I don't question this, Senator, if this is what you mean

The CHAIRMAN. I am not arguing with you. I am simply trying to get your views on the matter so I may come to some conclusion myself in regard to the present bill and how far it goes, and also in reference to the lend-lease bill in its application to the present bill. Senator KILGORE. Might I ask a question right there?

The CHAIRMAN. Certainly.

Senator KILGORE. Under the lend-lease bill is there any way set forth for procuring property without what we say in legal terminology "due process of law"? I mean without a day in court.

Mr. EMERY. Yes, sir.

Senator KILGORE. Or under the terms of a definite contract.

Mr. EMERY. Without a day in court after seizure but not before. Usually when the Government exercises the power of eminent domain in times of peace, a proceeding is brought for the condemnation of property and if there is an objection raised by the owner of that property on the ground of lack of necessity or the fact that it is not being used, in other words, for a public purpose, or the compensation offered is not fair, those are matters for judicial determination.

Well, now, under the necessities of war, that is in wartime, the war powers of Congress have extended themselves to the taking of property without those formal proceedings and the determination of what fair compensation for the property so taken is.

The CHAIRMAN. Will you pardon the interruption-this is a reversal of that situation.

Mr. EMERY. Yes, sir.

The CHAIRMAN. Under present law notice must be given-proper legal notice must be given-to the parties whose property you are about to seize, but under this bill you may seize it before you give the notice?

Mr. EMERY. Yes, sir.

Senator JOHNSON of Colorado. Under the lend-lease bill, section 3, paragraph A, it states:

Notwithstanding the provisions of any other law the President may otherwise

procure.

The President

may otherwise procure any machinery, facility, tool, material, or supplies necessary for the manufacture, production, processing, repair, servicing, or operation of any article described in this subsection

And so forth.

Mr. EMERY. I think that reference to any other laws is a reference to laws which would otherwise govern contracts which would be made under section 3.

Senator JOHNSON of Colorado. Well, I think it just lifts all limitations out of it so far as other laws are concerned and makes this law to all of them.

Senator DOWNEY. If I may make this comment: The issue that has been raised here now was very extensively argued on the floor of the Senate while this bill was before us, and some apprehension was expressed along the line that the distinguished chairman and the Senator from California have expressed, but I believe the chairman of the Foreign Relations Committee, as I recall, Mr. George and some other Senators, gave us the assurance that the bill was not intended

to enlarge the power of the President to summarily seize property, but was merely meant to give the power to the President within the terms of our appropriations, to procure property by any lawful means, and I do think that the records of debate clearly show that the law was passed by the Senate with the interpretation that Mr. Emery has made here.

That does not mean that some Supreme Court may not later interpret it otherwise, because I do think the language is somewhat ambig

uous.

Mr. EMERY. I would like to call your attention in conclusion, gentlemen, that the operating effect of the clause "B" on page 2 is just as broad with respect to the disposition of property taken over the Government to third persons or to foreign governments, as the language of the lend-lease bill, because there is no limitation to the terms which the Government-upon which the Government may dispose of the property. The Executive may lease it, he may lend it, he may give it away, or he may sell it for less than its value. That, obviously, is included in paragraph "B," to use and on such terms as he shall deem satisfactory, to sell or otherwise dispose of, either temporarily or permanently, any property, right, or interest requisition or taken over pursuant to the provisions of this act.

The CHAIRMAN. Now, under the lend-lease bill he has a perfect right to give that material to them.

Mr. EMERY. Yes; and he has here.

The CHAIRMAN. He can lend it to them or he can transfer it to them for any purpose.

Mr. EMERY. Yes, sir.

The CHAIRMAN. Or he can give it outright to them.

Mr. EMERY. The only difference is this, there the transfer or gift can be made only to a foreign government that he deems necessary for national defense, and here it may be given to anybody.

The CHAIRMAN. But this is for the purpose, supposedly, of national defense.

Mr. EMERY. But it isn't limited by that, sir.

The CHAIRMAN. That was the question raised by you and also by Senator Lodge.

