bureaus and agencies. Instead, we should be giving thought now to extensive curtailment of the many agencies we now have; to an ending of the unwarranted and inexcusable duplication of effort that goes on; and to reduction in the countless rules, regulations, directives, and questionnaires that are slowing up the war effort and which, if continued, will definitely impede full employment and peacetime progress, particularly in small business and industry.

Congress should provide for the rapid settlement of contracts and disposal of surplus properties; for the coordination of cutback policies and programs with allocation of materials for civilian production, particularly to enable small enterprises to survive and again become the greatest source of employment. Congress should also provide for control of prices and materials for as short a time as conditions warrant.

We already have agencies which should be capable of handling problems of education, social security, employment and reconversion financing. There is no reason for duplicating their efforts by setting up new agencies to handle such situations as may be created by the return of service personnel, lay-offs of workers from war production, and resumption of peace operations.

It is the opinion of those whom I represent, also of members of comparable groups of business, industrial and agricultural men whose executives we have conferred with, that the Congress should make it clearly evident that the aim and intent of our Government is to bring about quick, equitable and complete settlements of war contracts and to accomplish the disposal of our war, surpluses by recognized standard business procedures which will not permit these surpluses to come into the hands of nor promote monopolistic control; will not permit them to fall into the hands of fly-by-night speculators or others seeking "fast" dollars; and will not permit them to disrupt efforts to restore our industrial, commercial and agricultural enterprises to a sound peacetime footing.

In striving for peacetime progress and prosperity, it is vital that the Congress keep in mind that speed in converting from war to peace operations is of the essence. Delays and unsound moves can only pile up costs and an endless array of troubles. There seems no doubt that Americans as a whole much prefer to stand on their own feet, to earn their own living, to live as they deem best. They have had their lesson from Government doles and made work. They know there are taxes that must be paid to cover the cost of the war. They do not want those taxes increased to pay for work projects undertaken as a cover-up for inefficiency and slowness in winding up war matters. We believe that it is much better for the Government to pay out a few millions in the settlement of contracts and perhaps lose some money in disposing of surpluses, than to hand out billions in doles and relief jobs. If you will provide the opportunity for Americans to get to work promptly when war demands end, they will take the war bill in stride and America will move forward.

It is clear, therefore, that the Congress should pass legislation authorizing prompt and final settlements and arrangements for the proper disposal of war surpluses. This legislation should eliminate personal liability on the part of those actually doing the work (except in cases of fraud or collusion) and should require final settlement by negotiation and not through exhaustive audit.

It would be a physical impossibility to arrange any system of extended audit of hundreds of thousands of contracts and subcontracts that would not result in serious delays in final determination and the creation of disastrous unemployment. The cost to the Government of meeting such unemployment and to the country as a whole because of it, would be enormous and many, many times any amounts that might be lost to Government through settlement by negotiation. With proper legislation that will make for prompt, final determination of cancelled war contracts that will enable industry to employ men, it will not be necessary to even consider other programs which have been advocated because men returning from military to civilian life will be able to find jobs on a straight forward basis without seemingly being in the position of accepting favors. There is no question but that able-bodied veterans will need the opportunity to work when the peace comes more than they need anything else. It was partly because such men were unable to obtain useful work following World War I that the nervous tension brought about by war could not be controlled. In many European countries, returned soldiers and others were unemployed and put on a dole. This resulted in the development of tremendous unrest which helped lay the foundation for World War II.

We do not wish to risk the development of such a situation when the present war is ended. If we are to succeed in this, returning soldiers must assume ail the responsibility of citizenship for their own protection and for that of the people

of the United States. Any plan which would permit a lessening or sidestepping of this responsibility should, therefore, have no place in our laws.

Disposal of surplus supplies should be carried out by the agency provided for in the Baruch-Hancock report. Laws should be passed to supplement this report, preferably S. 1718 and S. 1730, separately or in some combined form that will give force and strength to the Executive orders covered in the Baruch-Hancock plan, and that will carry Congress into the situation in such manner as to best protect the interests of the people.

Property and other supplies held by or for the Government following cancelation of contracts should, when they have been declared surpluses by the military agencies of Government, be turned over for disposal to the one agency established for that purpose.

