MOBILIZATION AND DEMOBILIZATION PROBLEMS

MONDAY, AUGUST 7, 1944

UNITED STATES SENATE,

WAR CONTRACTS SUBCOMMITTEE OF THE COMMITTEE ON MILITARY AFFAIRS, Washington, D. C. The subcommittee met, pursuant to notice, at 10:30 a. m. in room 357, Senate Office Building, Senator James E. Murray (chairman) presiding.

Present: Senators Murray, Stewart, Revercomb, and Taft.
Also present: Bertram M. Gross, and Sigmund Timberg.

Senator MURRAY. The hearing will please come to order. We will hear further testimony on the problem of surplus property disposal. The first witness this morning is our distinguished colleague, Senator Johnson of Colorado.

Senator Johnson.

STATEMENT OF HON. EDWIN C. JOHNSON, UNITED STATES SENATOR FROM THE STATE OF COLORADO

Senator JOHNSON. Mr. Chairman, as you know, I have been giving the matter of surplus property considerable study for many months. I have worked out several bills on the subject, and I have the latest version of a bill that I want to discuss with you this morning. It is an amendment in the form of a substitute to Senate bill 2045.

I know also that there are many other bills on the subject, and well there might be, because there is no portion of the reconversion problem, in my opinion, of more importance than the surplus property phase of reconversion. What is to be done with the surplus property will either make or break reconversion.

The bill which I have prepared and which I wish to discuss this morning is a bold bill, it is a straight-from-the-shoulder bill. It hits the problem at its very heart and it does not deal with it in any easy manner, but it is a bold question that must be handled, and the only way you can handle it is with a bold, decisive, definite bill. Already you have many groups who are trying to get some personal advantage out of the solution that we make of surplus property. My bill gives no advantage to any group. It helps small business, it helps big business, it helps America in reaching a sound reconversion basis.

I do not know how to proceed to describe my bill except by going through the text which I have before me, and I do not know whether that would be the pleasure of the committee or not.

Senator MURRAY. That is satisfactory to the subcommittee.

Senator JOHNSON. As I go through the bill, I would be very glad to be interrupted with any questions that might occur to any member of the subcommittee, or ot others interested in the bill.

The first section deals with the objectives of the bill. There isn't very much new in those objectives. Those objectives have appeared in many of the bills on this subject, but I will read them:

(a) To assure the most effective use of such property for the purpose of war and national defense, by creating a stock pile therefrom.

(b) To facilitate the transition of enterprises from wartime to peacetime production and of individuals from wartime to peacetime employment.

(c) To promote production, employment of labor, and utilization of the productive capacity, and the natural and agricultural resources of the country. (d) To avoid dislocations of the domestic economy and of international economic relations.

(e) To discourage monopolistic practices, preserve and strengthen the competitive position of small business, and promote fair prices to consumers.

(f) To retain control in Congress of the distribution of surplus property.

I want to emphasize (f), if you please, Mr. Chairman. Many of these other bills are a complete delegation by the Congress of surplus property to an administrator or some other agency that is to carry out the surplus property program, but under my bill control is retained in Congress, where it should be retained.

(g) To realize the highest obtainable return for the Government consistent with the maintenance and encouragement of a healthy competitive economy. Senator STEWART. Do you object to interrogations?

Senator JOHNSON. I would be very glad to answer any questions as they occur to members of the subcommittee and others.

Senator STEWART. You emphasize the congressional retention of control. Do you know of any other plan that is being sponsored for any other control group or board?

Senator JOHNSON. Yes; the so-called Clayton bill that Mr. Clayton, the present Administrator of Surplus Property, brought before the Senate committee, the George committee. I was there and listened to the testimony, and in that bill Congress delegates all of its power over surplus property to the Administrator.

Senator STEWART. Is that the same as the Colmar bill that was introduced in the House of Representatives?

Senator JOHNSON. I am not sure. I think it is very similar to the Colmar bill, but if you go through that bill carefully you will find that Congress has delegated its power and authority over surplus property to an administrator almost fully and completely, and my bill does not do that at all.

Senator REVERCOMB. Senator Johnson.

Senator JOHNSON. Senator Revercomb.

