UNITED STATES MARITIME COMMISSION Hon. JAMES E. MURRAY, WASHINGTON, May 15, 1944. Chairman, War Contracts Subcommittee, Committee on Military Affairs, United States Senate. DEAR SENATOR MURRAY: This refers to your letter of May 6, 1944, requesting a list of those aspects of the post-war utilization and disposition of Governmentowned war property on which congressional action is, or will be, essential or desirable. A complete list of the subjects which might be desirable to cover by legislation cannot, of course, be compiled until such time as an extensive study has been made of all existing legislation and the problems which will arise at the termination of hostilities. At this time it would appear that legislation might cover, among others, the following subjects: (1) Designation or creation of an agency with responsibility for carrying out the over-all policy as to surplus disposal. (2) The conferring of authority on agencies of the Government to sell and lease real and personal property which has become surplus. (3) The requirements, if any, as to the manner in which sales or rentals are to be made, including any requirements for competitive bidding, minimum prices, and the terms of financing. (4) A statement of the policies to be followed in the offering or withholding from sale of surplus property and plants. (5) Provisions in respect to the disposition of the proceeds of the sale, including those covering the situation where one agency transfers to another agency property for disposal. At this time I should like to emphasize the fact that merchant shipping acquired by the Government during the war should not be disposed of in accordance with the provisions and general legislation covering the disposition of surplus property, as the terms and conditions upon which vessels are disposed of, both as to American and foreign operators, will have a profound effect upon the ability of the American ship lines to compete in foreign trade. Provisions in respect to the sale and charter of merchant ships are presently contained in the Merchant Marine Act, 1936, as amended, and other statutes. At the present time there is also pending before the Congress a bill which confers certain further authority upon the Maritime Commission in respect to the sale of ships. I understand that Mr. William Clayton, Surplus War Property Administrator, has arranged to have a committee on which this Commission will be represented, study, together with members of your staff, the problems involved in regard to the disposition of surplus war property. Such committee will be in a position to advise you in respect to all aspects of the general problem in respect to this property. Sincerely yours, E. S. LAND, Chairman. OFFICE OF ALIEN PROPERTY CUSTODIAN WASHINGTON, May 15, 1944. Re Surplus property legislation. Hon. JAMES E. MURRAY, United States Senate, Washington, D. C. DEAR SENATOR MURRAY: I am advised that a subcommittee of the Senate Committee on Military Affairs, under your chairmanship, has under consideration the several legislative proposals with reference to the disposition of surplus Government property, including S. 1730, introduced by yourself and Senator George, and S. 1893, introduced by Senator Kilgore. It is doubted that the property under the jurisdiction of the Alien Property Custodian is "surplus" in the sense of that term as intended by the surplus property bills. It has been brought to my attention, however, that in the event of enactment of legislation in the form of S. 1730, this agency might be unintentionally hampered in its program of sale of enemy property vested in the Custodian, pursuant to the authority granted by the Congress in the Trading With the Enemy Act, as amended. This might result from the broad definition of the term "property" contained in section 407 (1) of S. 1730, together with the power granted in section 205 (a) of that bill whereby the Director of Demobilization might determine what property was "surplus" to the needs of this agency. If legislation in the form of S. 1730 should receive the favorable consideration of your committee, you may, therefore, wish to consider an addition to the definition of "property" as therein stated. This could be done by inserting at the end of the present definition, the words: "but shall not include property vested in the Alien Property Custodian." S. 1893 does not appear to present the same problem, for the reason that the terms "surplus war property" and "surplus property" as defined in section 501 (b) thereof, would only be such property as the particular agency determines (subject to the authority of the Office of War Mobilization) to be surplus to such agency and in excess of its needs or not required for the performance of its duties and functions. The foregoing is brought to your attention at the suggestion of members of the staff of your committee and of the Special Committee on Post-War Economic Policy and Planning in order that you may be cognizant of this particular phase of the matter prior to the definite formulation of surplus property legislation. Should you find it appropriate to consider an exemption in favor of this agency in connection with such formulation, I shall be pleased to supply any further explanation or information that may be desired. I have not been advised by the Director of the Bureau of the Budget whether this legislation is in accordance with the program of the President. Respectfully, cc: The Director, Bureau of the Budget. JAMES E. MARKHAM, Alien Property Custodian. FEDERAL SECURITY AGENCY, DEAR MR. CHAIRMAN: This is in reply to your letter of May 6, 1944, with respect to the problem of post-war utilization and disposition of Government-owned war property. You state that your committee now has before it a large number of bills dealing directly or indirectly with this question, and request me to indicate those aspects of the problem upon which congressional action is or will be essential or desirable, together with any recommendations I may have regarding congressional policy on these subjects. I appreciate the opportunity to place before your committee the views of this agency with respect to some of the aspects of this problem which we have been considering in recent weeks. Both the Office of Education and the Public Health Service are very much concerned with the ultimate disposition of large quantities of mobile and immobile properties which are adapted for use by Federal, State, and local educational and health authorities. The Office of Education is particularly interested at the present time in the disposition of property currently being made available because of the termination of certain military and civilian training programs. To a lesser extent, other constituent units of this agency are also concerned with this general problem. I am therefore briefly listing phases of the problem which I believe warrant consideration, together with some suggestions. 1. Preferential treatment for tax-supported institutions.