The methods of disposal should all be those which, when carried out, make for the protection of the private enterprise system and their utilization in such manner as to enable industry to function and employ men. There should be no dumping processes that would injure or destroy markets either here or abroad; no Government competition with private enterprise, and no method should be employed which would result in useless waste or that will put brakes upon the smooth working of business, industry, and agriculture throughout the country.

Our major issue is to insure full employment when war ends. It will be the foundation of our future prosperity.

STATEMENT OF EDWARD A. O'NEAL, PRESIDENT, AMERICAN FArm Bureau FedERATION, BEFORE THE WAR CONTRACT SUBCOMMITTEE OF THE SENATE MILITARY AFFAIRS COMMITTEE, CONCERNING THE GEORGE-MURRAY BILL, S. 1730, DEALING WITH THE CREATION OF AN OFFICE OF DEMOBILIZATION, THE DISPOSAL OF WAR SURPLUSES, AND CONTRACT SETTLEMENTS

I wish to commend this committee for its constructive action on this most important subject of post-war planning. I also wish to commend Mr. Baruch for his splendid report on the same subject. It is heartening to see that these two important documents are in substantial agreement on the broad principles pertaining to post-war activity. It is hoped that the best features from each of these proposals, with some additional improvements, can be enacted into legislation at an early date.

In a letter of March 18, 1944, from Senator Murray, requesting my appearance before this committee, it was requested that I express my views on the following questions:

"(1) What policy directives should be laid down by the Congress in this act to guide the executive agencies through the demobilization and reconversion period? "(2) What should be the powers and the responsibilities of the top demobilization agency? Should its functions extend into the fields of manpower demobilization and reemployment, of the allocation of materials for civilian production, of price and wage stabilization in the transition period, of reconversion financing, or other fields?

"(3) Should the top policy board provide for formal representation from business, labor, and agriculture?

"(4) In order to achieve full coordination between demobilization and the war program, should a combined Office of War Mobilization and Demobilization be established by the act, to take the place of the present Office of War Mobilization?" I shall attempt to cover these questions in my testimony and also call your attention to some of the vital reconversion and post-war problems confronting agriculture.

The American Farm Bureau Federation believes that agriculture should receive more consideration than is now contemplated in the proposed plans. I need only to remind you that following World War I the American Farmer went into a tailspin from which he did not fully recover in the interim between the two wars. Between 1919 and 1921 the average price of wheat dropped from $2.16 a bushel to $1.17; corn from $1.51 a bushel to 52 cents; cotton from 30 cents per pound to 121⁄2 cents; hogs from $16.39 per hundredweight to $7.63; and lard from 28 cents a pound to 13 cents. During the same period the prices paid by farmers decreased. only 17 percent. Better-developed plans and a more judicious handling of surpluses could have avoided much of the suffering experienced in agriculture. We farmers are vitally interested in post-war planning.

On March 3, 1944, the board of directors of the American Farm Bureau Federation passed the following resolution pertaining to the bill now under consideration:

"We commend both the Baruch-Hancock report and the report of the George committee for taking progressive steps on a definite post-war demobilization plan. "We favor the broad principles set forth in the George-Murray bill, S. 1730. However, in the interest of democratic procedure, we believe that the proposed National Demobilization Board should constitute the policy-determining body, over rather than under the Director, and should, therefore, be appointed by the President and confirmed by the Senate. Further, we believe that representatives of agriculture, industry, and labor should be included in the membership of this Board.

"In view of the certainty that the food emergency will continue after the end of the war, we vigorously recommend that farmers be given priority in obtaining surplus materials and equipment needed for production as long as the necessity for abnormal food production continues.

"We also believe that the disposal of surplus agricultural products should be assigned by the Board to the War Food Administrator; and that the disposal of any manufactured goods, housing, equipment, etc., which can be used advantageously by farmers, be handled in such a way as to assure farmers of equal opportunity with others to purchase such materials."

The American Farm Bureau Federation believes that Congress should asume active leadership during the demobilization period. The urgency of war necessitated the concentration of power in the executive branch of the Government, However, we feel that plans for the post-war period should be dominated by the elected representatives of the people. It is a real challenge to Congress to assume the active leadership, and to steer our Nation through this very difficult and delicate period of adjustment. The farmer and the American people expect Congress to assume this leadership.

