I can assure you that the Committee on Armed Services has no desire to oust the jurisdiction of the Committee on Banking and Currency over the activities of the Office of Emergency Planning relating to functions under the Defense Production Act. With cordial regards, I am, DICK RUSSELL. The Joint Committee on Defense Production is authorized under section 712 of the Defense Production Act of 1950, as amended. It is composed of five members from the Senate and five members from the House of Representatives. The committee has the responsibility of making a continuous study of the programs authorized in the Defense Production Act and of reviewing the progress achieved in the execution and administration of these programs. Some of the activities of the Joint Committee on Defense Production were set forth in a press release of Senator A. Willis Robertson dated January 8, 1963. The press release follows: STATEMENT OF SENATOR A. WILLIS ROBERTSON Senator A. Willis Robertson, chairman of the Joint Committee on Defense Production, released the 12th annual report of the committee today. The Joint Committee on Defense Production is authorized under section 712 of the Defense Production Act for the purpose or reviewing the execution and administration of Defense Production Act programs. The Banking and Currency Committees have legislative jurisdiction over the Defense Production Act. In releasing the report Senator Robertson stated that "This committee is frankly proud that it was able to save the taxpayers of the Nation a substantial sum through reductions in materials purchases. "Upon the recommendation and at the urging of this committee, in the past 5 years there have been reductions of $351.3 million in the contracts which provided for the delivery of materials to the Defense Production Act inventory." In explaining the actions taken to accomplish this favorable result, Senator Robertson pointed out that "It has been more than 5 years since this committee called in procurement officials to see what the Government could do to reduce future deliveries of surplus materials that were expected to replace earlier shortages and also live up to its contractual obligations. As a result of the actions which followed, the deliveries to the Defense Production Act inventory have been substantially less than the contracts provided. The reduction of $90 million in aluminum purchases was brought about when the committee insisted that consideration be given to the imports of Canadian aluminum by Alcoa and Kaiser. "In addition, the committee took a close look at new proposals calling for the expenditures of DPA funds. In a hearing on May 28, 1957, this committee questioned the necessity of buying $47 million worth of cobalt, inquired as to whether the agreement for the purchase of nickel from the Freeport Sulphur Co. was in the best interest of the Government, and received assurances that the U.S. Government was not obligated to buy additional quantities of nickel from the International Nickel Co. as had been previously indicated. "As to nickel, it is pertinent to remember that when the planning for a 5year emergency was changed in 1958 to that of a 3-year emergency, the stockpile objective for nickel was reduced from 675 million to 323 million pounds. This reduction of 352 million pounds compares with 142,077,157 pounds of nickel that was reported to be in surplus supply as of June 30, 1962. "It was this committee that called for the rejection of a proposal to use $52 million of DPA funds to bail out a railroad that had not made a profit in years." He continued by stating that "The Joint Committee on Defense Production repeatedly opposed the use of DPA funds to solve economic dislocations as being contrary to the purposes of the Defense Production Act, and millions of dollars could have been saved by eliminating a high percentage of the $78 million expended for materials under Public Law 206 and the administrative actions which followed. This law came into being through a convenient bypass of the committees having_legislative jurisdiction over the Defense Production Act, authorized the use of DPA borrowing authority funds intended for defense and defense-supporting purposes, increased the deliveries of unneeded materials to the DPA inventory over an extended period of time, and thereby brought about additional losses for nondefense purposes." Senator Robertson stated that if there have been any new contracts signed in recent years to increase surpluses, these contracts have not involved the use of Defense Production Act funds. He added: "The General Services Administration advises the committee that there has not been one contract signed to buy materials for the Defense Production Act inventory in more than 3 years. "Mica was the only material involving new contractual obligations under this act during the fiscal years of 1958 and 1959. "There have been deliveries of materials to the