-In any disposition of surplus property for use by schools or hospitals, the question arises as to whether preferential treatment by way of donation, price differential, or priority in purchasing privilege should be given to tax-supported institutions. The question may be split further into whether such preferential treatment should be accorded to all property allocated to such public institutions, or only to certain kinds of property, and to whether it should be extended to sales as well as donations of property. It is my feeling that the Congress might wish to give consideration to authorizing donations to tax-supported institutions, at least of certain types of property, but that on sales any preference might well be extended both to public and to private nonprofit institutions. 2. Types of property to which preferential treatment might be extended.S. 1893 and the proposed Kilgore amendment to S. 1718 provide in sec. 307 (a) for the donation, subject to regulations issued by the Surplus War Property Administrator, to tax-supported educational institutions of surplus property which has been acquired for school, classroom, or other educational use by the Federal Government. The transfer would be made through the Office of Education. I believe that this provision is an excellent one so far as it goes, but I would like to suggest that there may be other types of property, such for instance, as radar equipment and trucks, which are not now used for educational purposes but which may readily be adapted to such use. If the classification of property specified in this section is to be broadened, it should, of course, be accurately defined so that the responsibility of the Administrator would be clearly established. 3. Requirement for establishment of State surplus distribution agency.—It is obvious that distribution within a State would be more effective if there were a central board or agency responsible for the receipt and distribution of surplus war property. It may be questioned, however, whether there should be a single State agency to represent all types of use within the State, or whether each type of use should be represented by a special agency. For example, should distribution of property to be used in the schools be made to an over-all State agency or to a State educational agency representative of all educational interests on the State level? It is my feeling that distribution in terms of the character of the use is to be preferred. Thus, in the educational field the State might be required, as a condition to sharing in any type of preferential treatment, to designate an educational agency for the disposal of surplus war property which would be representative of all types of educational institutions within the State, and which would utilize so far as practicable the regularly constituted educational officers or boards. 4. Type of Federal allocation.-An analogous problem is the question of whether Federal allocation to the States should be made on a functional or geographic basis; that is, in terms of specific fields of use, such as education, public health, highways, etc., or whether a bulk allocation should be made to the States as a whole, leaving the ultimate distribution to be made by the State to its various departments. It is my recommendation that the Federal allocation should be on a functional basis and made in cooperation with the Federal agencies concerned with the various fields. 5. Determination of need for surplus property.—Some basis must be found for determining the need for surplus property as between different functions and different localities. Thus, if there are 10,000 trucks to be disposed of, it must be decided what portion of these shall be devoted to different types of use and in different parts of the country. Surveys will be needed to elicit this information and to keep it on a current basis. A continuous listing by the disposing agencies of all property available, or about to become available, should also be maintained, and the lists made accessible to prospective consumers. Here, again, I believe that the Federal agencies operating in the specialized fields can be of service. 6. Responsibility of Federal agencies.-Some specifications should be set forth in the legislation of the responsibility of the Federal operating agencies in connection with the distribution of property to the States. I have already suggested their participation in the allocation of property and in the determination of need. A further possibility is that the arrangements for disposal should channel through the appropriate Federal operating agency rather than be made directly with the State agencies. Although many detailed problems will present themselves in working out a program of this magnitude, the foregoing seem to me representative of some of the initial problems that will have to be solved before such a program can be set up. Because of the limited time available for the preparation of this report, no advice has been obtained from the Bureau of the Budget as to the relationship of these comments to the program of the President. DEAR SENATOR MURRAY: I have yours of May 6 requesting the views of the War Department as to those aspects of the problem of disposition of surplus war property which should be the subject of congressional action. I am informed that the Surplus War Property Administrator, Mr. W. L. Clayton, is establishing a joint committee composed of representatives of the various interested agencies, for the purpose of working with your committee on such legislation. The War Department views will be presented in detail through this committee. I understand that this arrangement has been discussed with you and with representatives of the committee and that it meets with your approval. In general, the War Department considers that the following aspects of this problem should be covered in any legislation. (a) The authority to determine what property is surplus. (b) The disposition of contract termination inventories, and other surplus property. (c) The disposition of scrap, waste, and salvage. (d) The disposition of surplus property located abroad. (e) A clear definition of the responsibilities of procuring and disposal agencies with respect to surplus property. (f) The fiscal aspects of the problem, namely: (1) The funds or appropriations from which the expenses of repair, maintenance, storage, handling, and shipment should be paid. (2) The disposition of proceeds of sales. (3) The extent of reimbursement required on transfers of surplus property between the agencies of the Government. (4) The extent to which donations will be permitted. (g) The nature and scope of reports to the Congress covering the disposition of war surpluses. (h) The status of existing legislation should also be clarified by express repeal or preservation of the many outstanding statutes on this subject. Sincerely yours, Hon. JAMES E. MURRAY, ROBERT P. PATTERSON, DEPARTMENT OF AGRICULTURE WASHINGTON, May 15, 1944. Chairman, War Contracts Subcommittee of the Senate Committee on Military Affairs, United States Senate. DEAR SENATOR MURRAY: This is in reply to your letter of April 21, in which you request comments and suggestions on S. 1730 and S. 1823; to your letter of May 6, with which you attached a copy of the amendment proposed by Senator Kilgore to S. 1718, title IV of which you suggested that we consider instead of title V of S. 1823; and to your letter of May 6, in which you requested us to briefly list those aspects of the problem of post-war utilization and disposition of Government-owned property on which we felt congressional action was essential or desirable. Upon examination of these bills, we find that the Department of Agriculture is very much interested in and in general agreement with the objectives of all of them.. Contract termination.