now, that man is not going to be paid for the loss of the reputation that he has built for his company over the years. I believe you admit that.
Mr. PATTERSON. Well, he is not going to be any worse off as a matter of fact than the man called for training under selective service.
The CHAIRMAN. No; and in many instance against his will and taken into the armed forces of the United States. We will say that that man was a practicing attorney and that his business is going to be destroyed for the year that he is in the Army, but as soon as he is out of the service for 1 year he reopens his office and returns to his business and his reputation as a lawyer in the community and elsewhere is just as good as it ever was before
Mr. PATTERSON. There are men here around the table who have had their careers interrupted by service in the Army.
The CHAIRMAN. So it follows that if some business is seized and equipment is taken the Government is going to pay him for that equipment, isn't it? Mr. PATTERSON. Yes.
The CHAIRMAN. The Government is going to pay him for that equipment and after the emergency is over he could reestablish that company, that is correct, isn't it?
Mr. PATTERSON. I think so.
The CHAIRMAN. And his reputation would be just as good after the reestablishment as it was before? In other words, his business is interfered with only for the time being as a business of attorney or doctor or dentist or any other profession that has been drawn under the Selective Service Act, so you are not, in this bill, doing any more against industry as I understand it, than you are doing against the individual when he is drafted, isn't that true?
Mr. PATTERSON. Yes.
Senator DowNEY. As a member of the committee I would like to ask that we have witnesses brought here before us that will take this question out of generalities and bring it down to specific cases.
The Army by this time must know exactly what power in southern California it would want to exercise in relation to commandeering the machinery in the United States.
Mr. PATTERSON. I don't think they do, Senator, but I will find out. I don't think they have their eyes on any. I don't think they have their eyes on any particular supplies or piece of machinery down there.
Senator Downey. Well, Mr. Chairman, here is what I would like to do. I have no disposition to quibble or quarrel about the commandeering of machine tools or any other kind of machinery in the hands of second-hand dealers who are holding that machinery for a speculative profit. And of course I raise no question about the commandeering of any strategic war materials that are being held for speculative profits, but I do have a fearful apprehension that this power will be used to further big business in California. I know that, Mr. Chairman.
And I would like to have the Maritime Commission which knows this whole story, the Navy that knows the whole story, and the War Department officials who know the whole story in southern California
I am interested in southern California and northern California, as well, and I want them to show specifically what they intend to do, what are the machine tools they want in southern California, and how the seizure of them will affect private business; who will be using them, when do they expect to take them. I think our businessmen are entitled to know that. We are not at war.
This is a step into a military dictatorship. Let us, if that is what we want, take the step; if that is what we want to do, give any Army officer the power from here in Washington, to go into any manufacturing concern in southern California and destroy it. If that is what we want, that sort of thing, let us find out at least to what extent it is going to be applied and for what purposes.
Now, I am making this statement after many months of investigation, and I believe this power will be predominantly used for the purpose of building up the great defense corporations in southern California and to destroy the small man.
Mr. Patterson says he is not disturbed at the financial sacrifices involved in the destruction of small business enterprises in the United States. I am, Mr. Chairman, I am tremendously disturbed about what is going to happen when this war emergency is over.
I am tremendously disturbed, and I believe that this committee is entitled to have a better viewpoint of this. I think I know certain things that are going to happen under this bill in relation to the Bethlehem Steel Co. and the Consolidated and certain of the great airplane factories. I think I know what is going to happen to small business in southern California. It is going to get a blow it will never recover from, and I do think I am entitled to have the Representatives of the Government give us concretely what they intend to do.
I know that Mr. Patterson, burdened as he is with hundreds of things, cannot have these details at his fingertips, but there are plenty of men in the Government who know the whole picture in southern California and know it intimately, and every manufacturing plant and every wharf and every shop and machine tool there. There have been wide investigations already made of that and the results are in the hands of the Government.
Senator Hill. Who made that investigation?
Senator DOWNEY. Well, the Government has made it. the War Department for one. I can secure the figures from our chamber of commerce. The chamber of commerce out there has a description of all the different machine-tool factories and the different factories located there. And I might say in voicing this opinion I am voicing the opinion and the apprehension of most of the leaders of southern California who look with fear and horror upon what is going to happen, so I would like to ask, Mr. Chairman, that men who are acquainted, concretely, with what is going to happen under this law be brought here.
The CHAIRMAN. Whom have you to suggest, Mr. Secretary, that would provide us with more information relative to the inquiries that have been directed by the Senator from California as a result of these apprehensions?
Mr. PATTERSON. I don't think we have any inventory. The War Department has none that I know of, of the kind mentioned. Under the industrial mobilization plan we surveyed a great many plants over the years with regard to their usefulness for producing military equipment, but I take it that Senator Downey has in mind something more specific than that. But that is the only thing I know of that the War Department has. Isn't that right, Colonel Dinsmore?
