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to use that would be to in turn dispose of it or sell it to one of our own suppliers who would fashion it into something in performance of his contract.
Senator JOHNSON of Colorado. I can see the necessity, I might say, for such language with relation to material, but this can also be applied to machines and to factories and to plants and in that I can see a very great difference between the parallel that the chairman of this committee attempted to draw between conscripted men.
Mr. PATTERSON. Of course we wouldn't do that, Senator; I don't see how anyone would want to do that.
Senator JOHNSON of Colorado. Well, I can't see why they would want to do that either and I can't see why you would want that kind of language in the bill. Mr. PATTERSON. Only to cover a certain kind of case.
Senator JOHNSON of Colorado. Let us make it specific as to material then and supplies and not make it specific to all of the transactions which are provided for under this bill, because as Senator Downey has so well pointed out, under this bill all of the little industries could be gobbled up and transferred and sold to the larger industries and the transactions made permanent.
Mr. PATTERSON. I believe that the Army, or whoever was doing it, would not abuse the authority given, which I admit is broad.
Senator JOHNSON of Colorado. Just one further suggestion: It seems to me that if the Army or the Government is going to be granted this very broad power that they ought not to take the capital property of one person and dispose of it to another; that they ought to hold it permanently, that they ought to retain title to it and then after the emergency is over return it to him.
Mr. PATTERSON. That ought to be done in all possible cases. I think we are in agreement, all of us, as to the aims to be accomplished by this. I can't dispute the fact that the language is broad, sweeping, and that conceivable cases of abuse could arise under it.
If those cases can be guarded against by appropriate limiting language, I would welcome it. I don't think we are very far apart. My own view at any rate is, that none of us sitting around the table are very far apart.
Senator LODGE. You uttered a good phrase, Mr. Secretary, when you said you intended to use these powers to equip the armed forces. Would you have any objection to adding to that: “The powers enumerated in that act," and I am not giving anything verbatim, but roughly, “the powers enumerated in this act shall be used solely for the purpose of equipping the armed forces of the United States”??
Mr. PATTERSON. The direct answer is "No." Of course I wouldn't have any objection to that. I think that could be included in the very first paragraph.
Senator Hill. I think that is what you had in mind when you used the words “national defense.”
Senator LODGE. The words “national defense” are used to cover a great many things that no human being ever thought was national defense before. When you say "equipping the armed forces” it is much more definite.
Mr. PATTERSON. That is all right with me.
Senator KilGORE. I just want to ask one other question. Of course these prime contractors naturally expect to make a profit on their contracts, a reasonable profit. Now the reason I am bringing this up at this point is because the comparison was made as between this and the draft. Under this they could procure machinery at its actual value from another man, thereby taking his means of earning a livelihood and profit away from him and use that to make a profit for themselves which wouldn't make it commensurate or comparative to the draft in any way. One manufacturer might be ruined by getting only the value of his machinery, whereas the other manufacturer would use the same machinery to get a profit. Wouldn't that be true?
In other words, the man fortunate enough to have a prime contract would not be in the draft, whereas the man unfortunate enough not to be a prime contractor would be in the draft. Isn't that the practical effect of this in case it was carried to its ultimate aim and conclusion?
Mr. PATTERSON. I haven't any ultimate aim or conclusion. Mine is a very direct aim for immediate purposes. Of course no one concern could go ahead and just move into another concern and say "give me this and give me that."
Senator KILGORE. No; but by cooperation with proper authority he would be unable to take the other man's capital and use it for his own profit. I don't think the comparison with the draft is analogous.
Mr. PATTERSON. I am sure there are not going to be roaming bands of army officers, roaming over the country, seizing and grabbing this and that. That just will not occur.
Senator KILGORE. I know that, Judge.
Senator DOWNEY. But what will occur, Mr. Patterson, is that the Navy, for instance, may want to divert all of the shipbuilding work to a few big companies. They have announced that and they are very impatient with the smaller men who want subcontracts. They are not for that. I have talked with them personally and I would like for them to be called before this committee. They will tell the committee the same things they told me. The Navy would immediately go out and say, "Well, we want that machine and we want it operated on the site of the Bethlehem," or whatever shipbuilding company it is. That is the way it is going to result, Mr. Patterson, and that it the purpose of this bill. If that isn't what you want, then the bill has no meaning as far as machinery is concerned.
