its characteristics. But it is a vastly different problem if it has been a farm and a big area has been covered with gravel, and there is an airport or runway put down in the center, and other portions of the land has been covered with some kind of soil which has damaged it for farm purposes. There is almost every conceivable condition and circumstance that can happen to a piece of land under military use. Mr. CASE. In most cases of acquisition of land by the War Department the appraisers in some sections of the Department of Agriculture were called upon to appraise the land before it is purchased. Are there not records available to you as to prior values? Colonel HowSE. We would necessarily use all available records of all governmental agencies. There is a physical job of looking through the records and determining what will be done with the land after we have looked through the records. We have a further difficulty, it seems to me, if I might mention it, and that is that land declared surplus, for the most part, has some utilization during the period of time when it is out of use. let it stay idle until we get it classified. OTHER CONTRACTUAL SERVICES (See p. 1225) We cannot Mr. CANNON. Colonel Howse, I notice that your estimate for other objects has been increased in the revision of the Budget from $279,970-that was the amount in the original Budget for other objects to $1,220,500 in the supplemental Budget. CONTRACTS FOR ENGINEERING STUDIES AND REPORTS ON PLANTS (See p. 1225) The largest part of that, $800,000, is for other contractual purposes, and according to the justifications it is for engineering studies, and reports on plants, and so forth. I take it that is a proper function of a disposal agency, is it? Colonel HowSE. Mr. Chairman, that figure, which was considerably less than we had in mind asking for, was arrived at by consultation with the Senate and House committees that I mentioned this morning, with respect to the reports which we are required to furnish Congress in these 12 categories of industry and with respect to the reports which we will be required to furnish Congress on any plants other than those within those categories of industry which cost more than $5,000,000. The disposal agencies will make, or we will ask them to make, economic studies of certain types of plants, such particular plants as are within these 12 categories. For the most part we rely entirely on the information they give us. On the other hand there are certain industries that are of such importance to the economy of the country, namely, aluminum, magnesium, iron, and steel, principally, that it has been determined by agreement between the congressional committees and ourselves that we will not simply rubber-stamp information and recommendations given us by the disposal agencies; that we will in those cases where it appears desirable, and where there is enough at stake, conduct certain independent studies of our own. I mentioned this morning the iron and steel industry in connection with the western steel plants, particularly the Provo steel plant, ir Utah. We probably would ask a firm of consulting engineers to make a economic study of the iron and steel industry, with particular respect to that plant, on our own authority, to supplement investigations that are made by the different disposal agencies. Those reports are of some scope. As you know, I am sure, with respect to the Provo plant alone I think the R. F. C. is at presen: paying in excess of $100,000 for a single report on a single plant. The extent to which we will have to go in doing this kind of work depends on the developments, and is something we are working or with both Senate and House committees. We would not propose in any case where it was not necessary to duplicate any particular kind of work, which may have been done by the disposal agencies or any other governmental agency in connection. with that particular industry study. Mr. CANNON. I see you say it is not unusual to expend as much as $150,000 on some of these studies. At that rate you would only have enough money to handle four or five of them, or at most, not more than six. Will you give us a little information on that? Colonel HowSE. I doubt, Mr. Chairman, whether we would ever be in a position where we would be required to make a complete study of a particular plant or group of plants. Those studies would already have been made by the disposal agencies, for the most part, and I think in that case we would ask the disposal agencies to make them. Our studies would be concerned primarily with economic surveys within certain categories of industry, utilizing reports that have already been prepared by disposal agencies. The United States Steel Co., I am told, and I think with some