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Full text of "Post-war economic policy and planning. Joint hearings before the special committees on post-war economic policy and planning, Congress of the United States, Seventy-eighth Congress, second session, pursuant to S. Res. 102 and H. Res. 408, resolutions creating special committees on post-war economic policy and planning"

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POST-WAR ECONOMIC POLICY AND PLANNING 



JOINT HEARINGS 

BEFORE THE 

SPECIAL COMMITTEES ON POST-WAR ECONOMIC 
POLICY AND PLANNING 

CONGRESS OF THE UNITED STATES 

SEVENTY-EIGHTH CONGEESS 

SECOND SESSION 

PURSUANT TO 

S. Res. 102 and H. Res. 408 

RESOLUTIONS CREATING SPECIAL COMMITTEES 

ON POST-WAR ECONOMIC POLICY 

AND PLANNING 



PART 1 

JUNE 16 AND 20, 1944 



DISPOSAL OF SURPLUS GOVERNMENT 
PROPERTY AND PLANTS 



Printed for the use of the Special Committees on Post-War 
Economic Policj' and Planning 




UNITED STATES 
GOVERNMENT TRINTING OFFICE 
61846 WASHINGTON : 1944 






UNITED STATES SENATE 
Special Committee on Post-Wab Economic Policy and E^annins 

WALTER F. GEORGE, Georgia, Chairman 
ALBEN W. BARKLEY, Kentucky ARTHUR H. VANDENBERG, Miehigatt 

CARL HAYDEX, Arizona WARREX R. AT'STIN. Vermont 

JOSEPH C. OMAHONEY, Wyoming ROBERT A. TAFT, Ohio 

CLAUDE PEl'PER, Florida ALBERT W. IIAWKES, New Jersey 

SCOTT W. LUCAS, Illinois 

Scott Russell, Counsel 



HOUSE OF REPRESENTATIVES 

Special Committee on Post-Wab Economic Policy and Planning- 

WILLIAM M. COLMER, Mississippi, Chairman 



JERE COOPER. Tennessee 
FRANCIS WALTER, I'ennsylvania 
ORVILLE ZIMMERMAN. ISIissouri 
JERRY VOORHIS, California 
JOHN R. MURDOCK, Arizona 
WALTER A. LYNCH, New York 
THOMAS J. O'BRIEN, Illinois 
JOHN E. FOGARTY, Rhode Island 
EUGENE WORLEY, Texas 

Marion B. Folsom, Director of Staff 
Guy C. Gamble, Economic Adviser to Committee 
A. D. H. KArL.w, Consultant 
II 



HAMILTON FISH. New York 
CHARLES I. GIFFORD, Massachusetts 
B. CARROLL REECE, Tennessee 
RICHARD J. WELCH, California 
CHARLES A. WOLVERTON, New Jersey 
CLIFFORD R. HOPE, Kansas 
JESSE P, WOLCOTT, Michigan 
CHARLES S. DEWEY, Illinois 



CONTENTS 



Hearings : Page 

Friday, June 16, 1944 1 

Tuesday, June 20, 1944 43 

Testimony of — 

Adams, Russell B., Assistant Director, Economic Bureau, Civil Aero- 
nautics Board : 55 

Clay, Maj. Gen. Lucius D., Director of Materiel, Army Service Forces, 

Department of War 46 

Clayton, William L., Surplus War Property Administrator 8 

Cox, Hugh B., Assistant Attorney General, Department of Justice 63 

Fleming, Maj. Gen. Philip B., Administrator, Federal Works Agency 49 

Hawes, Alexander, assistant general counsel. War Production Board — 45 

Jackson, Wayne, Office of Wartime Economic Administration, State 
Department 54 

Klagsbrunn, Hans, Deputy Director, Surplus War Property, Reconstruc- 
tion Finance Corporation 51 

Leland, Robert, OtTice of the General Counsel, Foreign Economic 

Administration 52 

Maverick. Maury, Chairman, Board of Directors, Smaller War Plants 

Corporation 55 

Olrich, E. L., Procurement Division, United States Treasury 

Department 54 

Strauss, Capt. Lewis L., United States Navy Department 43 

Supporting statements and supplementary material : 

A bill to provide for the disposal of surplus Government property and 

plants, and for other piuiDoses 2 

Letter of June 1, 1944, from Hon. Francis Biddle, Attorney 
General, to Hon. W. L. Clayton, Administrator, Surplus War Prop- 
erty Administration 63 

Letter of June 1, 1944, from Hon. Marvin Jones, War Food Admin- 
istrator, to Hon. W. L. Clayton 66 

Letter of June 13, 1944, from Hon. J. W. Robinson, Acting Chairman, 
Select Committee on Small Business of the House of Representatives, 
to Hon. William IM. Colmer, Chairman, Hovise Special Committee on 
Post-War Economic Policy aad Planning, re surplus property 
legislation 68 

A bill to amend the Reconstruction Finance Corporation Act by adding 
a new title thereto relating to the sale or other disposition of surplus 
property of the United States 70 

Fifth Interim Report of the House Small Business Committee — the 

Surplus Property Problem from the Viewpoint of Small Business 74 

III 



POST-WAE ECONOMIC POLICY AND PLANNING 



miDAY, JUNE 16, 1944 

Congress of the United States, 
Committees on Post- War Economic 

Policy and Planning, 

Washington^ D. G. 
executive session 

The committees met, pursuant to call, at 10: 30 a. m., in room 318, 
Senate Office Building, Senator Walter F. George (chairman of the 
Special Committee on Post-War Economic Policy and Planning of 
the United States Senate), presiding. 

Present: Senators George, Johnson (Colorado), Vandenberg, 
Hawkes, Lucas, Revercomb, Murray, Pepper, Austin, Hill, and Kil- 
gore; Representatives Colmer (chairman of the Special Committee on 
Post- War Economic Policy and Planning of the House of Representa- 
tives), O'Brien, Fish, Reece, Dewey, Manasco, Worley, Wolverton, 
Hope, Walter, and Cooper. 

Also present : Mr. Scott Russell, counsel for the Senate Special. Com- 
mittee on Post-War Economic Policy and Planning; Mr. Marion B. 
Folsom, staff director. House Special Committee on Post-War Eco- 
nomic Policy and Planning. 

The Chairman. The committee will come to order, please. 

All members of the House, on any committee, come right around. 

Mr. Clayton, before you begin, I will make this very brief state- 
ment. 

This is a joint meeting of the House and Senate Special Commit- 
tees on Post-War Economic Policy and Planning. Chairman Col- 
mer, of the House Committee, invited Representative May, chairman 
of the House Military Affairs Committee; Representative Vinson, 
chairman of the House Naval Affairs Committee; Representative 
Spence, chairman of the House Banliing and Currency Committee; 
and Representative Manasco, chairman of the House Committee on 
Expenditures in the Executive Departments, to attend the meeting. 

On behalf of the Senate committee, invitations were extended to 
Senator Hill, chairman of the Senate Committee on Expenditures in 
the Executive Departments, and Senators Murray, Revercomb, and 
Truman, composing a subcommittee of the Senate Military Affairs 
Committee. 

All of these committees have been considering surplus property 
legislation, and Mr. Colmer and the chairman of the Senate Post- 
War Committee thought it would be helpful for them to hear your 
statement this morning, Mr. Clayton. 



2 POST-WAR ECONOMIC POLICY AND PLANNING 

I am also hoping to have here the entire Military Affairs Committee 
of the Senate, which has several surplus property bills before it. 

