Mr. TABER. Well, wait until I get the answers and find out whether that is so or not, and I will give you the answer on what I would do. Mr. KLAGSBRUNN. The Surplus Property Board requested an interim appropriation based on the best judgments that they and ourselves could make based on the exceedingly limited experience we have had, and with the realization that in order to carry out the policies of the Surplus Property Act, we must be properly organized, and we must be organized to give wide distribution and wide notice of availability, and to dispose of property in small lots, and we feel that we would be subject to censure in holding back, and then coming in late in 1946 and starting a sales program then. We are coming in now with the best estimates available, saying that we would like to sell primarily during a period of short supply. This is the first need, to get started, and we will be coming in to you constantly with our best experience and our best views as we go along.

Mr. CANNON. What is your alternative?

Mr. TABER. The alternative is this: They have not had enough of those components that are going to cost them so much to handle to amount to anything. As to these planes, they have not enough that are readily salable to run into big money. Now, the alternative proposition would be this, to give them money enough to carry them along for maybe 3 months, to see what they were about, and let us see what kind of experience they would have with it

Mr. LUDLOW. They say this $60,000,000 will last only 4 months. Mr. TABER. They will have to produce something bigger than the story we are getting now to have me vote for more when this is up. Mr. CANNON. It was agreed that if we are going to get rid of this stuff profitably, it should be done in the first year, and he adds the further economy to it that we will sell it, in the first instance on location, and also save warehousing and transportation.

Mr. TABER. But he also adds that the total prospective receipts do not run very much above the cost. Now, that is where we get, and that is the kind of a proposition we are up against. I do not like to be a party to appropriating all of this money without getting something for it.

Mr. CANNON. You have not told us what the alternative was. Mr. TABER. Yes; I did tell you what the alternative is. You did not pay attention to it.

Mr. CANNON. You said give them money enough to carry them for 3 months, and this only provides for 4 months.

Mr. TABER. Well, it provides for a good deal more than that if it is handled right, I will tell you that.

Mr. CANNON. I do not think that has been demonstrated.

Mr. TABER. Because if they are going to spend that much they might better junk the whole business than to try to spend $100,000,000 to get back just about that same amount.

Mr. CANNON. All right, then, do you propose selling it all as junk right now?

Mr. TABER. I would rather do that than to work on it and lay out all of this money.

Mr. CANNON. If you sell it all as junk now instead of following this plan, what would be the cost of those proceedings?

Mr. KLAGSBRUNN. I would not even want to hazard a guess. Under the present system there would not be enough value in there in junk to warrant somebody coming in and cutting up the planes

and putting a torch to the engines and carrying them out. It is for that reason we are trying to develop this method, and also develop a method of handling this aggregate alloyed metal. It does not have any junk value in location until we can develop a method of handling it expeditiously.

As Colonel Harding pointed out, in addition to this cost of handling, it, at the same time if we cannot dispose of it, it is eating its head off in storage fees, and some degree of care and service has to be performed, unless Congress authorizes and directs that the property be just left rust, or allow anyone to carry it off as he wishes. There are hurdles at every turn in this problem.

Mr. CANNON. The gentleman might suggest as an alternative that we abandon it.

Mr. LUDLOW. If you want to sink or burn the nonsalable planes and devote yourselves to those that have marketable value, what would be the cost then?

Mr. KLAGSBRUNN. They do not burn. They are metal.

Mr. LUDLOW. They go down in water; do they not?

Mr. KLAGSBRUNN. Yes; they could still be flown out over the ocean and dropped in.

Mr. LUDLOW. Then what would be the cost of your operation if you segregated them carefully and saved those that have some value and put those on the market and destroyed the others? What would be the cost of your operation in that event?

Mr. KLAGSBRUNN. I do not have any figures to give you on that, sir, but I want to stress the point that we are bending every effort to find prompt and effective ways to dispose at scrap value of these planes and components that have only scrap value, because we realize these handling and storage costs would mount up, and we feel that it would be just criminal to let them mount up any longer than necessary. At the same time those that do have a salable value, we want to segregate and market.

Take, for example, the 11,000 planes we have sold to date. On the one hand they have given an enormous amount of work to the aircraft builders, and repair shops have all of that employment money coming in after a dry spell of years. Then we have 11,000 more people flying planes, who will be keenly interested in buying the new model planes on a turn-in basis as soon as they come off the line. I think we have performed more than a negligible service in what we have been able to dispose of. We will continue to try to dispose of planes and components as rapidly as we can. We will make mistakes, but it is simply a matter of exercising the best judgment we can as far as we can.

Mr. CANNON. What is the opinion of the gentleman from New York of the suggestion made by the gentleman from Indiana, that they make another screening of them and abandon the rest of them by taking them out and throwing them into the sea?

Mr. TABER. I do not think I would do that right now. I think you could make a survey of them, and I think you can get rid of them in some way without providing all of this money for such a program as suggested.

Mr. CANNON. Well, we provide for it for 4 months, and you say 3 months.

Mr. TABER. I will bet you are providing for more than that.
Mr. CANNON. How much would the cost of it be for 3 months?

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 proportion ate to realization of these estimates. 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 carefully 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 operation 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 metal 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. Ĉ. 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 Maritim 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 res 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 yo 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