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The CHAIRMAN. I also wish to insert in the record the lend-lease act. (The document referred to follows:)

(Public Law 11477TH CONGRESS)

[CHAPTER 11—1st SESSION]

(H. R. 1776) AN ACT Further to promote the defense of the United States, and for other purposes Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That this Act may be cited as “An Act to Promote the Defense of the United States”.

SEC. 2. As used in this Act
(a) The term “defense article” means—

(1) Any weapon, munition, aircraft, vessel, or boat;

(2) Any machinery, facility, tool, material, or supply necessary for the manufacture, production, processing, repair, servicing, or operation of any article described in this subsection;

(3) Any component naterial or part of or equipment for any article described in this subsection;

(4) Any agricultural, industrial or other commodity or article for defense. Such term “defense article” includes any article described in this subesction: Manufactured or procured pursuant to section 3, or to which the United States or any foreign government has or hereafter acquires title, possession, or control.

(b) The term “defense information” means any plan, specification, design, prototype, or infornation pertaining to any defense article.

Sec. 3. (a) Notwithstarding the provisions of any other law, the President may, from time to time, when he deems it in the interest of national defense, authorize the Secretary of War, the Secretary of the Navy, or the head of any other department or agency of the Government

(1) To manufacture in arsenals, factories, and shipyards under their jurisdiction, or otherwise procure, to the extent to which funds are w.ade available therefor, or contracts are authorized from time to time by the Congress, or both, any defense article for the government of any country whose defense the President deen s vital to the defense of the United States.

(2) To sell, transfer title to, exchange, lease, lend, or otherwise dispose of, to any such government any defense article, but no defense article not manufactured or procured under paragraph (1) shall in any way be disposed of under this paragraph, except after consultation with the Chief of Staff of the Army or the Chief of Naval Operations of the Navy, or both. The value of defense articles disposed of in any way under authority of this paragraph, and procured from. funds heretofore appropriated, shall not exceed $1,300,000,000. The value of such defense articles shall be determined by the head of the department or agency concerned or such other department. agency, or officer as shall be designated in the manner provided in the rules and regulations issued hereunder. Defense articles procured from funds hereafter appropriated to any department or agency of the Government, other than from funds authorized to be appropriated under this Act, shall not be disposed of in any way under authority of this paragraph except to the extent hereafter authorized by the Congress in the Acts appropriating such funds or otherwise.

(3) To test, inspect, prove, repair, outfit, recondition, or otherwise to place in good working order, to the extent to which funds are made available therefor, or contracts are authorized from time to time by the Congress, or both, any defense article for any such government, or to procure any or all such services by private contract.

(4) To communicate to any such government any defense information, pertaining to any defense article furnished to such government under paragraph (2) of this subsection.

(5) To release for export any defense article disposed of in any way under this subsection to any such government. (b) The terms and conditions upon which any such foreign government receives any aid authorized under subsection (a) shall be those which the President deems satisfactory, and the benefit to the United States may be payment or repayment in kind or property, or any other direct or indirect benefit which the President deems satisfactory.

(c) After June 30, 1943, or after the passage of a concurrent resolution by the two Houses before June 30, 1943, which declares that the powers conferred by or pursuant to subsection (a) are no longer necessary to promote the defense of the United States, neither the President nor the head of any department or agency shall exercise any of the powers conferred by or pursuant to subsection (a); except that until July 1, 1946, any of such powers may be exercised to the extent necessary to carry out a contract or agreement with such a foreign government made before July 1, 1943, or before the passage of such concurrent resolution, whichever is the earlier.

(d) Nothing in this Act shall be construed to authorize or to permit the authorization of convoying vessels by naval vessels of the United States.

(e) Nothing in this Act shall be construed to authorize or to permit the authorization of the entry of any American vessel into a combat area in violation of section 3 of the Neutrality Act of 1939.

Sec. 4. All contracts or agreements made for the disposition of any defense article or defense information pursuant to section 3 shall contain a clause by which the foreign government undertakes that it will not, without the consent of the President, transfer title to or possession of such defense article or defense information by gift, sale, or otherwise, or permit its use by anyone not an officer, employee, or agent of such foreign government.

Sec. 5. (a) The Secretary of War, the Secretary of the Navy, or the head of any other department or agency of the Government involved shall, when any such defense article or defense information is exported, immediately inform the department or agency designated by the President to administer section 6 of the Act of July 2, 1940 (54 Stat. 714), of the quantities, character, value, terms of disposition, and destination of the article and information so exported.

(b) The President from time to time, but not less frequently than once every ninety days, shall transmit to the Congress a report of operations under this Act except such information as he deems incompatible with the public interest to disclose. Reports provided for under this subsection shall be transmitted to the Secretary of the Senate or the Clerk of the House of Representatives, as the case may be, if the Senate or the House of Representatives, as the case may be, is not in session.