There was an unfortunate mix-up with reference to the time of the 
meeting, which becomes particularly unfortunate because of the early 
hour at which the House is convening today. I regret that the mis- 
understanding as to the time occurred, in view of the fact that this is 
the first effort of the House and Senate Post-War Committees to hold 
a joint hearing. I hope that we may be able to have many such joint 
hearings in the future. 

We have under consideration a bill which has been proposed by 
Mr. Clayton, and I will ask that it be included in the record at this 
point. 

(The bill proposed by Mr. Clayton, with his suggested amendments, 
follows:) 

[S. , 78th Cong, 2d sess.] 

A BILL To provide for the disposal of surplus Government property and plants, and for 

other purposes 

Be it enacted by the Senate and House of Representatives of the United States 
of America in Congress assembled, 

OBJECTIVES 

Section 1. The Congress hereby declares that the objectives of this Act are to 
facilitate and regulate the orderly disposal of siu'pliis property so as — 

(a) to assure the most effective use of such property for the purposes 
of war and national defense ; 

(b) to facilitate the transition of enterprises from wartime to peacetime 
production and of individuals from wartime to peacetime employment ; 

(c) to promote production, employment of labor, and utilization of the 
productive capacity, and the natural and agricultural resources of the 
country ; 

(d) to avoid dislocations of the domestic economy and of international 
economic relations ; 

(e) to discourage monopolistic practices, preserve and strengthen the com- 
petitive position of small business, and promote fair prices to consumers; 

(f) to effect broad and equitable distribution of surplus profjerty ; and 

(g) to realize tiie highest obtainable return for the Government con- 
sistent with the maintenance and encouragement of a liealthy competitive 
economy. 

DEFINITIONS 

Sec. 2. As used in this Act — 

(a) The term "Government agency" means any executive department, board, 
bureau, independent commission, or other agency in the executive brancli of the 
Federal Government, and any corporation wholly owned and controlled by the 
United States. 

(b) The term "owning agency" means Government agency having control of 
property at or before the time when it is determined to be surplus to the needs 
and responsibilities of that agency. 

(c) The term "disposal agency" means any Government agency designated 
under tiiis Act to handle disposition of one or more classes of .surplus property. 

(d» The term "property" means any interest in property, real or personal, 
owned by the United States or any Government agency, including, but not limited 
to, plants, facilities, equipment, macliinery. accessories, parts, assemblies, prod- 
uct.s, commodities, materials, and supplies of all kinds, whether new or used, 
and wherever locate<l. 

(e) Tlie term "surplus property" means any property which has been de- 
termined to be surplus to the needs and responsibilities of the owning agency 
in accordance with section 7 of this Act. 

(f) The term "contractor inventory" means (1) any property related to a 
terminated contract of any type with a Government agency or to a subcontract 
thereunder (except any machinery or equipment subject to a .separate contract or 
contract article specifically governing its use or disposition) ; and (2) any prop- 
erty acquired under a cost-plus-a-fixed-fee contract and in excess of the amounts 



POST-WAR ECONOMIC POLICY AND PLANNING 6 

needed to complete performance thereunder; and (3) any property which the 
Government is obligated to take over under any type of contract as a result of 
any change in the specifications or plans thereunder. 

(g) The term "care and handling" includes repairing, converting, rehabilitat- 
ing, operating, maintaining, preserving, protecting, insuring, storing, packing, 
handling, and transporting. 

(h) The term "option" means any contractual right to retain or acquire any 
property at a price and upon terms prescribed or determined by the contract. 

(i) The term "person" means any individual, corporation, partnership, firm, 
association, trust, estate, or other entity. 

(j) The term "Administrator" means the Surplus Property Administrator. 

SURPLUS PKOPEETY ADMINISTRATOR 

Sec. 3. (a) There is hereby established the Surplus Property Administration 
which shall be headed by a Surplus Property Administrator. The Administrator 
shall be appointed by the President by and with the consent of the Senate, shall 
receive compensation at the rate of $12,000 per year, and shall serve for a term of 
two years. 

(b) The Administrator may, within the limits of funds which may be made 
available, employ and fix the compensation of necessary personnel without re- 
gard to the provisions of the civil-service laws and the Classification Act of 1923 
and make expenditures for supplies, facilities, and services necessary for the 
performance of his functions under this Act. The Administrator shall perform 
the duties imposed upon him through the personnel and facilities of the estab- 
lished Government agencies so far as consistent with his duty to insure uniform 
.and efficient administration of the provisions of this Act. 

(c) The Administrator shall have general supervision and direction over 
(1) the care and handling and disposition of surplus property and (2) the transfer 

'Of surplus property between Government agencies. 

SURPLUS PROPERTY BOARD 

Sec. 4. There is hereby created a Surplus Property Advisory Board with which 
the Administrator shall advise and consult. The Board shall be composed of 
the Administrator, who shall act as its Chairman, and of the Secretary of 
State, the Secretary of the Treasury, the Secretary of War, the Secretary of the 
Navy, the Attorney General, the Secretary of Commerce, the Secretary of the 
Interior, the Chairman of the Board of Directors of Smaller War Plants Corpora- 
tion, the Chairman of the United States Maritime Commission, the Chairman 
of the War Production Board, the Director of the Bureau of the Budget, the 
Administrator of the War Food Administration, the Administrator of the Federal 
Works Agency, the Chairman of the Civil Aeronautics Board, and the Adminis- 
trator of the Foreign Economic Administration, or any alternate or representa- 
tive designated by any of them. 

SURVEILLANCE BY CONGRESS 

Sec. 5. (a) To assist the Congress in appraising the administration of this 
Act and in developing such amendments or related legislation as may be necessary 
to accomplish the ob.iectives of the Act, the appropriate committees of the Senate 
and the House of Representatives shall study the reports and information sub- 
Tnitted to the Congress under this Act and shall otherwise maintain continuous 
surveillance of the operations of the Government agencies under the Act. 

(b) Within three months after the enactment of this Act, and thereafter in 
January, April, July, and October of each year, the Administrator shall submit 
to the Senate and House of Representatives a progress report on the exercise of 
his authority and discretion under this Act, the status of surplus property disposi- 
tion, and such other pertinent information on the administration of the Act as 
will enable the Congress to evaluate its administration and the need for amend- 
ments and related legislation. 

(c) The Administrator shall submit to the Senate and House of Representa- 
tives copies of the regulations prescribed by him from time to time under this 
Act within thirty days after the effective date of such regulations. 



4 POST-WAR ECOKOMIC POLICY AND PLANNING 

PLANNING 

Sec. 6. (a) The Administrator shall formulate as rapidly as possible detailed 
plans — 

(1) for the care and handling, and disposition of surplus property in 
accordance with this Act ; 

(2) for converting to civilian production by private industry as rapidly 
as war needs and conditions permit any Government-owned plants which 
are not needed for national defense and are capable of use for civilian pro- 
duction ; and 

(3) for facilitating the most economical use and disposition of Govern- 
ment-owned plants which are not needed for national defense but are not 
capable of use for civilian production. 

(b) The Administrator shall make such studies as he deems necessary for 
the formulation of such plans or shall cause such studies to be made by other 
Government agencies. 

DECLARATION OF SURPLUS PROPERTY 

Sec. 7. (a) Each owning agency shall have the duty and responsibility con- 
tinuously to survey the property in its control and to determine which of such 
property is surplus to its needs and responsibilities. 

