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Mr. PATTERSON. They have a good deal. Of course they are committed to the same policy that we try to pursue and we have their aid in carrying it out.
They have a section up there in the Office of Production Management that is supposed to, and does, promote as many of the orders of the smaller sort and subcontracting as possibly can be done. They have cooperated very thoroughly along that line with us. They have, of course, the approval of our purchases. We clear all important contracts with the Division of Purchases under the direction of Mr. Nelson, in the Office of Production Management, but they do not initiate any of those.
Senator LODGE. Mr. Secretary
Senator DOWNEY. Senator Lodge, may I make one further statement and then I will be through.
Senator LODGE. Go ahead.
Senator DOWNEY. I want to say I am today asking Senator Truman if he cannot hold a meeting in Los Angeles to investigate this very issue we have been discussing here. It is my opinion that there is a vast reservoir of labor in Los Angeles untouched; vast capacity of machine tools untouched; vast number of skilled labor, architects, untouched, all of which could be used to promote our shipbuilding program, particularly, and especially our airplane industry.
That is one reason those are not being utilized, because of the policy of the Maritime Commission and of the Navy in restricting their contracts to only a few large companies, knowing of this other vast reservoir, and that issue cuts in very direct on the purpose of this bill, and if Senator Truman can go out there, I think that after he holds his hearings, within the next 10 days or 2 weeks, I can come back with very concrete and detailed information on that for this committee.
Senator JOHNSON of Colorado. On that point, Senator Downey, do you not think that it would be to the advantage of the Government to let the contracts to the large companies, provided they sublet the contracts to the smaller companies and utilize the smaller companies in that way and that that is the proper way for a small industry to get into the program?
Senator DOWNEY. And, I think that this bill is going to do just the opposite. Instead of the large companies letting the work out to the small companies, they will want to hold the profits and hold the business too, and they will go right out and take not only the machines and the business, but the personnel.
Mr. PATTERSON. Of course, that has been discussed. It was brought out in discussion here in 1917 and 1918 in connection with comparable control to that which has been brought out here in this emergency, and, so far as I know, it did not have any of the disastrous effects that have been mentioned here.
Although no one of those bills was anything like as broad as this, the 17 added together I think covered a great variety of materials and supplies.
Senator LODGE. That is a point that I wanted to ask you about, Mr. Secretary.
Here, for instance, is an excerpt from the Food and Fuel Administration Act of August 10, 1917.
Sec. 12. That whenever the President shall find it necessary to secure an adequate supply of necessaries for the support of the Army or the maintenance of the Navy, or for any other public use connected with the common defense, he is authorized to requisition and take over, for use or operation by the Government, any factory, packing house, oil pipe line, mine, or other plant, or any part thereof, in or through which any necessaries are or may be manufactured, produced, prepared, or mined, and to operate the same.
Now, it seems to me that that is so far superior to this. I was trained in the philosophy that you ought to think out legislation, ought to think out exactly what you wanted to do, and formulate the language specifically for that purpose, and I am for anything that is for national defense, and will support anything that will promote our defense; but I am a little bit startled by a grant of power that is so tremendous that you cannot tell whether it will be used to do what Senator Downey suggests, or use it to do just the opposite, or can be used.
Mr. PATTERSON. Why not say useful for military supplies or materials. If it came down to a pinch and to any particular machine tool, and we depended upon that machine as to whether troops in the field should be supplied or whether it should be continued to be used in nondefense industries, I would not myself have the slightest hesitancy in making a choice as between those two, never.
Senator LODGE. That is just it. Can we not have a bill that lists all of the things that you want, or do you not know what you want?
Senator Hill. May I see that quotation, Senator?
The CHAIRMAN. I am very much interested in that language. I have not read it. It seems to me that that language is
Senator LODGE. Very broad.
Senator Hill. Let me see. It seems to me that that language is just about as sweeping as this bill before us.
Senator LODGE. We were in war then.
