that the Congress instruct the disposal agencies to dispose of surpluses in such a way as not to disrupt the markets. There has been some objection to this phraseology, and I wonder whether it would not be well to consider using the following language: "Give due, consideration to the consequences of Government sales upon employment and production both in the industry affected and the economy as a whole."

Another general problem on which the Congress might well wish to make a determinaton, is whether Government-owned plants should be operated by the Government for short or long periods after the war, if at all.

4. The question of stock-piling critical materials is related to the future national security. Here, too, there is an important issue of national policy for the Congress to decide. Should we use surplus stocks of critical raw and semifinished products as a partial guaranty of our future national security? Clearly, to the extent that such stock piles are to be established, full use should be made of surpluses left over from the war.

As these comments suggest, I view the surplus stocks which will result from wartime expansion of production as a national asset which can be used to preserve the freedom and equality of opportunity in the United States, to stabilize the economy, and to safeguard our future national security. It follows that although reasonable speed in the disposal of surplus goods and properties is desirable, we should not be stampeded into precipitate action. Undue haste will make waste in many ways, and may make impossible the attainment of the objectives which I have outlined. Further, excessive haste will actually impede the war effort through failure to describe adequately the equipment and tools in the surplus stock which may be urgently needed by manufacturers. With the sole exception of the recommendation that it be made clear that Congress intends to continue the Office of Price Administration's responsibility for maximum prices, my comments are sent to you as matters for your consideration rather than as final recommendations. I appreciate your courtesy in inviting my comments, and will be pleased to confer with you further on this subject if you so desire.

Sincerely yours,

CHESTER BOWLES, Administrator.

FEDERAL DEPOSIT INSURANCE CORPORATION,
Washington, May 16, 1944.

MY DEAR SENATOR MURRAY: I am happy to reply to your letter of May 6 and to give you my views regarding post-war utilization and disposition of Government-owned war property.

The amount of Government-owned property is so great that the method of distribution will be a major influence in shaping our post-war economy. Unless the bulk of this Government-owned property is returned to private ownership in a way which will not foster monopoly or excessive Government control, the free-enterprise system will receive a set-back from which it cannot be expected to recover in our lifetime. And, unless the disposal of this property is properly timed, it will hinder the achievement of our goals of maximum production, emplovment, and real income, and a high standard of living.

Inasmuch as goods are most apt to be scarce during the initial stages of reconversion, the quickest possible disposition of surpluses would appear to be in the public interest as a general rule. Commodities which are useful to individuals either for personal use or for use in individually owned enterprises should be offered for sale as promptly as possible after the close of hostilities and priced so that they will be sold quickly. Additional goods placed upon the market now and in the reconversion period, when purchasing power will most greatly outrun production, will tend to maintain standards of living and reduce inflationary pressure while the dumping of goods after the industrial plants swing into production will disturb prices and markets and will be a depressing influence.

Excess stocks of consumers' goods should be sold wherever possible through existing channels of distribution as soon as it is determined that they will not be needed by the armed forces. Such a procedure will facilitate the reestablishment of customary peacetime trade.

The real-estate and industrial equipment owned by the Government falls into many categories. At one extreme, some of it can be readily converted to the production of peacetime goods, while at the other extreme, some of it is 60054-44- -5

useful only for the production of war materials. Likewise, the equipment is of all ages and all degrees of efficiency. I am convinced that the Government should follow the policy of gracefully withdrawing from competition with private industry and should sell the property which can be converted to the production of peacetime goods as quickly as possible. Obviously, the Government should realize as much as possible on the sale of this property. There is a reasonable presumption that the best interests of society will be served by giving a first option to the former owners or operators, but care should be taken that such a policy does not create new monopolies or strengthen old ones. Special care should be taken that policy in this regard is not nullified by the sale of valuable equipment to syndicates acting as dummies.

The policy towards the plants which are useful only for the production of munitions of war should be exactly the reverse. As part of the preparedness program, the Government should maintain these plants as stand-by equipment until they become obsolete.