Senator REVERCOMB. On the subject of where the control and management may be, may I also suggest to you that the bill that is in the committee dealing with surplus stock piles of metals also put it in the control of a Government corporation. Isn't that correct? Senator JOHNSON. That may be. That is an outside matter.

I do not believe in Congress delegating its powers over surplus property, or over stock piles, or over anything else to anyone to act independently.

Senator REVERCOMB. I simply mention it to you, because I know you are familiar with that.

Senator JOHNSON. The Senator and I had many hot debates over that question.

Senator STEWART. Have you given much thought to the disposition of the surplus property that might be overseas when the war ends? Senator JOHNSON. Yes; I have given considerable thought to it, considerable study to it, but the Senator will notice, as the conditions and provisions of my bill are revealed, the matter of the disposition of surplus property in foreign countries is pretty much left alone, with the exception of a few classes of surplus property. They are left alone for this reason, that international trade and what we do beyond our own borders is not only a diplomatic problem but it is a problem for which the Congress and the Administration have already set up agencies. It is a problem which is complicated, deeply complicated. I thought it would be better in this particular bill to not deal specifically with the disposition of surplus property in any other country except

our own.

Senator REVERCOMB. Senator Johnson, would you apply the same principle to the metal stock pile bill?

Senator JOHNSON. The Senator keeps going back to the metal stock pile bill. There is no act of Congress on that subject. As the Senator knows, the subcommittee considering that bill had a great deal of difficulty. I do not know whether that bill died on the vine or what became of it, but I haven't heard anything about it for several months. Senator REVERCOMB. It is very much alive.

Senator JOHNSON. I hope it is, because it deals with a very important subject. But that bill will have to stand on its own, and I would prefer not to discuss its terms at the present time, only as we deal with it in this bill.

Senator REVERCOMB. I mentioned that, Senator Johnson, because the Senator is now talking on the very line of thought that was advanced by me when we discussed the particular bill that I referred to. Senator JOHNSON. It may be that the Senator from West Virginia convinced me, I don't know. Perhaps the arguments I have had with him have had a good effect on me.

Senator REVERCOMB. It has always been pleasant.

Senator MURRAY. I might say, gentlemen, we only have an hour and 10 minutes to hear Senator Johnson. I think we should let him go through his bill first, and then if we have any time left over afterward we could go into the dicussions of the policies.

Senator JOHNSON. I thank the chairman. I will hurry along as fast as I can. The questions are always enlightening and they are very helpful even to an author of the bill.

Senator STEWART. Is that statement made in the nature of an admission?

Senator JOHNSON. That is in the nature of a confession, sir.

I am going to skip section 2, because it refers to definitions. Perhaps I should read (c) of these definitions, because there are some very important implications in (c).

(c) The term "property" means any interest in property, real or personal, owned by the United States or any Government agency, including, but not limited to, plants, facilities, equipment, machinery, accessories, parts, assemblies, products, commodities, materials, and supplies of all kinds, whether new or used, and wherever located; but shall not include grains and food products held by the Department of Agriculture or any of its agencies, the War Food Administration, or the Commodity Credit Corporation.

(d) The term "durable property" means every kind of property, except real property, which is not subject to rapid deterioration from natural causes, and shall include unmanufactured wool and unmanufactured cotton.

(e) The term "perishable property" means every kind of property which is subject to rapid deterioration from natural causes.

(f) The term "surplus property" means any property which has been determined to be surplus to the needs and responsibilities of the owning agency in accordance with section 6 of this Act, and all unmanufactured wool and unmanufactured cotton held by any Government agency, including the Department of Agriculture or any of its agencies, the Commodity Credit Corporation, or the Reconstruction Finance Corporation or any subsidiary thereof.

(g) The term "common suppli es"

that is a new term as far as these bills are concerned

means small tools and hardware and nonassembled articles which may be used in the manufacture of more than one type of product.

Now, we go to section 3. We set up a Surplus Property Administrator and Deputy Property Administrator. A great many people who have been studying this subject have advocated that a commission rather than an administrator handle surplus property, but after a careful study we have set up in this bill the Administrator, a single head. Since so much of the power and control over surplus property under my bill has been retained by Congress, it was felt that a commission would hardly be advisable and that Congress could deal better with an Administrator. I have also worked on the theory that one man is more effective than three, and three more effective than five, and five more effective than seven. So, this bill provides for an Administrator and a Deputy Administrator.