We believe that Congress should enact a series of legislation which would set forth the broad principles to be followed in all phases of demobilization. The laws of Congress should be carried out and administered through the creation of a National Demobilization Board. This should be a bipartisan board and should consist of seven outstanding and well qualified full-time members, appointed by the President and confirmed by the Senate. Two of these members should be Qutstanding and recognized men with business experience. Two should be experienced and recognized in the field of labor. Two should be experienced and recognized in the field of agriculture. The seventh should be a member at large. The Chairman should be elected by the members of the Board. This National Demobilization Board should be a policy determining and coordinating board, within the framework provided by Congress.

There should be established under the direction of the National Demobilization Board an Office of Demobilization. The National Demobilization Board should select administrators in such fields as deemed advisable by the Board. There could be established an administrator of contract termination; an administrator of surplus property disposal; a reemployment administrator; and such other administrators as necessary for the successful coordination of the work. The Board should assign the disposal of surplus agricultural products to the War Food Administrator. These administrators should be instructed to create and use. advisory committees representing industry, agriculture, labor, and Government. The Office of Demobilization, under the administration of the National Demobilization Board, should not be primarily an operating agency, but an agency to determine over-all policies of demobilization, to assign responsibility for various tasks to existing governmental agencies as far as possible, and to coordinate the activity among the various branches of Government. This new Board should

not require a large staff.

The Board should exercise its powers and authority to the fullest extent practicable through the personnel and facilities of contracting agencies and other established Government agencies. The Board should issue such directives on policy or operations to other Government agencies, and such regulations as may be necessary to carry out the provisions as outlined by Congress. Each such agency should execute such directives, and conform to such regulations, and make such further regulations as it deems necessary to carry out the intent of Congress or any regulations of the National Demobilization Board.

There should be created a bi-partisan congressional Committee on Demobilization. This congressional committee should be free to attend meetings of the National Demobilization Board at any time. The Board should confer with the joint congressional committee at regular and specified intervals. It should be the duty of the committee to represent the Congress and to assume leadership in the preparation of additional legislation in order to effectuate the work of the

National Demobilization Board. The National Demobilization Board should be required to report its activities monthly to the Congress and to the President. It should be the duty of the National Demobilization Board to formulate policies and programs for the disposal of all surpluses of war materials, housing, plants, lands, etc. As long as hostilities continue, the Demobilization Board should handle only that material and equipment which is declared by the Office of War Mobilization or the appropriate military agencies to be a surplus in light of present and future military requirements.

For the duration of the emergency the Office of War Mobilization should be supreme in all matters pertaining to the acquisition of equipment by the Government. At the cessation of hostilities the Office of War Mobilization should be terminated. It should be the plan of the War Demobilization Board to use the experience and personnel of the Office of War Mobilization in handling many of the demobilization problems. The National Demobilization Board and the Office of War Mobilization should counsel together and cooperate on problems in which there is a common interest.

The National Demobilization Board should be instructed to proceed immediately to develop plans for the demobilization period. It should be given access to all information pertinent to the development of its plans. If the information obtained by this Board indicated that there was surplus of material which was not being released to it for disposal, it should then have the privilege of presenting the facts to Congress. It is imperative that this new agency proceed at once to develop plans and obtain all the information and experience possible which will aid it in a satisfactory handling of demobilization problems.

It

The National Demobilization Board, acting within the framework provided by the Congress, should be supreme in all matters pertaining to reconversion. should not interfere with existing governmental agencies, except when their policies are hampering reconversion. For example, if the Office of Price Administration, during the reconversion period, insists on prices so low that it is impossible to manufacture certain peacetime products, then the National Demobilization Board should have authority to over-rule the Office of Price Administration in respect to that particular product.

It should be clearly understood that it should not be the intent to create a super governmental agency with thousands of employed personnel. It is the intention to create one representative board to which the people of the United States can look for guidance and avoid conflicting authority in demobilization. In order to prevent a self-perpetuating agency, the proposed National Demobilization Board should be created for a period of 2 years. At the end of 2 years the legislation can then be reviewed, revised, and reenacted, if necessary, in the light of existing conditions.

BROAD GUIDING PRINCIPLES

The Congress of the United States should formulate broad guiding principles to be followed by the National Demobilization Board and the Office of Demobilization. Many suggested principles have already been presented in the report of the George committee and in the report of Mr. Baruch. I shall not take your time to go into the details of these principles, except to mention a few of the more important.