Mr. EMERY. I can't see any limitation in clause "B."

Senator KILGORE. Might I ask another question: Under the terms of this act wouldn't it be possible for a contractor to contract for the production of material vastly in excess of what he had the facilities to produce, and then procure the seizure of sufficient equipment from, shall we say, a competing plant to enlarge his plant and place it on a basis to produce that material? Could it be possible for that to happen?

Mr. EMERY. Well, if the President concluded that the giving of equipment or the loaning of or the leasing of equipment to such person was necessary for national defense he certainly could do that. He certainly could take it from others and give it to him or loan it to him. That is possible.

Senator KILGORE. In other words, it is open to that kind of abuse? Mr. EMERY. Of course it is.

Senator KILGORE. In other words, it might be possible in such a way for one manufacturer to make way with or dispose of a competitor. Mr. EMERY. Well, the manufacturer couldn't do it but the power is in the Government to do the thing that you speak of; yes, sir.

Senator KILGORE. In order to administer an act of this kind, wouldn't it be necessary to have a complete survey of all the manufacturing interest in the United States, their capacities, their plants, their equipment, and what they are engaged in?

Mr. EMERY. Well, of course, I would regard that information as necessary for national defense and presumably it exists. I know our organization has made a survey which it turned over to the Government of all the unused capacity in the United States of which—manufacturing capacity which it could find any evidence of.

Senator JOHNSON of Colorado Has your association made any survey or any study of the subletting of contracts?

Mr. EMERY. Yes, sir.

Senator JOHNSON of Colorado. A subject in which all of us are tremendously interested because the defense program at the present time is confined to relatively small areas and naturally everyone throughout the country-all industries throughout the country want to participate in it, but the only way they can do so is by handling subcontracts.

Could you briefly give us some expression of the results of your studies along that line?

Mr. EMERY. Not mine, Senator, but the association has held over 50 regional meetings now through the officers and representatives of manufacturers in all parts of the United States, in which it has brought together anywhere from two or three hundred to two thousand manufacturers for the purpose of impressing upon them the necessity of participation in national defense and the vital importance of using all the capacity, large or small, that can be made available for this purpose, and to expressly bring to them information with regard to the conditions which they have to meet in undertaking these various tasks for the Government; the officers who can give them the information, the sources of information, the methods of financing contracts and the vital importance and necessity of emphasizing the importance, particularly to the smaller manufacturers of subcontracting; to impress upon larger manufacturers the vital importance of their subletting contracts as fully as they can to expedite their own works.

Those meetings have been held all over the United States. I just participated in some of them that carried a group over into California where we had meetings at San Diego, Los Angeles, San Francisco, and then into Portland, Oreg., Seattle, and Spokane, Wash., and in Minneapolis, and again at Denver and from there went down through Salt Lake, so that these meetings have been held in all parts of the United States.

It has been pretty well covered to date for the very purpose of carrying out the very thing you have in mind.

Senator JOHNSON of Colorado. You found industry everywhere very anxious to participate in contracts?

Mr. EMERY. Yes, sir; very deeply, very deeply concerned about it-very anxious about it.

Senator KILGORE. Would it be possible for this committee to see a copy of that report on unused industry that you made?

Mr. EMERY. Why, that is in the possession of the O. P. M. The CHAIRMAN. I should think the O. P. M. would be able to provide us with all the information suggested by Senator Johnson.

Senator DOWNEY. I think it is one of the most important questions before the country today, and while I speak partly from hearsay and partly from rumor, I think that businessmen have cooperated very loyally along the lines indicated by Mr. Emery. It seems that some of our governmental authorities are becoming very impatient with delays and believe they can cut the Gordian knot in many cases by doing away with the subletting of contracts and entirely eliminating the smaller man by having a larger unit take over his machines and then, necessarily, his technicians and his personnel and mechanics.

I think that is a policy that will have a very great significance in our post-war life that we have all got to confront, and it seems to me this military committee should learn something about what is going on in the country with reference to factories that now exist and are idle and what the intention of the Government is in relation to the use of the power under this bill in relation to them.