Real estate should be offered for sale in conformity with the plans of city and regional planning authorities, with public bodies given preference in the case of land which local planning authorities consider useful for public purposes. Goods useful to public authorities, Federal, State, or local (e. g., road-building machinery), should be offered for sale or transfer directly to the appropriate authorities at nominal prices, subject only to some method of allocation which will avoid favoritism to some localities or some State or local governments relative to others.

In a great number, or perhaps even a majority, of cases, the issues will not be as clear cut as indicated above. A given plant can perhaps be converted, but only at a cost so great that the return to the Government is small. As we all know, it is not easy in these borderline cases to decide where the best interests of society lie. There is also the problem of the plant which can almost, but not quite, operate at a profit either because of old or obsolete equipment, or because of a bad location or other reasons. I do not believe that such plants make a positive contribution to their communities and I think they should be dismantled. Congress could well make an appropriation to study these marginal cases to see if profitable use cannot be found for them. Doubtless many proposals for subsidizing these plants will be made, but to repeat, I feel strongly that if after a reasonable time no profitable use has been found for them they should be demolished and sold for scrap. While this might appear to be wasteful, it is only one of the wastes of war and would not be nearly so wasteful as the costly diversion and dislocation of efforts needed to keep uneconomic plants in operation. In the immediate post-war period the foreign demand for industrial equipment will be heavy and the disposal abroad of a part of our excess equipment may constitute an important form of cooperation in post-war reconstruction. The disposal of this equipment abroad should be arranged for on terms which will be advantageous to the long-run welfare of this country. Some of the factors to be considered in these disposals are the amount of goodwill obtained, the price, and the materials we can obtain from foreign countries, particularly strategic materials, the stock-piling of which in this country would be in the public interest.

Care should be taken that we do not sell our more efficient, modern, Government-owned equipment abroad leaving our own industrial plants to struggle along with their pre-war equipment much of which may be either semiobsolete or seriously deteriorated. Consideration could well be given to the problem of permitting private industries to pay for Government equipment in part through exchange of their semiobsolete equipment which could then be shipped abroad to assist in the rehabilitation of some of the foreign countries. Equipment that is marginal or obsolete in the United States may be a real asset to a less favored nation.

Very truly yours,

LEO T. CROWLEY, Chairman.

DEPARTMENT OF STATE

WASHINGTON, June 1, 1944.

The Honorable JAMES E. MURRAY,

Chairman, War Contracts Subcommittee, Committee on Military Affairs,

United States Senate.

MY DEAR SENATOR MURRAY: Reference is made to your letter of May 6 asking for suggestions as to congressional action which might be necessary with regard

to the problem of post-war disposal of surplus property. While a good deal of thought has been given in the Department to the problem of disposal of surpluses, it does not seem possible for us to make any specific suggestions at the present time concerning congressional action. Mr. W. L. Clayton, Surplus War Property Administrator, has suggested the formation of a subcommittee of the Surplus Property Policy Board to consider problems relating to foreign disposal, but this committee has only started detailed consideration of the problems. It might be helpful, however, to mention some of the considerations involved, some of which raise problems that may require congressional action.

Although the Department is interested in the effect which the disposal of domestic surpluses may have on foreign trade, it is especially concerned with the problem of foreign disposal of surpluses. This relates not only to the export of domestic surpluses but also to the disposal of surplus property located abroad. It is assumed that every effort will be made to obtain in domestic sales the highest prices consistent with a speedy disposal of surpluses. However, it is recognized that, in many cases, these prices will be substantially below the price of new equivalent material. In considering the export of domestic surpluses it would seem desirable to avoid the extensive unloading of materials in foreign countries at excessively low prices. This might result not only in the imposition of tariff barriers to the permanent detriment of our export trade, but also the demoralization of foreign markets through flooding them with surplus goods. Likewise, it would seem desirable to avoid sending defective or second-hand goods in such a way as to damage the reputation of American products. At the present time, statutory authority for export controls exists and might provide a means by which irresponsible exporting could be controlled. Any attempt to sell Government-owned surpluses under an agreement not to export except under approved conditions might be extremely difficult to operate effectively. Consideration may, therefore, have to be given as to whether some statutory authority to control exports for this purpose will be necessary.