(b) Each ov.-ning agency shall promptly report to the appropriate disposal 
agency all surplus property in its control which the owning agency does not dis- 
pose of under section 8. 

DISPOSITION BY OWNING AGENCY 

Sec. 8. (a) Any owning agency may dispose of any property for the purpose 
of war production or authorize any contractor with such agency or subcontractor 
thereunder to retain or dispose of any contractor inventories for the purpose of 
war production, subject only to regulations of the Administrator with respect 
to price policies. 

(b) Subject to subsection (c) of this section, any owning agency may dispose 
of— 

(1) any property which is damaged or worn beyond economical repair; 

(2) any waste, salvage, scrap, or other similar items; 

(3) any products of industrial, research, agricultural, or livestock oper- 
ations, or of any public works construction or maintenance project, carried 
on by such agency ; 

(4) any contractor inventory in its control ; and 

(5) any other class or type of surplus property designated by the Admin- 
istrator. 

(c) Whenever he deems such action necessary to effectuate the objectives 
and policies of this Act, the Administratoi-, by regulations, shall restrict the 
authority of any owning agency to dispose of any class of surplus property under 
subsection (b) of this section. 

DISPOSAL AGENCIES 

Sec. 9. (a) The Administrator, by regulations, shall designate one or more 
Government agencies to act as disposal agencies under this Act and shall pre- 
scribe the class or classes of surplus property to be handled by each such agency: 
Provided, however, That the United States INIaritime Commission shall be the 
sole disposal agency for merchant vessels or vessels capable of conversion to 
merchant use, and that such vessels shall be disposed of in accordance with 
the provisions of the ^Merchant IMarine Act, 1936, as amended, and other laws 
authorizing the sale of such vessels. 

(b) When any surplus property is reported to it under subsection (b) of 
section 7. the di.sposal agency shall have responsibility and authority for the 
disposition of such property, and for the care and handling of such property 
pending its disposition. Where any disposal agency is not prepared, at the time 
of its designation under this Act. to undertake the care and handling of such 
surplus property, the Administrator may postpone the responsibility of the agency 
to assume its duty for care and handling for such period as lie deems necessary 
to permit its preparation therefor, but the owning agency shall be reimbursed, 
pursuant to subsection (b) of section 17, for its expenses for the care and 
handling of such surplus property during such period. 

(c) The Administrator, by regulations, shall prescribe policies, standards, 
methods, and procedures to govern the exercise by any disposal agency of its 
authority under subsection (b) of this section. 



POST-WAR ECONOMIC POLICY AND PLANNING 5 

TRANSFERS BETWEEN AGENCIES 

Sec. 10. (a) The Administrator shall establish procedures to facilitate the 
transfer to each Governmeut agency, for the performance of its functions, of 
surplus property of other Government agencies. Each Government agency shall 
make the fullest practicable use of surplus property in order to avoid vmneces- 
sary commercial purchases. 

(b) The disposal agency responsible for any such property shall transfer it to 
the agency acquiring it at the fair value of the property as fixed by the dis- 
posal agency, under regulations of the Administrator, unless transfer without 
reimbursement or transfer of funds is otherwise authorized by law. 

methods of disposition 

Sec. 11. (a) Wherever any Government agency is authorized to dispose of 
property under this Act, then, notwithstanding the provisions of any other law 
but subject to the provisions of this Act, the agency may dispose of such property 
by sale, exchange, lease, transfer, or other disposition, for cash, credit, other 
property, or otherwise, with or without warranty, and upon such other terms 
and conditions, as the agency deems proper. 

(b) Whenever the Government agency authorized to dispose of any property 
finds that it has no commercial value or that the cost of its handling and sale 
would exceed the estimated proceeds, the agency may donate such property to 
any agency or institution supported by the Federal Government or any State or 
local government, or to any nonprofit educational or charitable organization, or, 
if that is not feasible, shall destroy or otherwise dispose of such property. 

(c) The Administrator, by regulations, shall prescribe such policies govern- 
ing prices and other terms and conditions of dispositions under the authority 
of subsections (a) and (b) of this section, as he deems necessary to effectuate 
the objectives and policies of this Act. 

(d) A deed, bill of sale, lease, or other instrument executed by or on behalf 
of any Government agency purporting to transfer title or any other interest in 
property under this Act shall be conclusive evidence of compliance with the 
provisions of this Act insofar as title or other interest of any bona fide pur- 
chasers for value is concerned. 

POLICIES governing DISPOSITION 

Sec. 12. In formulating regulations to govern the care and handling and dis- 
position of surplus property under this Act, the Administrator shall be guided 
by the objectives stated in section 1 of this Act, and shall give effect to the 
following policies to the extent feasible and in the public interest : 

(a) To facilitate transfers of surplus property of one Government agency to 
other Government agencies for their use. 

(b) To afford pulilic, governmental, educational, charitable, and eleemosynary 
institutions and cooperative organizations an opportunity to fulfill their legiti- 
mate needs. 

(c) To afford returning veterans an opportunity to establish themselves as 
proprietors of agricultural and business enterprises. 

(d) To afford smaller business concerns and agricultural enterprises gener- 
ally an opportunity to acquire surplus property on equal terms with larger com- 
petitors, and to discourage sales to speculators, by assuring i-easonable notice 
of such dispositions, by disposing of such property in appropriate quantities, by 
using commercial channels of distribution to the maximum extent consistent 
with efficient and economic distribution, by collaborating with Smaller War 
Plants Corporation, or by other appropriate means. 

(e) To afford former owners of surplus real property acquired by the Gov- 
ernment by the exercise of its war powers an opportunity to reacquire such 
property. 

(f ) To encourage mutually beneficial trade relations with foreign nations and 
to develop foreign markets. 

<g) To dispose of surplus property as promptly as feasible without fostering 
monopoly or restraint of trade or unduly disturbing the economy or encouraging 
hoarding, and to facilitate prompt redistribution of such property to consumers. 

(h) To realize the highest obtainable return for the Government from such 
surplus property, consistent with the policies and objectives set forth in this Act. 

DISPOSITION OF PLANTS 

Sec. 13. Nothing in this Act shall impair, amend, or modify the antitrust laws 
or limit or prevent their application to persons who buy or otherwise acquire 

61846— 44— pt. 1 2 



6 POST-WAR ECONOMIC POLICY AND PLANNING 

property under the provisions of this Act. Upon the request of tbe Attorney 
General the Adniinistrator or any other Government agency shall furjiish oV 
cause to he furnished to the Attorney General such information as the Admin- 
istrator or any such agency may possess which the Attorney General determines 
to be pertinent to the application of the antitrust laws to the disposition of sur- 
plus property under the provisions of this Act. As used in this section, the 
term "antitrust laws" includes the Act of July 2, 1890 (ch. 617. 26 Stat. 2U1)), as 
amended ; the Act of Aug. 27. 1894 (ch. 349, sec. 73, 74, 28 vStat. 570), as amended ; 
the Act of October 15, 1914 (ch. 323, 38 Stat. 730), as amended; and the Federal 
Trade Commission Act. 

Skc. 14. (a) No Government agency shall dispose of any surplus Government- 
owned plant for the production of synthetic rubber, or aluminum, which origi- 
nally cost the Government $5,000,000 or more, except in accordance with this, 
section or pursuant to an option therefor. 

(b) The Administrator may authorize any disposal agency to lease any such 
surplus plant for a term of not more than five years. 