-The proper and speedy termination of industrial war contracts, through its effect upon the total national economy, will have a great influence on whether or not agriculture has adequate markets to warrant abundant production of farm commodities after the war. Agriculture's interest in the speedy termination of industrial war contracts is threefold. Farmers want to get these plants back into heavy civilian production quickly in order (a) to maintain full employment, which will assure purchasing power to buy farm products; (b) to assure a large supply of civilian goods, which will help to prevent inflation; and (c) to increase the much-needed farm supplies. It seems to us that in the case of every industry, as soon as a particular plant is no longer needed for war production, it should resume full production of civilian goods at the earliest possible moment that materials and labor are available. In addition to industrial war contracts, there are contracts for the procurement of food directly or indirectly for war purposes and for price-support programs established by legislative mandate. Foreign relief needs for food will last for at least a year or two after the war. However, food-procurement contracts do not present the same problems as industrial contracts on termination because most food is purchased on an offer and acceptance basis. But even though these shortterm contracts are not actually terminated, the markets for some foods may be seriously affected when the Government stops making new food-procurement contracts at the expiration of the old ones. This may be as serious a problem in agriculture as the problem of contract termination in industry. Congress has committed the Government to the support of farm prices for at least 2 years after the war is won, so the Government should stand ready to carry out fully its pricesupport contracts on food during that period. Disposal of surplus property.-Agriculture has a special interest in the following phases of the problem of disposal of surplus war property: (a) It seems to us that these surpluses should be distributed as rapidly as possible, without glutting markets, as one means of avoiding inflation while the supply of goods in the market place is limited. (b) We believe that procedures for the disposition of surplus property should be streamlined just as far as protection of the public interest will permit. In this connection it occurred to us that considerable discretion will have to be left with administrative agencies as to the details for handling such an enormous program and that legislation should lay down general policies as a framework in which administrators would operate rather than to include as a matter of law too many details. It seems to us that the procedure should be somewhat more flexible due to the size of the undertaking than would be proper in ordinary times. For example, in view of the hundreds of thousands of individual property items involved, we have some reservation as to whether it would be possible for a disposal agency to prepare and transmit detailed inventories of surplus property to several governmental agencies as provided in section 407 of S. 1823. * * * * to (c) We were particularly interested in section 401 (b) of S. 1823, in which Congress declares that the objective of title IV is, among other things, to facilitate the prompt and maximum utilization of all surplus war properties promote maximum production * As you know, agriculture has been handicapped in obtaining farm machinery and other farm supplies during the war. Surplus property needed in agriculture should be made available promptly during the remainder of the emergency to promote maximum agricultural production. Every effort should be made to keep war plants needed to produce fertilizer, spray materials, and other farm supplies and equipment in production both during and after the war. It is believed that special consideration should be given to farmer-owned cooperatives in the disposal of war plants producing chemical materials suitable for fertilizers, fungicides, and insecticides. (d) Agriculture has a special interest in the manner of disposal of surplus military land. We recommend that land suitable for farming should be turned over to the Department of Agriculture for disposition. This Department is equipped through experience and trained personnel to handle this job. We also recommend that lands previously held and reserved for a specific governmental purpose, and temporarily made available for war use, and acquired lands interrelated thereto, shall be excluded from the category of surplus lands, since such public lands were made available for war use with the understanding that they would be restored to their prior status when the war need had ended. (e) We believe that the Department through the War Food Administration will be in position to handle the intricate problem of disposing of surplus war food stocks. Taking into account foreign relief requirements and needs of the ever-normal granary, surplus food stocks should be disposed of as rapidly as possible to avoid demoralization of domestic food markets by surpluses in later stages of the post-war period. There are many agricultural commodities now handled by the War Food Administration under production and procurement programs which cannot be classified strictly as food-wool, cotton, fibers, naval stores, seeds, etc. It is suggested, therefore, that food, as the word is used in S. 1823, be given the same definition as in Executive Order 9280 and, in addition, be deemed to include naval stores. Large quantities of war supplies are held by corporate agencies of the Government. For example. the Commodity Credit Corporation owns large supplies of agricultural commodities and products which include stocks of foods, cotton and other fibers. fats and oils, etc.. acquired either for the purpose of supplying other war agencies, such as Lend-Lease. Army, War Shipping Administration, or for purposes of price support. Disposition of these commodities by the Commodity Credit Corporation is subject, among other things, to the general statu |