reliability, because this was testimony given to a Senate committee spent half a million dollars to make their own surveys of the Utah steel plant alone, and the R. F. C. is presently expending, I think. $150,000 for a reproduction cost study of the same plant. We would not propose to duplicate any such studies. We would propose to make particular industry studies, utilizing factual information de veloped by the individual plant studies. Mr. CANNON. Looking ahead, how many of these studies do you plan to make in the fiscal year 1946? Colonel Howse. We propose to make a general economic survey as we are required to do by the act, of these 12 categories of industry mentioned in the act. We also have a requirement under the act that we will render continuing reports and recommendations to Congress as industry situa tions change, and as to specific plants costing above $5,000,000. Mr. CANNON. You would not be able to roughly estimate at this time the number? Colonel HowSE. I could say definitely that we would have one on each of the 12 categories mentioned in the act. We would have a continuing survey in each of the 12 categories. Mr. CANNON. You would not expect each of the 12 to cost $150,000* Colonel HowSE. It would depend on the extent to which we are required to go. Mr. CANNON. If you did, you would not have sufficient money. Colonel HowSE. I do not think there is sufficient money allotted to either our administrative budget or in the $60,000,000 fund, to go through the year. I think we are prepared to state to the committee that the budget should be larger when we get into the disposal agencies, set-up. We are asking now for only a certain amount to start with. INADEQUACY OF ESTIMATES FOR 1946 Mr. CANNON. How much more should we provide than is provided in the estimates? Colonel HowSE. We had originally an estimate of $2,500,000 for that particular purpose after talking to the congressional committees and ascertaining their wants on reports. The figure was reduced to $800,000 in the supplemental Budget request. Mr. CANNON. What do you think will be a minimum required to carry out the bare purposes of the act itself? Colonel HowSE. I do not think this $800,000 will do it. Mr. CANNON. How much will it take to do it? Colonel HowSE. I have no idea. It is like buying a pig in a poke, at this stage of the game. Mr. CANNON. In other words, you expect to come back for a deficiency? Colonel HowSE. That is correct, but we hope to confine any deficiency estimate to the disposal agencies' expenses. Mr. CANNON. We do not like to do business like that. We like to know what a program will cost before we embark on it. Colonel HowSE. I would generally concur in that. Mr. CANNON. That is like working in the dark. We will start you off and you can expend whatever you want to expend. Then when you come in and want a deficiency we have no choice but to pay whatever you have spent. In other words, we have no control over the purse strings under a system of that character. You say you discussed this with the committees. Have you discussed this with the Budget Bureau since the $800,000 was named in the Budget? Colonel HowSE. Yes, sir. INADEQUACY OF BUDGET ESTIMATES FOR DISPOSAL AGENCIES Mr. CANNON. What did the Budget say about it? Colonel HowSE. I think, generally, the Budget Bureau's position. as stated originally by Mr. Byrnes, and I understand, concurred in by Mr. Vinson, is that the budgets that are contemplated by all of the agencies that are taking a hand in this work, must of necessity, just guesses. be There has been no policy and experience to date that is of any reasonable degree of exactitude-in my own personal opinion. It was determined by Mr. Byrnes originally that the Budget estimates of the agencies will approximate in excess of $156,000,000, as I recall, plus $35,000,000 to reimburse them for 1944 and 1945 costs, and that we would ask at the present time only for a $60,000,000 fund on which to start. That contemplates a continuance Mr. CANNON. That is only the start and we do not want a request for so much to start with. We want a request based on how much it will cost you to go through. My understanding was that this $60,000,000 was proposed to supply any deficiency. When you use the $60,000,000 and the $15,000,000 which has been provided for Procurement, can you not get through 1946 without a deficit? Colonel HowSE. Mr. Cannon, again, it is a matter of guesswork solely. Mr. CANNON. Do you guess you can get through? Colonel HowSE. I would not think so; no. Mr. CANNON. How much would you guess you would have to have to get through? Colonel HowSE. The $156,000,000 figure was arrived at figuring that the war would last through 1946. Mr. CANNON. That is, both wars, or merely the Japanese war? Colonel HowSE. Both