DPA inventory in recent years, but it must be remembered that many of the DPA contracts provided for deliveries over a period of years. "It should also be remembered that the primary purpose for purchasing materials under the Defense Production Act was to expand the productive capacity of the United States to overcome critical shortages in supply, and this objective was accomplished. The accumulation of a DPA inventory of materials was a byproduct of this endeavor. "The Congress recognized that there would be losses under these expansion programs when the Defense Production Act was approved in September 1950, and provided for reports to the Congress covering losses incurred and anticipated losses." Senator Robertson stated that insofar as he knows there have not been any newly discovered losses on materials purchases under the Defense Production Act not previously reported by this committee and the agencies concerned. The committee reports have set forth the probable losses that were reported from year to year. The chairman added: "The probable ultimate net loss and expense on Defense Production Act programs administered by GSA, which includes materials, was estimated to be over $1 billion more than 8 years ago. Estimated losses were published quarterly prior to the year 1960 and semiannually thereafter. Information on these losses and the quantitites of materials held in the DPA inventory was not classified." The committee report indicates that the total gross transactions contracted under the Defense Produtcion Act to June 30, 1962, by the General Services Administration amounted to $7,508,712,000 and that the losses and expenses on these transactions are expected to amount to $1,260.844.000 by the end of the fiscal year 1965. There were additional gross transactions by other departments and agencies in the amount of $539.218 000 on which the anticipated losses and expenses will amount to about $108,320,000 by the end of the fiscal year 1965. The committee has conducted a continuing review of disposal plans and receives advance notice when sales are to be made from the Defense Production Act inventory. Sales have been made from the DPA inventory in the amount of $69.3 million through disposal plans. In regard to the future outlook for the disposal of materials, the chairman stated: "No solution has yet been offered for the problem that we have been stressing for the past 5 years, namely: How can the Government dispose of surplus materials without undue loss to the taxpayers on the one hand and without unduly depressing the market on the other?" Surplus materials may be sold from the Defense Production Act inventory without congressional approval at not less than the current domestic market price. However, until recently the policies and procedures being followed in the administration of the disposal program permitted any one interested agency to veto a disposal plan except when materials were sold to other agencies. When it appeared that disposal plans were being held up or vetoed without adequate justification, the committee staff questioned some of the actions that were taken. The committee then reported to the Congress in the 11th annual report that a proposed disposal could be upheld by the dissent of a single department or agency and that disposals could be delayed for indefinite periods if a department or agency elected to keep a proposed plan under consideration. 36-073-64-4 46 DEFENSE PRODUCTION ACT INVENTORIES In connection with the sales of materials, the chairman stated: Surplus materials have resulted largely because of reductions in stockpile Senator Robertson stated that "When the planning for a 5-year emergency was changed in 1958 to that of a 3-year emergency, the overall stockpile objectives were reduced from $82 to $4.4 billion, a reduction of $4.1 billion. Although Government inventories on hand and on order were about $1.1 billion short of meeting objectives for a 5-year emergency at that time, this decision created a surplus in excess of $3 billion in specification grade materials plus the additional quantities of lower grade materials." It is obvious that any decision to change the planning concept from a 5-year With respect to materials requirements, Senator Robertson stated: In past reports this committee has criticized the poor judgment which was "The payment of funds under circumstances will permit the expensing of costly items, thereby increasing the cost of nickel, raises a question as to the adequacy of the auditing procedures being followed by the General Services Administration." The committee report is critical of the Interstate Commerce Commission for its insistence on a so-called system of "random sample" audits of its records by the General Accounting Office. Under this system the GAO was denied access to records considered pertinent for an audit of the guaranteed loans extended to the New York, New Haven & Hartford