The agency responsible for demobilization should be instructed to follow a democratic procedure in the process of demobilization. The American system of private enterprise is basic to our democracy. Every reasonable effort should be made to safeguard and promote this important heritage. There is danger that we as a government may over-plan, as well as under-plan for the post-war period. We believe that if the proper environment is created, American business, which incidentally includes the farmer and the laborer, will develop many of its own plans. A centralized agency in Washington cannot plan details for 135,000,000 people. The American people have demonstrated their creative genius during the war period. Every opportunity should be provided to encourage this same creativeness during the post-war adjustments.

The prevention of excessive unemployment during the post-war period should be given much consideration. This involves the speedy termination and settlement of war contracts, the hasty removal of war materials from plants, and many other things which will encourage prompt production of civilian goods. The war has cost billions of dollars. We believe that during the post-war period it would be poor policy to cause the loss of billions in the production of civilian goods by attempting to save a few dollars through excessive Government audits and red tape. Of course, every reasonable effort should be made to prevent fraud, and

severe penalties should be applied in cases where there has been a direct violation of honest business principles.

We believe that the disposal of war materials should be through private channels. Government-owned plants and property should be sold to private individuals as rapidly as possible. Care should be exercised to see that the surplus material and plants are disposed of in such a manner as to give small business and private individuals an opportunity to participate in their use and to avoid the promotion of monopolies.

Surplus war materials should not be disposed of in such a manner as to unduly disrupt domestic or foreign markets. We believe that these war materials should and can be moved into civilian use very rapidly at the cessation of hostilities, and before full civilian production is obtained. War materials should not be deliberately destroyed. Research should be started immediately to determine the best utilization or reconversion to other uses of materials which are likely to be in excess of any reasonable domestic demand.

We believe that the present system of taxation should be carefully scrutinized, and that Congress should pass the necessary legislation to create the proper environment to encourage private enterprise, especially small business and individual enterprise, and at the same time provide for orderly and expeditious retirement of the public debt.

AGRICULTURAL NEEDS

As was expressed in the opening remarks of my testimony, we feel that agriculture has not received proper consideration in the development of the present plans for the post-war period. The shock experienced at the close of World War I left a permanent injury to the agriculture of this Nation. We cannot afford to repeat this experience following World War II.

We believe that the National Demobilization Board should assign the problems dealing directly with agriculture to the War Food Administrator or the Secretary of Agriculture. The personnel of the Department of Agriculture has had experience in administering Federal programs in this field. We consider that this is very essential in order to avoid unnecessary delay, waste, and chaos in the disposal of agricultural products.

During the war period farmers have performed a herculean task in the production of food, in spite of shortages of machinery, labor, and necessary equipment. Present indications are that there will be a big need for food in the rehabilitation period immediately following the war. We, therefore, urge that farmers be given special consideration in the disposal of surplus war materials that will aid in this gigantic struggle for food production. Any surplus equipment now in the hands of the military forces should be placed on the farms of the Nation immediately, and certainly at the cessation of hostilities equipment should be placed on farms at the earliest possible moment. These supplies, placed on the farms of the Nation, can be making a real contribution to winning the peace while our domestic economy is converting to normal peacetime production.

During the war period, agricultural production has been increased by about 32 percent, compared with an increase of around 10 percent during World War I. Military demands have necessitated the creation of huge stock piles of food materials. Plans should be developed very carefully to prevent these stock piles from being dumped on the market in a disorderly manner, and thus break the market price for agricultural products. As has been recently demonstrated with eggs, it does not take a large volume of surplus products to create a chaotic condition in the markets for farm products. At the close of World War I the unwise handling of agricultural surpluses cost the farmers of this Nation billions of dollars. Most agricultural products are perishable and cannot be stored for a long period. This makes it very essential that plans be developed in advance to meet emergencies before they arise. It is, therefore, urged that through the National Demobilization Board the War Food Administrator be instructed to consult with agricultural leaders on this problem and that workable plans be developed. Many farms of the Nation have been converted into military camps. lands should be returned to farming as soon as possible. We believe that the original owners of the land should be given first chance to purchase the land. If, after a reasonable period of time, the original owners do not exercise their options, then the land should be sold at public auction in units of a size suitable for familytype farms in the respective regions.

99189-44- -13

These