In regard to some of the points that were raised this morning, but which were, I think, pretty well cleared up before the War Department finished, I think it is a mistake to think that this bill is going to have anything to do with the absorption of business generally throughout the country. That is already provided for and is going on and will continue.

This bill here will really be used very little. There will be times when it will be quite essential. But the relative number will be very few. We should not, however, be put in the position of not having the authority that is here when we do need it.

As was pointed out very clearly, the thing that is causing and will continue to cause disruption of business is the authority that now is lodged with the O. P. M. in regard to priorities. That is really what governs business, and not this particular bill. This might do it if we did not have priority; but priority is so much more important that I think we can neglect any effect that this bill will have here, because that is absolutely complete in its final effect.

One more thing, however. I have great confidence in the ingenuity of the American businessman. As soon as this bill is passed, I foresee that every man who has a business now will immediately study his plant to see if there isn't some part of the national defense that he can enter into; and he is himself going to take steps to get into that.

It is impossible for the War Department or the Navy Department or the O. P. M. or any of them to have the absolutely complete knowledge of the industry of this country that would be necessary in order to make sure that every small plant in the United States was engaged in some way in the national defense advancement. But it can be done and I think it will be done as soon as everybody realizes that he must put his plant into national-defense production some way or other. As soon as he realizes that, he will do that of his own effort without any prodding from the Navy Department or the War Department or the O. P. M. either. He will do it himself. He will do it by dealing with other business people and the businessmen himself. These people have these contracts. It is impossible, of course, for the Navy Department or the War Department to put these contracts out in small sizes. The Navy Bureau of Ships will contract for a ship. It may cost $8,000,000 or $50,000,000 to build it.

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Now, the contractor in turn subcontracts for machinery. contractor in turn contracts for, we will say, turbine rotors. man in turn contracts for bearings. It goes on indefinitely. There is almost no limit to which they cannot carry it in any given area. But a whole lot of it has to be done by the cooperation of the American business people. It just is not possible for the War Department and the Navy Department to run the national defense business without every citizen in the United States devoting some of his time to thinking out how he can best advance that program.

And I think it will be done. And a bill of this kind brings that home to everybody, and makes them realize that if he does not have national defense work in his business, he is not going to be secure. makes him think about it some.

It

In the final analysis that is what we have to rely on. And I think that the final outcome of this whole business is that all of the country will be devoting a large part of its resources to the national defense.

You must realize that it took Germany 7 years of absolutely unlimited authority to direct all of the industry in the country into a total war effort. We are trying to do it in one year. We are pretty good, but I don't think that we can do quite as much in 1 year as Germany did in 7.

But it is coming very fast, and this bill will strengthen the hands of everybody who has anything to do with the national defense, and will at the same time act as sort of a prod on everybody else that is not connected with these things. It will tend to bring them in and make them use their ingenuity in getting in.

I think that is all I have to say, sir. Senator HILL. Do you think it would be helpful to the Navy? Admiral ROBINSON. Oh, yes. I am sure that it will. I think it would be more helpful if we could get the bill as originally introduced rather than with the amendment.

Senator HILL. What provision in the bill as originally introduced and not now in the measure in its substituted form is it that you want? Admiral ROBINSON. I only listened to the proposed amendment as it was read. But it seemed to me that it did weaken the bill somewhat, because it restricted it pretty much to machine tools and things of that kind, whereas we might want to take over a building with the machine tools in it.

It might be interpreted to mean the same thing as. the original bill. But the present bill enables us to take over anything that is needed in the national defense, and I think that that is the way it should be, because it is not going to be exercised unfairly.

As Senator Downey said, the people administering this bill are going to do it with the greatest restraint. They will have every reason to do that and none whatever to do otherwise. And the stronger that the bill can be made, it seems to me, the better it will be.

I don't see any restriction at all on what is going into the program so long as it is national defense. That is the sole criterion. You may be sure that nobody is going to take over anything that is not actually national defense.

