Mr. MURPHREE. But, from a licensing standpoint, not from the standpoint of development work.

Mr. BECKWORTH. You do not regard the licensing standpoint as unimportant, do you?

Mr. MURPHREE. It is not a very important part of our activity. Mr. BECKWORTH. But important enough to fight the case all through the courts with reference to it?

Mr. MURPHREE. We think they are our property and we ought to get them back.

Mr. BECKWORTH. Would you state how much you have spent in carrying forward the patent case in the courts?

Mr. MURPHREE. In doing what?

Mr. BECKWORTH. In carrying this fight along. How much have you spent in carrying this fight on to date?

Mr. MURPHREE. I could not give you the figures. I imagine two or three hundred thousand dollars, perhaps.

Mr. BECKWORTH. I see. Thank you very much.

The CHAIRMAN. I have in mind an outstanding American who some years ago resented the charge that he was addicted to intoxicating liquor and carried his case through the courts in order that he might obtain 6 cents damages-a former President of the United States.

So I assume that there is that question of principle involved as well as money value.

I am glad at times that there are companies who are able to do it and can stand the necessary financial strain to fight cases through the courts in order to establish principles.

Mr. BECKWORTH. Who is objecting to that, Mr. Chairman?

The CHAIRMAN. I do not know of anyone. Are there any further questions? If not, we thank you, Mr. Murphree.

STATEMENT OF COMMANDER R. C. WING, UNITED STATES NAVY, PETROLEUM BOARD, DEPARTMENT OF NATIONAL DEFENSE, WASHINGTON, D. C.

The CHAIRMAN. We have had with us in these hearings as observer Commander R. C. Wing, Petroleum Board, Department of National Defense.

We appreciate having had the presence of Commander Wing during these hearings, and I would want him to feel that if there is any statement that he wishes to make as a result of what he has heard in these hearings that he will be permitted to make it a part of the record if he so desires.

And I will say the same, with reference to Mr. M. G. Hoffman, Petroleum Division, State Department.

Commander WING. Mr. Chairman.

The CHAIRMAN. Do you have any statement you wish to make at this time?

Commander WING. I think I can say what I have to say very briefly, Mr. Chairman, if you care to have me.

The CHAIRMAN. You may proceed.

Commander WING. I was asked to reaffirm the policy that was propounded by Mr. Forrestal before the Armed Services Committee

on January 19 of this year and if I may, I will quote a paragraph. He said:

I am of the firm opinion that the United States Government should not only support pilot-plant operations in the synthetic-liquid-fuel industry but also should support a few large-scale plants sufficient to provide the engineering know-how and to advance technical developments. The encouragement and promotion of synthetic-liquid-fuel developments is an important part of the petroleum policy of the National Military Establishment.

I should like to add also, Mr. Chairman, with respect to the specific bill that the committee has addressed itself to, that the Armed Services Petroleum Board feels that it supports the policy as propounded by the Secretary of Defense, but that there may be, as has been indicated by previous witnesses, controversial technical details, such as the size of the plant and the matter of 120 days and all of that, which we do not take a stand on. That, we feel, is a matter for the industry technicians and Bureau of Mines to reconcile.

I would like to add one more thing. Certainly it is our opinion that now is the time to address ourselves to the development of these plants. When I say that I am not unmindful of, as I understand, Mr. Rubel who said this morning that in getting on the track of finally achieving the construction of these full-scale plants we may very well have a year or a year and a half, or whatever the period may be, of necessary preliminary engineering work to do, but the point is that we feel that we should address ourselves immediately to the achievement of the construction of these full-scale plants so that we may have the development of the nucleus of a synthetic industry, and soon know the expansion potential of a synthetic industry in the event of an emergency.

We are aware that on the basis of our conversations with industry it is entirely impossible to develop or expand this industry to a commercial industry after a national emergency is once upon us and that is why we think the time is now to address ourselves to this problem.

It has already been stated in the armed services hearings-I will just mention it again-that the problem is facing us, because we see ourselves with at least a 2,000,000-barrel-a-day petroleum shortage at the peak of any national emergency and that is why we are interested in this picture.