(c) The Administrator shall prepare and submit to Congress a report as to 
each class of such property : 

(1) Describing the number, cost, and location of such surplus plants 
and setting forth other descriptive information relative to the use and 
potential use thereof; 

(2) Outlining the economic problems that may be created by the dis- 
position thereof; 

(3) Setting forth a plan or program for the care and handling, disposi- 
tion, and use thereof consistent with the policies and objectives of this 

Act ; and 

(4) Describing any steps already taken with respect to the care and 
handing, disposition, and use of the property, including any contracts 
relating thereto. 

The Administrator shall request Government agencies to submit information 
and suggestions for use in the preparation of such reports and shall encourage 
States, political subdivisions thereof, and private persons to submit such infor- 
mation and suggestions, and he shall submit to the Congress together with each 
such report, copies or .siumnaries of such information and suggestions. After 
6 months from the submission of a report hereunder, unless the Congress jjro- 
vides otherwise by law, the Administrator may authorize the appropriate dis- 
posal agencies to dispose of such property in accordance with the plan or program 
proposed in the report to Congress. 

(d) The Administrator may authorize any disposal agency to dispose of any 
materials or equiimient related to any surplus plant covered by siibsection (a) 
of this section, if su^'h materials and equipment are not necessary for tlie oper- ■ 
ation of the plant in the manner for which it is designed. 

(e) This section shall not apply to any Government-owned equipment, structure, 
or other property operated as an integral part of a privately owned plant and 
not capable of economic operation as a separate and independent unit. 

REGULATIONS 

Sec. 15. The Administrator shall prescribe regulations to elfectuate the pro- 
visions of this Act. Each Government agency shall carry out such regulations of 
the Administrator expeditiou.«ly, and shall issue such regulations witli respect 
to its operations and procedures as may be necessary for that purpose. Any 
Government agency may issue such further regulations not inconsistent with tlie 
regulations of the Administrator as it deems necessary and desirable to carry 
out the provisions of this Act. The regulations prescribed xmder this Act shall 
be published in the Federal Register. 

GENERAL PROVISIONS 

Sec. 16. (a) Each Government agency shall submit to the Administrator (I)' 
such information and reports with respect to surplus property in its control, in 
such form and at such times as the Administrator may direct ; and (2) information 
and reports with respect to other property in its control, to such extent, and in 
such form as the agency deems consistent with national security. 

(b) Any (Jovernment agency may execute such documents for the transfer 
of title or other interest in property or take such other action as it deems necessary 
or proper to transfer or disijose of surplus property or otherwise to carry out 
the provisions of this Act, and .shall do so to the extent required by the regulations 
of the Administrator. 



POST-WAR ECONOMIC POLICY AND PLANNING 7 

(c) Where any property is disposed of in accordance with this Act and any 
regulations prescribed wider this Act, no ofiicer or employee of the Government 
shall (1) be liable with respect to such disposition except for his own fraud or 
(2) be accountable for the collection of any purchase price which is determined 
to be uncollectible by the agency responsible therefor. 

(d) Any interested Government agency may take sucli action for the care and 
handling of property subject to disposition under this Act, and for completion of 
any semifabricated property, as it deems necessai'y or desirable to effectuate the 
objectives and policies of tliis Act. 

(e) Each disposal agency shall maintain in eacli of its disposal offices such 
records of its inventories of surplus property and of each disposal transaction 
negotiated by that office as the Administrator may prescribe. Tlie information 
in .=:uch records shall be available at all reasonable times for public inspection. 

(f ) Nothing in this Act .shall be deemed to impair or modify any contract or 
any term or provision of any contract without the consent of the contractor, if the 
contract or the term or provision thereof is otherwise valid. 

DISPOSITION OF PEOC!EE3)S 

Sec. 17. (a) All proceeds from any transfer or disposition of property under 
this Act shall be deposited and covered into the Treasury as miscellaneous re- 
ceipts, except as provided in subsections (b), (c), (d), and (e) of this section. 

(b) From the proceeds of such transfers or dispositions, the agency may deduct 
all expenses incurred for the care and handling, completion, and transfers or 
dispositions of sucli property under this Act, and may reimburse the fund or 
appropriation bearing sucli expenses, or the corresponding fund or appropriation 
currently available at the time of reimbursement. 

(c) Where the property transferred or disposed of was acquired by the use 
of funds either not appropriated from the general fund of the Treasury or appro- 
priated from the general fund of the Treasury but by law reimbursable from 
assessment, tax, or other revenue or receipts, then upon the request of the inter- 
ested agency the proceeds of the disposition or transfer remaining after any 
deductions under subsecrion (b) of this section shall be credited to the reimburs- 
able fund or appropriation or paid to the owning agency. 

(d) To the extent authorized by the Administrator, any Government agency 
disposing of property under this Act (1) may deposit, in a special account with 
the Treasurer of the United States, such amount of the proceeds of such disposi- 
tions as it deems necessary to permit appropriate refunds to purchasers when 
any disposition is rescinded or does not become final, or payments for breach 
of any warranty, and (2) may withdraw therefrom amounts so to be refunded 
or paid, without regard to the origin of the funds withdrawn. 

(e) Where a contract or subcontract authorizes the proceeds of any sale of 
property in the custody of the contractor or subcontractor to be credited to the 
price or cost of the work covered by such contract or subcontract, the proceeds 
of any such sale shall be credited in accordance with the contract or subcontract 
and shall not be subject to subsection (a) of this section. 

USE OF APPKOPKIATED FUNDS 

Sec. 18. (a) Any Government agency is authorized to use for the disposition 
of property under this Act and for its completion, care, and handling, pending 
such disposition, any funds heretofore or hereafter appropriated, allocated, or 
available to it for such purposes or for the purpose of production or procurement 
of such property. 

(b) Any Government agency is authorized to use in payment for the transfer 
to it of any surplus property under this Act any funds heretofore or hereafter 
appropriated, allocated, or available to it for the acquisition of property of the 
same kind. 

(e) There are authorized to be appropriated such sums as may be necessary 
or appropriate for administering the provisions of this Act. 

DEIEGATION OF AUTHORITY 

Sex3. 19. (a) Tlie Administrator may delegate any authority and discretion 
conferred upon him by this Act to any Deputy Administrator, and may delegate 
such authority and discretion, upon such terms and conditions as he may pre- 
scribe, to the head of any Government agency to the extent necessary to the 
handling and solution of problems peculiar to that agency. 



8 POST-WAR ECONOMIC POLICY AND PLANNING 

(b) The head of any Govornment agency niay delegate, and authorize suc- 
cessive redelegations of, any authority and discretion conferred upon him or 
his agency by or pursuant to this Act to any officer, agent, or employee of such 
agency or, with the approval of the Administrator, to any other Government 
agency. 

(c) Any two or more Government agencies may exercise jointly any authority 
and discretion conferred upon each of them individually by or pursuant to this 
Act. 

APPLICABILITY 

Seo. 20. All policies and procedures relating to surplus property prescribed 
by the Surplus War Property Administration, created by Executive Order Num- 
bered 9425, dated February 19, 1944, or any other Government agency, in effect 
upon the effective date of this Act, and not inconsistent with this Act, shall 
remain in full force and effect unless and until superseded by i-egulations of the 
Administrator or of the agency in accordance with this Act. 

SEa 21. (a) Nothing in this Act shall limit or affect the authority of com- 
manders in active theaters of military operations to dispose of property in their 
control. 

(b) The provisions of this Act shall be applicable to dispositions of property 
within the United States and elsewhere, but the Administrator may exempt 
from some or all of the provisions hereof, dispositions of i^roperty located outside 
of the continental United States or in Alaska, whenever he deems that such 
provisions would obstruct the efficient and economic disposition of such property 
in accordance with the objectives of this Act. 