For one thing, they don't have the time. They have too much to do to be interfering with people unnecessarily.

And you may be sure that this thing will be used only for a last-ditch resort. Nobody is going to bother about that. We are contracting for things all the time. We are too busy. It is only in rare instances that we are going to run into trouble. But certainly we ought to have the necessary authority to take care of those situations.

I think that the bill the way it is is a little better than the proposed amendment, and I cannot see any particular reason for the amendment. It does not seem to me to have any reason for it or anything behind it. Certainly nobody wants to accept any kind of property of one kind more than the other, the machine tools any more than the land or the shop or anything else.

The CHAIRMAN. Are there any further questions, Senator Hill?
Senator HILL. No.

The CHAIRMAN. Senator Downey?

Senator DoWNEY. No.

The CHAIRMAN. Senator Kilgore?

Senator KILGORE. I would like to ask one question.

Admiral, this person building the ship and the subcontracts resulting therefrom-that, of course, follows where a ship is built on a competitive-bid basis. It becomes the duty of the general contractor then to assure himself of the supply of materials and parts necessary to build this ship even before he makes any bid. Isn't that right? Admiral ROBERTSON. That is true; yes, sir.

Senator KILGORE. That is on the competitive basis. However, on a large part of your work now being done it is on a cost-plusfixed-fee basis, is it not?

Admiral ROBINSON. Not a large part. No, sir. The Navy Department business-I don't know the exact figure-but we have about $8,000,000,000 worth of contracts already. I think probably about six billion of those are on the fixed-price basis.

Senator KILGORE. Not competitive?

Admiral ROBINSON. Not competitive. No, sir. We fix the price by negotiation. But it is not on the fee basis. It is a fixed price. Senator KILGORE. Where you are using the cost-plus-fixed-fee basis it rather puts the department that is using that on the spot rather than the contractor in the proposition of getting his parts if he fails to get them. Isn't that right?

Admiral ROBINSON. No, sir. We hold him responsible for getting the material. In order, however, that he may not unnecessarily run. the cost of the ship up, we make him get bids on all the material that he uses himself.

As a matter of fact, every man does the same thing. All these shipbuilders get bids, just as the Navy Department does, for their materials.

Senator KILGORE. Do they submit bids to you before they accept the contract?

Admiral ROBINSON. They do not submit them to us. It is decentralized in every one of these concerns.

Senator KILGORE. The subcontractor submits bids before he gets the contract?

Admiral ROBINSON. That is true. There are exceptions to that, but generally speaking that is the case.

Senator KILGORE. Of course, you rely on him for the responsibility of his subcontractors as to whether or not they can produce?

Admiral ROBINSON. Oh, yes. Of course, the people who are supplying ships as a rule are people that have been doing so for many, many years, and we know perfectly well what their capacities are, and they know what shops they have, and they know whether they can meet the date of delivery or not.

These bids are informal to the extent that very often they won't contain a great deal in the way of specifications. They may just say "To be to the satisfaction of the Navy Department.' But the other man knows just exactly what he is bidding on, because he is all the time speaking of those things to the people who have the fixed-price contract.

Senator KILGORE. That is all the questions that I have of this particular witness.

The CHAIRMAN. We are very much obliged to you, Admiral. Senator HILL. Admiral, I don't suppose that you have had an opportunity to go back, as did General Rutherford, to see how this

power or a similar power was exercised during the World War so far as the Navy was concerned?

Admiral ROBINSON. No, sir. I have not. But generally speaking the War and Navy Departments got together during the last war, just as they are doing now.

Senator HILL. In other words, your illustrations would be very much the same as General Rutherford's?

Admiral ROBINSON. They would be just the same.

The CHAIRMAN. Gentlemen of the committee, I have before me a letter from Mr. Harold T. Stowell, chairman of the laws and rules committee of the American Patent Law Association, 898 National Press Building, Washington, D. C., in which Mr. Stowell asks that he may be given permission to appear before the committee and make a brief statement.