Sec. 6. (a) There is hereby authorized to be appropriated from time to time, out of any money in the Treasury not otherwise appropriated, such amounts as may be necessary to carry out the provisions and accomplish the purposes of this Act.

(b) All money and all property which is converted into money received under section 3 from any government shall, with the approval of the Director of the Budget, revert to the respective appropriation or appropriations out of which funds were expended with respect to the defense article or defense information for which such consideration is received, and shall be available for expenditure for the purpose for which such expended funds were appropriated by law, during the fiscal year in which such funds are received and the ensuing fiscal year; but in no event shall any funds so received be available for expenditure after June 30, 1946.

Sec. 7. The Secretary of War, the Secretary of the Navy, and the head of the department or agency shall in all contracts or agreements for the disposition of any defense article or defense information fully protect the rights of all citizens of the United States who have patent rights in and to any such article or information which is hereby authorized to be disposed of and the payments collected for royalties on such patents shall be paid to the owners and holders of such patents.

SEC. 8. The Secretaries of War and of the Navy are hereby authorized to purchase or otherwise acquire arms, ammunition, and implements of war produced within the jurisdiction of any country to which section 3 is applicable, whenever the President deems such purchase or acquisition to be necessary in the interests of the defense of the United States.

Sec. 9. The President may, from time to time, promulgate such rules and regulations as may be necessary and proper to carry out any of the provisions of this Act; and he may exercise any power or authority conferred on him by this Act through such department, agency, or officer as he shall direct.

Sec 10. Nothing in this Act shall be construed to change existing law relating to the use of the land and naval forces of the United States, except insofar as such use relates to the manufacture, procurement, and repair of defense articles, the communication of information, and other noncombatant purposes enumerated in this Act.

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Sec. 11. If any provision of this Act or the application of such provision to any circumstance shall be held invalid, the validity of the remainder of the Act and the applicability of such provision to other circumstances shall not be affected thereby. Approved, March 11, 1941.

The CHAIRMAN. Are there any questions by any member of the committee?

Mr. PATTERSON. I will simply add, of course, the War Department had no notion when it submitted the bill that it was going to interfere with the watch in a man's pocket or anything like that. The bill is couched in broad language, but what we have in mind is purely materials, supplies, and equipment for the armed forces.

Senator Hill. Mr. Secretary, even if it did take that man's watch under this bill, he would get due compensation for it?

Mr. PATTERSON. Yes, sir.

Senator HILL. In other words, every piece of property that you might take, under this bill, the owner of that property would get due and proper compensation therefor?

Mr. PATTERSON. There is no element of forfeiture in this bill at all..
Senator Hill. No element of forfeiture at all?
Mr. PATTERSON. None at all.

Senator Hill. And no one is going to sustain any loss such as a man sustains when he is drafted into the service and perhaps has to leave his business or some lucrative endeavor he is in, to go into the Army at $30 a month?

Mr. PATTERSON. The situation is not comparable.
Senator Hill. Because the sacrifice is not comparable.
Mr. PATTERSON. No, sir.

Senator Hill. Now, as you have already suggested, this is simply · the third, and so far as I forsee, the final step of what we undertook to do when we passed the Selective Service Act.

The first step that we took was the drafting of our men, our manpower; the second step was when on the floor of the United States Senate there was written into the Draft Act what was known as the Overton-Russell amendment, and which now appears as a section of the Draft Act. That is section 9. That second step, in short, being simply this, that the Government would have the power to place an order with a factory or plant and if that plant did not comply and fulfill that order, the Government had the power to take over the plant so as to insure the production of the material which the Government needed.

Now, this third step is to take that property which is not covered by section 9 as you say, things like patents and maybe a man has got some machine tools out here that he cannot use himself so far as the defense effort is concerned; he cannot make a contribution to the defense, but they are badly needed to be used somewhere else for defense.

Now, you take those machine tools. He is fully compensated, and they are put to work to properly prepare and equip these men that we have inducted into the service, so that not only they will be best prepared and trained, but if they should have to go into battle we will give them the best possible chance to protect and to save their lives: in battle. Is that not what the situation is?

Mr. PATTERSON. You have stated our views.
Senator LODGE. Have you completed, Senator Hill?

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Senator Hill. Yes.

Senator LODGE. What would be the objection, Mr. Secretary, to following the system followed in the World War and enacting a series of specific measures as the need arose?

Mr. PATTERSON. Delay.
Senator LODGE. Is that the only objection you have against it?