In (c), "Subject to the general supervision of the Director of War Mobilization and Adjustment," you will notice that the bill is set up under the plan that Congress has already approved, or at least this committee has already approved, of establishing a Director of War Moblization and Adjustment to head all of the reconversion plans, so we have dovetailed this particular phase into that situation and placed the supervisor or the Administrator of Surplus Property under the Director of War Mobilization and Adjustment.

Section 4, page 6, creates a Surplus Property Board with which the Administrator shall advise and consult. There is nothing new in that particular section, it is common to many of the other bills which are before this committee and before Congress. This Board is advisory only and is set up to be helpful to the Administrator in working out the problems of surplus property.

Section 5 deals with reports to Congress and speaks for itself.
Section 6. "Declaration of surplus property."

(a) Each owning agency shall have the duty and responsibility continuously to survey the property in its control and to determine which of such property is surplus to its needs and responsibilities.

(b) Each owning agency shall promptly report to the Administrator all surplus property in its control.

TRANSFERS TO MILITARY AGENCIES

SEC. 7. (a) Each military agency shall make the fullest practicable use of surplus property in order to avoid unnecessary commercial purchases.

In other words, if the Army has something that the Navy needs it should go to the Navy, and the armed forces should have easy access to the surpluses occurring in other branches of the armed forces. The Administrator is given authority in (b) to make such transfers.

Senator REVERCOMB. Mr. Chairman, may I ask this question? Senator Johnson, the second sentence of subsection (a), section 7, says:

The Administrator shall establish procedures to facilitate the acquisition by each military agency of surplus property of other Government. agencies.

The military agencies today really are the only agencies with any considerable quantity of surplus property; isn't that correct?

Senator JOHNSON. I do not think that that is entirely true. Of course, if Lend-Lease is a military agency that is true. I am speaking of the armed forces, the Army and Navy, Coast Guard, and so on, but of course there are other agencies interested in the war effort, in helping to prosecute the war effort, that do have surplus property, and this was meant to cover such property.

Section 8, "Transfer outside continental United States."

This answers one of the questions that was asked a moment ago as to what we do outside the continental United States.

(a) The Foreign Economic Administration and other governmental agencies authorized pursuant to Act of Congress to dispose of perishable or durable property abroad, and the American Red Cross, shall have the right to acquire any surplus perishable or durable property in the United States for sale or transfer abroad in such quantities as the Administrator and the above agencies shall agree upon.

(b) Surplus property sold for export or transferred abroad pursuant to the provisions of this Act shall not be entitled to entry at any of the ports of the United States, and the importation thereof is hereby prohibited, and the Secre tary of the Treasury is authorized and directed to prescribe such regulations as may be necessary for the enforcement of this subsection.

That, of course, speaks for itself. If these goods are transferred to a foreign country they cannot immediately be returned, shipped back into the United States.

Section 9, "Disposition of common supplies." You recall our definition on "common supplies" over here on page 4:

The term "common supplies" means small tools and hardware and nonassembled articles which may be used in the manufacture of more than one type of product.

Now, then, the disposition of common supplies:

Until the termination of the present war and six months thereafter, in order to relieve market shortages and expedite the war effort, any common supplies declared surplus by any owning agency shall be sold by the Administrator through the regular trade channels at not less than 75 per centum of replacement cost.

Common supplies would include nails and small tools, screws, and such hardware as that. Since there is a shortage of such goods on the market today, it was thought that such goods ought to be made available to our civilian population, and so the Administrator is given until 6 months after the war is over to dispose of such goods to civilians, but after that 6 months' period is up then all such supplies must go under padlock with the other durable goods.

Section 10, "Disposition of surplus perishable property."

Surplus perishable property for which commitments have not been made shall be made available for use by the military and naval forces or if not needed for such purpose may be turned over to and used by the American Red Cross and similar public relief agencies or be otherwise disposed of as the Administrator may deem advisable.

Now, we have given the Administrator almost blanket power over the disposition of perishable property. There is a good reason for that. At the end of the war there will probably be a great shortage of

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