Sec. 22. (a) The authority conferred by this Act is in addition to any authority 
conferred by any other law and shall not be subject to the provisions of auy law 
inconsistent herewith. This Act shall not impair or affect any authority for 
the disposition of property under auy other law, except that the Administrator 
may prescribe regulations to govern any disposition of surplus property under 
any such authority to the same extent as if the disposition were made under 
this Act, whenever he deems such action necessary to effectuate the objectives 
and policies of this Act. 

(b) Nothing in this Act shall impair or affect the provisions of the Emergency 
Price Control Act of 1942, as amended; or the Act of October 2, 1942 (ch. 578, 
56 Stat. 765), as amended; or of section 301 of the Second War Powers Act, 
1942; or of the Act of March 11, 1941 (.55 Stat. 31), as amended; or Acts supple- 
mental thereto, or of any law regulating the exportation of property from the 
United States. 

EFFECTIVE DATE; EXPIRATION 

Sec. 23. This Act shall become effective from the date of its enactment. Unless 
extended by law, this Act shall expire at the end of three years following the 
date of the cessation of hostilities in the present war, as proclaimed by the 
President or by concurrent resolution of the two Houses of Congress. 

SEPAKABILITT OF PEOVISIONS 

Sec. 24. If any provision of this Act, or the application of such provision to 
any person or circumstance, is held invalid, the remainder of this Act or the 
application of such provision to persons or circximstances other than those as to 
which it is held invalid, shall not be affected thereby. 

SHOUT TITLE 

Sec. 25. This Act may be cited as the "Surplus Property Act of 1944." 

The Chairman. Now, Mr. Clayton, we will be very glad to have yoa 
proceed in your own way with respect to the disposal of surplus Gov- 
ernment property and plants. 

STATEMENT OF W. L. CLAYTON, SURPLUS WAR PROPERTY 
ADMINISTRATOR 

Mr. Clayton. Mr. Chairman and gentlemen, on May 5, 1944, ap- 
pearing at the request of Senator Murray, I testified before the War 
Contracts Subcommittee of the Senate Military Affairs Committee on 



POST-WAR ECONOMIC POLICY AND PLANNING 9 

the subject of property disposal legislation. I then stated that I was 
not prepared to make recommendations as to legislation and that I 
wished some experience with actual disposal problems before attempt- 
ing it. I did, however, indicate certain fields in which I thought that 
congressional action would be desirable in due course. 

In the 6 weeks since that testimony a number of things have occurred 
having a bearing on the subject. Our first regulation has become ef- 
fective, so that the channeling into the disposal agencies of surplus 
property of the War and Navy Departments and of the Maritime Com- 
mission has begun on a permanent basis. We have had 6 weeks' more 
experience with some of the practical problems of disposal, and al- 
though this is still an inadequate background for predicting the pre- 
cise nature and extent of the problems to come, it has at least given us 
concrete examples of the variety of situations which will arise in dis- 
posing of surpluses. 

Following my testimony on May 5, 1944, referred to above, Senator 
Murray expressed a desire, in line with his statements on the Senate 
floor in connection with the contract termination bill, to obtain recom- 
mendations from a number of the executive agencies as to the matters 
that should be covered by a Surplus Property Act, with a view to 
prompt congressional action. 

After consultation with representatives of the agencies and congres- 
sional committees particularly interested, it was decided that Senator 
Murray's request could best be complied with by preparing a draft 
bill. I accordingly convened a committee on legislation on which 11 
agencies were represented. This committee worked under great pres- 
sure and met frequently, twice with representatives of the Murray, 
George, and Colmer committees. 

The result of its deliberations, which was forwarded to several com- 
mittees of Congress on June 2, 1944, just 18 days after our committee 
had its first meeting, is the proposed bill which you have before you 
today in the form of a confidential committee print of the George 
committee, dated June 8. 

I am prepared to go through the bill section by section, if you so 
desire, giving you in detail the various considerations and arguments 
which led to the inclusion of each in its present form. 

Before going into such detail, however, I think it essential to dis- 
cuss a few of the fundamentals, and I think there really are only a 
few, upon which any sound legislation in this field must be based 
and in the light of which each individual provision of any bill must 
be carefully scrutinized. I think I can fairly say that there is very 
little difference of opinion as to these fundamentals among the agencies 
represented on our committee on legislation or on our policy board, 
though they are represented here and I assume will speak for them- 
selves. 

If we can agree upon these fundamentals and carefully appraise 
all specific provisions in relation to them so that considerations of 
lesser importance are not allowed to override them, I have no doubt 
that we can arrive at sound and workable legislation. Otherwise 
the result will literally make the job of surplus disposal impossible 
of satisfactory achievement. 

I am a believer in the theory that Congress should control and 
clearly define the duties of the Government officers charged with 
executing its wishes, and should not delegate its legislative respon- 



10 POST-WAR ECONOMIC POLICY AND PLANNING 

sibility by conferring uncontrolled administrative power. The duty 
which Congress in this instance wishes the Administrator to carry out 
is to dispose of war surpluses in the manner most beneficial to the 
domestic economy. This means that, to the extent consistent with 
that objective, he must sell them so as to obtain the highest possible 
return for the Government. 

The problem is to write a statute which will enable an Administrator 
to accomplish this result and which will insure that in doing it he car- 
ries out the wishes of Congress. When the fundamentals, which are 
undeniable facts, are squarely faced, I think it will be manifest that, 
while Congress can and should supervise the job. safeguard it and 
lay down clearly defined policies, it must still permit great admin- 
istrative discretion and flexibilit3\ 

The first fundamental is tlie sheer physical size of the problem. 
Dollar figures do not, I think, convey the idea in a concrete way, and in 
any event we can now have no accurate idea of the number of dollars 
which may ultimately be involved. But viewing it from the stand- 
point of an Administrator charged with the responsibility of coordi- 
nating the job and seeing that it operates as a consistent whole, the 
following facts give the size of the problem some meaning : 

As of the present time, in preparing to do the job, each disposal 
agency has to organize its regional otHces so as to be able to receive 
reports of surplus, record them for inventory purposes, catalogue 
them, make the full information available to prospective buyers, de- 
termine prices, terms and methods of sale, find the best market, test 
it thoroughly, and carry out the actual mechanics of sale. 

This is being done by Reconstruction Finance Corporation in 22 
offices, by Treasury Procurement in 11 with more to be organized, 
by War Food Administration in 5 regional offices and many smaller 
offices in cA^ery State, and by the Foreign Economic Administration 
in offices all over the world. The Maritime Commission for the pres- 
ent is handling disposals centrally but will probably decentralize as 
volume increases. 

These agencies may require additional offices and still other agen- 
cies may be employed for different commodities and in different 
places. 

Contracts are being terminated in large numbers monthh'. Every 
such termination results in the termination of a number of sub- 
contracts, sometimes a very large number. Every such termination 
produces property in which the Government has an interest, with 
rhe attendant problems of storage, packing, handling, transporta- 
tion, and disposal. Each of those problems must be administered 
and solved by some representative of the Government, initially by a 
representative of the procuring agency, and, later, as to property 
undisposed of during the initial period, by a representative or repre- 
sentatives of one or more disposal agencies. 