wars. If the war is ended prior to that time the cost will necessarily be higher. We have no control over the rates or the quantities, or the points of origin of the surpluses. Mr. CANNON. The $156,000,000 will last through the war? Colonel HowSE. If the war lasts through 1946. Mr. CANNON. That was on both fronts. Mr. MCNAMARA. That is right. Mr. CANNON. On one front how much would it cost to carry you through 1946? On the Japanese front alone, how much would it cost? Mr. MCNAMARA. It would tend to make our estimates so far very conservative, because with that situation it would cost us so much more. Mr. CANNON. How much do you figure you could get through the entire year 1946 with now? Mr. MCNAMARA. I do not think we have any factual data on which we can base an estimate. Mr. CANNON. You should have brought that information up here. That is why we called you before us. There is no use to hold hearings if we are not going to get the information on which to base an appropriation. Mr. MCNAMARA. Mr. Chairman, we had a great deal of difficulty getting the disposal agencies to even hazard a guess as to how much would be declared surplus to them. The armed services are not in a position at this time to even guess as to how much they will declare surplus, or where it will be. It was only after great persuasion that we got them to estimate how much of a total might be declared surplus, as a minimum. Mr. CANNON. As to those figures which you have as a minimum. how much might be declared surplus and how much would it take to carry you through 1946? Mr. MCNAMARA. On the basis of a continuation of global warfare. the amount would be $156,000,000. Mr. CANNON. Global warfare means both the eastern and western fronts. You have no longer any western front. Mr. MCNAMARA. That is right. These figures were prepared- Mr. MCNAMARA. It would be much more than that, because that would result in a declaration of more surplus, and more people t handle more sales. We were not satisfied to ask $165,000,000 because that was a guess Mr. CANNON. You think you could get through with a two-front war with $156,000,000, or at least you made that estimate? Mr. MCNAMARA. That is right, plus $32,500,000 reimbursement to Government-owned corporations for their expenses in 1944 and 1945. Mr. CANNON. That was in the original Budget? Mr. MCNAMARA. Yes, sir. Mr. CANNON. And also in the supplemental Budget? Mr. MCNAMARA. Yes, sir. Mr. CANNON. $156,000,000 plus the $32,500,000 is in accordance with the supplemental Budget? Mr. MCNAMARA. That is correct. We are not making any change in our request at all. Mr. CANNON. That $60,000,000 is merely a token appropriation? Mr. MCNAMARA. That is a way of expressing it, but I think there is little or no chance of going through the entire year on that. Mr. CANNON. In the event of the discontinuance of the Japanese war before the close of the fiscal year 1946, it would be necessary for you to make a complete and drastic revision of your figures? Mr. MCNAMARA. Yes, sir; we would have to increase them all along the line because surpluses would start flowing in quantities that were not expected at the time of the preparation of this Budget. Mr. CANNON. You, of course, are unable to say at this time how long the Japanese war will continue, so you are unable to give us any accurate estimate of what your Budget might be in the latter part of 1946? Mr. MCNAMARA. That is right. But, Mr. Chairman, it is only fair to state that the administrative portion of the Budget is a little more accurate. Mr. CANNON. That is the $2,500,000 for administrative expenses. You think that is fairly accurate? Mr. MCNAMARA. Yes, sir. Mr. CANNON. That is dependable? Mr. MCNAMARA. It depends on the scope and size of the reports that might be needed. Mr. CANNON. With the $2,500,000 for administrative expenses you do not expect at this time to return for a deficiency? Mr. MCNAMARA. We hope not, on that portion of the Budget? Mr. LUDLOW. I think I can comprehend, with my limited vision, that you cannot know the magnitude or the flow of your job. You cannot know that. Mr. MCNAMARA. That is right. Mr. LUDLOW. What concerns me is this: Are you setting up machinery here that will dispose of this surplus expeditiously, efficiently, and economically? Mr. MCNAMARA. That is the machinery we hope to set up with the appropriation. Mr. LUDLOW. With that, you think you will be able to handle the job expeditiously, efficiently, and economically? Mr. MCNAMARA. I think that is a fair statement. PRECAUTIONS TAKEN AGAINST IMPACTS ON PRIVATE ENTERPRISE Mr. LUDLOW. I wanted to ask what precautions you have taken to prevent any serious impacts on private enterprise in the disposal of the surplus. What are your standards along that line? I can readily |