2. Sum needed for nine months operations-Oct. 1, 1942, to July 1, 1943: Personal services _ _

Travel.

Supplies and equipment_.

Total_

$34, 980 2,500

2, 520

40,000

Mr. SMITH. This is a program to get a 21-nation attack on subversive activities in all the American republics. The committee for Political Defense is a mechanism for a multilateral attack against subversive activities, supplementing the customary bilateral method. In other words, this is a means whereby 21 nations act together, in line with the good-neighbor policy, to combat the totalitarian political warfare in the Western Hemisphere.

I went down to Rio de Janeiro with Mr. Welles in January, as his adviser on subversive activities. Out of that conference of foreign ministers came Resolution No. XVII, which outlines a general pattern of control of subversive activities, and provides for the creation of the Committee for Political Defense, composed of seven members, on which the United States has one member, to prepare and stimulate the adaption of detailed remedial measures in all the nations.

The committee was created in April, and is now organized and meeting every day in Montevideo.

It has as its chairman Dr. Guani, who is the Foreign Minister of Uruguay, and the other members are men of distinction in their respective countries.

Among the topics upon which the Committee is prefering remedial programs on this multilateral basis are security of shipping, protection against sabotage, censorship, control of propaganda, and the whole range of that kind of activity.

I have here the report of the third meeting of the ministers of foreign affairs which contains the resolution and details the various activities to be covered. I have here also letters which indicate the active and personal interest of Mr. Welles, and the State Department in this matter.

Adequate support of the United States member of the Committee has great significance because the resolution which gave rise to this committee was proposed by the United States. We took leadership here. Of course, a number of similar resolutions were sponsored by other countries as well, so that there was general agreement among all the 21 republics on the need for this program. Naturally, every country is anxious to prevent Axis agents from continuing their intense subversive activity and propaganda against the democracies. The CHAIRMAN. These other countries, are they spending any money on this?

Mr. SMITH. Every other country has a liaison officer to the Committee and practically all of them are cooperating with it. In addition, seven countries have sent men to Montevideo for the rest of the war to sit as a permanent committee. Those countries are Argentina, Brazil, Chile, Mexico, Uruguay, the United States, and Venezuela. You may have heard over the radio 3 days ago that the committee had a subcommittee go down to meet with representatives from Brazil, Paraguay, Bolivia, Argentina, and Uruguay, and they agreed upon closing certain borders and creating five main central control points, which had not been done before, so as to prevent the dangerous Axis nationals from getting out of Brazil and the other countries in

the north, to neutral countries, and thereby escaping detention or other wartime control and getting information back to Germany.

That meeting was based in part upon a program for control of exit and entry of aliens upon which we did a great deal of work and which the committee adopted. Our work, in turn, was greatly assisted by the advice of our Immigration Service. What we do on each such topic is to take our domestic experience in this country and make that available to the Committee for Political Defense so that, utilizing the experience of the other countries as well, it can formulate comprehensive and uniform 21-nation programs.

The CHAIRMAN. Did the State Department ask you to do this?

Mr. SMITH. Yes. This is at the specific request of the State Department and is a joint program. They received funds for the United States member and his staff as well as certain special operations there, and have called upon our unit to do this particular project, because of the technical experience of the Department of Justice with domestic programs to control subversive activities.

The amount of this budget has been cleared with Mr. Berle. As a matter of fact, I discussed a much larger budget with Mr. Welles. There is no duplication. There is a clear division of the work between us, so that we function with them and try to build up and implement this committee.

The CHAIRMAN. This estimate is predicated upon getting action by October first. Of course, it is quite obvious that the bill cannot become a law by that time. Does that mean that we may reduce these estimates by say one-ninth, on the basis that it will become operative the 1st of November?

Mr. SMITH. This work as well as that of the other two programs is of tremendous importance and I would like, if there is any way of doing it, to get started on my recruiting program and get under way as of October 1. That is one of the difficulties.

The CHAIRMAN. You think time is of vital importance?