Senator Hill. I understand that. After all, I cannot quibble over the question as to whether we are at war or not at war, as the situation stands today. That is just my opinion. The Senator may have some other opinion.
Senator LODGE. I do not think there is any question as to whether we are at war or not at war. Congress has not declared war.
Mr. PATTERSON. An unlimited emergency has been declared.
Mr. PATTERSON. And the importance of equipping the Army is fully as real and fully as urgent.
Senator LODGE. Nobody will go along with you any stronger than I will in equipping the Army. I want to see the Army equipped.
Senator DOWNEY. May I intervene to ask a point of information? The CHAIRMAN. Yes.
Senator DOWNEY. Judge Patterson, I understand that you indicated it as your opinion that under this bill that if a corporation had a subsidiary corporation which it owned through the ownership of 100 percent of its stock, that a military authority could go right in and take over the stock of that corporation or that subsidiary corporation?
Mr. PATTERSON. If necessary for the national defense.
Senator DOWNEY. And then turn over that stock to some other corporation that the Army officers might direct?
Mr. PATTERSON. Of course, you are bringing up cases of extreme abuses, I think, which I am sure would not occur.
Sentor DownEY. Well, I am just endeavoring to do what I can to find out.
Mr. PATTERSON. If you mean that that could conceivably be done Senator DOWNEY. Únder this bill?
Mr. PATTERSON. Possibly. I have not studied it with that consideration in mind. The language is very broad. I said that it was drafted that way.
Now, if somewhat more restricted language would be more satisfactory and still would not cripple us, when we needed the power, well that, I think, would be a very good solution.
Senator LODGE. That is the whole point. We do not want to keep you from getting anything you need; at least I do not. I want to give you everything that you want.
Mr. PATTERSON. We are responsible for the military part.
Mr. PATTERSON. And it is our duty, as I conceive it, to come down and ask Congress for the powers we think necessary in equipping the Army.
Senator LODGE. Exactly, and what would be the draw-back, from your standpoint, to enumerating all of the different things that you think you might want to do in the next 6 months and then put that in the statute?
Mr. PATTERSON. Well, that could be done, but as I say cases come up—it has happened repeatedly in the last year, not only on equipment, but something else, and you look for the law, and you say, “Oh well, it does not cover the case.”
Senator LODGE. You mean that things will come up that you cannot foresee?
Mr. PATTERSON. We had to take over the North American plant last week. Someone said that section 9 of the Selective Service Act did not cover the case; covered only a refusal to produce. There was no refusal on the part of people to produce.
Senator LODGE. It did not take long to get legislation.
Mr. PATTERSON. The House is doing something else. We had to act without regard to that, but that is just an illustration of the situation you are in when the language is restricted, and then something comes up. I have no doubt from your own experience you have that come up constantly; all of us do.
Senator LODGE. Could you furnish for the record the recommendations Mr. Baruch made at the time of the last World War?
Mr. PATTERSON. That is in my statement.
Mr. PATTERSON. I quoted from his book. He did not make it at the time.
Senator LODGE. Was there any bill drafted to carry out his recommendations?
Mr. PATTERSON. That is the recommendation that he made in the book which is off of the press this year. I do not know when he made that recommendation. I discussed this problem with him and he tells me that his own views are that this is appropriate legislation.
Senator LODGE. I see, but no proposal was made at the time of the World War?
Mr. PATTERSON. I understand that there was right at the close of
Colonel DINSMORE. That is right.
Colonel DINSMORE. I am reading from the report of the War Policies Commission.
The CHAIRMAN. Give the page, please; the citation.
Colonel DINSMORE. That is page 450.' This is one of the exhibits of the industrial mobilization plan which the War Policies Commission had before it.
A bill relating to the acquisition of private property, in emergency, by the United States.
Various laws were passed during the World War along the same general lines. All were restrictive in character to a particular kind of property or particular commodity for a specific purpose. A bill of the general tenor of this draft was being considered by the Congress at the time of the armistice.
