overhauls the tax structure. But they offer no specific suggestions as to just how it should be done. I would like to ask you a specific question on a specific point having to do with the disposition of approximately $25,000,000,000 of Government-owned plants. Are you familiar with that subject?

Mr. JOHNSTON. Yes, sir.

Mr. WORLEY. You are familiar with the option that business now has to buy those plants? They seem to be given favored treatment, do they not?

Mr. JOHNSTON. Yes.

Mr. WORLEY. The contractual agency, that is, the business manufacturing that product, now has an option to purchase that plant at original cost less depreciation. Is that correct?

Mr. JOHNSTON. That occurs in very few instances.

Mr. WORLEY. Didn't Mr. Hoffman make the statement that that was the general type of option contract?

Mr. JOHNSTON. That isn't my understanding. My understanding is that the Defense Plants Corporation buildings which are the main portion of these are not subject to purchase by the operating company under those terms or any terms at the present moment.

Mr. WORLEY. As a representative of business, what specific suggestion could you make to this committee as to how the plants should be disposed of?

Mr. JOHNSTON. I quite agree with you that we should be specific. I have some specific suggestions in this pamphlet which I am going to leave with you. I have made several specific suggestions on that question. I have suggested that a nonpartisan committee of seven be set up to determine how these plants should be disposed of, and to whom and at what price.

Mr. WORLEY. That is a suggestion that we set up a committee. But upon what basis? You are a businessman. Who is going to determine the value of that plant that you are interested in purchasing? Mr. JOHNSTON. I don't believe that you as a congressional committee can set up regulations or rules that seven men, or whatever the group may be, may follow rigidly.

Mr. WORLEY. Somebody will have to set up the rules.

Mr. JOHNSTON. Oh, yes; but it depends on a variety of circumstances and conditions.

Mr. WORLEY. Will you give us a specific instance of what elements will enter into that picture? Our job is to get as much money out of these plants as we possibly can to protect you and the other taxpayers, and your job is to get a bargain if you can.

Mr. JOHNSTON. I think the group should be composed of men who understand the problems involved. I think an aluminum-reduction plant in the State of Washington-there are seven of them out there. The problems involved in disposing of that plant are numerous.

First, what will the demand for aluminum be in the post-war period? Can the plant be operated?

Second, the availability of power and other raw materials come up, because power is a raw material in the production of aluminum. And the availability of bauxite or some process for extracting aluminum from clay which exists in those areas.

There is a question of how much the plant has depreciated during the war. The old rule-of-thumb used by the Treasury Department

is that plants are depreciated over a period of 20 years. Operating three shifts a day may accentuate that depreciation and it may be a 10-year or 15-year period. I do not see how the Congress can set up a set of rules, definite rules.

We are going to present to you not a rigid form that you will have to follow, but we will present to you a program as to how these can be disposed of, an elastic skeleton framework within which men can use their judgments in disposing of these plants.

In any of the other operations, you will simply take the Office of Price Administration. As has been said here very effectively a few minutes ago, you set up an administrator to do that under a set of rules. You can't tell him everything he will do.

Mr. WORLEY. And we "cuss" him out when he does something he shouldn't do.

Mr. JOHNSTON. But in general I think Chester Bowles has done a pretty good job. He has probably made some mistakes. Any human being would make mistakes. There will be mistakes made in the disposition of these plants, but in my opinion you can't set up a rigid fixed set of rules for their disposition any more than you can set rigid rules for the operation of O. P. A. by Chester Bowles.

Mr. WORLEY. We are going to set up the framework.

Mr. JOHNSTON. That is right.

Mr. WORLEY. And then find someone to make the best business deal they can for the Government.

Mr. JOHNSTON. Yes.

Mr. WORLEY. That is a part of our job.

Mr. JOHNSTON. Yes.

The CHAIRMAN. Mr. Johnston, I didn't hear if you commented upon the suggestion of Mr. Ickes that we turn them over to the veterans. Mr. JOHNSTON. No one asked me to comment on that, but I shall be happy to if you want me to.

Mr. MURDOCK. When I released Mr. Johnston at the hour of 12 from answering one of my questions, I thought we would probably discontinue the questioning at that moment, but I want to remind him that I am still expecting an answer.

I believe in the highest production by American agriculture and I would like to have it recompensed by the right price in the market place. How can that be brought about in peacetime? I don't know that we want to take the time for that now, but it is an important question.

Mr. JOHNSTON. That is a big question, but I have no hesitancy in giving you my humble opinion.

Mr. GIFFORD. Are you going to Russia?

Mr. JOHNSTON. Yes, sir.

Mr. GIFFORD. Don't get too enthusiastic and write a book "One World" when you come back.

Mr. WORLEY. Last September in Spokane, you might recall a trip by three members of the Subcommittee on Appropriations. I was there, but on another committee. During the course of that trip, a great play was made by some subdivision in the State of Washington for an irrigation project costing $35,000 or $40,000

The CHAIRMAN. $40,000,000.

Mr. WORLEY. No, $40,000. It was a small project. I was amazed at the eager determination of those citizens to get that small amount

of money from the Federal Government. I was wondering if that spirit has changed and they would be willing to assume the cost of such projects themselves after the war?

Mr. JOHNSTON. I don't think the spirit has changed with any municipalities or States to have the Federal Government assume all public works in their areas. The time has come, I think, when the Federal Government should differentiate between what is strictly local, and I recommend irrigation and reclamation

Mr. WORLEY. How about electric power?

Mr. JOHNSTON. The development of Grand Coulee and others would not have been possible by private means. I think our society is a fluid society. It changes as the people wish it changed.

Mr. WORLEY. Do you think people are going to change and want to do the things themselves right at home rather than have the Federal Government do them?