Mr. Chairman, may I ask this: I understand that California has more defense contracts than any other State in the Union, except Pennsylvania, and I presume it is a representative State. Now, I would like to have representatives of the Government and the airplane industry come before this committee and tell us whether such a bill as this is necessary and if so, for what purpose, and how they expect the power under it to be carried out. Ships and airplanes are the great need of this Nation today and I think we should have representatives of the shipbuilding industry here.
I know something about conditions in California and as I say, I would like to have them called as witnesses, if it suits the committee and the chairman, and let us find out whether they need this.
Now, I declare to this committee that our airplane builders are going forward with tremendous power and energy, and that within 6 months or 12 months or 18 months we are going to be producing more airplanes than we can use. We don't have to go into dictatorial powers by the Government to do that.
Now, to whatever extent it is necessary to further the national defense by a military dictatorship I am for it, but as a member of this committee I am not for it until some showing is made that this is needed and there hasn't been any such showing yet, Mr. Chairman.
The CHAIRMAN. I will say to the Senator from California, that as soon as we dispose of the witnesses who are to testify before the committee, we will take up the matter of other witnesses, at which time we will be very happy to have any and all suggestions the Senator from California makes in regard to witnesses whom we shall deem proper to testify here, to provide the committee with such information as it desires in relation to this bill.
Senator DOWNEY. I thank you, Mr. Chairman. 'The CHAIRMAN. Now, gentlemen, are there any other questions for answer by the Secretary of War. Mr. Patterson, we thank you very much. The CHAIRMAN. Our next witness is Mr. James E. Emery.
STATEMENT OF JAMES E. EMERY, GENERAL COUNSEL, NATIONAL
ASSOCIATION OF MANUFACTURERS OF THE UNITED STATES
The CHAIRMAN. Mr. Emery, will you please provide the official reporter with your full name and your title and with the name of the organization or association with which you are connected?
Mr. EMERY. James E. Emery, general counsel, National Association of Manfacturers of the United States.
Mr. Chairman, the National Association of Manufacturers is an organization of some 8,000 individual firms and corporations, with which are affiliated some 40,000 manufacturers in the various States of the Union, all of whom are largely engaged in production for defense at the present time.
These firms and corporations are in continuing cooperation with all the departments of the Government in respect to national defense. They view with considerable apprehension the terms of this bill as it is written. They recognize the necessity of granting broad powers to the Executive for the conduct of national defense, and we do not question the power of Congress to give such authority as part of the war power. We recognize with John Quincy Adams that, I quote:
It is strictly constitutional but it breaks down every barrier so anxiously erected for the protection of liberty and property and life.
And I beg to call your attention to Webster's famous statement that:
Only the legislative power could determine the nature and extent and the purposes for which they would grant authority, but they alone could not determine to what uses it would be put.
Now, I beg to direct the committee's attention to the extraordinary operating effect of this bill. The fact is that no such authority has evern been sought or granted either when the Nation was at war or when war was eminent; and furthermore, that ample authority has been granted for the major purposes of defense and if necessary may be expanded, without authorizing the transfer to the United States in executive discretion, of all forms of private property and property rights possessed by the people of the United States.
I would like to call the attention then of the committee to what this bill does and in doing so, I venture to direct the attention of the committee, first of all, to the fact that there is a clear distinction that is to be observed in all this discussion between taking title to property and commandeering it or taking possession of it for purposes of use or operation.
This bill provides in the first section that during any national emergency which the President may proclaim in his discretion, in the interest of national defense, he may take over title or he may requisition and use any property, real or personal, tangible or intangible, and any property right or interest of whatever character that may be in the possession of any individual, firm, or corporation.
This applies equally, of course, to the property in the possession of natural or artificial persons. Moreover, I call your direct attention to the fact that with respect to the rights or interests in properry that it includes all such rights as may be taken by virtue of contract, patent, license, or otherwise. And “otherwise" would include anything in the form of a property right which a person could possess.