The principal difference between the proposed law and the World War legislation with respect to the same authority is that here all quisition by the Government in war is covered in one piece of legislation, whereas in the World War the legislation was restricted to particular kinds of property and specific purposes.
In other words, it was felt at that time, in the World War days, that it was desirable to consolidate.
Senator LODGE. Who made that statement?
Colonel DINSMORE. This is a part of the industrial mobilization plan, Senator, that the War Policies Commission was then considering.
Senator LODGE. Well, to your knowledge, was any recommendation made during the World War for legislation similar to this?
Colonel DINSMORE. I have not checked that, sir.
Senator Hill. Now, going back to this language a minute, as I read it it says:
That whenever the President shall find it necessary to secure an adequate supply of necessaries for the support of the Army or the maintenance of the Navy, or for any other public use connected with the common defense, he is authorized to requisition and take over, for use or operation by the Government, any factory, packing house, oil pipe line, mine, or other plant, or any part thereof.
Well, I take it that a machine tool would be considered a part of a plant. It covers about everything connected with or anything connected with that plant.
Senator LODGE. It is very broad. I do not see why it is not broad enough.
Mr. PATTERSON. It did not touch raw material.
Senator Hill. There are two things I would say that it did not touch, perhaps from your testimony. It does not touch raw materials and it does not touch patents.
Senator LODGE. Well, we can put that in, Mr. Secretary.
Senator LODGE. Can you not think out just what you want to do and give us a list of them?
Senator Hill. You do not need legislation on electric power?
Mr. PATTERSON. I think so. Of course, the priorities bill does not touch this situation at all. It touches future production whereas this touches existing articles.
Senator LODGE. Existing supplies.
Senator KilGORE. There is one question I want to ask. On pgae 2, line 7, you use the words “to sell or otherwise dispose of, either temporarily or permanently, any property, right,” Now, under that, for instance, the equipment in a plant could be seized and sold, we will say, to the Bethlehem Steel Co., by the Government. Is that correct?
Mr. PATTERSON. Yes, sir.
Mr. PATTERSON. Suppose that you had some steel or raw material, you have to, as I see it, and the most convenient way at any rate would be to sell it, because it is going to be consumed.
Senator KILGORE. Right.
Senator KILGORE. But that also would apply to machine tools, and other equipment and what is there about that to prevent, in a very short time, there being practically a machine-tool monopoly in the hands of two or three concerns?
The point that brings that up, Mr. Secretary is-I will give you a little history back of it--I have a letter in my files from a man who interviewed representatives in Richmond, Pittsburgh, and Cleveland, for the Office of Production Management, and he discussed with them a farming out policy, and was met flatly by those representatives with the statement "No; we are going to build these things in central areas around Cleveland, Pittsburgh, and Richmond.”
I have another from a man who applied to the Office of Production Management to see if he could get some contracts, and he had a pretty good sized plant, because the State I come from is an industrial State, and every community has machine shops in it, and they immediately wanted to buy all of his equipment, but could not suggest where he could go to get into the defense industry.
What I am afraid of is that this may be written in such a way that there is a possible chance for terrific abuses in this thing in which the individual plant has no protection.
Mr. PATTERSON. Of course, extreme cases can be imagined.
Senator KILGORE. But if there is some way that we can draft into it protection against those extreme cases and still protect national defense, that is what I am after.
Mr. PATTERSON. Some people voiced a fear at the time of the lendlease bill that the entire Navy would be given away. They said the power was there and it could be done. Of course things like that are fanciful.
Senator KILGORE. That, of course, was impossible and fanciful for this reason, that a step like that would precipitate revolution in the United States, whereas John Jones who has a shop with about 30 lathes or something like that in a small town down here is not in shape to stage a revolution if his plant is taken. He is just one man down there.
But, that is the situation that I foresee in this bill, a possibility of that. I realize that the War Department is sincere in this, but there is a danger, as Senator Downey points out there.
Senator Hill. In that connection, Mr. Secretary, I realize that you are a tremendously busy man. You cannot know all the details of this situation. It is humanly impossible.