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DEFENSE PRODUCTION ACT INVENTORIES AND THE EFFECT
OF S. 2272, THE “MATERIALS RESERVE AND STOCKPILE

ACT OF 1964"

JULY 24, 1964

Printed for the use of the Committee on Banking and Currency

l-x2228

U.S. GOVERNMENT PRINTING OFFICE

36-073

WASHINGTON : 1964

Then we find this very, pertinent statement by our distinguished colleague which he made in a press conference on June 1, 1962, after stating that his subcommittee of the Armed Services Committee had established that the taxpayers stand to lose over a billion dollars as a result of these stockpile operations. He said the committee had also established the fact that much of this loss is because of maladministration or inefficiency in the handling of these programs.

Now I just wanted to remind him that I was fearful of that when we went into the program. I don't challenge the fact that there has been poor administration. I don't challenge the fact that we made some mighty bad deals. Periodically, as chairman of the Joint Committee on Defense Production, I have challenged those.

I finally worked out a “gentlemen's agreement” with some of the aluminum companies that they would not bring any more aluminum from Canada and put it to the Government at a specified price under their contracts. We saved about $90 million on that, by not buying high-priced aluminum that we had no earthly need for. (See p. 44.)

Naturally, I know that we have a stockpile. In fact we have three stockpiles: the agricultural stockpile the so-called supplemental stockpile; the Defense Production Act stockpile, or inventory, that is about the smallest one; and we have the national stockpile, which is the largest one.

This committee has jurisdiction over the Defense Production Act stockpile. I don't know who exactly has jurisdiction over the supplemental stockpileperhaps the Agriculture Committee. But all of them seem to have been operated in one way or another by GSA. And when I was chairman of the Joint Committee I could not get any worthwhile information about what was going on. Either they would hem and haw and say this is supersecret and they wouldn't give it to us or this is highly classified and they would give it to us in a way that we couldn't do anything with it.

And whenever we had a proposal up to lower the statutory minimum sales price that was specified in the Defense Production Act which created the Defense Production Act inventory which was the domestic market price, we would have big protests from those who felt we would flood the market.

Now we have before us a bill to merge all stockpiles into one stockpile and put that under the jurisdiction of the Armed Services Committee. It contains a provision that that committee can supervise and authorize the sale of surplus at a lower price than the domestic market price. I am not sure just what the price would be, except that they were to use discretion so as to not hurt the market. Some thought maybe they could say the world price, that that would be a price that wouldn't hurt the market. I don't know how the provision would work out.

We will insert the language of the bill as reported. (See p. 61.)

Certainly it is desirable that we get rid of this surplus, because we know now we are not going to fight any 5-year war, we are not going to fight any 3-year war, and some of us believe that in a nuclear war, if we are on our feet 3 days after it starts, we are going to win it and it won't take any 3 years to do it.

But when I found out that the pending bill eliminates much of the jurisdiction of this committee, I wrote a letter to Senator Mansfield raising this question and then a letter to Senator Symington suggesting elimination of certain language on pages 25 and 26, which would leave the Defense Production Act completely out of it.

(The text of these letters and a staff memorandum on the subject follow :)

JULY 20, 1964. Hon. STUART SYMINGTON, U.S. Senate, Washington, D.C.

DEAR STUART: As I told you this morning on the floor, I would have no objection whatever to your bill, provided you would leave out provisions in your bill which virtually eliminate the Defense Production Act which, of course, is under the jurisdiction of the Banking and Currency Committee. I understood you to say that you had no desire whatever to interfere with any existing authority of the Banking and Currency Committee over the Defense Production Act and asked that I submit appropriate amendments that would accomplish that objective.

In accordance with that understanding of what you would like to do and, of course, what I would like to do, I suggest the following amendments :

On page 25 strike out everything beginning with "(1) materials" on line 18 and ending with "so canceled” on line 10.

On page 26 strike out everything beginning with "Any notes” on line 1 and ending with "so canceled” on line 10.

On page 26 insert "so" on line 10 after the word "materials", and delete "under clauses (1) and (2) above," on line 11.

Those changes on pages 25 and 26 do nothing more than to completely eliminate from your bill any reference to the Defense Production Act.

As I wrote Senator Mansfield on July 17, copy of which I sent you, I understand that your objective is to facilitate the sale of some $5 billion of surplus stockpiling materials. You may have objection from someone else on that score, but my proposed amendment does not in any way affect that part of your bill. With kind personal regards, I am, Sincerely yours,

A. WILLIS ROBERTSON.

U.S. SENATE,
COMMITTEE ON BANKING AND CURRENCY,

July 17, 1964.
Hon. MIKE MANSFIELD,
U.S. Senate,
Washington, D.C.

DEAR MIKE: Since S. 2272 virtually repeals the Defense Production Act without complying with subsection 4 of rule 29 concerning legislation repealing or amending any statute or part thereof, and without making any statement to that effect in the report, I hope that you will not bring that bill up for action on the floor Monday and thus give me an opportunity to discuss with members of the Banking and Currency Committee whether or not they are willing for the Defense Production Act to be superseded.

If new legislation be needed for purposes of disposing of surplus stockpile material, I would be glad to support it, but my surface impression is that the Banking and Currency Committee would not favor å bill which makes no material improvement in the method of disposal but merely confers complete jurisdiction over all inventories of materials upon the Armed Services Committee.

For instance, subsection 7(a) of S. 2272 would abolish the defense production inventory. It also would abolish the supplemental stockpile established by subsection 104(b) of the Agricultural Trade Development and Assistance Act of 1954. The bill provides for the Armed Services Committee to exercise the general type of review of the Defense Production Act inventory as provided by the Defense Production Act. The same is true of the section relating to discovery and development of mineral resources and the development of substitutes for strategic and critical materials.

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