Mr. KLAGSBRUNN. I would like to have Mr. McNamara of the Surplus Property Board answer that.

Mr. MCNAMARA. $60,000,000 is the fraction of the $156,000,000 that we thought that the disposal agencies would need for a year, and in addition to what we would need to reimburse the R. F. C. for those expenses in 1944 and 1945.

Mr. CANNON. The gentleman from New York suggests that we make provision for 3 months. What would it cost to do that? Mr. MCNAMARA. Perhaps $50,000,000.

Mr. CANNON. $50,000,000.

Mr. TABER. Maybe $30,000,000. It might require $30,000,000 or possibly $20,000,000.

Mr. CANNON. Now, the gentleman from New York is making a shot in the dark

Mr. TABER. Just like the rest of them.

Mr. MCNAMARA. The statement of Colonel Howse on that, which was read into the record, answers that question. The colonel said in his statement:

I would like to call attention to the fact that the disposal agencies have computed their expenses on the same bases and presumably expenditures will be proportionate to realization of these estimatcs. In the estimate for the Board's own expenses a special division has been provided for, to review the fiscal operations of the dis posal agencies. It is the Board's intention to scrutinize and analyze most care fully these operations before making an allocation or reimbursement from the appropriation to any disposal agency.

The Board is going to be most diligent to see that every cperation of the disposal agencies is a plus operation. As soon as it comes to the attention of the Board that there is a danger that the disposition of any class of property is going to be a negative or minus operation. that is, that the cost of care, handling, and disposition will exceed the proceeds, the Board will order a scrapping program at the source of the surplus, or as near to the source as possible.

REDUCTION OF PLANES BY CAUSTICS METHOD

Mr. DIRKSEN. Let me ask you a question, Mr. Klagsbrunn, about this caustics method. First of all, do you have any figure in mind as to the number of planes you are going to reduce by that process?

Mr. KLAGSBRUNN. No; we merely have the figure that appears to be a spread of 4 to 6 cents, I believe was the testimony a little earlier. between the return on it as scrap or the return as aluminum meta! if we reduce it by that process of handling. It is believed that the biggest cost would be in the matter of cutting up the planes, and of developing caustic cells sufficiently large so that an entire wing can be put in, then of being able to put these cells near these various fields, and to have enough power available for their operation rather than transporting these planes to the cells, which would make the cost prohibitive.

Mr. WIGGLESWORTH. Do you have any green sheets on this set-up covering what you have submitted by your agency?

Mr. MCNAMARA. They have been consolidated for all the disposal agencies into one green sheet, and the objective classifications have been combined and reduced to equal $60,000,000.

Mr. WIGGLESWORTH. Do you have any big green sheets for this portion of the Budget?

Mr. MCNAMARA. No.

BREAK-DOWN OF ESTIMATES FOR 1946

Mr. WIGGLESWORTH. You told us you wanted $17,000,000 just for personnel and $131,000,000 for other obligations. Have you any green sheets giving a break-down of that figure?

Mr. MCNAMARA. The Reconstruction Finance Corporation has submitted to the Surplus Property Board a résumé, and furnished that to the committee, but we have reduced the amount of the estimate. Mr. WIGGLESWORTH. So far as this committee is concerned we have not any such break-down.

Mr. MCNAMARA. It was not contemplated that it would be furnished. It was contemplated that a fund would be furnished out of which these expenses would be paid and reimbursements would be made to R. F. Č. on an actual cost basis.

Mr. WIGGLESWORTH. I wish you would furnish something of that kind, giving us a break-down, so we can see the basis of these figures. Mr. MCNAMARA. Very well.

(The information requested follows:)

Estimate submitted to Surplus Property Board by Reconstruction Finance

Corporation

DISPOSITION OF PLANES IN FOREIGN THEATERS

Mr. LUDLOW. Most of these big nonsalable planes are of the bomber type and are in the foreign fields of action, theaters of war? Mr. KLAGSBRUNN. Yes.

Mr. LUDLOW. What would be the unit cost of bringing them back to the United States, or would that be more burdensome than trying to dispose of them in the theaters of war, marketing some of them abroad?

Mr. KLAGSBRUNN. They are being handled, I believe, by the Foreign Economic Administration, and I believe there is a very active program of dismantling and scrapping these planes abroad. but that is in process now. I believe I am correct in that.

The Reconstruction Finance Corporation would come into the picture only if some loan or allocation of funds is necessary to return the planes to this country before they are considered surplus, and then after they were determined or declared as surplus.

Mr. LUDLOW. Under that plan of demobilization of these planes what would be the probable unit-salvage value; do you have any idea? Mr. KLAGSBRUNN. I do not.

MARITIME COMMISSION

STATEMENT OF WILLIAM U. KIRSCH, BUDGET OFFICER

DISPOSAL OF SURPLUS SHIPS AND MARITIME PROPERTY

Mr. CANNON. We will take up next the estimate for the United States Maritime Commission. What is the property the Maritime Commission handles?

Mr. KIRSCH. We will handle ships and maritime property.

Mr. CANNON. About what value will be involved, Mr. Kirsch? Mr. KIRSCH. We will handle surplus property in the amount of $200,000,000 in the year 1946, exclusive of ships, shipyards, and reai property.

Mr. CANNON. What part, if any, is your own and what is that being transferred from other agencies?

Mr. KIRSCH. The greater part of it will be transferred from other agencies. I expect 90 percent of it will be transferred from the War and Navy Departments.