He said that he would contact the clerk of the committee to ascertain a convenient time for his appearance. Mr. Stowell is here now, and we will be glad to hear from him.

STATEMENT OF HAROLD T. STOWELL, CHAIRMAN, LAWS AND RULES COMMITTEE, AMERICAN PATENT LAW ASSOCIATION, WASHINGTON, D. C.

Mr. STOWELL. My name is Harold T. Stowell. I am here representing the American Patent Law Association, which is an association of some 680 practitioners of patent law throughout the United States. I am authorized by the board of managers of the association to appear for them.

I want to say that our primary interest is to assist the committee in working out the solving of the problems that are before it as far as they relate to patent matters.

I think it might be well at the start to emphasize the distinction between patents and inventions, which laymen frequently do not recognize.

With a few possible exceptions it is hard to conceive what the Government wants of patents, what use the Government could make of patents. What the Government wants to use is inventions.

A patent is a right given by the Government to prevent other people from using your invention. The Government does not want in general to stop other people from using the invention. They want the invention to use.

Now, with that distinction in mind, I want to call attention to the act of June 25, 1910, as amended July 1, 1918, which reads in part as follows:

Whenever an invention described in a patent of the United States shall hereafter be used or manufactured by or for the United States without the license of the owner thereof or lawful right to use or manufacture the same, such owner's remedy shall be by suit against the United States in the Court of Claims for recovery of his reasonable and entire compensation for said use and manufacture. Under this statute, which has been on the books as amended since 1918, the Government can use or have used for it any invention covered by a United States patent.

There may be no injunction against such government use or against use by a contractor of the Government because of the provision for

recovery of the entire compensation in this suit in the Court of Claims. And I say that on the basis of actual decisions of the court refusing such injunctions.

So that as far as the use of inventions covered by the United States patents are concerned, this statute gives the Government at the present time and it makes full use of it—the right to use or have used for it those inventions.

There has been a reference by Secretary Patterson, and, I believe, in the President's letter as it appeared in the newspapers, to possible interference with defense production by virtue of foreign-owned patents.

To the extent that that is true and to the extent that that might prevent production, it might be necessary to take title to patents. It is recommended that the committee, if it is convinced that that is necessary, restrict the right to take title to patents or patent rights owned or controlled by aliens, which would cover clearly anything that has been suggested before this committee, and it has only been suggested. The CHAIRMAN. You heard here a moment ago about these two suggestions by Mr. Byerly, who was here the other day representing the New York Patent Law Association?

Mr. STOWELL. Yes. The association has had no opportunity to consider that amendment. I would say personally that it sounds to me like a very helpful suggestion to this committee, and it might well be adopted with very good results.

The CHAIRMAN. We thank you very much.

Senator Hill?

Senator HILL. No questions.

The CHAIRMAN. We are very much obliged to you.

Are there any other witnesses here who desire to make a statement in regard to this?

STATEMENT OF EDMUND C. FLETCHER

Mr. FLETCHER. Mr. Chairman and Senators, I represent myself purely as a citizen.

I have been a practicing lawyer for about 40 years. In 1923 and 1925, as Special Assistant Attorney General, I have defended the Government in a good many suits in the Court of Claims, and became familiar with these various war powers and war acts, and the taking of property under eminent domain, and so forth, under the acts as drawn then. Since that time I have had considerable experience through the study of such acts in my litigations against the Government.

So, in order to aid the committee, I have drawn up a little memorandum brief here, which contains pertinent matters, especially decisions of the Supreme Court of the United States in regard to these questions. I will not burden the committee with reading it. I will just leave the memorandum.

(The brief referred to was filed with the committee.)

Mr. FLETCHER. Here is what I want to emphasize before the committee. And, by the way, this brief is mainly devoted to land. This bill is an eminent domain proceeding strictly. That power lies dormant in the Government until it is put into effect by an act