Mr. DITTER. It would be entirely dependent on the agreement, would it not, Mr. Smith? Mr. SMITH. Yes. Mr. DITTER. They might be loaned to them, or they might be sold to them? Mr. SMITH. That is right. Mr. DITTER. Or they might be leased to them; in fact, any one of a number of conditions might be present? Mr. SMITH. Right. Mr. JOHNSON of West Virginia. Well, suppose you lent them instead of selling them, what would physically become of those tanks? And, of course, what will apply to the tanks will apply to everything else, unless it be powder, which they would consume; but it would apply to airplanes, for instance. Mr. SMITH. The agreement might provide for their return or, in the agreement, we might have traded tanks for some raw materials which we could secure from some of the British dominions. We might prefer that they keep the tanks and we keep the raw materials. Mr. JOHNSON of West Virginia. Well, have you given that matter any thought? Mr. SMITH. Those agreements will have to be worked out at the time articles are to be disposed of under the law. Mr. JOHNSON of West Virginia. Well, now, you may have 100 tanks delivered in the next 90 days, and you do not know now whether you want potash, sulfur, tin, or what. Now, how are you going to take care of that situation? Mr. SMITH. Well, the lease-lend bill provides under section 3 (b): The terms and conditions upon which any such foreign government receives any aid authorized under subsection (a) shall be those which the President deems satisfactory, and the benefit to the United States may be payment or repayment in kind or property, or any other direct or indirect benefit which the President deems satisfactory. Mr. JOHNSON of West Virginia. Well, we all admit that the success of England will be much to our advantage, and the President might come to the conclusion that, by reason of that fact, he would be justified in letting England keep the 100 tanks without repaying anything. Is not that true; could not that be so construed? Mr. SMITH. It might be. Mr. JOHNSON of West Virginia. In other words, we take a chance here on building all of these facilities and furnishing all of this material and, at the end of the war, England might have them without paying a dollar for them, or obligated to pay a dollar for them? Mr. SMITH. I assume we take that chance. Mr. JOHNSON of West Virginia. I say it is possible under this appropriation to do that? Mr. SMITH. It is under the lend-lease bill. Mr. JOHNSON of West Virginia. It would be possible? PERSONNEL UNDER CIVIL SERVICE Mr. TABER. Just one question. Now, these folks that are employed in the departments as the result of this bill, or anywhere else insofar as the Government setup goes-will they be under the civil service, just like the rest? Mr. SMITH. I assume that all existing laws with respect to personnel will be applied. Mr. TABER. The civil-service requirements will not be waived for that purpose for the purpose of handling this bill? Mr. SMITH. All the present provisions would apply. Mr. DITTER. And there will be no new bureau established, no new alphabetical agency? Is that right, Mr. Smith? Mr. SMITH. I do not know of plans for any. Mr. DITTER. There will be no B. A. B., for instance? Mr. LUDLOW. What about the ability of the Civil Service Commission to supply all of the personnel needed in this very vast expansion? Mr. SMITH. They seem to be doing it now, and are doing a very good job of it. Mr. LUDLOW. Up to date? Mr. SMITH. Yes. FRIDAY, MARCH 14, 1941. STATEMENT OF WILLIAM S. KNUDSEN, CHAIRMAN, OFFICE OF PRODUCTION MANAGEMENT CONTRACTS HERETOFORE PLACED FOR PLANTS AND MATÉRIEL Mr. WOODRUM. Mr. Knudsen, the committee has before it estimates in the amount of $7,000,000,000 for the implementing of the lease-lend bill. A very important part of that, of course, is represented by funds for expediting production and providing for extra production. The committee would be very glad to have any statement you wish to make on the subject, following which we shall ask you questions. Mr. KNUDSEN. Mr. Chairman, would you care to know where we are today, what we have done up to date? Mr. WOODRUM. The committee would like very much to know that. Mr. KNUDSEN. I might start by saying that since we came down here in June, the total contracts placed for matériel, not for facilities, up to date, amount to almost $12,600,000,000. In order to handle this amount of work, we have spent for Government plants, or contracted for, $1,574,000,000. That has been spent in 302 establishments. On top of that, the British have financed 61 plants, in the amount of $171,000,000. We have certified privately financed plants in the number of 421 at a cost of $393,000,000. So that the total amount that we have as of today of plant expenditure, is $2,138,000,000. These are only prime contracts, to the largest extent. There are a number of privately financed subcontracts which we have no record of. We are only dealing, of course, with Government contractors. That is where we are today. NUMBER AND TYPE OF PLANTS HERETOFORE PROVIDED FOR I can tell you how the plants are distributed, if you are interested. Mr. WOODRUM. Yes, sir. Mr. KNUDSEN. Aircraft: We have 11 engine plants, 20 plane plants, and 66 parts and accessories plants. Ammunition and ammunition components: We have 11 plants on explosives, 3 on small arms ammunition. Shells, bombs, and torpedoes, 18; munitions loading plants, 9. Guns: We have 5 plants on machine guns, 2 on other small arms, and 27 on artillery. Ships: 40 establishments have been started or enlarged. In addition to that, we have rehabilitated existing arsenals to the number of 19. That totals up to 302, the figure I gave you a minute ago. Mr. WOODRUM. Those plants are either already in operation or in the course of construction? Mr. KNUDSEN. Yes, sir. Mr. KNUDSEN. We expect to have all of those completed by July. Mr. TABER. The list that you gave us includes only Governmentowned establishments altogether? Mr. KNUDSEN. Yes, sir; Government financed. Mr. TABER. What is that? Mr. KNUDSEN. Government financed. Mr. TABER. That does not include the 421 