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personnel, for instance, in the Treasury in this way; that is, it would be taken out of the $7,000,000,000 fund, or any additional fund to handle that requirement created by this demand?

Mr. SMITH. It will be taken out of the administrative expenses; yes; that is item (d) under the bill.

Mr. SNYDER. Most of this production for these various implements and materials are in the category that there will be just another production for the plants that are already in existence? For instance, you have a plant down here manufacturing certain types of shell; we have plants for those, and the same condition, the same contractual condition, will exist in putting out this order for the democracies, as exists at present?

General BURNS. I think that is correct.

AGRICULTURAL PRODUCTS

(See pp. 13, 20, 32, 35, 51)

Mr. SNYDER. My third question is with reference to the agricultural phase, Mr. Smith, in which you stated that the Department of Agriculture would have to come in on this. Have you called in the Secretary of Agriculture or anybody under him in your consultations up to the present time with reference to the commodities that are being taken up under this program?

Mr. SMITH. The Secretary of Agriculture and four or five members of his staff sat in with us in the discussion of this item as well as a representative of the Defense Commission concerned with food.

Mr. SNYDER. They can fulfill the conditions that might be asked of them in supplying these agricultural commodities?

Mr. SMITH. So far as they know them now.

Mr. O'NEAL. Mr. Smith, if any part of this should be off the record you are at liberty to delete it.

TITLE TO DEFENSE ARTICLES

(See p. 21)

This bill is not simply a lend-lease bill in that you have authority to do other things than lend and lease; that is, to make outright purchases and outright sales. In other words lend-lease is not fully descriptive of the powers conferred in the bill. Is that correct? Mr. SMITH. That is right.

Mr. O'NEAL. I would like to ask this question: As I understand, the title to anything which the Government is transferring to some foreign power does not pass until actual delivery is made. Am I correct?

Mr. SMITH. That is my understanding. In some cases it may never vest, depending upon the agreement that is made.

Mr. O'NEAL. Now, if the war were to end very soon and delivery had not been taken the Government would be under no obligation to furnish the materials or to make them up for some foreign government; the Government would not be under obligation to go ahead, nor would the other government be required to pay; is that correct? Mr. SMITH. I am not quite clear with respect to the last part of your question.

Mr. O'NEAL. For instance, you are under contract to deliver a certain amount of material to some foreign country, and if the war should end we would not continue to be under obligation to do that?

Mr. SMITH. Probably not.

Mr. O'NEAL. Or are they under obligation to pay for it?

Mr. SMITH. I assume they would not have to pay for things they did not receive.

Mr. O'NEAL. In other words, they would not be required to pay; and we could stop operating, and possibly salvage something from the money appropriated.

Mr. SMITH. Yes.

Mr. O'NEAL. Under this bill, title will not pass until the actual delivery takes place and no obligation to pay for it will accrue until delivery is ready. Am I correct in that?

Mr. SMITH. Obligation insofar as any foreign country is concerned? Mr. O'NEAL. That is what I mean; yes.

Mr. SMITH. The terms of the agreement would decide that.

PROCUREMENT OUTSIDE UNITED STATES OF DEFENSE ARTICLES

(See pp. 21, 42)

Mr. O'NEAL. I would like to ask this further question: Under this law do you have authority to construct facilities both at home and abroad?

Mr. SMITH. We have authority to purchase from foreign countries. Mr. O'NEAL. And to contract for the manufacture?

Mr. SMITH. That is not my understanding.

Mr. WOODRUM. You can purchase goods that are made abroad, but you cannot set up facilities in foreign countries.

Mr. O'NEAL. You can buy at home or abroad under the bill, but you cannot actually erect facilities outside the territorial limits of this country. Am I correct?

Mr. SMITH. That is my understanding.

Mr. JOHNSON of West Virginia. General Burns, you have stated, I believe, and it was approved by Mr. Smith, that by comparison of cost of articles that were purchased in the last war you found that prices now were lower?