Every general procedural or substantive requirement or limitation 
on property disposal which is made effective by Congress Avill affect 
every sale made by every office and every teruiination officer. Regu- 
lations putting these into effect will be disseminated by the central 
directing agency, carried out by hundreds of people in hundreds of 
places, and the results reported back centrally in sufficient detail 
to enable the central agency to know that the statutory mandate is 
being: carried out. 



POST-WAR ECONOMIC POLICY AND PLANNING H 

If Congress says that sales shall follow specific prescribed pro- 
cedures, tiiat surpluses shall be frozen for specific periods of time, 
that specified classes of people or agencies shall have notice, or be 
consulted, or be given an opportunity to buy, before property can be 
sold, the impact of such provisions on the entire administrative or- 
ganization will be heavy. We should be sure that the virtue of each 
particular requirement is not overbalanced b}^ the extent to which 
it might clog this vast machinery. 

For example, provisions such as have been proposed requiring that 
complete inventories of available surpluses be forwarded the Budget, 
Smaller War Plants Corporation, and Foreign Economic Adminis- 
tration, with each having a successive priority, before the goods could 
be offered to the public, would be administratively impossible. 

The second fundamental is the variety of types of property which 
w^ill have to be disposed of. There will be surpluses, in varying 
quantities, of substantially every t.ype of property which has ever 
been created, grown, mined, or manufactured. 

This is a fact Avliich everyone readily admits, and yet it seems very 
difficult to keep it constantly in mind when considering over-all poli- 
cies and provisions. Nothing is easier, or more dangerous, than un- 
consciously to think of the desirability of a particular policy or pro- 
vision in the light of its applicability to, let us say, the sale of a thou- 
sand motorcars, or pairs of shoes, or blankets, or cans of beans, and to 
jump from there to the couclusion that such a policy or provision 
should be made applicable generally. 

On innumerable occasions, particularly in discussions with persons 
who are specialists in a particular field, 1 have found that though the 
language they used in talking about property disposal was general, 
they were in fact thinking about sales of machine tools, or valves, or 
paint, or airplanes. 

This fundamental permits of only two approaches to the legislative 
problem. One is to legislate specifically with respect to specified 
classes of property which require special treatment. There are cer- 
tainly some types of property where this is highly desirable, and there 
may be many. For instance. Congress acted with great care and 
completeness in peacetime to prescribe the manner in which merchant 
vessels should be acquired and disposed of in the development of the 
merchant marine, and has for some time been considering a bill spon- 
sored by the Maritime Commission which declares very specific poli- 
cies as to the disposition of the huge post-war surplus of merchant 
vessels. There may be special problems relating to aircraft, certain 
industrial plants, foodstuffs, and perhaps others which Congress will 
wish to consider individually and to handle by specific legislation. 

No general legislation would or should preclude such congressional 
action. But I think it is manifest that an attempt to provide in a 
single bill specific treatment for each separate class of property would 
be a task too monumental and time-consuming to merit serious at- 
tention at this time. 

The only other possible approach is to put in a general statute either 
provisions which permit of administrative flexibility so that different 
types of property can receive the different treatments which they re- 
quire or, in the case of mandatory provisions, only those which, on 
mature and sober consideration, we are all really certain will be bene- 
ficial in all kinds of disposals of all types of property. There are few 



12 POST-WAR ECONOMIC POLICY AND PLANNING 

such proA'isioiis in the proposed bill because the committee, which 
considered many, including those found in various pending bills, found 
few which would meet the tests of general applicability and admin- 
istrative feasibility. 

If the facts are to be faced, proposed mandatory provisions on how 
to sell pro]ierty must be subjected to a rigorous questioning, as for 
example : "Is this provision equally desirable for selling sleeping bags 
in Alaska, unwieldy numbers of surplus transport aircraft, machine 
tools in a Navy machine shop at a Pacific advance base, tools, dies, jigs, 
and fixtures in an aircraft plant, work in process in a textile mill, a 
housing project in Pennsylvania, an Army camp in Mississippi, and 
10,030,000 pounds of foreign wool?" If so directed, the Adminis- 
trator would have to apply such provisions to all such sales and many 
more. If not so directed, the statute must either say when the pro« 
vision is or is not applicable or must permit the Administrator to 
decide. 

The third fundamental is that there is only one interested groups 
to which everyone belongs, and that is the taxpayers' group. Pro- 
vided the economy is not otherwise adversely affected, that group i» 
primaril}'' interested in seeing that sales of surplus property are made 
in such a way as to recoup as much as possible of the money already 
spent. Every dollar that accrues to the benefit of any other group, 
however large and however meritorious, in the form of price reduc- 
tions or gifts of property which could be sold at a higher price, is a 
dollar lost to the largest group of all. Price preferences to any 
group are just as much gifts of public funds as if they were made 
in cash. 

The making of such gifts is the prerogative of Congress, and there 
are groups Avhich deserve special consideration. But in almost every 
case where Congress desires to confer benefits on a particular class 
of citizens, it can do so much more equitably and satisfactorily by 
specific separate legislation designed for that purpose than by giving 
them preferential rights to acquire surplus property. 

The last fundamental is perhaps in the nature of a summary ; that 
legislation of this character must be administratively workable, and 
we are convinced that this can be achieved only by vesting in the Ad- 
ministrator a very large area of discretion, after formulating the 
principles and policies which must guide his actions. 

This by no means connotes an uncontrolled and unchanneled dis- 
cretion. Congress can and should clearly state its wishes and impose 
all safeguards which are consistent with the basic purpose of the stat- 
ute. This. I think, the proposed bill accomplishes. 

As we visualize the progress of the surplus disposal program, there 
is no way in which Congress can insure in advance, by words in a 
statute, that the job will be well done. However the act is written^ 
Congress will want to folloAv its administration closely, to be kept 
constantly advised as to the progress being made and the plans for 
future action, and in all probability will want to legislate on specific 
problems from time to time as they arise or are anticipated. 

The draft bill which we have prei)ared not only ]:)rovides for keep- 
ing Congress fully advisejl. but limits the term of the Administrator 
to 2 years and terminates the entire statute 3 years after the end of 
hostilities unless extended by Congress. It is strictly temporary legis- 
lation designed to provide the necessary basic mechanism and author- 



POST-WAR ECONOMIC POLICY AND PLANNING 13 

ity for the disposal of war surpluses. It does not go into the perma- 
nent management of Federal property and in no way precludes 
subsequent specific legislation on that or any other subject. 

I feel sure that, whether or not any general legislation is adopted 
at this time, a period of experience with actual disposal will enable 
those in charge of surplus disposal to recommend definite directing 
legislation covering various specific parts of the field. But with the 
experience we have had to date, we have been unable either to recom- 
mend detailed legislation in specific fields or to arrive at mandatory 
provisions covering the whole field, other than those found in the draft 
bill, which we felt would be of sound general application or admin- 
istratively workable. I may add that, with the exception of Smaller 
War Plants Corporation, which advocated inserting in the statute 
provisions which we thought should clearly be left to administrative 
regulation, there was no difference of opinion on this point among 
the agencies represented on our committee on legislation. 

The proposed bill is not perfect. I am nevertheless satisfied that it 
comes as close as possible to representing the collective views of the 
agencies which participated in its preparation, and that it is a bill 
under which the very large task of surplus disposal could be effectively 
performed in the way that Congress wants it performed. 

Now, Mr. Chairman, I will proceed in any way that you wish. If 
you would like, I can take the bill and go over it with you section 
by section ; or if any other method is desired, I will conform to that. 

