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the closing of the fort. Here is a list of some of the uses the old fort land and buildings have been put to: an industrial park, a county nursing home and convalescent center, a water and sewerage technical school (in which 50 students from all over the country will train under the Manpower Training Act), school district facilities, a junior college, and a municipal airport. When the whole conversion program is complete and there is still more land to be disposed ofFort Crowder will have been converted into a lively nucleus for area growth. In time, the rate of growth created by the sale and development of the fort property will be significantly greater than that produced by the military spending when the fort was in full use.

Frankly, Missouri is not faced with an immediate problem of conversion. We are extremely fortunate in having some time to prepare our economy. We do not fear shifts and reductions in defense spending because we will be able to meet the challenge of conversion with creativity and vigor.

At the present time, many of the major defense contractors in Missouri have a long backlog of contract money which should keep them in the defense business for some time to come.

The greatest help we can receive from S. 2274 will be (1) the development of Federal programs designed to offset the general economic effects of defense cuts, (2) the stimulation of organized voluntary planning on all levels, and (3) the preparation of detailed schedules which can be used in estimating the impact of defense shifts and cuts on communities, industries, and States.

At the same time, a major responsibility rests with the industries and the communities where defense industry is concentrated. Section V of S. 2274 requires that Department of Defense and Atomic Energy Commission contracts shall contain a clause requiring the contractor to set up an industrial conversion committee "which shall be charged with planning for conversion to civilian work arising from possible curtailment or termination of such contract or grant." This section is designed to do what many industries have or probably will do themselves. But it also adds a degree of insurance for the community that the firms will consider conversion. The bill, of course, in no way indicates what type of conversion individual firms will adopt. We hope they will consider converting their plant facilities into civilian production. We hope they will make every effort to continue in the community and state where they worked on defense production. But we cannot legislate forms of conversion. Conversion plans must be a product of a cooperative effort on all levels and must take local factors heavily into consideration.

Some firms dealing in defense contracts have begun one or more forms of conversion planning. Some are broadening the scope of their operations through acquiring interest in other companies in nondefense production. Some firms are expanding their production in nondefense areas. McDonnell Aircraft, for instance, had 7,621 employees working on space projects and 103 employees in commercial production during March 1964. Altogether, McDonnell's nondefense production involved an annual payroll of $53 million.

Some Missouri companies pay considerable attention to product diversification and to the expansion of exports. One Missouri firm has an expert working full time on evaluating diversification possibilities.

If the present trend of reduced defense expenditures continues, many industries will be faced with the necessity of conversion planning. By convening a National Conference on Industrial Conversion and Growth (sec. IV, par. 2), and by consulting with state officials (sec. IV, par. 3), the Commission will go a long way in winning support for serious conversion planning.

The spirit of this bill is one of cooperation. No one sector of the economy need bear all the burden of economic conversion. Conversion is a vital matter for communities and industries and its is a vital matter for the Missouri and Federal Governments. To all of us, the problems of avoiding unemployment, increasing productivity, averting economic disruption, and expanding net industrial output are tremendously important. By establishing a National Economic Conversion Commission we will be expressing our joint willingness to cooperate in every way, on every level, to accept the "great challenge and opportunity" (sec. 2) of economic conversion.

CONVERSION AND THE CONFERENCE ON PEACEFUL USES OF SPACE

Finally, would like to point out to the members of this committee and all those people interested in the problems of economic conversion that the fifth National Conference on the Peaceful Uses of Space will be held in St. Louis during May 1965. Among the topics of discussion for this conference will be: "The Effects of Space Technology," "The Space Program and the Economy," "The University and the Community in Space Research," and "Social Implications of the Space Program." I hope that the Conversion Commission will be enacted well before this conference gets underway, for I think the Commission will find the conference an extremely useful forum for discussion of the impact of Government spending and the problems of shifts in Government procurement programs. The conference is being held in connection with the St. Louis 200th anniversary.

CONCLUSION

Missouri still has time to develop plans for industrial conversion. Therefore, we are particularly eager to see the Commission conduct and compile detailed studies on the total impact of defense spending. Such studies are essential for effective analysis. With detailed statistics we will be able to predict the direct and indirect effect of defense reductions in particular communities. And with adequate data we will be able to judge which programs would best offset the economic effects of a general reduction in arms spending. At the same time we are eager to see that national plans be developed for directing Federal funds into projects such as area redevelopment and job retraining and into better housing, education, vocational training, and medical research.

For the Nation, conversion plans will increase our flexibility in shifting from one defense program to another as our needs shift. If world events force us to build new weapons systems, conversion plans will make it possible to make the shift without hurting individual communities such as St. Louis-or the Nation.

In the long run, economic conversion will bring economic and social revitalization. Rather than injure our economy, the decline in defense production may lead to a tremendous expansion of civilian production. Conversion will bring new products, new industries, and new fields of technology.