Mr. JOHNSTON. I think in many respects the people do want to carry on many of their public works, their local and State matters, if they feel the Federal Government is not going to have the bag open so as to be reached. As I go around the country, and that includes Texas, I believe that most people are beginning to realize that you can't run a Federal Government like ours. It has to be administered at the local level where they understand the facts, where they can take care of matters expeditiously and judiciously.

The CHAIRMAN. Mr. Johnston, we are very grateful to you for your appearance here this morning. You serve as a grindstone to whet our minds upon.

Mr. JOHNSTON. Thank you, sir.

The CHAIRMAN. We are very much indebted to you and when you get back from your visit with Comrade Stalin, we will be glad to have you come back and give us the benefit of your reactions.

Mr. JOHNSTON. I shall be very happy to. I want to say also that I have never appeared before a more delightful and intelligent committee than I did this morning.

The CHAIRMAN. That makes it unanimous.

The committee is adjourned.

(Whereupon, at 12:45 p. m., the committee adjourned sine die.)

ESTABLISHING THE SURPLUS WAR PROPERTY ADMINISTRATION

By virtue of the authority vested in me by the Constitution and statutes of the United States, particularly the First War Powers Act, 1941, as President of the United States and as Commander in Chief of the Army and Navy, it is hereby

ordered as follows:

1. There is hereby established in the Office of War Mobilization, the Surplus War Property Administration (hereinafter referred to as the "Administration"), the powers and functions of which, subject to the general supervision of the Director of War Mobilization, shall be exercised by a Surplus War Property Administrator (hereinafter referred to as the "Administrator"), to be appointed by the Director of War Mobilization.

2. With the assistance of a Surplus War Property Policy Board, composed of a representative from each of the following: State Department, Treasury Department, War Department, Navy Department, Justice Department, Reconstruction Finance Corporation, Smaller War Plants Corporation, United States Maritime Commission, War Production Board, Bureau of the Budget, War Food Administration, Federal Works Agency, Civil Aeronautics Board, and the Foreign Economic Administration, it shall be the function of the Administration, to the full extent that such matters are provided for or permitted by law:

(a) To have general supervision and direction of the handling and disposition of surplus war property.

(b) To have general supervision and direction of the transfer of any surplus war property in the possession of any Government agency to any other Government agency whenever in the judgment of the Administration such transfer is appropriate.

(c) Unless otherwise directed by the Director of War Mobilization, to assign, so far as it is deemed feasible by the Administration, surplus war property for disposition, as follows: consumer goods to the Procurement Division of the Department of the Treasury; capital and producers' goods, including plants, equipment, materials, scrap, and other industrial property, to a subsidiary of the Reconstruction Finance Corporation, created pursuant to Section 5d (3) of the Reconstruction Finance Act, as amended; ships and maritime property to the United States Maritime Commission; and food to the War Food Administration; provided that surplus war property to be disposed of outside of the United States, unless otherwise directed by the Director of War Mobilization, shall be assigned, so far as it is deemed feasible by the Administration, to the Foreign Economic Administration.

3. All functions, powers, and duties relating to the transfer or disposition of surplus war property, heretofore conferred by law on any Government agency may, to the extent necessary to carry out the provisions of this order, be exercised also by the Administration.

4. The Administrator may prescribe regulations and issue directions necessary to effectuate the purposes of this order; and no Government agency shall transfer or dispose of surplus war property in contravention thereof. Each Government agency shall submit such information and reports with respect to surplus war property and in such form and at such times as the Administrator shall direct. When requested by the Administration, a Government agency shall execute such documents for the transfer of title or for any other purpose or take such steps as the Administration shall determine to be necessary or proper to transfer or

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dispose of surplus war property or otherwise to carry out the provisions of this order.

5. The Administrator may perform the functions and exercise the powers, authority, and discretion conferred on the Administration by this order by such officials and such agencies and in such manner as the Administrator, subject to the provisions of this order, may determine. In carrying out the purposes of this order, the Administration may utilize the services of any other Government agency. The Administration, within the limits of funds which may be made available, may employ necessary personnel and make provision for supplies, facilities, and services necessary to discharge the responsibilities of the Administration.

6. As used in this order

(a) "Government agency" means any executive department, independent establishment, agency, commission, board, bureau, division, administration, office, service, independent regulatory commission or board, and any Government-owned or Government-controlled corporation.

(b) "Surplus War Property" means any property, real or personal, including but not limited to plants, facilities, equipment, machines, accessories, parts, assemblies, products, commodities, materials, and supplies in the possession of or controlled by any Government agency, whether new or used, in use or in storage, which are in excess of the needs of such agency or are not required for the performance of the duties and functions of such agency and which are determined, subject to the authority of the Office of War Mobilization, to be surplus by such agency.

7. All prior Executive Orders, insofar as they are in conflict herewith, are amended accordingly.

THE WHITE HOUSE,

February 19, 1944.

EXHIBIT No. 2

FRANKLIN D. ROOSEVELT.

Distribution of average annual employment in the United States by industrial classes for the period 1939-43 (000's omitted)

Data provided by S. DeBrul from Government and other sources by telegram including the message: "Following are the figures we discussed on the telephone of the distribution of employment in the United States. These are expressed as the average employment for the year in the respective classifications. They cover the years 1939, 1940, 1941, 1942, and 1943, in that order. The division given above between durableand nondurable-goods manufacturing is a little confusing during the wartime period. Accordingly, I called Washington and got the estimate that of the present total of a little over 16,000,000 employed in all manufacturing, 9,200,000 are employed in munitions manufacturing. The figure of munitions means all manufactured goods destined for military use, including synthetic rubber and gasoline, which are clearly not durable goods, but excluding quartermaster items, that is, food, clothing, and personal equipment."