I believe that is all I have to say, sir.

The CHAIRMAN. We thank you very much, Commander, and I assume you would be willing to further collaborate with the committee in the event that the committee desires to report legislation on this subject.

Commander WING. Yes, sir; we will be very happy to.

The CHAIRMAN. And the committee so requests.

Commander WING. Yes, sir.

The CHAIRMAN. And I am hopeful that others who have testified will likewise be willing to do so.

This bill was prepared in order that the principle might be the subject of consideration by the committee. There is not that pride of authorship in the bill itself that would preclude the possibility of making it more workable or provide better details for it and in that respect I feel that those who have appeared as witnesses here could be very helpful to the committee, and I am pleased that I am in a posi

tion that I can call on them for that assistance if they are requested to do so.

Are there any further questions?

Does Mr. Hoffman wish to say anything, or is his position merely

that of an observer.

Mr. HOFFMAN. I have nothing, Mr. Chairman.

STATEMENT OF HARVEY J. GUNDERSON, MEMBER, BOARD OF DIRECTORS, RECONSTRUCTION FINANCE CORPORATION, WASHINGTON, D. C.

The CHAIRMAN. We have one more witness and I have reserved him for the last. Possibly I have imposed a bit upon his good nature by having kept him here so long before calling upon him to testify. I have done it purposely in order that he might have the benefit of the statements which were made by these gentlemen preceding him. Mr. Harvey J. Gunderson, member, Board of Directors, Reconstruction Finance Corporation.

Mr. GUNDERSON. Mr. Chairman, in connection with House Resolution 5475, there are several things in our operation that I would like to comment upon.

During the past few years the Reconstruction Finance Corporation has acted to the extent of its authority to assist the synthetic-fuel industry.

We were first approached in connection with financing of a plant to produce natural gas into gasoline. The Government interest in this plant was established to our satisfaction by advising with the armed services, and the Department of the Interior.

This initial project was undertaken by Carthage Hydrocol, Inc., which received a loan from Reconstruction Finance Corporation in April 1946 and which now has under construction a 7,000-barrel-a-day plant at Brownsville, Tex.

Since then, it is our understanding that certain companies in the oil industry have definite plans for at least three similar plants.

Construction at Brownsville, Tex., of the plant, is in progress but is not expected to be completed until after the middle of 1949. Originally, it was estimated that the plant to be designed would produce about 5,300 barrels of gasoline and 1,100 barrels of Diesel oil daily. It is understood that design refinements may increase the capacity. The approval of our loan to Carthage Hydrocol, Inc., accelerated action to construct a similar plant by an independent operator without Government financing near the Hugeton gas field in southwest Kansas. Recently, we have been requested to give consideration to loans for the erection of two additional plants by two separate groups and the bases on which loan applications will be considered has been indicated. These two plants propose a daily production of 7,000 to 10,000 barrels each of hydrocarbon liquids, such as gasoline, Diesel oil, and alcohols. Appreciating the dire need of these products, the Reconstruction Finance Corporation is taking a sympathetic and helpful attitude in respect to these applications consistent with the limits of its authority. It is recognized, however, that outside of the successful demonstration by a pilot plant, the process is not yet proven from a practical commercial operating standpoint.

In connection with the possibility that the Reconstruction Finance Corporation might be called upon to assist in the program for synthetic fuels, I would like to point out that the Corporation's national defense authority under which most of the wartime construction activities took place, expired on June 30, 1947, and that today our assistancet to a program of this nature under existing authority is confined to making loans where we find that there is a reasonable assurance of the repayment of the loans, which, stated another way, would mean that under our present authority, our help is limited to commercial situations; to situations in which an applicant is able to manufacture a product which can be sold at a profit.

Also today the Reconstruction Finance Corporation has no authority to subsidize, which would mean that it would not be possible for us to construct a plant that would not operate at a profit and it would preclude us from operating a plant if a loss was entailed in the operation or if we did not believe at the time we assisted in the financing that our loan would be repaid.

Consequently, if the RFC were to proceed on a program of assisting synthetic-fuel production other than on a strictly commercial basis, some legislation would be required.

