when was that determined? Since when did the Army develop that policy?

Mr. PEARL. I would say about 1954, Mr. Doyle.

Mr. DOYLE. Then 6 months ago, in favor of holding onto that, you stated that in spite of the policy which you adopted in 1954?

Mr. PEARL. No, we were not proposing 6 months ago to hold onto it. We were merely proposing at that time that restrictions on the future use should be imposed under a sale. The policy not to hold onto property does envision the fact that there might be come restrictions placed on the sale of property that is essential in the event of future

Mr. DOYLE. I realize that, Mr. Pearl, but when you did that 6 months ago you had in mind inferentially and by reason of past experience, that you might need that facility again. Therefore, you, in your letter of July 30, 1958, copy of which I have before me, in the last paragraph thereof you said:

The conveyance herein authorized shall be made for the sum of $4,500,000, the appraised fair market value of the property, paid by the city of Philadelphia.

Now, this is the phrase I want to call to your attention:

and shall be made on such other terms and conditions as the Secretary of the Army determines to be in the public interest.

So, on July 30 I take it, inferentially from that statement, by the Department of the Army, that you still recognize that the Army had an anticipated need for this facility.

Mr. PEARL. No, sir, that was not involved at all because the letter, itself, says that accordingly, since there was no mobilization require

ment:

The property is available for disposal without restrictions as to the use to be made by the purchaser.

Mr. DOYLE. Of course, but your last paragraph in the communica tion

Mr. PEARL. In the draft substitute bill that was submitted, sir? Mr. DOYLE. That is right. And you proposed that the Secretary of the Army have carte blanche authority in that draft of the bill to define what restrictions should be made on sale in order that the Army might have it available in the future.

Mr. PEARL. No, sir. My copy that I have here does not have the word "restrictions" in it. It may be that yours does, Mr. Doyle. Mine says:

The conveyance shall be made upon such other terms and conditions as the Secretary of the Army determines to be in the public interest.

Now, if the Secretary of the Army didn't have the authority to put in any terms and conditions at all, he couldn't, for example, allow for time payments.

Mr. DOYLE. I understand that, but I understand the public interest to be concerned with national defense, in the case of the Army. He had authority to put into that sale any condition in his judgment which was in the interest of national defense.

Mr. PEARL. Terms and conditions of the sale in the public interest, but he would not be able under this, in my opinion, to put in any restrictions on the use of the property.

Mr. DOYLE. All right, let's be technical, then. I am a lawyer, too. When you put in there, "public interest," you had the national

defense in mind, didn't you? That is the public interest as far as the Army is concerned. My point is this, Mr. Secretary: On July 30, you proposed a draft bill that proposed that the Secretary of the Army, through the Secretary, should have the authority to put in any term or condition which he regarded in the interest of national defense.

Now that is the condition under which you wanted to sell, or advised the sale of this facility. What made you change that opinion since July 30? That is just a couple of weeks ago.

Mr. PEARL. Our opinion hasn't been changed. The Department's position is exactly the same.

Mr. GREEN. Now wait a minute. Your position is certainly not the same. Your position has never been the same.

Mr. DOYLE. It is just 2 months.

My point is this: When you say your policy in 1954 became such that you didn't want to hold onto any property unless you had a current need for it, in July 30, 1958, you wanted to hold onto the property under such terms and conditions, however, as might be put in there by the Secretary in the public interest, meaning that you wanted to have some term and condition in there so you could get the use of it if you wanted it. Isn't that true?

Mr. PEARL. I don't know. I know of no requirement, desire, or inclination on anybody's part to put in any such restriction for future use and and the letter reported indicates that the Secretary says that it would not be done.

The basis for it-the man who drafted this particular draft bill which you have before you copied the language from the act of August 1, 1956, Public Law 902 of the 84th Congress, which provided for the disposition of the Stockton Air Force Station and the Stockton annex of the Sharpe General Depot to the port of Stockton at fair market. value.

In that section it says:

The conveyance herein authorized shall be made at the fair market value of the property as determined by the Secretary of the Army and shall be made upon such terms and conditions and shall include such reservations as the respective Secretary shall determine to be in the public interest.

