have put the money back into business and imported employment. Any time I make money I put it back into the business and make more employment. It is so simple I cannot see why anyone cannot see it. I think one of the reasons we have had the taxes upped so much is because we have all been anxious to pay for this as we have gone along; and that is a fine idea.

Senator WHERRY. If taxes remain at the present high level, or higher, would that preclude you from putting money back into the business?

Mr. GUNN. We haven't got it to put back in; it has already been taken away.

Senator WHERRY. In other words, would it destroy the incentive? Mr. GUNN. Our personal taxes

Congressman MAGNUSON. You mean corporate taxes?

Mr. GUNN. Yes; I think the taxes have destroyed incentive, and are continuing to do it.

Mr. MAGNUSON. The income tax?

Mr. GUNN. Yes. And I should like to talk on the corporate entity and not get into the personal proposition, because I think we are talking about war plans for employment. The minute we get into that discussion we all realize that no one person, or no one group of people can make money or keep money unless the laboring man is provided for, and unless he has a job. We all want work, and it won't do if it gets into just some few hands.

There are many companies today that can't show much of a gain in net assets, even the strict war corporations. That is due to renegotiation and high taxes. I think it is perfectly proper. I have no hesitation to say that. But there are many who have a very poor current assets position and have insufficient working capital, and will have less, because of the capital that has been affixed to it in order to get a job. I mean by that-I think it is very clear-if you have invested fixed capital, and the people who have done the outstanding job in the war effort have had to increase their fixed capital-you should have an opportunity to get it out. We have all been forced, practically, through a will to win, through a spirit to be patriotic, and with the war agencies pushing us on for more and more business. We have continued to speed up our production. I don't think there are many of us who have turned them down. But in so doing we have had to put too much money into fixed capital and assets.

As I stated, the Murray-George bill does not provide for that. I am of the opinion that some special relief for growth corporations, who expended profits into fixed capital, should be had; I think they should be taken care of by relief legislation. It is a hard thing to do, I know, but if it were easy we shouldn't be here asking you Senators for help.

One of my companies, the Kirsten Pipe Co., was doing a national business, making an aluminum smoking pipe, and there is no question but that we will be back in the pipe field after the war is over. We have our plans all ready for that.

As for the Webster-Brinkley Co., of which I am an officer and half owner, that company has done a fine war job. Prior to the job they were in the conveying business, mostly with relation to saw-mill and pulp-mill machinery, and machinery for transmission lines. Particularly with respect to that company, where the expansion has been

very great, the working capital will be depleted and there will be no incentive to supply new capital under the present laws.

As to Government-owned plants, I have not touched on them. To make it brief, I think they should be gotten into private hands as soon as possible. I think we should recognize that there are a lot of war plants that have been built, which must be torn down or destroyed. I think to try to keep a lot of them busy, if we try to do that, we are just kidding ourselves. I am convinced that we are going to have our Navy; that we are not going to sink it, but we are certainly going to cut it down some. Our Navy today is a war Navy. The same thing is true in industry. We have a lot of plants that have served their purpose, or will have served their purpose, which should either be able to stand up on an economic basis in private hands, or they should be gotten rid of.

I think there has been something said about patent laws. Í think our patent laws are adequate. They have been under attack, and to some extent from small business, but generally speaking, I think from the standpoint of small business the patent laws are adequate. I think the small business is protected by the use of patents. I think the little business profits more than big business does from patents. We have heard about the immense profits being made by big business, but, nevertheless, I think little business has profited still more. There are thousands and thousands of businesses which have originated in the hills of the country and in the plains, in the ways and byways, where some patent has been invented by some small manufacturer, and the only protection that manufacturer has had has been in the patent laws, and I think they are a good thing.

Senator MURRAY. It has been suggested that the great pool of alien patents that have been taken over by the Government should be made available to the small concerns, upon equal terms, to give them every opportunity to take advantage of the existence of those patents, and also to give them access to new processes and methods of production that have been discovered in the war and developed at Government expense, so as to aid the smaller firms in getting into production. You would agree with that, I suppose?