Mr. SMITH. Time is of the essence, especially in South America. To be effective, the committee must be able to act immediately. Ships are still being sunk and the need for sabotage protection is urgent. The longer we wait-well, we do not want to hear "too little and too late" again. Nor do we know how the situation is going to change. Also it is so difficult to get personnel; if we cannot hire good prospects promptly we lose them.

Mr. TABER. These schedules that you submitted, schedules A, B, and C, will you put them in the record?

Mr. SMITH. They were drawn up to be put in the record, and it is my understanding they will be so inserted.

The CHAIRMAN. When you revise your remarks, you may supplement them in any way you think necessary and put into the record what material you think is necessary and eliminate anything that you think best to leave out.

Mr. SMITH. Thank you, Mr. Chairman.

DUPLICATION OF ACTIVITIES

Mr. TABER. To what extent are your activities a duplication of activity now being carried on by the Bureau of Censorship or Military Intelligence, or the Rockefeller set-up, or the Bureau of Economic

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Warfare, or the O. W. I., or any of these other organizations who have been up here and who have told us that they are doing just about the same things you have been doing except the matter of prosecution of cases?

Mr. SMITH. I am familiar with the South American field and no one but the State Department and ourselves has authority to proceed under resolution XVII, which is an extensive resolution on subversive activities. No one else has the responsibility for the inauguration of remedial action in connection with the Committee for Political Defense.

We are not taking over the individual antisabotage protection in South America, which is the responsibility of individual operators and owners and is quite a different matter, a tremendous program. What we are doing is to cooperate with the State Department in this one mechanism, which is the Committee for Political Defense, through which remedial programs may be prepared and coordinated for all the governments above the investigative level.

If you would like me to explain in more detail, the F. B. I. is in investigation; we are post-investigation.

The O. W. I. is in information. We do not deal with information. The Rockefeller office is engaged in health, cultural, and propaganda programs but not in dealing with subversive activities. In fact, the Rockefeller office cooperates closely with us on this program against Axis political warfare.

The State Department is concerned with the general supervision of subversive activities in South America, and we are performing this relatively technicial part of the job at their instance they are primarily responsible because everything has to clear through them before transmittal to the committee or the United States member. They are the top coordinating unit and are the ones who have assigned us this particular function.

The Board of Economic Warfare is concerned with measures to procure materials, to freeze funds of certain nationals in South America, preclusive buying, and such economic matters. Subversive activities are political, not economic, warfare, fall in the realm of the State Department's ultimate responsibility.

Mr. TABER. What about censorship?

Mr. SMITH. Censorship operates the domestic censorship of the mails, radio, and cable. However, we have been seeking their advice on the desirability of a twenty-cre-nation censorship program. We are not an operating agency. They are an operating agency in the censorship field. But in terms of getting a twenty-one-nation program of censorship through this committee, censorship cooperates with us.

Do I make myself clear?

Mr. TABER Fairly so; yes. The thing that I am afraid of is that they have so many of these organizations down there that you cannot possibly have any efficiency. I do not see how they can operate effectively with all of these different outfits down there. I think the thing that we might do that would help more than anything else, perhaps, would be to set a couple of first-class lawyers to work to try to coordinate the whole business and get it in shape. It would save a lot of time and a lot of energy.

We are getting so many of these coordinators and liaison officers. that it is impeding the war effort instead of helping it.

Mr. SMITH. What you will find, and what I have found in my two and a half years at the Department, is that a lot of these organizations are organized for peacetime activity. Then the war comes along and it cuts right across through all activities and you have got to reorganize in terms of your specific problem. That is one of the difficulties.

May I say in respect to each one of these items we have breakdowns here in terms of manhours based upon what our actual experience has been. These are available if you want to look at them. The CHAIRMAN. Thank you, Mr. Smith.

THURSDAY, SEPTEMBER 24, 1942.

NAVY DEPARTMENT

STATEMENTS OF HON. JAMES V. FORRESTAL, UNDERSECRETARY OF THE NAVY, REAR ADMIRAL EZRA G. ALLEN, BUDGET OFFICER; REAR ADMIRAL W. H. P. BLANDY, CHIEF, BUREAU OF ORDNANCE; REAR ADMIRAL RANDALL JACOBS, CHIEF, BUREAU OF NAVIGATION; AND CAPTAIN RAWLINGS

DEFICIENCY AND SUPPLEMENTAL ESTIMATES, 1942 AND 1943

The CHAIRMAN. We have before us in House Documents No. 845 and 860 estimates for the Navy, calling for $5,593,154,308 for the fiscal year 1943, and an additional amount of $6,820,000 for the fiscal year 1942.