Perhaps the converting of defense industries is not the great national issue of the day. Scholars who study 1964 in years to come will find us concerned about the Negro's great struggle for civil equality and the Nation's effort to unroot the strangling vines of poverty. Yet, to those communities-like Wichita and Presque Isle-where shifting way from defense production has been a critical task, economic conversion is a vital issue.

Finally, I think future generations will see in our conception of the National Economic Conversion Commission evidence that our quite commitment to peace is accompanied by a willingness to act.

TESTIMONY OF SENATOR GAYLORD NELSON ON THE NEED FOR A NATIONAL ECONOMIC CONVERSION COMMISSION

Mr. Chairman and members of the committee, I am glad to have this opportunity to present my views on S. 2274, a bill to establish a National Economic Conversion Commission.

As a cosponsor of this bill, I believe I can briefly say that its main purpose is to help us get ahead of an impending threat to the national economy and to: many communities. No longer is it a matter of guesswork that defense spending is bound to be cut in the coming years. We can say with reasonable certainty that it is a fair prediction that by 1970 the budget will be reduced by perhaps $12 billion. This, at least, is the opinion of the distinguished former Deputy Secretary of Defense, Roswell Gilpatric, writing in the recent Foreign Affairs. Secretary Gilpatric's view is bolstered by the facts we now have at hand. Today the United States is reaching the saturation point in its needs for major military procurement. The Secretary of Defense and others have stated on several occasions that our strategic nuclear forces are so large and so powerful as to be capable of absorbing a full first strike directed against them and even then surviving with sufficient power to completely destroy the aggressor.

Today the U.S. Air Force has 540 strategic bombers. In contrast, it is estimated the Soviets could place over this country, on two-way missions, no more than approximately 120 heavy bombers plus perhaps an additional 150 medium bombers, the targets for which would be limited to Alaska and the Northwest areas of the United States.

Our Air Force has today on launchers approximately 750 intercontinental ballistic missiles; the Soviets have less than one-fourth of that number in operation. We have 192 Polaris missiles deployed; the Soviets have substantially fewer submarine-launched ballistic missiles in operation. Each of our Polaris missiles is carried in a nuclear-powered submarine-only a small percentage of the Soviet missile-carrying submarines are nuclear powered. Each of our Polaris missiles can be launched from below the surface-none of the Soviet missiles have that capability. Each of our missiles has a range of 1,500 miles or more the range of the Soviet missiles is less than one-third as much.

In short, we are tremendously powerful as compared with the Soviets and as measured by any standard.

The increasing military superiority of the United States has been the result of the $4 billion increase in Defense Department expenditures in fiscal year 1962 and the further increases in fiscal years 1963 and 1964. A total of $17 billion was added in these 3 years. With these expenditures, the number of nuclear warheads in the strategic alert forces has been increased 100 percent; the number of tactical nuclear warheads in Western Europe has been increased 60 percent; the number of combat-ready divisions has been increased 45 percent; the number of tactical air wings has been increased 35 percent; the airlift capability has been increased 75 percent; and general ship construction has been increased 100 percent.

With this fantastic power now built up because of the massive expenditures of recent years, military spending is almost certain to be reduced soon. It is leveling off now and it is a reasonable prediction to expect that the defense budget will begin to decline. It is certain that as a percentage of our national budget, it must fall.

But beyond this general trend in defense spending is the fact that Secretary McNamara and the Congress are taking increasingly critical looks at the operation of the Defense Establishment. There have been substantial cuts brought about by Secretary McNamara's economy drive in the last years. There are certain to be increasing cuts as the Secretary and the Congress take an increasingly businesslike view of ways to reduce defense expenditures and eliminate duplication in various parts of the service. These too will have their impact on the budget and will certainly result in less spending by the Defense Department. Finally, there is a possibility-increasingly likely after the test ban treatythat limited steps toward arms control and disarmament may very well take place in the coming years. The United States has suggested at Geneva that both sides freeze the development of strategic delivery vehicles. This would mean that the United States and Russia both would agree-under adequate inspection to stop producing new missiles. If both sides stopped producing, the level of the arms now held would be maintained. Such a reduction in the speed and pace of the arms race in this one area would inevitably mean a reduction in defense spending.

Thus there are many reasons to expect that in future years there will be increasingly great reductions in the amount of spending and defense contracts. Inevitably these reductions will have an impact upon those communities which are largely dependent upon defense purchasing.

We have all seen how, as defense technology has moved from the airplane age to the missile age, it has left behind unemployed workers and empty factories. The aircraft industry is 90 percent dependent on defense contracts and the shipbuilding industry is more than 60 percent dependent. Whole communities in southern California, once dependent upon military aircraft production, are now becoming ghost towns because we are now producing missiles.

The economic whiplash from shutting down bases and cutting back on contracts is an ever-growing threat.

We must now take wise action, in my view, to anticipate further cuts in overall defense spending and further changes in defense technology which result in cutting off the lifeline of many communities dependent upon defense contracts. The bill we are now considering is designed to do just this. It would establish a Federal commission to work with State, local, and private industry officials to develop plans to ease the coming transition from military to civilian production.