Colonel DINSMORE. Yes, sir. Senator Downey. Let me ask Mr. Patterson this: Do you know whether the War Department needs the authority in this bill to commandeer a single piece of machinery in southern California?
Mr. PATTERSON. I don't know that; no, sir.
Senator DOWNEY. Well, Mr. Chairman, I don't believe a bill of this character should be
Mr. PATTERSON. I wouldn't predict a single piece of machinery there would be commandeered under this bill. It is possible, but I couldn't say it would be. We just differ as to what is going to happen. The Senator is very fearful of something that I am not fearful of, but that is all I can say about it.
The CHAIRMAN. In other words, I suppose the Senator has in mind the question of whether or not at the present time any particular plants they contemplate taking over.
Senator DowNEY. And yes, any particular machinery.
Mr. PATTERSON. I don't think the War Department has its eye on any particular plant, Senator.
Senator DOWNEY. I am not disturbed about the War Department; I am disturbed about the Maritime Commission and the Navy.
Mr. PATTERSON. And that is beyond my scope.
Mr. PATTERSON. This bill is not restricted to the War Department. I mean there are problems with which I am not familiar. If others have any plans I don't know of them.
The CHAIRMAN. As the Chair understands from the statement made by the Secretary, as a result of the inquiries directed by the Senator from California, the War Department at the present time has no particular plant or machinery that they desire to seize under the bill.
Mr. PATTERSON. We are simply short of certain kinds of tools that we are trying to get for our producers, which are urgently needed, but we haven't got them spotted as being yours, or yours or mine, so far as I know.
The CHAIRMAN. And if it is possible to secure them otherwise this act will not be employed for their procurement?
Mr. PATTERSON. And they are an infinitesimal fraction of the machines that are now available in the country, as I understand it.
Senator JOHNSON of Colorado. And you have tried to purchase the machines on the market and cannot purchase them?
Mr. PATTERSON. They say they have been unable to get them..
Senator Lodge. In how many cases have they been unable to get them? A large number of cases?
Mr. PATTERSON. A considerable number.
Mr. PATTERSON. I can't say. I have some material here before me. I was looking to see if it covered that but it does not.
Senator KILGORE. I am wondering if we couldn't get some informed representative of the procurement branch of the Army here to tell us about this situation and give us some specific information. That is just a suggestion. The procurement branch will know more specifically what they are after.
Mr. PATTERSON. Of course, we have a machine-tool committee in the Army and Navy and munitions that would be able to give you better information than I can along the line that Senator Lodge wants.
Senator Hill. Let me make this suggestion if I might, Mr. Chairman: I think the Secretary here undoubtedly knows pretty well what is in the minds of different members of the committee, the things that are troubling the members of the committee, the things that are causing fears in the minds of at least some members of the committee. Let me suggest if I may, that the Secretary, when he goes back to the War Department, get in touch with the Procurement Department-he is the commander in chief, so to speak, of the Procurement Division, let him get in touch with his staff down there and see just who he might send here to perhaps give a little more detailed information and perhaps clear up some of these questions that are now in the minds of certain members of the committee.
Senator LODGE. The Secretary is a very good lawyer; he might revise this bill and save us the trouble.
Senator DOWNEY. He is more than a good lawyer, he is a great lawyer.
Senator JOHNSON of Colorado. I was a little bit late getting to the hearing this morning. Before I came in did Judge Patterson discuss the terms in this bill which are found on page 2, lines 7 and 8? One of those lines reads:
“Or otherwise dispose of," and then the word "permanently.”' Was that terminology discussed?
Mr. PATTERSON. To some extent.
The CHAIRMAN. The Secretary made a general statement and his particular attention was called to the words “to sell or otherwise dispose of,': by Senator Kilgore at the time. If the Senator was not here at that time I am going to ask the Secretary of War to repeat it.
Mr. PATTERSON. The only point of the word “permanently” was if
you took some raw materials and fashioned them into weapons and ammunition and shot the ammunition away, you obviously couldn't take that on a temporary basis. Some of these things would be things that might be consumed. If you took some food and some men ate it, that is another example.
Senator JOHNSON of Colorado. A moment ago the chairman of this committee tried to draw a parallel line between the conscription of men and the conscription in this bill, but under that language “otherwise dispose of," and the word "permanently," you cannot only conscript materials and machines and factories and plants, but you can turn around and sell them to a third party and the title passes permanently to that third party.
Mr. PATTERSON. "To sell or otherwise dispose of” was broad language used to cover a case of the type--of course, you can imagine abuses of it, but it was framed and designed to cover this kind of a case, and I think reasonably so:
Suppose you took a stock of raw material, let us say steel or copper or something of that sort, it might well be that the most efficient way