I suggest to you, not to illustrate the extremity of the bill, but merely because it is illustrative of what“otherwise” includes, that it would include the right to real estate or the rights to real estate contracts; the rights to insurance contracts, the rights to inheritances as well as any actual possession of property, and that that section alone that is with respect to property rights, is qualified by the further phrases“that such rights may be taken where their exercise or control can be used or is adaptable for use, directly or indirectly, in anyway for national defense."
And then is added the specific uses that may be considered with respect to such rights and that is “in the construction, manufacture, production, transportation, repair, testing or storage of military or naval supplies or other articles, commodities, materials, machinery, or equipment for national defense."
Those who drew this bill, of course, knew what they wanted. It applies completely to every form of property that can be conceived.
In that connection let me merely call your attention to what the elementary rights of property are, with which you gentlemen are doubtless familiar, but nevertheless they should be noted. They are the rights to the acquisition, the possession, the use, the enjoyment and the disposition of either property or property rights.
All of these are included here and any one of them may become the subject of action under this bill, or all of them. And, of course, the major power to take over property, take title to it, includes the other rights of property—that is use or possession and specifically it includes disposition.
Since the second clause of this first section provides that all such property which may be taken over may be also on such terms as the President shall find satisfactory, be sold or otherwise disposed of, either temporarily or permanently, and that applies to any property or right or interest requisition or taken over "pursuant to the provisions of this act.”.
But there is no limitation that the disposition of this property to third parties is limited by the requirements of national defense. There is no such limitation found in this measure and I call your attention to the fact, of course, because it is closely connected with that, the fifth section of the bill provides that in the construction of
“this act that it shall be effective notwithstanding the provisions of any other acts."
It, therefore, overrides or it may be complementary to any other limitation that would apply to this act.
Senator LODGE. Did you hear the question that I asked Judge Patterson, as to whether he had any objection to putting the provision in here, specifically stating that the powers of this act should be used solely for the purpose of equipping the armed forces?
Mr. EMERY. Yes; I heard that question.
Mr. EMERY. Well, it would be a limitation but I venture to suggest that on further realization of the operating effect of this bill you wouldn't find that, perhaps, ample. It would be a valuable limitation indeed.
Senator LODGE. Have you got a suggested amendment? Mr. EMERY. May I conclude the analysis and then discuss that feature of it, with your permission?
Senator LODGE. Yes; go ahead. Mr. EMERY. You will note that it not only operates, notwithstanding the provision of any other act, and therefore it would operate as the last expression of Congress on this subject, to repeal any prior amendment or limitation that would otherwise affect this particular provision; and the act is to be construed according to the statement in this section as an additional grant of authority in all cases.
Now, of course, you passed the lend-lease bill, for example, and the lend-lease bill authorizes the President of the United States, upon such terms as are satisfactory to him, to lend, lease, or otherwise dispose of any subject matter of a contract to any nation which the President considers necessary for the defense of the United States.
So that the transfers which are contemplated here, even of military property or any other property, of course applies to the power of the President to dispose of that to nations as well as individuals outside of the United States if it is deemed necessary for the national defense of this country
Now, secondly, I want to distinguish between the power of eminent domain, to which reference has been made, and the powers exercised under this bill.
The distinguished gentleman who preceded me, a very able and experienced lawyer, realizes that in normal condemnation proceedings that particular property is the subject matter of action, and it is condemned in a proceeding brought by the United States for that purpose. The value of the property is determined at that time under some conditions, which I shall presently call your attention to. The property may be taken over by the United States and the value determined thereafter. But proceding under this bill, it is summary.
There is no judicial proceeding whatever. The property is taken over by the Government. The President determines the value of the property in his discretion and that value is said to be fair and just. That determination, when made, if not satisfactory to the owner, whether an artificial or natural person, may be the subject of subsequent action if the party refuses to accept the compensation offered by the Executive or through his representative or agent, as the fair value of the property. Immediate possession of it is taken under all circumstances if the Executive so wishes, and if the compensation is