The CHAIRMAN. Mr. Emery, I assume from your preliminary statement in reference to your association, that both large and small manufacturers are members of that association?

Mr. EMERY. Oh, yes. The smaller ones predominate. There are members who represent very large organizations but I would say upon the whole that far more than a majority could be described as "middleclass manufacturers." That is, the middle-class manufacturers compose the great membership of the organization.

The CHAIRMAN. Now, in reference to Senator Downey's suggestion, I think it would be well to have representatives of the Navy Department here and representatives from the Army, and likewise representatives from the Maritime Commission. You made mention of another agency, the Office of Production Management, and I think we should have a representative from that organization before the committee to provide us with information which is sought by Senator Johnson and Senator Downey, both members of this committee, so I am going to ask the secretary of the committee to be good enough to notify the Maritime Commission, the Army, the Navy, the Office of Production Management, and the others whom I have mentioned, to kindly have representatives here at the opening of our session tomorrow morning.

Senator JOHNSON of Colorado. I want to ask Mr. Emery one other question to pursue his testimony just a little bit further. He said these meetings had been held in a great many different places and that great interest had been shown by small industry in Government

contracts.

Your association must be convinced of the necessity for subcontracting. Now, what are you doing about it? You say you turned the information over to the Office of Production Management. You simply handed it to them?

Mr. EMERY. They turned it over with respect to a survey of unused capacity, but I think that in all these meetings that have been held that every effort has been made to emphasize the importance of subcontracting. I know that that thing has been emphasized among our own members constantly, to do that as fully as possible. Of course, there are certain practical difficulties connected with it in some instances, which you can well understand.

Senator JOHNSON of Colorado. I can imagine you didn't have very much difficulty in convincing the small industrialists throughout the country that they should have some of the subcontract business, but how about getting some of these subcontracts-what have you done about that?

Mr. EMERY. Well, I think many of the small industries were rather under the impression-we got that idea from traveling about a great deal, that they thought the Government would come to them instead of their going in to the Government.

We impressed upon them that there was the same necessity for going after a contract with the Government that there is in the competitive field in the doing of private operations. And you will naturally understand, Senator, that when you undertake to transform an economic machine as big as the American manufacturing industry from peacetime into wartime operation, there is bound to be a lot of hitches and slowing up and awkwardness in the transformation. It does take time.

Senator JOHNSON of Colorado. But the trouble is these big industries get a sizable contract and then they cling to it and they don't farm it out-they don't let subcontracts, and it looks to me as though your association should be able to put your finger on the exact situation with respect to these industries who do not subcontract and that something constructive should come out of that survey.

Mr. EMERY. We hope so.

Senator JOHNSON of Colorado. It doesn't do any good to hold hearings and give everybody a pep talk and sic them onto the Senators and Congressmen. I think you should get some action and results.

Senator KILGORE. Along that line, don't you find generally, among your smaller industrial concerns, a lack of knowledge as to what they can bid on and how they can procure subcontracts? Don't they inquire about as to how they can approach the matter?

Mr. EMERY. You understand I speak on these matters more as a matter of revelation and experience. My department is not concerned with those matters, but we have a very elaborate machinery for the purpose of assisting and procuring information and aiding all our members and manufacturers generally, by the distribution of information, by personal contact, and to supply them with all the information we can that will assist them in carrying out their part of the defense program.

Senator JOHNSON of Colorado. Do you have anyone in your association who could come before this committee and relate his experiences in getting results along the line of farming out and subletting contracts? Mr. EMERY. I am sure we could. I don't know about "farming out," because our association has nothing to do with that, I mean in the sense of subcontracting.

We undertake to assist and to provide for a stimulus that will urge the carrying out of that policy.

Senator JOHNSON of Colorado. Do you know whether you have had any favorable response or sympathetic response from the War and Navy Departments?

Mr. EMERY. Yes, sir; we have been in constant cooperation with them.