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In order to meet increasing requirements of the defense program for the basic metals-steel, copper, and aluminum-the Controlled Materials Plan (CMP) was placed in operation on July 1, 1951. Under CMP, producers advise the National Production Authority and other designated Federal agencies of their estimated requirements for the three basic materials that they need to manufacture the specific items they intend to produce. After the estimated requirements are balanced against the known supply of CMP materials, allotments are determined. Each applicant then receives an allotment of his basic material or materials. When presented to the supplier, this CMP allotment is designed to assure that the amounts of steel, copper, and aluminum allotted will be made available. In this way the basic materials for the defense and defense-supporting programs and the industrial expansion program are provided on schedule. CMP prevents an excessive use of materials in specific programs and reserves for civilian production the steel, copper, and aluminum not actually needed for defense. If a producer secures an allocation of controlled materials he is entitled to rate his requirements for any other materials or components needed to complete his authorized production schedule.

In the first phase of the CMP program covering the third quarter of 1951 (July, August, and September), allotments of controlled materials were made only to producers in defense or defense-supporting industries. For the fourth quarter of 1951, CMP was extended to consumer durable goods including household appliances and automobiles. This action brought all industries using controlled materials under CMP and provides for proper distribution of steel, copper, and aluminum to the entire economy.

The third quarter of 1951, being the initial period of CMP operations, marked the difficult transition from a priority system to an allotment system for the controlled materials involved. It is anticipated that the new CMP system will be operating about as planned for the fourth quarter of 1951, and that for the first quarter of 1952 CMP operations will be as smooth as they were after a similar period of experience in World War II. There are several indications that the Controlled Materials Plan will successfully operate to channel materials into essential defense programs. First, steel production has not been hampered but has risen steadily almost every week to new highs, showing indirectly that there has been no interference with production. Secondly, indications are that CMP is doing what it was intended to accomplish, that is, balancing requirements for controlled materials against the available supply, and channeling the supply through direct quantitative allotments into programs for defense, facilities and resources expansion, and essential civilian production.

Facilities expansion

While the United States was turning out goods during the last quarter of 1950 at an annual rate of 300 billions of dollars, the defense program required increases in production. This in turn required new and expanded facilities to meet the target of a steel-ingot capacity of 118 million tons annually, and to meet a primary aluminum capacity of nearly 1.5 million tons a year, as well as increases in a host of other basic materials. Such expansion of the Nation's industrial plant was

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stimulated by incentives established by the Congress through accelerated tax amortization and emergency loan arrangements.

Under the Revenue Act of 1950 the Congress provided for the reduction from a normal rate of amortization to 5 years for tax amortization of certified building of industrial plants intended for production vital to the defense program. As of September 27, 1951, NPA has received 10,107 applications for "certificates of necessity" to allow the 5-year-tax amortization, and had taken action on 6,856 of these applications, leaving 3,251 applications pending. Of those acted upon, a total of 4,365 applications were recommended for approval to DPA, 2,069 were denied, and 422 were transferred to other delegate agencies. As of August 18, 1951, a moratorium on the granting of tax-amortization certificates was declared for a period of 60 days, during which time a review was to be made of administrative procedures and of the criteria on which certificates are to be granted and percentages determined. This has been a factor in the accumulation of applications pending, along with policy considerations and the lack of supporting data consisting of (1) industry operation reports, (2) military endorsements, and (3) in some cases, additional information from the applicant.

Under section 302 of the Defense Production Act of 1950, the Congress provided that emergency loans may be made for the procurement of materials for the national defense and for the expansion of capacity when other financial assistance is not available on reasonable terms. As of October 1, 1951, a total of 647 applications for certificates of essentiality had been docketed by NPA, representing loan requests of over $1,480,000,000. Of this total, 77 applications had been recommended by NPA to the Defense Production Administration for approval of which 47 (totaling $60,170,000) were approved, 2 approved and subsequently canceled and 5 disapproved, with 16 currently pending in DPA and 7 pending in RFC. The NPA has recommended denial of 290 loan applications, totaling $828,365,000. A total of 143 applications had been withdrawn and 11 transferred to other delegate agencies.

Conservation and salvage

Both conservation and salvage of materials are fundamental objectives of the NPA. A special program was initiated in the summer of 1951 to increase the flow of iron and steel scrap to steel mills and foundries to supply the 32,500,000 gross tons of purchased scrap required to maintain the high rate of steel production during 1951. Industry and agriculture cooperated in this effort to channel dormant scrap into defense uses. Scrap-mobilization committees are being formed in cities, in industries, and in agricultural organizations. An emergency scrap conference was held on September 11, 1951, to further the objectives of the scrap program.

