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$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 thầt 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. 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. 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. 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. 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?
Mr. KIRSCH. Three and one-half million dollars.
Mr. TABER. Three and one-half million. I thought you were going to spend a million and a half for warehousing and $500,000 for other expenses.
Mr. Kirsch. A million and a half personal service; $500,000 for other administrative expenses, that totals $2,000,000; and a million and a half for warehousing; that makes the three and one-half million.
Mr. TABER. Three and one-half million, all told.
Mr. WIGGLESWORTH. You anticipate that this thing is going to drag and drag on for a great while?
Mr. KIRSCH. It is quite possible it will. I recall after the last war that this character of material did take some time to dispose of.
Mr. TABER. It did; that is right.
Now, have you any break-down of this money, how you are going to spend it?
Mr. KIRSCH. None other than what I have stated.
Mr. KIRSCH. No, we are using the best estimates we could make in the matter of the numbers of employees that will be required to handle the $200,000,000 worth of declarations, as compared to our present situation in the handling of $25,000,000 worth of declarations.
NUMBER AND SOURCE OF PERSONNEL
Mr. TABER. And how many people do you have on that?
Mr. KIRSCH. We have 75 now in our disposal section, including employees in our field offices, handling $25,000,000 worth of declarations, and we anticipate that $200,000,000, which is about 10 times as great, will need about 6 times our present staff.
Mr. DIRKSEN. Mr. Kirsch, have you been transferring employees from rolls that have heretofore been engaged in your regular contract work?
Mr. KIRSCH. Yes.
ement Division and from the Production Division, where the work has been reduced to the point where they are not needed. But we have not closed down on personnel connected with shipbuilding; they will be needed for the next 6 months or more, because, as you know, we are still building ships and we are going to keep building ships for the war effort right on up to February or March of next year.
Mr. DIRKSEN. And will this involve the employment of other personnel?
Mr. KIRSCH. To some extent it will; because it calls for specialized employees for disposing of materials in a sales agency that we do not find in our other divisions.
We will have inspectors, we will have material appraisers; we possibly can transfer them over. But section 31 of the act requires the Surplus Property Board to make allotments of funds to a disposal agency that will handle goods certified to it by other governmental agencies.
Mr. DIRKSEN. You will handle that as a separate accounting transaction quite aside from the program for which appropriation was made in the independent offices bill?
Mr. KIRSCH. Yes, we will.
DISPOSAL OF SMALL CRAFTS
Mr. DIRKSEN. In connection with the disposal of small crafts you are testifying now for the War Shipping Administration and the Maritime Commission?
Mr. KIRSCH. That is correct so far as it relates to disposal of maritime material under the Surplus Property Act.
Mr. Dirksen. In connection with the disposition of small craf: What kind of an arrangement are you making for the disposal of craft covered under the original act?
Mr. Kirsch. We must not confuse the term "small craft," as used in this bill, with small powered craft such as trawlers and pleasure boats under Public Law 305, where they were requisitioned for use by the War Shipping Administration for the Navy, for patrol and other purposes.
Mr. DIRKSEN. That is not involved here?
Mr. DIRKSEN. What I was trying to find out is whether the disposition would be made back to the private owners.
Mr. Kirsch. That is not involved here. What we have here are landing craft, assault boats, knocked-down barges, which have been built specifically for the Army and Navy for certain war purposes. The launches, tugboats, and motorboats will be disposed of by the War Shipping Administration under Public 305
Mr. Dirksen. But you have testified here with reference to pleasure craft, have you not?
Mr. KIRSCH. I have not referred to disposal of pleasure craft under the Surplus Property Act; I have not had that in mind in referring to the materials that we have to dispose of under the Surplus Property Act; it will relate to such items
Mír. DIRKSEN (interposing). What about marine Diesels?
Mr. KIRSCH. Yes. There are a great number of those; the War Department and the Nav, Department have a great quantity of those that were to be installed, particularly in the assault craft and the power landing barges. We had quite a number of them; most of them were new engines, and, I am very happy to tell the committee that as to a great portion of our disposals to date, we have recovered from 92 to 100 percent of the original cost of such engines. We have made a rather good record, although I do not expect that record can be kept up. Our total recoveries in all disposals so far have averaged about 84 percent, and that is due to the high recovery we have had on the new marine engines. We do not anticipate that such a percentage of recovery will continue.
Mr. DIRKSEN. Because you have had a good market.
AGENCIES DECLARING SURPLUS PROPERTY TO MARITIME COMMISSION
Mr. WIGGLESWORTH. What agencies have declared surplus property to you?
Mr. Kirsch. The War Department and the Navy Department, primarily; the War Shipping Administration, some little items, very few items, and there have been one or two other agencies that have declared some small amounts of material surplus-I think principally the Rubber Development Corporation.
Mr. WIGGLESWORTH. Does the Maritime Commission as an owning agency declare property surplus to the Maritime Commission as a disposal agency?
Mr. KIRSCH. Yes.
Mr. WIGGLES WORTH. Does the War Shipping Administration as an owning agency declare property surplus to the Maritime Commission as a disposal agency?
Mr. Kirsch. Yes.
Mr. WIGGLESWORTH. Have you any estimate as to how much in this year those agencies are likely to declare surplus?
Mr. KIRSCH. Well, as I explained, we estimate something like $200,000,000 will be declared surplus in the year 1946; and we anticipate fully 90 percent of that will be from the Army and the Navy:
Mr. WIGGLESWORTH. You do not anticipate any substantial declarations of surplus property by either the Maritime Commission or the War Shipping Administration in the next fiscal year?
Mr. Kirsch. No. Certainly very little, if any, from the War Shipping Administration, as long as the war is going on.
PERCENTAGE OF COST RECOVERED ON SALE OF SMALL VESSELS AND
Mr. WIGGLESWORTH. Here is a break-down which the surplus property set-up gave us under the heading "Small vessels W. S. A. disposed of to date," vessels costing originally $6,650,000, disposed of for $2,693,000, or 40.5 percent of the original cost.
Mr. KIRSCH. We have been talking about assault boats, knockdown barges, and life floats, and craft of that character; they are not the powered boats similar to those requisitioned by the War Shipping Administration.
Mr. WIGGLESWORTH. You have realized only 40.5 percent of the original cost of some of these vessels?
Mr. KIRSCH. You are referring to the trawlers, launches, and the like disposed of by the War Shipping Administration under Public Law 305. What I have been referring to are small craft being disposed of under the Surplus Property Act, where we have recovered better than 50 percent of cost. Take the small assault boats, and I have a picture of that here (indicating] about 13 feet in length and 5 feet 4 inch beam, with a flat bottom, with no oarlocks, no fittings. Those boats cost originally $75. We have received them in four conditions: 1. In new condition; 2. used boats that have been reconditioned, and in good serviceable condition; 3. boats used that have not been reconditioned but usable; and 4. boats used and needing repairs before usable. We have established various prices for the sale of those boats.