We have appropriated heretofore for the Navy for this fiscal year over $14,000,000,000, and this supplemental estimate would make the total about $20,000,000,000 up to this time.

Mr. Secretary, we shall go into the details with the Bureau Chiefs and Admiral Allen; but before we call on them, perhaps you might be able to give some information about the war situation which the members of the committee would like to have, provided you do not consider it prejudicial to the interests of the Service.

Mr. FORRESTAL. Mr. Chairman, I will be very glad to have that opportunity, and for the record the supplemental items we are requesting are first in Public Document No. 845, $2,737,974,308, of which $6,820,000 is for 1942 deficiencies and the remainder is supplemental 1943. Second, there is an additional submittal for 14,611 new program aircraft estimated to cost $2,862,000,000. The total of the estimates is $5,599,974,308, of which $3,822,000,000 is in "Aviation, Navy." Of the remaining $1,777,974,308 a total of $1,131,144,778 is in the pay items of the three services.

For other items than aviation, the estimate consists of sums required for maintenance and operation, and, personal charges needed to complete the current year resultant from:

(a) The new pay bill (Public, 607) and the new servicemen's dependency allowances (Public, 625).

(b) Increases in enlisted personnel.

The CHAIRMAN. You might give us a brief summary of the war situation, particularly from the Navy angle, off the record, of course. Mr. FORRESTAL. I would prefer to have it that way. (Discussion off the record.)

RENEGOTIATION OF CONTRACTS

The CHAIRMAN. What success have you had in the renegotiation of contracts? Are you aggressively pursuing the policy of renegotiation?

Mr. FORRESTAL. I think you can measure that aggressiveness by the deluge of telegrams you get and the protests from business. I think we are not making so much specific progress, in terms of contracts that we can say "are done and renegotiated," but we are pushing that with great vigor.

The CHAIRMAN. What sums are you recovering, if any?

Mr. FORRESTAL. I should say three or four hundred million dollars. We recovered one item of $40,000,000, and, we have under negotiation now, I think, half a billion of recoveries.

The CHAIRMAN. Are you having any difficulty in securing cooperation on the part of the contractors?

Mr. FORRESTAL. We are having difficulty. You see, the contractor has to face the uncertainty of the tax bill; he has to face our renegotiation; he has to consider the impact of Mr. Henderson's O. P. A. We are honestly concerned, for example, I will give you one case. We have a little company called the Grumman, run by two men. One was a marine in the last war, a Latvian by birth. He has done a good job. His plant I saw in action, and it is very good. It is a small company that has had a tremendous growth from a business of $6,000,000 a year to a volume on its books of three to four hundred million. They are two men who are really small businessmen; Swirbul, one of the two is a man who goes into the shop with his coat off and who knows every man in it. He is really a working man; there is no nonsense about it. He has an inventory to handle of great proportions. He has to control that inventory. To get a knowledge of its composition is a difficult job for any man.

We hesitated to bring too much pressure on him to take less for doing that kind of a job, because I have seen the terrifically urgent and vital need to the boys afloat to aid them in the fighting off of the Solomons, so I said "The first thing I want to say to you Mr. Swirbul is that if this renegotiation is a particular headache to you and is stopping you from getting out aircraft, we will deal with you fairly, but for God's sake go to work and make planes. I would rather go to jail 2 years hence than to have you stop making planes." The CHAIRMAN. You do not feel we are paying unjustified costs in following a policy of that character, do you?

Mr. FORRESTAL. My statement to them was

We can arrive at a settlement with you. I can give you my assurance it will be a fair one, but go back and make planes and we will be fair and equitable about it.

The CHAIRMAN. In the first instance, the need of renegotiation was due to the fact that we had no knowledge, when we started in on certain kinds of defense articles, what it was going to cost to produce such material; but now, after considerable actual experience, we ought