Stockpiling

The NPA as an administrative body under the Department of Commerce discharges the stockpiling responsibilities assigned to the Department under the provisions of section 2 of the Strategic and Critical Stockpile Act (60 Stat. 598). These responsibilities require cooperation with other designated Federal agencies in determining which materials are strategic and critical, in determining the quality and quantities of such materials to be stockpiled, and in controlling of the distribution and use of such materials so as to provide adequate supplies to meet current military and civilian requirements and to permit the acquisition and retention of sufficient quantities in the national stockpile. The actions by which NPA aids in reaching stockpile objectives are in the nature of (1) restrictions on the distribution and use of materials to assure their availability for the stockpile in quantities established by decision of the Vital Materials Coordinating Committee of DPA; (2) issuance of control orders exempting certain materials from purchase limitations when purchased by the General Services Administration and other Federal agencies for the stockpile; (3) prohibition of private importations of rubber and tin which are subject to purchase only by the General Services Administration and the Reconstruction Finance Corporation, respectively; and (4), in some cases, direct allocations made to the stockpile.

The stockpile materials covered by NPA material (M) orders are listed by general types of control in table I. This listing refers only to orders covering the primary materials. There are other orders concerning those primary materials in their partially or completely processed state which have not been included in the compilation of table I.

TABLE I.-Stockpile materials covered by NPA orders (as of Sept. 30, 1951)

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While each NPA order is a conservation order, there are specific categories of limitations. Some of these materials may be under types of control other than those noted. Each material is listed under the major types of control as designated in the respective orders. These types of control are generalized as follows: (a) allocation-use and delivery subject to NPA monthly or quarterly authorization; (b) control on delivery, acceptance, processing and products; (c) limitation on civilian consumption to a stated percentage of a related base period; (d) use prohibited in manufacture of finished products or groups of products specified in the respective orders; (e) limitations on inventories; (f) suggested or required substitution of other materials, and (g) exemption from purchase, delivery or allocation restrictions of the General Services Administration and other Federal agencies in acquisition for the stockpile.

Machine tools

On the recommendation of NPA the General Services Administration executes appropriate contracts with producers of machine tools in the implementation of the machine-tool-pool order program, the purpose of which is to stimulate production of machine tools needed for defense production. Under this program specific contracts called "pool orders", which are initially a financial responsibility of the Federal Government, are placed with individual machine-tool builders. Provision is made permitting the firms to divert machine tools from pool contracts to fill orders received from a defense contractor. As the machines are siphoned off to fill other defense orders, the Government is gradually relieved of the financial responsibility. The program is a purchase and resale type of operation, except that the resale is accomplished in most cases by the producer rather than by the procurement agenciy.

Funds for this program to the extent of $340,000,000 have been made available. This will underwrite a pool-order program amounting to $224,582,814. In addition, new recommendations totaling $507,034,972 has been sent to the General Services Administration. The total of pool order contracts executed and recommended was $731,617,786.

Flood-disaster relief

SPECIAL PROGRAMS AND ACTIVITIES

Prompt relief for the Missouri-Kansas flood-disaster area was provided by NPA during and immediately following the flood of midsummer. On July 22, 1951, an NPA "survey mission" was succeeded by an "emergency mission," which was directed to obtain materials and equipment for repairing or replacing buildings and equipment damaged in the flood area. This mission was authorized to take all appropriate actions under the Defense Production Act and applicable Executive orders for flood-damage relief. CMP regulations and other NPA orders were tailored to assure an adequate flow of materials to the stricken area during a 90day emergency-relief period. The mission which worked closely with the Office of Defense Mobilization and other Federal agencies was disbanded on August 9, 1951.

Civilian requirements

In order to insure maintenance of a strong economy, and maximum productivity in support of the defense effort, an Office of Civilian Requirements was established in February 1951.

This office serves as claimant for products, materials, and services for State, county, and municipal governments; private and religious institutions; wholesale, retail, and service trades; and common-use consumer goods necessary to meet essential civilian requirements. It is responsible for assuring equitable distribution of such products, materials, and services. The office also coordinates and integrates efforts and activities taken by other claimant and nonclaimant agencies in behalf of the civilian population.

Foreign requirements

To provide necessary international cooperation in the distribution of materials, the Authority participates in the development and administration of programs involving allocation of scarce materials, construction and expansion of foreign facilities, export controls, and similar matters.

A special relationship has been established with the Canadian Government by which reciprocal and parallel action affords maximum effectiveness in carrying out the defense-production programs of both countries.