Now as I understand it, there was a meeting held at which I was not present, at which the representatives of the city of Philadelphia indicated that they wanted to know the price that they would have to pay for the property and in any legislation that was enacted, they wanted a price set forth instead of leaving it as it was in the Stockton case, "fair value as determined by the Secretary."

This substitute draft bill was then made up to copy the Stockton case with which I am sure you are familiar.

Mr. DOYLE. I remember that.

Mr. PEARL. (continuing): But also put in $4,500,000, omitting the reservations which were also authorized to be included in the Stockton port case, and leaving in only terms and conditions.

Now if this committee wants to amend this substitute bill to say that, "Provided, however, That no such terms and conditions shall include any requirement for future use of the property", we are perfectly agreeable to that type of amendment because we don't intend for this to include that kind of restriction or use.

Mr. DOYLE. May I ask one more question, Mr. Chairman?
Mr. DURHAM. Mr. Doyle.

Mr. DOYLE. According to your own testimony, the United States Treasury has made a net profit of $8 million-plus, on this facility. Mr. PRICE. In 37 years.

Mr. DOYLE. I take it from what you say and from what I heard yesterday, one reason you don't want to hold onto it or perhaps the Director of the Bureau of the Budget deosn't want to hold onto it is because you might be concerned with an expenditure of $2 million to put it in shape.

Would it be a fair suggestion that perhaps in view of the fact that the Treasury has received $8 million, net, that that fact should be taken into consideration equitably in the sale to the city of Philadelphia?

Mr. PEARL. The reason we don't want to hold onto it is because we have no use for it. It is entirely unrelated to the question of profits.

Mr. PRICE. Would the gentleman yield?

Mr. DOYLE. I yield.

You are just

Mr. PRICE. That is a very disturbing point to me. thinking of today. We on this committee are thinking about an emergency that may occur in the future and whether or not these piers will be accessible to military use. I think the Defense Department shouldn't be thinking of today in business terms, but should be thinking of planning for long-range mobilization in the country.

Mr. PEARL. That is a question, of course, of judgment, but if I could just finish up another line

Mr. GREEN. Here is what you said 6 months ago:

The Army is vitally concerned that the property involved be preserved as a waterfront facility primarily devoted to water shippers.

Now what factors caused the Army to change their minds?

Mr. PEARL. That is what I was in the middle of saying a minute ago, Mr. Green.

On February 12, 1958, we had this letter from the Bureau of the Budget and, of course, the Army position set forth in that letter from which you just read submitted on February 12 to this committee is what the Bureau of the Budget was challenging.

So under the impetus, if I may, of this letter from the Bureau of the Budget, the Department of the Army undertook a rereview, if you will, of these facilities, and the recommendations of the various people concerned were funneled through to the Secretary of the Army.

Mr. GREEN. In connection with that, here is what the Bureau of the Budget said:

We believe that the disposal of this property subject to a recapture-of-use right in the event of emergency is not advisable because experience has shown that the Government will obtain a greater return if the property is disposed of without restriction.

In other words, the Bureau of the Budget ways, "In order to get the most money for this property, we are better off letting the thing go without any restrictions," and they take absolutely no interest or concern in national defense.

I don't believe that the Secretary of the Army or the Army people think that this is a good thing. I think they are being directed by the Bureau of the Budget.

Mr. PRICE. Mr. Chairman, I think the committee should get some representatives of the Transportation Corps of the United States

Army and some military people who do some planning for mobilization in the event of national emergency.

Mr. PEARL. I spoke with General Besson, the Chief of Transportation, this morning and he concurred in the view that this property could be sold without a restriction for future use.

Mr. PRICE. I don't see how anyone having anything to do with mobilization would reach such a decision.

Mr. PEARL. This doesn't mean that the port facilities generally in the city of Philadelphia are not to be used.

Mr. PRICE. They can't be used if they are not going to be there to be used.

Mr. GREEN. Let me quote further from the report of the Bureau of the Budget. They say:

If the property is required for military use at some future date, the Government can acquire such right by negotiation or condemnation.

But the Government cannot acquire the right if it has been sold and buildings put up on it. Imagine the cost. It has 25 acres in

the back.

Mr. PRICE. I think we should get some considered opinion from the Director of Mobilization and let them be on record here and see just how they stand on these matters vital to the mobilization needs of the country.