Railroad. The committee report states: "In the letter to the Chairman of the Interstate Commerce Commission dated August 2, 1962, the chairman of the Joint Committee on Defense Production stated that even though this railroad had lost more than $50 million since it had made an annual profit, the Interstate Commerce Commission acted favorably on a $7.5 million loan guarantee as late as December 8, 1961, bringing the total amount owed on ICC guarantees to $34,790,440 in addition to defaulted Defense Production Act loan guarantees of $11,797,198. Yet, the ICC was required to make a finding under the law that there was reasonable assurance that this railroad would repay the loan. About 3 months earlier the ICC had asked for direct Federal grants for this railroad, stating that it is highly improbable that the New Haven can emerge from reorganization and continue to render essential transportation services in the absence of direct Federal grants. It was later reported in the press on October 29, 1962, that this railroad sustained a deficit of $9,938,401 for the first 9 months of 1962. "It is the belief of this committee that the 'random sample' formula of the Interstate Commerce Commission provides inadequate protection for safeguarding the expenditure of public funds. Although this committee has taken action to stop the use of Defense Production Act funds for the purpose of paying the operating deficits of this railroad, additional Government funds were made avail- "On August 11, 1950, in debate in the Senate on the Defense Production Act, I stated that a comprehensive renegotiation act was a necessary and integral part of a successful defense production program. This matter was also discussed when the Defense Production Act Amendments of 1951 were considered. The Senate Banking and Currency Committee stated in its report that if the Congress sees fit to control profits it will do so through tax legislation." 1 THE DEFENSE PRODUCTION ACT OF 1950, AS AMENDED 1 AN ACT To establish a system of priorities and allocations for materials and facilities, authorize the requisitioning thereof, provide financial assistance for expansion of productive capacity and supply, provide for price and wage stabilization, provide for the settlement of labor disputes, strengthen controls over credit, and by these measures facilitate the production of goods and services necessary for the national security, and for other purposes Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That this Act, divided into titles, may be cited as "the Defense Production Act of 1950." TABLE OF CONTENTS Title I. Priorities and allocations. Title II. Authority to requisition and condemn.2 Title III. Expansion of productive capacity and supply. Title IV. Price and wage stabilization.3 Title V. Settlement of labor disputes.3 Title VI. Control of consumer and real estate credit.4 DECLARATION OF POLICY SEC. 2. In view of the present international situation and in order to provide for the national defense and national security, our mobilization effort continues to require some diversion of certain materials and facilities from civilian use to military and related purposes. It also requires the development of preparedness programs and the expansion of productive capacity and supply beyond the levels needed to meet the civilian demand, in order to reduce the time required for full mobilization in the event of an attack on the United States. In order to insure productive capacity in the event of such an attack on the United States, it is the policy of the Congress to encourage the geographical dispersal of the industrial facilities of the United States in the interest of the national defense, and to discourage the concentration of such productive facilities within limited geographical areas which are vulnerable to attack by an enemy of the United States. In the construction of any Government-owned 1 Public Law 774, 81st Cong., Sept. 8, 1950, ch. 932, 64 Stat. 798, 50 U.S.C. App. 20612166; Public Law 69, 82d Cong., June 30, 1951, ch. 198; Public Law 96. 82d Cong., July 31, 1951, ch. 275, 65 Stat. 134, 50 U.S.C. App. 2061-2166; Public Law 429, 82d Cong., June 30, 1952, ch. 530, 66 Stat. 296, 50 U.S.C. App. 2061-2166; Public Law 95,, 83d Cong., June 30, 1953, ch. 171; Public Law 119, 84th Cong., June 30, 1955, ch. 251; Public Law 295, 84th Cong., Aug. 9, 1955, ch. 655, 69 Stat. 580, 50 U.S.C. App. 2061-2166 (effective as of the close of July 31, 1955); Public Law 632, 84th Cong., June 29, 1956, ch. 474, 70 Stat. 408, 50 U.S.C. App. 2061-2166 (1956 amendment to sec. 712(e) effective July 1, 1956); Public Law 85-471, 85th Cong., June 28, 1958, 72 Stat. 241, 50 U.S.C. App. 20612166(a); Public Law 86-560, 86th Cong., June 30, 1960, 74 Stat. 282, 50 U.S.C. App. 2061-2166(a); Public Law 87-305, 87th Cong., 75 Stat. 667, 50 U.S.C. App. 2158 (amendment to sec. 708 (e) effective Sept. 26, 1961); Public Law 87-505, 87th Cong., June 28, 1962, 76 Stat. 112, 50 U.S.C. App. 2061-2166 (a); Public Law 88-343, 88th Cong., June 30, 1964, 78 Stat. 235, 50 U.S.C. App. 2093, 2094, 2166. 