The Chairman. We will be very glad to have you take the bill, Mr. 
Clayton, and discuss its main provisions. Perhaps you would not 
want to do so in great detail, but just so that we will get the general 
program which is outlined in the bill. 

Senator Vandenbeeg. Mr. Chairman, I think it would be helpful, 
as he goes along, if he would indicate wherein it departs from S. 1730. 

The Chairman. Very well. Senator Vandenberg. 

Mr. RtrssELL. There is a memorandum on the desk of each member 
that points out the differences between this bill and S. 1730 and S. 1893. 

The Chairman. Yes; the memorandum does show all points of di- 
vergence from these other bills. 

Mr. Russell. Yes ; the other bills that are pending in the Senate. 

Mr. Cooper. Mr. Chairman, if it would be agreeable, I think it would 
be very helpful to follow your original suggestion. This is the first 
time I have ever seen this draft. It is marked "Confidential com- 
mittee print." So if you could give us the highlights of this bill, I 
think it would be very helpful to us, because we haven't had a chance 
to study it. 

Mr. Reece. Mr. Chairman, may I make inquiry: This committee 
print is the same as the mimeographed copy which was given to the 
members of the special House committee ? 

Mr. Russell. Exactly. 

The Chairman. All right, Mr. Clayton. 

Mr. Clayton. The bill is a bill "to provide for the disposal of sur- 
plus Government property and plants." 

The objectives are stated as being — 

(a) to assure the most effective use of such property for the purposes of war 
and n'ational defense ; 

(b) to facilitate the transition of enterprises from wartime to peacetime pro- 
duction and of individuals from wartime to peacetime employment ; 

61846— 44— pt. 1 3 



14 POST-WAR ECONOMIC POLICY AND PLANNING 

(c) to promote production, employment of labor, and utilization of the pro- 
ductive capacity, and the natural and agricultural resources of the country ; 

(d) to avoid dislocations of the domestic economy and of international eco- 
nomic relations ; 

(e) to discourage monopolistic practices, preserve, and strengthen the com- 
petitive position of small business, and promote fair prices to consumers ; 

(/) to effect broad and equitable distribution of surplus property ; and 
ig) to realize the highest obtainable return for the Government consistent 
with the maintenance and encouragement of a healthy competitive economy. 

I don't think it is necessary, Mr. Chairman, to read the definitions 
that are set out in this bill, except that I think I should read the defi- 
nition of the term "care and handling." 

Six. 2 (g) The term "care and handling" includes repairing, converting, re- 
habilitating, operating, maintaining, preserving, protecting, storing, packing, 
handling, and transporting. 

We would like to suggest a slight change in that paragraph, by in- 
serting the word "insuring" after "protecting." 

The bill provides for the establishment of the Surplus Property 
Administration to be headed by a Surplus Property Administrator 
who will draw compensation of $12,000 per year and shall serve for 
2 years. 

The bill provides, in section 4, for the creation of a Surplus Prop- 
erty Advisory Board — 

with which the Administrator shall advise and consult. The Board shall be 
composed of the Administrator, who shall act as its Chairman, and of the Secre- 
tary of State, the Secretary of the Treasury, the Secretary of War, the Secretary 
of the Navy, the Attorney General, the Secretary of Commerce, the Secretary 
of the Interior, the Chairman of the Board of Directors of Smaller War Plants 
Corporation, the Chairman of the United States Maritime Commission, the Chair- 
man of the War Production Board, the Director of the Bureau of the Budget, the 
Administrator of the War Food Administration, the Administrator of the Federal 
Works Agency, the Chairman of the Civil Aeronautics Board, and the Adminis- 
trator of the Foreign Economic Administration, or any alternate or representa- 
tive designated by any of them. 

Mr. WoKLEY. The Comptroller General is not included on this 
Board ? 

Mr. Clayton. No, sir. 

Section 5 provides 

Senator Hevercomb (interposing). May I interrupt? What would 
be the duties of that Board, Mr. Claj'ton? Would the Board be 
simply advisory to the Director? 

Mr. Clayton. Yes, sir ; they would advise the Director or the Ad- 
ministrator, and he would consult with them on matters of policy, 
and the Board would be composed of representatives of the principal 
agencies with which the Administrator would have to work, the so- 
called owning agencies, the disposal agencies, and other agencies 
having interest in surplus property. 

Senator Ren^ercomb. Is it your thought that the Administrator, when 
he felt it advisable to do so, would call the Board together and con- 
fer with them, simply to be advised and have some enlightenment on 
some particular subject? 

Mr. Clayton. I think the Board should meet at regular intervals. 
That is the policy that we pursue now in our operations under Execu- 
tive order. We have such a Board under Executive order, as you 
know, and it meets at regular intervals. 

Senator Revercomb. Would the Board have the power to direct the 
actions of the Administrator, or would the Administrator act upon 



POST-WAR ECONOMIC POLICY AND PLANNING 15 

his own initiative, being advised by the Board? What is the extent 
of the powers of the Board ? 

Mr. Clayton. Under the proposed statute the Board would simply 
act in a consultative and advisory capacity. 

Senator Revercomb. Thank you. 

Senator Lucas. There isn't very much question as to what the two 
words "advise" and "consult" mean, is there? 

Mr. Clayton. I wouldn't think so, Senator. 

Senator Revercomb. I simply wanted to know your thought on this 
proposal. 

Mr. Clayton. Yes, sir. 

Mr. Cooper. You had gotten down to section 5 of the bill, I believe. 

Mr. Clayton. Yes ; surveillance by Congress. 

Sec. 5. (a) To assist the Congress in appraising the administration of this 
Act and in developing such amendments or related legislation as may be neces- 
sary to accomplish the objectives of the iAct, the appropriate committees of the 
Senate and the House of Representatives shall study the reports and informa- 
tion submitted to the Congress under this Act and shall othervpise maintain 
continuous surveillance of the operations of the Government agencies under 
the Act. 

Section 5 (b) is as follows- 



Mr. Reece (interposing). Mr. Chairman, may I interrupt? 

The Chairman. Mr. Reece. 

Mr. Reece. What is the purpose of subsection (a) of section 5, or 
rather what is the necessity for that? 

Mr. Clayton. We feel that the Congress has such a great interest 
in the administration of an act of this kind, that regular reports 
should be made by the Administrator to Congress and that he should 
be subject to being called before the committees at different times to 
discuss and explain his acts. 

The section or subsection in question is taken from S. 1718. I 
should explain that the drafting committee which prepared this bill 
had access, of course, to all the other bills which had been introduced 
and studied them very carefully, and a good many of the provisions 
of this bill are lifted out of some of the other bills which have been 
presented to the Congress. 

Mr. Reece. I see no harm in it, but it would appear somewhat super- 
fluous to require Congress to study these reports. It is a thing that 
is expected of Congress. 

Mr. Clayton. We only inserted it because we thought that Con- 
gress would wish it. If not, we have no objection to its deletion. 

Section 5 (b) provides: 

In January, April, July, and October of each year the Administrator shall sub- 
mit to the Senate and House of Representatives a quarterly progress report on 
the exercise of his authority and discretion under this Act, the status of surplus 
property disposition, and such other pertinent information on the administra- 
tion of the Act as will enable the Congress to evaluate its administration and 
the need for amendments and related legislation. 

We would like to suggest a change in that paragraph, so that it will 
read: 

Within three months after the enactment of this Act, and thereafter in Janu- 
ary, April, July, and October — 

and so forth, and delete the word "quarterly" in line 16. 