General BURNS. That is correct; that is my understanding.

DISPOSITION OF PLANTS AFTER DEFENSE EFFORT HAS CEASED

(See pp. 14, 43)

Mr. JOHNSON of West Virginia. Going back to these factories, or these facilities that you propose to build, suppose the war would end, say, in 6 months or a year and England would be successful, what would be the need of these factories?

General BURNS. Well, I think the situation would have to be reviewed then and the general policy determined as to what we should do. Mr. JOHNSON of West Virginia. But, in the meantime, we have gone into contracts to build these facilities.

General BURNS. Right.

Mr. JOHNSON of West Virginia. And they have already started construction?

General BURNS. As you know, exactly that same thing happened in the World War; we had a lot of plants under way, a lot of orders under way, and Congress passed a law in reality requiring the cancela

tion of a great many of those projects. I presume the same thing would happen again, and we would have to work out a scheme for liquidating our war effort.

Mr. JOHNSON of West Virginia. That is what I want: Is there any cancelation clause in these contracts that would enable the Government to release itself from that obligation?

General BURNS. I do not recall whether we put in a cancelation clause.

NOTE. When copies of contracts were produced it was found that they do contain cancelation clauses.

Mr. JOHNSON of West Virginia. So that, if the war should end within. a year, we would have little or not need of these plants and their equipment?

General BURNS. No; I do not think we would need them; because, with the plants we have already started or will start with the money you have given us or will give us, I think we will have ample support for our military effort. This program is over and above that, and I have no doubt if the war stopped, with the situation reasonably favorable to us, we could liquidate a good deal of this.

SUPPLY OF ELECTRIC POWER

Mr. SCRUGHAM. Mr. Smith, a few months ago I read a statement emanating, I think, from the Federal Power Commission, that if the requirements for war munitions and such implements as are given in this lend-lease bill were continued we would face a serious power shortage in 2 or 3 years. Now, partly to rectify that situation, plans and specifications were presented to the Budget for authorizing funds for one or more power plants. I have particularly in mind the Bull's Head site on the lower Colorado River. Are you taking such factors of power shortage into consideration?

Mr. SMITH. Yes; we are.

Mr. SCRUGHAM. Has there been any action taken to prevent the power shortages?

Mr. SMITH. There has been action on several such plants. In fact, we have, with respect to every such issue that has arisen, consulted the Federal Power Commission and had their staff people in with us. Mr. SCRUGHAM. I am interested in the Bull's Head project. You do not recall any Budget, action on that request for construction funds? Mr. SMITH. No, sir.

Mr. WOODRUM. Any questions, Mr. Taber?

Mr. TABER. I am not going to ask any questions at this point. I have some questions with reference to the status of the British financial situation and what they would have available to pay, and I am going to ask just this one question:

I understand, Mr. Smith, you are prepared to answer those ques

tions?

Mr. SMITH. Not at the moment, sir.

Mr. TABER. You are not?

Mr. SMITH. No, but I can get the information for you and for the record. The Treasury will furnish it.

Mr. TABER. When you come back here this afternoon, I would like to have you prepared for it, if you can do so. That information ought

to be available to the committee. I am not going to ask it, however, and I am going to suggest that we not ask it until after we get through with the detail of this bill.

PROCUREMENT OUTSIDE UNITED STATES OF DEFENSE ARTICLES

(See pp. 21, 40)

Mr. WOODRUM. Mr. Wigglesworth?

Mr. WIGGLESWORTH. I will pass also, except for one question. Under section 8, which Mr. O'Neal's interrogation referred to, it says

The Secretaries of War and of the Navy are hereby authorized to purchase or otherwise acquire arms, ammunition, and implements of war produced within the jurisdiction of any country to which section 3 is applicable.

I would simply like to ask if the request before us contemplates the purchase or acquisition of any arms, ammunition, or implements of war in any country other than the United States?

Mr. SMITH. It does not, so far as I know.