As I have pointed out, our experience with synthetic fuels has been limited to this one situation of the production of gasoline and other oils from natural gas and in connection with that, our people have considered to some extent the other possibilities because all more or less fall into the same category. To the extent that we can be helpful at this time we will be glad to.

One of the suggestions that I would personally make for the committee's consideration is that I believe the industry itself in a synthetic-fuel-oil program would be able to go quite far if they had the same tax benefits that are now enjoyed by oil companies in the field of drilling for petroleum.

I believe, Mr. Chairman, that is about all I can say. We will be glad to assist your committee in preparing a bill if that is your wish, making changes in the bill, if that is your wish, and we will be glad to help you to the extent we can. However our knowledge is largely confined to the approach of a lending institution and I do not think we feel that we are as well qualified technically to discuss the various processes and how far this work should go as are the other people who have appeared before you.

The CHAIRMAN. Well, we appreciate that, Mr. Gunderson, and likewise we appreciate your willingness to assist the committee in its work in this connection. The Reconstruction Finance Corporation, as you have already stated, has shown its interest in this type of development which we all recognize is very important, not only from the standpoint of our own domestic economy but also from the standpoint of our security as a Nation. Are there any questions?

Mr. BECKWORTH. Mr. Chairman.

The CHAIRMAN. Mr. Beckworth.

Mr. BECKWORTH. How different would your authority have to be with reference to doing this as compared to the authority you had with reference to synthetic-rubber plants?

Mr. GUNDERSON. I am not sure, sir, that I can answer that directly, but I believe I can describe the situation.

I think the thing that has to be established first is how far people who are qualified-and your committee-would feel the Government should go into the construction of large-sized plants, that are largely experimental, and which competent engineers believe cannot be operated commercially. I believe that in considering these various processes, to the extent I have had an opportunity to inform myself, it is my feeling that in the case of plants to make gasoline from natural gas and in the case of plants to make gas from coal, and possibly in the case of plants that would make gasoline out of coal or shale, that it might be possible to get a considerable amount of private industry interested if we were permitted to make a nonrecourse loan to a subsidiary for a long period of time. I mean a period of time such as 20 or 30 years. I do not know, but I think those loans could be made with the injection of say 25 percent of the capital by the company doing the work. That is pure speculation, but I think that might be done.

From what little I have heard at your hearings and found out about the synthetic fuel processes, it seems clear that the hydrogenation process, which is the high-pressure method of getting liquid fuels from coal, is, in the belief of most of the people who know, the most expensive and I would think that with the possible exception of that one process, which might entail a subsidy, that a reasonable degree of progress could be made with the others if you were able to lend longtime financial assistance without requiring the credit of the oil company or any company that was interested be put behind the whole loan. I believe that industry would make some contribution to the building of the plant.

Mr. BECKWORTH. Possibly 25 percent, you suggest.

Mr. GUNDERSON. Yes, sir.

Mr. BECKWORTH. That is all, Mr. Chairman.

The CHAIRMAN. We thank you, Mr. Gunderson and again express our appreciation for your willingness to remain and hear the testimony that was given so that you might have as complete a picture as possible in the event we called upon you for further assistance.

Mr. GUNDERSON. Thank you, sir.

The CHAIRMAN. I have received several communications. One is from Gordon Duke, Southeastern Oil, Inc., & Affiliates dated March 2, 1948, and addressed to Hon. Julius A. Krug, Secretary of the Department of the Interior, Washington, D. C., dealing with this matter, a copy of which has been sent to me as chairman of this committee. I will ask that that be made a part of the record.

I also have a communication from the National Security Resources Board, Washington, D. C., dated March 3, 1948, signed by Arthur M. Hill, Chairman, addressed to me as chairman of this committee, dealing with this bill.

That will also be made a part of the record.

I have received a telegram from Robert E. Wilson, expressing his thoughts with respect to the bill.

That telegram is dated March 3. That will also be made a part of the record.

And, I have received a telegram from G. G. Oberfell, Bartlesville, Okla., dated March 1, 1948, addressed to me as chairman, with reference to this bill.

That will also be made a part of the record.