Mr. DOYLE. May I ask one more question, Mr. Chairman?

The thing that worries me, Mr. Secretary, is that 6 months ago the communication or report read by Mr. Green indicates clearly that the Department thought it ought to be held in some condition with some reservation in the event of an oncoming emergency.

Now that was the position 6 months ago. Was it the opinion of the Director of the Bureau of the Budget that took the place of the expert opinion of the Army 6 months ago?

Mr. PEARL. No, sir. As I was saying

Mr. DOYLE. So that you will be better informed on the thing that worries me in this connection, the Army sends us up what we have a right to rely upon as an expert opinion. I certainly don't claim to be an expert in this field.

Now 6 months ago you indicated you might need it in the event of national emergency. Six months ago you say, "No, we don't need it."

Now what caused that? Was it the Director's letter? If it was, that is understandable. What was it?

Mr. PEARL. The Director of the Bureau of the Budget's letter acted as an impetus as I say, for a further reanalysis and at that time and I might refer to Army regulation 120-5 dated July 16, 1957, which sets up the general framework for mobilization planning and this provides for mobilization planning at the lowest levels and finally if you go up to the Secretary level in this case, the recommendations were made by all the people concerned.

There were recommendations from the Transportation Corps and their views as to what their requirements would be and as you know and all the members of this committee know, the concepts of shipment of supplies is a flexible thing. It has been undergoing changes recently, recommendations from the real estate people, the Corps of Engineers with whom I am, as to what the property is and what it might be used for.

Finally, all this funnels in and one man makes a determination and it is his judgment and that is the Secretary of the Army. Whatever recommendations may have been made before, we now have the determination by the Secretary of the Army, after considering all of them, that there is no mobilization requirement in the property.

Mr. DOYLE. In other words, if we had acted 6 months ago on this report from the Army, we would have acted on a report that had not been sufficiently and finally reviewed. That is true, is it not? Because you have changed your opinion.

Now, what am I to conclude? You send us up a review 6 months ago in which you ask us to act. That is your judgment. Then 6 months later you make another re-review and change your opinion. I can't conclude otherwise, but that your first report was ill advised, not adequate, and not fully considered. Am I wrong?

Mr. PEARL. I would not say it was wrong, but I would say that since these concepts of mobilization planning are shifting at all times and are undergoing continuous review, this isn't the only one that has changed in that 6-month period and we know there will be other changes today and there will be other changes tomorrow.

This one happens to be involved in legislation so you know about it. Mr. PRICE. Would the gentleman yield?

Mr. DOYLE. I have just one observation: It would be wonderful and it would relieve a lot of my worries, however, that when you send up an opinion like you did 6 months ago you put a little note on it and say, "This is not final."

Mr. PEARL. It was final as of that day.

Mr. DOYLE. Put a note on it and say, "When we re-review this, we may change our opinion."

Mr. PRICE. Upon receipt of word from the Bureau of the Budget. May I ask committee counsel a question? Mr. Kelleher, can you recall any legislative action from this committee in the last few years where we made conveyance of property from the Department of Defense to various municipalities and other groups where we did not carry some restrictive language in there?

Mr. KELLEHER. Yes, I can, although I don't know that I could recall specific ones. Let me put it this way, Mr. Price: Where you make a conveyance for National Guard purposes for example, it is at no cost and, therefore, there are restrictions on it that in the event of emergency it will come back to the United States, for the use only, not title.

Or if it is not used for National Guard purposes, then the title, itself, will revert. But when you have a fair-market-value price as is here, then the conveyance is normally-and we have had many of them with no restrictions whatsoever.

I think if I may vary from your question for judgment, on the substitute bill of the Army a conveyance would be made without any restrictions to the city of Philadelphia. Obviously, from the testimony the committee has, the city of Philadelphia is going to keep this as a maritime terminal so I don't think that is a matter of concern.

If you put restrictions on it, then you lower the price and you always have the right of condemnation. This will be a terminal, it will continue to be a terminal if conveyed to the city of Philadelphia. It will be a going facility in the event of another emergency and the Army merely has to file à map-it is that simple-in the district court to take title to that at the time it wants, or to condemn a leasehold.