private plants? Mr. KNUDSEN. That is right. Mr. TABER. Those are in addition to that? Mr. KNUDSEN. Yes, sir. Mr. CANNON. What is the total number of plants available for the various facilities enumerated, both public and private? Mr. TABER. He has done that already; 421 private, 302 Government, and 61 others. Mr. KNUDSEN. There is a total of 784. Mr. CANNON. What we are interested in knowing is how many of each class; how many for explosives, how many for ordnance, how many for small arms, and in each case public or private. Mr. KNUDSEN. I do not have the figures of the private plants. I brought Government figures here. Mr. CANNON. Are the figures for private plants available? Mr. CANNON. You can supply them? Mr. KNUDSEN. Yes, sir. Mr. CANNON. In determining the number of these plants, were you governed by the number that you needed or by the number available? Mr. KNUDSEN. We were guided by what the schedule required. Mr. CANNON. You have made arrangements for every manufacturing facility you need or desire, or that could be profitably used for the purpose; you have no need for additional facilities outside of these plants? Mr. KNUDSEN. For the present Army program, yes. Mr. CANNON. Does that include the entire program to be undertaken under the 7 billion dollar proposed expenditure? Mr. KNUDSEN. No, sir. Mr. CANNON. In what respect does it not include all of the 7 billion dollar expenditure? Mr. KNUDSEN. I have said that the total amount of contracts that we had placed was $12,600,000,000. That is the money that Congress granted us before the lend-lease bill came up. FACILITIES PROGRAM UNDER FUNDS FOR DEFENSE AID ΤΟ OTHER COUNTRIES (See p. 53) Mr. CANNON. What expansion will be made possible by the appropriation of this money? Mr. KNUDSEN. We have not definite quantities yet. As I know it, there is something around $700,000,000 planned for additional plant capacity under the program of the lend-lease bill. In addition to that, we have about $700,000,000 that is now before the House. Mr. CANNON. Your report, then, to the committee, up to this time is a report on program expenditures and facilities heretofore provided, and which would be continued if none of these funds were expended? Mr. KNUDSEN. That is correct. Mr. CANNON. Now, we are interested in how you propose to expend the $7,000,000,000. Mr. KNUDSEN. Yes, sir. Mr. CANNON. What expansion of program will be undertaken and what additional factory facilities will be had as a result of the appropriation of this $700,000,000? Mr. KNUDSEN. A board has been set up by the Army to give us a schedule and suggestions for the plants required to handle the $7,000,000,000 program. We have some preliminary figures that indicate that we will need a certain number of plants, and as soon as the board furnishes us with the schedule, it will be up to us to check, and we will then go ahead and provide for the facilities. Mr. CANNON. You have not yet received the schedule and you are not in position to say what will be done with this additional fund when it is appropriated? We had the preWe have a sort as far as possible. But it is not in Mr. KNUDSEN. We have a preliminary schedule. liminary schedule for the second Army proposal. of forecast. We generally try to find out in advance We have a forecast covering the $7,000,000,000. final form. It mentions the different items that are required to be provided. Mr. WOODRUM. That $700,000,000 is in the bill we are now considering? Mr. KNUDSEN. This $700,000,000 deals with the lend-lease bill. This deals with the facilities required to meet the lend-lease bill. Mr. WOODRUM. That is what you are speaking of now? Mr. CANNON. Will the plans for the expenditure of the money provided by this bill be a mere projection of the facilities already provided or will you spend this money in different avenues or in different proportion from that already provided? Mr. KNUDSEN. You mean whether we will extend certain of the plants that we have, or expand them? Mr. CANNON. Yes; in the same ratio. Mr. KNUDSEN. That is, we will expand certain plants that we have now? Mr. CANNON. Or will there be any considerable difference in the allocation of the money provided in the bill? Mr. KNUDSEN. We will have to build more plants. Mr. CANNON. Will you use to the fullest extent all private plants available? Mr. KNUDSEN. Yes, sir; we will have to use, especially in machining more of the existing machine capacity. In other words, we will have to round that up. Mr. CANNON. Then there is no plant which can be utilized in manufacturing explosives, ordnance, guns, or plants, or other matériel that will not be used for that purpose when this money is made avaliable? Mr. KNUDSEN. To the extent that the machinery will handle parts. You understand, we have no complete plants that will handle these things. We will subcontract orders as much as we can, for parts. Mr. CANNON. What cooperation do you anticipate from owners of private plants? Mr. KNUDSEN. We expect to have a greater use of subcontracting facilities than we have had to date. We are using a great many subcontractors now. But we will organize the country to get the additional machine capacity inventoried for purposes of parts making. PRODUCTION COSTS AND PRICES (See pp. 29, 36, 51) Mr. CANNON. What terms do you get from private plants, Mr. Knudsen? How does the cost of material manufactured in Government plants compare with the cost of material manufactured in private plants? Mr. KNUDSEN. I think that it compares very well. Mr. CANNON. Does it cost more when the private plant makes it, or when the Government makes it. Mr. KNUDSEN. Well, you understand, sir, the so-called Government plants that you are talking about are managed by private corporations. Mr. CANNON. What is the difference in the arrangement you have with a firm that operates your own plants for you, and the contracts you make with private plants whose output you take? Mr. KNUDSEN. There is no difference there. Mr. CANNON. Do you have a standardized form of contract that you use as the basis for agreement with private plants and companies which operate your own plants? |