Difficult problems will arise also with regard to the disposition of surpluses which will be located abroad. Certain types of property raise special problems and will have to be dealt with on a special basis. Examples of this type of property are aircraft, ships, telecommunications equipment, and weapons. For example, the disposition of transport planes located abroad should be in line with whatever international arrangements are made with regard to air transportation. It has been the position of the Department that the disposition of these special types of property should be handled as separate matters in recognition of the special problems involved. To the extent that surpluses located abroad consist of consumable articles, such as food, clothing, medical supplies, et cetera, it will probably be desirable to make them available for relief purposes, either as part of this country's contribution to the work of the United Nations Relief and Rehabilitation Administration or through sale to the governments of occupied countries.

There will undobutedly remain a large variety of articles located abroad which it will not be desirable to bring back to this country. It may be necessary to provide authorization by which American representatives abroad will be able to sell these articles and give clear title. Consideration may also have to be given to the question of whether such foreign sales can be made for foreign curency and whether credit can be extended either to foreign governments or to individuals in connection with such sales. An examination of existing legislation with regard to foreign credits would be necessary on this point. In some cases it may be desirable to dispose of surpluses through the foreign representatives of American companies. In such situations it may also be desirable to arrange for extensions of credit or for having the goods handled on consignment. Special problems will arise with regard to property forming part of foreign installations, such as air and naval bases, port facilities, cantonments, et cetera. While it is not possible to foresee at the moment what special problems will arise with regard to this type of property, it would be unfortunate if legislation relating to the disposal of property located in this country should raise unnecessary difficulties in connection with foreign disposal.

In various discussions with regard to the disposition of war surpluses, it has been proposed that preferences should be given to tax-supported organizations and small businesses. Such special treatment would, presumably, apply only in the case of surplus property disposed of in this country and not to surpluses disposed of abroad.

In view of the distinct nature of the problems relating to property located abroad, and considering their complicated nature, it may be found desirable to give them seperate legislative treatment.

It would, of course, be most unfortunate if in the handling of our surplus disposal program we should in any way encourage the maintenance and extension of the widespread network of trade barriers that caused so much difficulty during the interwar period, particularly to our exporters.

Sincerely yours,

INTERIOR DEPARTMENT

CORDELL HULL.

WASHINGTON, May 20, 1944.

MY DEAR SENATOR MURRAY: In your letter of May 6 you asked me to list for your committee aspects of the problem of the post-war utilization and disposition of Government-owned war property on which I believe congressional action to be necessary or desirable. You stated that any specific comments or recommendations as to congressional policy on the subjects listed would be welcome. I am very happy to comply with your request. In common with other agencies of the Federal Government, the Department of the Interior has observed the tremendous increase and growth in Government-owned war property in the past few years, and has been thinking of ways and means of handling this property when the war is over. If substantial damage is not to be done to the economic structure of the Nation or to established Government operations, appropriate procedures must be devised now to take care of the post-war utilization and disposition of such property.

The attention of this Department has been principally focused on the question of real property. This is the natural consequence of the fact that this Department is the principal land administration agency in the Federal Government, and has participated actively in gearing the use of the Federal lands to the war program. This Department, for example, has turned over to other war agencies for war uses over 13,000,000 acres of the public domain. In addition to land, the Department is vitally concerned with the ultimate disposal which is to be made of plants and factories constructed upon public lands or operated in conjunction with power projects developed and managed under congressional direction by this Department. Because of these interests the Department has made a particular study of the principles which it believes should be embodied in any legislation relating to the utilization or disposal of Federal real property. The results of this study have been incorporated in a draft of a proposed bill, copies of which I am attaching for your consideration.

To facilitate your study of this bill. I will enumerate here the principal aspects of the surplus real property problem with which it deals:

(1) Type of property covered.-Except for public lands upon which permanent structures have been constructed, only acquired lands need be covered by legislation. It is well-established public-land policy that public lands which have been temporarily reserved for military use will be returned to the public domain for administration under the public-land laws when their military use is at an end. There is thus no disposal problem with regard to the 13,000,000 acres of transferred public lands alluded to above.