2 Power to condemn added July 31, 1951. Title terminated June 30, 1953. 3 Terminated April 30, 1953. 4 Control of consumer credit terminated June 30, 1952. Control of real estate credit terminated June 30, 1953. 48 DEFENSE PRODUCTION ACT INVENTORIES industrial facilities, in the rendition of any Government financial assistance for the construction, expansion, or improvement of any industrial facilities, and in the procurement of goods and services, under this or any other Act, each department and agency of the Executive Branch shall apply, under the coordination of the Office of Defense Mobilization, when practicable and consistent with existing law and the desirability for maintaining a sound economy, the principle of the geographical dispersal of such facilities in the interest of national defense. Nothing contained in this paragraph shall preclude the use of existing industrial facilities. TITLE I-PRIORITIES AND ALLOCATIONS SEC. 101. (a) The President is hereby authorized (1) to require that performance under contracts or orders (other than contracts of employment) which he deems necessary or appropriate to promote the national defense shall take priority over performance under any other contract or order,and for the purpose of assuring such priority, to require acceptance and performance of such contracts or orders in preference to other contracts or orders by any person he finds to be capable of their performance, and (2) to allocate materials and facilities in such manner, upon such conditions, and to such extent as he shall deem necessary or appropriate to promote the national defense. (b) The powers granted in this section shall not be used to control the general distribution of any material in the civilian market unless the President finds (1) that such material is a scarce and critical material essential to the national defense, and (2) that the requirements of the national defense for such material cannot otherwise be met without creating a significant dislocation of the normal distribution of such material in the civilian market to such a degree as to create appreciable hardship. SEC. 102. In order to prevent hoarding, no person shall accumulate (1) in excess of the reasonable demands of business, personal, or home consumption, or (2) for the purpose of resale at prices in excess of prevailing market prices, materials which have been designated by the President as scarce materials or materials the supply of which would be threatened by such accumulation. The President shall order published in the Federal Register, and in such other manner as he may deem appropriate, every designation of materials the accumulation of which is unlawful and any withdrawal of such designation. In making such designations the President may prescribe such conditions with respect to the accumulation of materials in excess of the reasonable demands of business, personal, or home consumption as he deems necessary to carry out the objectives of this Act. This section shall not be construed to limit the authority contained in sections 101 and 704 of this Act. SEC. 103. Any person who willfully performs any act prohibited, or willfully fails to perform any act required, by the provisions of this title or any rule, regulation, or order thereunder, shall, upon conviction, be fined not more than $10.000 or imprisoned for not more than one year, or both. SEC. 104. IMPORT CONTROLS. Terminated at the close of June 30, 1953, by section 11, 1953 amendments. guara servic perfor any co plation made section TITLE II—AUTHORITY TO REQUISITION AND CONDEMN Power to condemn added July 31, 1951. Title terminated June 30, 1953. TITLE III-EXPANSION OF PRODUCTIVE CAPACITY AND SUPPLY SEC. 301. (a) In order to expedite production and deliveries or services under Government contracts, the President may authorize, subject to such regulations as he may prescribe, the Department of the Army, the Department of the Navy, the Department of the Air Force, the Department of Commerce, and such other agencies of the United States engaged in procurement for the national defense as he may designate (hereinafter referred to as "guaranteeing agencies”), without regard to provisions of law relating to the making, performance, amendment, or modification of contracts, to guarantee in whole or in part any public or private financing institution (including any Federal Reserve bank), by commitment to purchase, agreement to share losses, or otherwise, against loss of principal or interest on any loan, discount, or advance, or on any commitment in connection therewith, which may be made by such financing institution for the purpose of financing any contractor, subcontractor, or other person in connection with the performance of any contract or other operation deemed by the |