Small business

The NPA's programs affect the entire national economy, and all major segments of the economy are therefore represented in their formulation and direction. The Office of Small Business of NPA represents the interests of the small-business man; reviews orders and regulations in the making to determine their possible impact on smaller firms and makes recommendations in behalf of small-business men; issues guides for the participation of small business in the emergency program; and assists in the formation of regional small-business pools for effective contract negotiations. It also provides spot assistance to small business and conducts an active program in Washington and in the field for the distribution of prime and subcontracts in the defense program. For example, during the third quarter of 1951 nearly 350 small-business men producing durable goods were given permission to adjust their base periods or to shift from the use of aluminum to steel, or from copper to aluminum. Some 320 users of chemicals—particularly producers in the plastics and paint-remover fields—presented the problems encountered in obtaining materials and in all but 10 cases they received assistance. Over 300 small producers of lumber products were given assistance in obtaining necessary equipment.

Labor

Many of the Authority's control actions vitally affect or are affected by manpower utilization, unemployment, and dislocations of labor. These considerations will become even more important as controls are increased and shortages of needed workers appear. Through cooperation with the Department of Labor and direct liaison with the national trade unions, measures are designed to help insure optimum utilization of the labor force.

Through its liaison with the labor unions the Authority is in a position to receive and transmit informally information of conditions which light lead to work stoppages. Through these means it is sometimes able to prevent loss of man-hours. Conversion from civilian to defense production in many industries has resulted in severe unemployment which has seriously affected local areas. The employment factor was a major item in the automotive survey of July 1951, sponsored

jointly by NPA, the Defense Manpower Administration, and State employment security agencies.

Unemployment if continued for any length of time could dissipate the skilledwork force in an area and create labor unrest. The Authority attempts to prevent such occurrences through giving spot assistance for additional materials and endeavoring to secure defense contracts for companies which are having difficulty in retaining their workers.

The impact on manpower of future limitation and prohibition orders is being studied in order to minimize manpower dislocations.

Compliance and enforcement

During the first year of its operations the National Production Authority has placed primary emphasis upon securing voluntary compliance with its orders and regulations. Whenever possible, misunderstandings on the part of industry members of NPA's requirements were corrected through the furnishing of information and explanations by compliance personnel. It will continue to be NPA's policy to seek voluntary compliance but increasing emphasis will be placed upon its enforcement program to insure attainment of defense mobilization goals, and to protect the great majority of businessmen who comply voluntarily with NPA's controls. In addition to routine compliance and enforcement investigations, which are conducted by field offices of the Department of Commerce, four industry-wide surveys have been made of the users of aluminum and of copper, of representative members of the canning industry, and the users of maintenance, repair, and operating supplies (MRO) under NPA Regulation 4. These surveys indicate that there has been substantial compliance with NPA's orders and regulations, that most violations were corrected voluntarily when brought to industry members' attention, and that steps were taken by them to avoid repetition of violations in the future.

In the third calendar quarter of 1951 the first audit was made of principal users of controlled materials under the Controlled Materials Plan. Reports of these audits were furnished to NPA's industry divisions for their use in the formulation of policies, and in the review of current applications by industry members for allotments under the Controlled Materials Plan. Information received in the course of this audit was combined with data obtained from a survey of the inven tories of large users of aluminum and excessive concentrations of this scarce metal when found were reported to industry divisions for corrective action by them and by other claimant agencies concerned with this problem.

Plans have been completed for the auditing of large users of controlled materials during the fourth calendar quarter of this year and succeeding periods. In conducting the audit for the fourth quarter particular emphasis is to be placed upon the users of aluminum.

To date, one criminal case has been filed in the Federal courts against violators of NPA controls. Other cases are being examined by the Office of General Counsel, with a view to institution of criminal or civil proceedings or to the imposition of other administrative sanctions.

Appeals

NPA Orders and Regulations contain provisions for adjustment or exception under which relief may be granted to prevent an unreasonable hardship to a company or where enforcement of the order would not be in the public interest or in the interest of the national defense. Applications for such adjustments or exceptions are granted or denied on the decision of the NPA official administering the particular order or regulation.

Any person who has filed an application for adjustment or exception requesting relief from the provisions of an order or regulation issued by NPA, and any person who has applied to NPA for a CMP allotment or allocation authorization pursuant to an order or regulation issued by NPA, and who has thereafter filed an application for adjustment or exception requesting relief from the action taken on his application for a CMP allotment or allocation authorization, may appeal to the NPA Appeals Board from the decision of the official administering the particular order or regulation.

The NPA Appeals Board is established as an impartial body and acts as the final agency authority in considering appeals permitted under the regulation. The grounds for appeal are that such decision:

(1) Works an exceptional and unreasonable hardship on him which is not suffered generally by others in the same trade or industry, or in the same relative position; or

(2) Results in unreasonable discrimination against him; or

(3) Is not in the public interest or the interest of the national defense.

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