(2) Central inventory of lands.—An efficient property disposition system cannot be organized without the inclusion of some provision for establishing a single central inventory of all Government lands. The General Land Office in this Department now has records of all public lands; its activities should be expanded to include lands acquired by purchase, donation, exchange, or in other ways.

(3) Definition of surplus property.-In general, it would seem advisable to consider as surplus only operating property of an agency which is no longer needed by the agency in the performance of its functions. Property specifically set aside by Congress for a particular purpose, such as a national park, should not be subject to disposal by administrative action as surplus property. Neither should similar property set aside for the purpose of conserving the property, or other special types of property which are not held for operating purposes, be susceptible to determination as surplus.

(4) Surplus property administrative agency. It would appear sensible to vest the actual day-by-day administration of a real property program in an established Government agency which has had extensive experience in the administration of Federal realty and which is now charged by law with administrative jurisdiction over large and varied holdings of such realty. In the development of broad policies to govern disposal, this agency might will be required to

consult with other Government agencies which have a substantial interest in property subject to disposal.

(5) Retention for Government use. Before any property not needed by an agency is disposed of to private parties or others, it is only logical and practical that it first be determined whether the property is not needed by some other Government agency or for some other Government use. Property should not be labeled surplus until it no longer has a Government use.

(6) Preferences in disposal. A substantial portion of surplus real property will probably be suitable for small farm, small business, or residential purposes. It would be highly desirable to make this type of property available for reestablishing war veterans in civilian life. Provision should therefore be made to give veterans some preference in acquisition. Subordinate preferences may also be considered for former owners of property and for public agencies such as States and municipalities.

(7) Manner of disposition. Flexible procedures should be devised to enable the most practical, inexpensive, and efficient disposition of property; yet they should be carefully drawn to prevent fraud or collusion in sales. Furthermore, they should be designed to prevent speculation in Government property or the promotion of monopolies.

(8) Taxation of surplus property. The exemption of property from local taxation because of its Government acquisition and ownership has created some considerable local problems. If property of that type is determined to be surplus but is not to be returned immediately to private ownership, it may be equitable in certain cases to permit its taxation or to provide for Federal payments on such property in lieu of taxation.

These eight points which I have listed and briefly discussed are, I believe, important aspects of the surplus real-property problem upon which congressional action is desirable. My specific recommendations on these points are contained in the proposed bill being submitted to you.

Although the primary interest of this Department lies in the disposition to be made of realty, the Department has also a considerable interest in the disposition which is to be made of personal property owned by the United States. A special study with a view to formulating specific recommendations has not been made of this phase of the property-disposal question, as in the case of real property, but certain of the topics listed above would be involved in a personal-property disposal program.

One of the most important principles which should be adopted is that property should not be disposed of outside of the Government unless it is not needed by any Government agency. I think that this is highly important because there will probably be considerable equipment, materials, and supplies which can be put to use by agencies other than those now holding such property. For example, there will be types of motor vehicles now in military use which practically any bureau in this Department could utilize; there will be vessels which the Fish and Wildlife Service or the Office of Indian Affairs or the governments of the Territories and possessions couid employ in the conduct of their activities; there will likely be photographic and airplane gear instruments which the Geological Survey might employ. It would be wasteful in the extreme for the Government to rid itself of this property and then discover that it must be repurchased.

A related phase of the property utilization and disposal problem is the question of stock piles. It is generally agreed that the United States should develop and execute a program for building up adequate supplies of strategic and critical materials in order to meet future emergency needs. The problem would appear to be one largely of procurement and, as such, is outside of the scope of your inquiry, but it does involve to some extent the question of disposition. There will undoubtedly be large quanties of strategic materials in the hands of some agencies when the war ends. The retention of such materials for stock-piling purposes should be considered in any general property-disposal plan.

In view of your request that the suggestions of the Department be made available by May 15, it has not been possible to obtain from the Bureau of the Budget advice as to whether the views expressed in this letter are in accord with the program of the President.

Sincerely yours,

HAROLD L. ICKES, Secretary of the Interior.