General BURNS. There is no plan under way to do that at all, that I have heard of.

Mr. TABER. That is not within the range of what you have brought here to submit?

General BURNS. No, sir; it is not.

PROCEDURE IN ADMINISTRATION OF FUNDS

(See p. 25)

Mr. DITTER. Now, Mr. Smith, just briefly: I confess I have not gotten into my head what the mechanics of this program will be. Let us assume we are to make 100 tanks: Will the allocation for that 100 tanks go into the War Department and be accounted for by the War Department, or will it be budgeted and carried through some new agency?

Mr. SMITH. It will be processed through the War Department exactly as our own munitions are processed.

Mr. DITTER. For instance, then, the War Department, in its supply account, or whatever the particular account might be, would have in there, first of all, the cost of these 100 tanks and then, if there were a credit established by the reason of the sale of those 100 tanks to Great Birtain, that would be an offset item on the credit side of the account? Is that the way the operation would be handled? Mr. SMITH. Yes.

Mr. DITTER. So that, to that extent, there would be a possible increase in the personnel needed by the War Department to handle this new overhead; is that right?

Mr. SMITH. Yes.

Mr. DITTER. This accounting?

Mr. SMITH. That is right.

Mr. DITTER. But, when it came to the administrative cost incident to that, it would not come out of the War Department's administrative funds, but would come out of this special administrative set-up that would be provided for under (d) in the bill?

Mr. SMITH. Right.

Mr. DITTER. Is my theory, generally speaking, correct?

Mr. SMITH. That is right. Otherwise, we would not be able to keep track of the additional amount of administrative expense due to the lend-lease bill.

Mr. DITTER. And the same thing would be true with reference to the Navy; for instance, if the Navy built a destroyer and had that destroyer transferred to Great Britain, the cost of that would be in "Construction and repair, engineering," and so on, and then whatever you sold it for would be a credit established on the other side of the ledger for it? Is that your general thought as to the way this thing will be carried out?

Mr. SMITH. That is right.

APPLICATION OF EXISTING LAW TO PROCUREMENTS

(See p. 27)

Mr. DITTER. Mr. Lawton, I confess-and this is not argumentative in any way, but in answer to one question, I think propounded by the chairman, as to the powers under this bill vested in the hands of the President, I believe you made the observation and used as an analogy the Walsh-Healey Act and said, for instance, that you felt there was no power in this bill, the lend-lease bill, for the President to set aside the terms of the Walsh-Healey Act. Was I correct in so understanding your statement?

Mr. LAWTON. I said that in its report the Committee on Foreign Relations, in interpreting this phrase "Notwithstanding the provisions of any other law"-made that statement.

Mr. DITTER. Now for the present, we shall not set-up the Committee on Foreign Affairs as the interpretive body of what the law means, shall we?

Mr. LAWTON. Well, they are the committee that brought out the bill, and I assume are the best qualified to speak.

Mr. DITTER. Well, cannot we ask you, as a skilled expert, what your opinion is with reference to the powers here, rather than the Foreign Affairs Committee?

Mr. LAWTON. No; I am sure the interpretation of this law, in the executive branch, would have to be by the Attorney General.

Mr. DITTER. If I may pursue that further, you used the word word "conflict", "those things which would not be in conflict." There are some who feel that the Walsh-Healey Act is in conflict with the spirit and intent of the lend-lease bill. Now, would that change your opinion in any way?

Mr. LAWTON. I am afraid the Attorney General would have to decide that question; I could not.

DISPOSITION OF MATERIAL AFTER DEFENSE EFFORT HAS CEASED

(See p. 14)

Mr. JOHNSON of West Virginia. Just one question there: Pursuing Mr. Ditter's inquiry on the 100 tanks, suppose we built the 100 tanks under the lend-lease bill and then delivered them to England and they would get them over there and the war would stop, and perhaps those tanks would be intact-what would become of those tanks?

Mr. SMITH. Well, I should say it would depend on the terms of the agreement.

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