Mr. CANNON. And what is your plan of organization? Do you have any field offices or any offices abroad?

Mr. KIRSCH. We have no offices abroad. We plan to have four regional offices: one at Oakland, one at Philadelphia, one in New Orleans, and one in Chicago.

The majority of these clearances of surplus property, declarations will be through Washington, and when sales are to be made many w be referred to the field for consummation.

We have at present an organization for the disposal of material: there are about 75 employees. We anticipate declarations during the current fiscal year ending June 30, 1945, in the neighborhood of

$25,000,000, and, as I say, the greater portion of that will come from the Army and Navy. Fortunately the Maritime Commission itself has been able to pretty well screen all unrequired material in the hands of shipyards, and is at present transferring the materials from one contract to the next or referring them to other yards where they can best be used. So that there is very little at the moment of Maritime Commission-owned materials that are being declared surplus. The majority is being declared surplus from the War and Navy Departments, such as types of assault boats; that the War Department is no longer using; life floats; smaller marine engines that are used for. powering barges and attack boats gas engines, boilers, capstans, and that character of things. We anticipate that probably 70 percent of whatever the Maritime Commission will eventually have as surplus property will be referred to the Reconstruction Finance Corporation as industrial equipment approximately 20 percent as consumer goods will be referred to the Commerce Department. The balance, as I stated before, about 10 percent, would be declared by the Maritime Commission as owning agency to the Maritime Commission as the disposal agency. In all, for the fiscal year 1946, we anticipate declarations from all agencies, including our own, of approximately $200,000,000.

COST OF OPERATION FISCAL YEAR 1946

Mr. CANNON. What do you estimate will be your cost of operation in the fiscal year 1946?

Mr. KIRSCH. A total of $3,500,000. We estimate approximately 500 man-years of administrative employment, and an aggregate cost of about $2,000,000.

Mr. CANNON. The over-all will be $2,000,000?

Mr. KIRSCH. Including all other administrative expenses. Personal services about $1,500,000 and other general administrative expenses, $500,000.

Mr. CANNON. And how would you use the remainder of that money?

Mr. KIRSCH. A million and a half dollars for warehousing.
Mr. CANNON. Warehousing exclusively?

Mr. KIRSCH. Yes; including crating and preservation for storage. Mr. CANNON. How did you arrive at this estimated amount of money you will need?

Mr. KIRSCH. The method by which we arrived at the figure is as follows: We have 75 employees now that will handle approximately $25,000,000 worth of declarations by June 30. We will handle, during fiscal 1946, about 10 times in the amount of surplus property, and we have blown up the employees by approximately 6 times the number of employees we have for handling $25,000,000 worth of property.

Mr. TABER. How much did you say you are going to have for personal services?

Mr. KIRSCH. There will be a million and a half dollars for personnel and $500,000 for other administrative expenses, or $2,000,000 for the entire general administrative expenses.

VALUE AND NATURE OF PROPERTY TO BE DISPOSED OF

Mr. TABER. And you plan to handle $200,000,000 worth of surplus property?

Mr. KIRSCH. Yes.

Mr. TABER. What type of surplus property?

Mr. KIRSCH. Marine engines, winches, boilers, small craft, such as the knock-down barges which the War Department has been using. and which they have declared surplus, the assault boats and small craft of that character.

Mr. TABER. And you expect a good many more of them next year, do you?

Mr. KIRSCH. We expect that of the $200,000,000 of material (cost to the Government) that will declared to us, we will sell about $100,000,000 worth (cost to the Government).

Mr. TABER. You expect to have $100,000,000 less?

Mr. KIRSCH. That is right.

Mr. TABER. Out of this declaration to you?

Mr. KIRSCH. Yes.

Mr. TABER. And that will be a kind of a drag on the market; will it not?

Mr. KIRSCH. The materials that we have here are of a special kind. such as winches and marine boilers and engines, where users who are interested in marine equipment will have to be found. There is not a very large group to contact or to dispose of it to.

Mr. TABER. And you will have left a lot of it that will not be readily desirable.

Mr. KIRSCH. It will be a long pull, and it will probably take quite some time to dispose of it all.

Mr. TABER. That will approximate about half the total amount, and it will require as much as a year to handle it.

Mr. KIRSCH. We anticipate that before the program of surplus declaration is over that the War and Navy Departments will probably declare over a billion dollars worth of the classes of materials assigned to the Maritime Commission for disposal.

Mr. TABER. Over to you?

Mr. KIRSCH. To the Maritime Commission. We do not anticipate the greater part until after the war with Japan is over.

Mr. TABER. And you are not figuring on finishing up before the end of 1946?

Mr. KIRSCH. No, sir.

Mr. TABER. And you are figuring on the most that is going to be declared, the biggest part of the declaration to you after this $200, 000,000 that will be the first bite, will not be very readily marketable. Mr. KIRSCH. I am afraid not.

Mr. TABER. What are you proposing to do with that?

Mr. KIRSCH. We will have to store that until we determine whether or not we are justified, in our own minds, that it is worth while to retain it over a period of years for a long pull, or determine to scrap it.

AMOUNT REQUESTED FOR PERSONNEL, ADMINISTRATIVE SERVICES, AND

WAREHOUSING

Mr. TABER. How much of this total appropriation that is put to you, of this $60,000,000 that they are asking us for, how much do you anticipate you will receive?