Mr. GUNN. I agree with it, in substance. I don't think it is practical because all the patents have been registered here for years, and they have had an opportunity to get them. The only thing is that you can't go in and get a patent, in ordinary times, without paying a royalty on it, but in this case you apparently can. There are some of them that can be used, and if they can't be used let them have them under the patent laws.

Senator MURRAY. I was led to understand that many of those patents were not available.

Mr. GUNN. They were not available because you couldn't get them under contract.

Mr. MAGNUSON. They were under cartels.

Senator MURRAY. They were under cartels and were made the basis of monopoly.

Mr. GUNN. I think some of them are and were, but I think the more scientific and complicated it is, the more necessary for the larger people to develop it, because they have the research laboratories and they could make better use of it. But it is the newer inventions, that come in at the outset I am talking about; and I think we should leave

those patent laws alone. I don't see how you can legislate patents one way for one person and another way for someone else. I think they should be left where they are.

Senator MURRAY. That is an important field for study. The very large concerns have established elaborate departments for the development of patents and have often used those patents as a basis of extending a monopolistic control.

Mr. GUNN. Of course, any patent gives a monopoly; it gives a monopoly to the little fellow where the big fellow can't touch it.

Senator WHERRY. In other words, you are satisfied with the present patent laws?

Mr. GUNN. Yes. But they have been attacked, so that it makes one hesitate to pay very much money for a patent.

I think we should get back to civilian production as quickly as possible without hurting the war effort. I think we were very slow in planning for war, and because of that I am wondering if we are not a little bit slow in planning for peace. I am quite well acquainted with some of the plans that are completed to work this out in Washington, but they have been delayed some. However, I think, with the outlook of war as it is today, we cannot afford to delay in getting ready to solve the peacetime problems, and get ready for the peacetime industrial effort that is to follow. If we don't, the businessman is going to bear the brunt of the difficulty because people are not put to work. If we can get the materials and get the restrictions relaxed, we can put the people to work.

We are in a critical area. That has been brought out, and that is true. We helped bring it about by being pretty good at getting contracts out here, and having a big navy yard close by that had to take the place of Pearl Harbor; and then we have the Boeing people who have done an outstanding job. But the fact remains that the problem is here, and let us lose no time in getting it solved.

Senator WHERRY. Do you mean that we should go back to civilian production now?

Mr. GUNN. No; I say that we should plan for it and have our plans ready.

Now, there are some very fine plans that are all set, and they have been put off. I am simply saying that we should stay on the job and not lag nor wait for eventualities to come. We should be ready to go the moment the war ends.

Mr. MAGNUSON. May I ask a question?

Senator MURRAY. Yes; surely.

Mr. MAGNUSON. The thought has struck me and I know that Mr. Gunn as well as the Boeing plant is faced with it can you make any plans for post-war business until you know what the Army and Navy have plans for insofar as their construction is concerned, and insofar as their procurements are concerned?

Mr. GUNN. No.

Mr. MAGNUSON. Don't you think there are many plans that the Army and Navy could very well let the civilian population know about so that they could fit their plans accordingly?

Mr. GUNN. That is right.

Mr. MAGNUSON. The Army and Navy know for months what they are going to do, and they say nothing until bang. I think the Army and Navy have been lax in letting the business and production men know so that they could make their plans to go ahead. I

think this committee should recommend that the Army and Navy release plans, which are not military secrets, so that the businessmen can make their plans having in mind what the Army and Navy is going to do. There are many things that are not so secret, that the Army could just as well release.

Mr. GUNN. That is right. I think with small business in this State it is hesitant to go ahead, because it is in ignorance of the Government's policy, or what the Government is going to do.

Another thing, the Government's policy on public lands is a matter of some concern. I think it affects small business, particularly the small manufacturers of this State, to a considerable extent. A lot of our public lands have recently been appropriated by the Federal Government, both from the State lands and private lands.