Others can tell you of the great need for this kind of work throughout the national economy. For my own part, I would only like to point out that since 1951 defense contracts in Wisconsin have amounted to more than $3.6 billion. I estimate that a quarter of a million man-years of employment in Wisconsin were dependent upon defense spending during this period.

In recent years, defense contracts in Wisconsin have indeed leveled off. Present prime contracts in Wisconsin amount to around $250 million annually and I estimate they involve about 17,000 jobs. I would like to offer for the committee's consideration a more detailed example of what I mean. The following table shows the value of defense contracts awarded to prime contractors in Wisconsin in 1963 broken down by counties.

Military prime contract awards of $10,000 or more each in Wisconsin, fiscal year 1963-military procurement

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These figures illustrate my general argument: Whole communities are extremely dependent upon defense spending. If we are to safeguard the economic life of these communities, we must now consider what may happen as defense spending is cut back and contracts end.

I am aware that various agencies of Government are now studying this problem. This is all to the good. But I believe we must make this a major focus of national interest and a major effort. We should establish a congressionally authorized commission with a staff to look into every aspect of this problem and ease us forward into that period when defense spending will be a less significant part of our national economic life. To look ahead now is to plan for the future. It is a way to establish sound conditions so that in the future private enterprise and each local community will be able to adjust for themselves.

STATEMENT OF WILLIAM B. SCHEFFEL OF MARYLAND STATE AND DISTRICT OF COLUMBIA AFL-CIO

Mr. Chairman and members of the committee, my name is William B. Scheffel. I am secretary-treasurer of the Maryland and District of Columbia AFLCIO.

We appear here in support of S. 2274, the McGovern bill.

This bill may not be the complete answer but it will help to eliminate the growing problem of economic converision. With defense orders being reduced and personnel being laid off because of this reduction of work in defense plants,

plus the impact of automation, the unemployment problems are being multiplied again and again.

It would be nice to cut back on defense spending and maybe put the additional money toward the Federal debt-but conditions today will not allow this to be done.

People want jobs-they need jobs in order to keep a roof over their heads and food in their stomachs-they need jobs in order to make a decent living in this great country of ours.

When we talk about cutbacks in our defense program, which means the saving of millions of dollars in defense spending, this money should be used to open up job opportunities in private enterprise; and, if this is not possible, then additional public works projects should be developed. Retraining programs stimulated to the degree, that as soon as people are dislocated because of discontinuance of their jobs in the defense area or because of automation, that they be given the opportunity of attaining new skills which may be needed today in the nondefense area.

I have heard Walter Reuther say that in times of war, our country can raise billions for war materials-then why can't we raise a hundred million a year to eliminate poverty caused by the cutting back of defense spending and automation?

We cannot afford for our country to save money while people are doing without because they have no job. We cannot afford to have our people go hungry. We need this bill to speed up the program of conversion from a program of defense to a program of peace and prosperity.

We therefore urge you to give a favorable report on S. 2274.

(The chairman submitted the following letters and articles for inclusion in the record of the hearings:)

Hon. WARREN MAGNUSON,

Chairman, Senate Commerce Committee,
Senate Office Building, Washington, D.C.

CITY COUNCIL, Baltimore, Md., May 22, 1964.

DEAR SENATOR Magnuson: The Senate Commerce Committee hearings on the McGovern bill (S. 2274) scheduled for Monday and Tuesday, May 25 and 26, have just been brought to my attention.

Because of the concern in the Baltimore area regarding the problems of defense cutbacks, and transition from defense to civilian industry, the city council, and Mayor McKeldin of Baltimore, have already taken some action in this matter which will be of interest to your committee.

A city council resolution was passed on March 16 urging attention to the problems of conversion; and on Wednesday, May 20, Mayor McKeldin asked the city's Economic Development Commission to make a top-priority study of the problems of transition from a military to a peacetime economy.

The measures contained in the McGovern bill, if enacted, will give to defensedependent areas like Baltimore the kind of research and staff support needed from the Federal level, to assure the success of community and industry efforts to effect a change from military contract work to a sound civilian economy. Therefore, it is my hope that your committee will report favorably on this legislation.

Enclosed are (1) a copy of City Council Resolution No. 430; (2) a copy of a report with recommendations to Mayor McKeldin; and (3) press clipping from the Baltimore Sun of May 20, 1964.

Sincerely,

HENRY G. PARKS, Jr., City Councilman, Fourth District.

[From the Evening Sun, Baltimore, May 20, 1964]

MAYOR ASKS STUDY ON CONVERSION OF DEFENSE INDUSTRIES-EYE PEACETIME USE OF PLANTS, EDC TOLD

(By Peter Marudas)

Mayor McKeldin asked the Baltimore Economic Development Commission today to make a "top priority study" of the problems involved in the transition from a military to a peacetime economy.

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