Mr. PATTERSON. Yes. Of course, they were about to enact a general commandeering statute just as the armistice came. They recognized at that time that that was no satisfactory way of handling the thing and that is the testimony of Mr. Baruch, who was in charge of the industrial efforts at that time.

Senator LODGE. Have you furnished that for the record?

Mr. PATTERSON. That is in my statement, a quotation from his work, where he recommends a general requisition statute rather than piecemeal requisition statutes such as relied upon at that time.

Senator LODGE. Did the statute he recommended have that permanent feature in it?

Mr. PATTERSON. I do not know that he recommended any particular draft. I have explained its purposes, I think, before you came in.

Senator LODGE. No; I heard that quotation.

Mr. PATTERSON. If there is any other way, I do not know of any way of returning material that may have been expended. As a matter of fact, the only point in putting in the “permanent” in this act was to get in the word “temporary” so we could turn back. Otherwise we would not have had the word “permanent” in it at all.

Senator LODGE. Well, so long as you have a statute that enables you to take aluminum and keep it, you would not necessarily be wedded to these words which enable you to take a man's watch and keep it?

Vr. PATTERSON. No, sir.

Senator LODGE. You have no desire to cover a whole lot of things that are of no military value.

Mr. PATTERSON. No.
Senator LODGE. Of course not.
Mr. PATTERSON. No.
Senator LODGE. Who drafted this bill, Mr. Secretary?

Mr. PATTERSON. I think Colonel Dinsmore drafted it. As I explained, it has been in the Industrial Mobilization Branch for at least 10 years.

Senator LODGE. I wanted to get that into the record.

Mr. PATTERSON. There is no desire here on the part of anybody to seize power. I have heard it so described, but that is not the purpose.

Senator LODGE. I do not know whether you want to seize power; but maybe some others do.

Mr. PATTERSON. I take the full responsibility, Senator, for the introduction of the measure.

Senator LODGE. Either directly or indirectly, anyway, it is drawn absolutely as strong as it possibly could be drawn, is it not?

Mr. PATTERSON. Yes, sir.
Senator LODGE. To sell or otherwise dispose of.

Mr. PATTERSON. Qualified only by the words “useful or to be used for national defense."

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Of course, those are important qualifying words, and I think that it is right that it should be in the interest of national defense

Senator LODE. Now, take those words “of any kind or character” at the beginning, what is the need for that phrase there?

Mr. PATTERSON. Well, that is supposed to make it broad enough for patents, contracts, shares of stock, if you like, or anything like that which might be most convenient; but it all has to do with national defense.

If someone can think of a happier form of wording that will accomplish what we are after and at the same time limit operations, it is all right with me.

Senator LODGE. Will you say for the record, or off of the record, I do not care which, give some specific examples of the uses that you would like to make of this power when you get it?

Mr. PATTERSON. I do not anticipate that this power will be availed of very often. It is one of those things that you have got to have in the closet, however, in case of need. It is a wonderful thing to have it.

Senator LODGE. Just so that people will know that you have it? Mr. PATTERSON. Yes, sir.

Senator LODGE. Of course, it is perfectly true, if you are going to draft

Mr. PATTERSON (interposing). If you are going to dicker with a man for some supplies or machine tools, or something that he has, it gives the Government that right, and that is very necessary if he is asking an exorbitant price.

Senator LODGE. Well, I think as you said, and as Senator Hill said, there is a lot of justice in saying that if you are going to draft a measure under which you are going to draft property, obviously that is a fair thing to do. On the other hand, you do not want to make such changes in our social system that the things for which the man was drafted will disappear behind his back. That is true, too, is it not?

Mr. PATTERSON. Of course we want that bill passed. Under necessity he will do anything. That is a fact.

Senator LODGE. But we are not at war yet.
Mr. PATTERSON. No.

Senator LODGE. And it is obviously true that if you draft a man and then refuse to draft a machine tool that is unfair; but if you draft a man and then take his watch while he is away at camp, that is unfair.

Mr. PATTERSON. I do not think that the Army is short of timepieces.
Senator LODGE. No; I do not think it is either.
Well, I think that is about all I wanted to ask.

Mr. PATTERSON. Someone has suggested that we ought to have the words in there, in case of shortage, "for the Army and Navy.”

I take it that is implied in what is said there, but if someone wants to put those words in there, that is all right.

The CHAIRMAN. Senator Downey, you desire to ask some questions?

Senator DowNEY. Mr. Patterson, I want to preface my remarks by saying frankly I am very much alarmed about the effect of this bill upon southern California, knowing the conditions that exist there.

Now, I am just thinking out loud, and I would like to have your advice and help as we go along.

We have in southern California between four and five hundred small manufacturing shops and machine tool shops. To a greater or less extent, depending upon the particular industry, they are now being used in nondefense industries.

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