The Department of the Interior has had a policy of appropriating public lands rather extensively, and we as citizens of this State have strenuously objected, but to no avail. There have been a great many small mines, timber claims, grazing lands, and oil lands that have been affected; and you gentlemen from out of the State must have been acquainted with the fact. I should like to bring out again before this committee that 65 percent of the Washington industry comes from forest products; we have in this State a sustained-yield law on reforestation. But sustained yield in our forests will not yield sustained employment. Now, when our timberlands are appropriated for other purposes by the Federal Government, it takes out of circulation not only the timber that is now standing there, which takes employment to get out and to process for the market, but it takes the land out of production for a new crop. You must not forget that our crop is timber, just as yours is wheat or corn. Timber is a crop, and when it is taken away from us we just don't like it.

In other words, there is 60 percent of the steamship line and railroad business in this State which originates from forest products. And we fellows who are making machinery to take out the logs, and who are making the machinery for the pulp or paper mills, or for the salmon industry, or the fishing industry, we don't particularly go for the taking of those lands out of circulation.

Now, one more thing and I shall wind this up. It is a very broad subject, but I don't see how the little fellow can get away from some of the big things. If all these things could be taken care of to the liking of everybody, we should still have, unless you do something about it ahead of time, foreign competition with countries who either depreciate their currency, to undermine and get our business, or who use their lower standard of living to attempt to get their products in here.

The Scandinavian countries have large inventories of pulp, and paper to dump into this country the minute the doors are open and it is up to you fellows in Congress to give us protection.

Senator WHERRY. That is, you must protect the domestic market? Mr. GUNN. I think, if we are going to maintain the standard of living in this country that we have in the past, or which we hope to maintain, it is up to us to do it, or we will be lowered to the standard of the Japs and be eating sake and rice.

Senator MURRAY. I understand there is an undertaking among the nations to bring about a rise in the standard of living in other parts of the world, and by bringing up their standard of living it will help.

Mr. GUNN. I hope they do it at their own expense, and not at ours. Senator MURRAY. That, of course, should be the policy. It seems to me that we will always suffer from competition with other countries that live on a much lower standard of living, with cheap labor and peon labor. We cannot compete with them unless something is done to compel them to raise their standards. I mean, by lending them money to enable them to do it, and to enforce it in some way, by international agreement and understanding.

Mr. GUNN. Of course, there is an international bank that may stop some of this depreciation of currency, which was ruinous to us in the wood-pulp business.

Senator WHERRY. But you feel that the safest protection is to protect your own standard of living?

Mr. GUNN. That is fundamental. I don't think anybody is going to look after us. I think if we wait until he brings his standard of living up to ours, ours will be down to his. I don't propose to stand idly by and see it done, if I can help it, because I don't want my youngsters to live under any such condition.

Senator MURRAY. Thank you.

The next witness will be Frank Hobbs. Will you step forward and take the stand, Mr. Hobbs?

STATEMENT OF FRANK HOBBS, OF HOBBS INDUSTRIES, INC., AND PRESIDENT OF PACIFIC HUTS, INC., SEATTLE

Mr. HOBBS. My appearance before this committee results from an experience concerned with an attempt to be realistic in the preparation for the transition of my personal and organizational activities to the type of system or economy which soon will be required to take the place of our war-production activity. My problems are in common with the tens of thousands of persons or organizations who apparently will be charged with the responsibility of providing employment for millions of our people and in manufacturing those articles which provide the medium of trade.

I stand before you as a contractor who has completed his war assignment; who has done his job in an efficient manner; who has employed initiative and resourcefulness to avoid waste; who has saved vast quantities of critical material, manpower, and transportation, which in the aggregate has represented a saving to our Government of more than $15,000,000 by comparison with methods heretofore used or available at the time the job was started.

I refer to the design and production accomplishment of Pacific Huts, Inc., which organization is now a closed entity and is perhaps a war casualty. Last February we completed our contract and I might add that had we not possessed the drive and resourcefulness required to do our job well, we might still be operating as our last delivery was made many months ahead of the original schedule. Renegotiation, together with Mr. Morgenthau's taxing formula, have left us with little if any new capital to invest in a new enterprise. We will still be obliged to utilize capital acquired out of pre-war earnings.

What I have said should interest your committee because of the fundamental fact that an orderly transition-progress, employment, and prosperity-will obtain only as a result of the exploitation of the initiative, resourcefulness, drive, and know-how of the individual who