16 POST-WAR ECONOMIC POLICY AND PLANNING 

The reason for that is obvious, that if the act should be passed, 
say in December, it would necessitate a report in January, which would 
not give the Administrator time to make an intelligent report, and we 
think it ought to read that the first report is to be made 3 months after 
the enactment of the Act. 

Senator Vandenberg. Let's contemplate its passage in June, instead 
of December. [Laughter.] 

Mr. Clayton. We understood that the idea of a joint committee of 
Congress to receive and consider these reports would be a part of the 
over-all legislation, so we left it out here, but we have no objection to 
its inclusion. We think, in fact, that it is an excellent idea. 

Now, section 5 (c) : 

The Administrator shall submit to the Senate and House of Representatives 
copies of the regulations prescribed by him from time to time under this Act 
within thirty days after the effective date of such regulations. 

Next we come to planning. 

Sec. 6. (a) The Administrator shall formulate as rapidly as possible detailed 
plans — 

(1) for the care and handling, and disposition of surplus property in accord* 
ance with this Act ; 

(2) for converting to civilian production by private industry as rapidly as war 
needs and conditions permit any Government-owned plants which are not needed 
for national defense and are capable of use for civilian production ; and 

(3) for facilitating the most economical use and disposition of Government- 
owned plants which are not needed for national defense but are not capable of 
use for civilian production. 

Section 7 provides for the Declaration of Surplus Property : 

Sec. 7. (a) Each owning agency shall have the duty and responsibility con- 
tinuously to survey the property in its control and to determine which of such 
property is surplus to its needs and responsibilities. 

(b) Each owning agency shall promptly report to the appropriate disposal 
agency all surplus property in its control which the owning agency does not 
dispose of under section 8. 

Section 8 provides for the disposition by the owning agency, in cer- 
tain circumstances, of property. 

Senator Lucas. Mr. Chairman, before the witness starts in on 
section 8, 1 should like to have him return to page 7 and elaborate for 
me paragraph 3 under section 6. 

Mr. Clayton (reading) : 

The Administrator shall formulate as rapidly as possible detailed plans 
* * * (3) for facilitating the most economical use and disposition of Govern- 
ment-owned plants which are not needed for national defense but are not 
capable of use for civilian production. 

Those plants in that category might be used as storage plants, ware- 
houses, or for some other purpose. 

Senator Lucas. Those plants would be retained by the Govern- 
ment ? 

Mr, Clayton. Not necessarily ; they could be sold to private people. 
They might be used for schools or hospitals, or something of that 
kind. 

Senator Hawkes. Might I ask this question, Mr. Chairman ? 

The Chairman. Senator Hawkes. 

Senator Hawkes. Have you anything in this bill further on which 
gives the Administrator the right to determine that the property 
is surplus property, even though the owning agency doesn't decide 
that it is? 



POST-WAR ECONOMIC POLICY AND PLANNING 17 

Mr. Clayton. No, sir, we have not. That is a subject which has 
been discussed a good deal. The bulk of this property, as you well 
know, of course, is in the custody or control of the armed services, 
the War Department and the Navy Department, and certainly while 
the war is on I think perhaps everyone would agree that they are the 
proper judges as to whether that property is needed, how much of it 
may be needed with which to fight the war, and so forth. 

Senator Hawkes. I don't think there is any question about it while 
the war is on, but I was thinking of when the war ends, and I was 
wondering if we couldn't wrap up in some way the power to determine 
that in this Board, with you ; that if a majority of the Board which 
sits with you determined that a thing was surplus, you might handle 
it in some such way as that. 

Mr. Clayton. You mean after the war? 

Senator Hawkes. Yes ; I mean after the war ; that is what I have 
in mind. 

Mr. Clayton. As we have said in the prepared statement, this is 
temporary legislation and we have felt that on questions of that kind, 
which are more or less controversial, we should, for this temporary 
bill, avoid them if possible. That, of course, could always be covered 
by a bill later on, and I am sure that there will be numerous things 
that are not dealt with in this bill which Congress will want to legis- 
late on. 

That is a subject that I expect both the Army and the Navy may 
have a good deal to say about when they appear before you. 

Senator Hawkes. Well, thank you very much, Mr. Clayton; that 
is all I wanted. 

Mr. WoLVEETON. Mr. Clayton, does the bill provide in any way for 
the fixing of priorities in the allocation of surplus commodities? 

Mr. Clayton. You mean priorities in respect of who would have 
the right to obtain them first, or who would have the prior right to 
obtain the property? 

Mr. WoLvERTON. I have in mind that this section seems to give 
the owning agency the right to dispose of property, and also makes 
provision that the contractor or subcontractor may retain or dispose 
of inventories that they have. Having in mind that there will prob- 
ably be a shortage in those surpluses, going out to industries that 
probably do not have any surplus of any kind, and yet it would be a 
necessary commodity in the carrying on of their business — who would 
determine those priorities which are handled at the present time by 
theW. P. B.? 

Mr. Clayton. During the war those priorities will be determined 
by the W. P. B. 

Mr. WoLVERTON. I realize that. Now after the war ? 

Mr. Clayton. After the war presumably there will be no shortages 
except perhaps in consumer goods, certain types of consumer goods. 
If there should be, T imagine that the W. P. B. powers would perhaps 
extend over for some period after the war is over, I don't know that. 
If not, then some machinery would have to be set up for determina- 
tion of priorities. 

Mr. WoLVERTON. The testimony of Mr. Nelson before our commit- 
tee in the House would indicate that they won't have that authority 
after the war. 

Mr, Clayton. After the war or after the emergency? 



18 POST-WAR ECONOMIC POLICY AND PLANNING 

Mr. WoLVERTON. Well, I take the two to be more or less synony- 
mous. That is the thought that I have in mind, at least. 

Mr. Clayton. I don't know, I had an idea that the w^ar powers 
might extend for some period after the war, some short period, per- 
haps, after the war. 

Mr. WoLYERTON. Tliis would seem to me to give a distinct advan- 
tage to the company that might happen to have a large surplus of 
material on hand, and would preclude the smaller corporation that 
doesn't have any on hand from carrying out its peacetime activities; 
and that therefore there may come a time, especially in the early part, 
after the cessation of hostilities, when there would have to be some 
priorities. 

Mr. Clayton. Of course this section (a) only deals with the right 
of disposal of contractor inventories for war production. 

Mr. WoL\T3RTO]sr. I understand. 

Mr. Clayton. So that at the end of the war section 8 would no 
longer apply, section 8 (a). And while the war is on, the priorities 
are fixed by W. P. B. 

Mr. WoRLEY. Mr. Chairman, may I ask a question? 

The Chairman. Mr. Worley. 

Mr. WoRLEY. Getting back to the question of the advisory board, you 
know that the Comptroller General is supposed to be the watchdog 
of the Treasury, for Congress. Was any thought given to including 
the Comptroller General on the Advisory Board ? 

Mr. Clayton. I don't believe so. 

Mr. WoRLEY. No thought was given to that? 

ISIr. Clayton. I don't recall that it was mentioned. The Comp- 
troller General is not included on the Board named in the Executive 
order under w^hich we are functioning today, and we have taken 
almost exactly the agencies named in that order. We have added 
just one. 

]Mr. Worley. Do you see any reason why he should not be included? 

Mr. Clayton. The only objection I see to putting as many Govern- 
ment agencies on the Board as feel an interest in it and want to go on, 
is the fact that the bigger you make the Board the more difficult it 
becomes to transact business and to get along effectively. The more 
people you have sitting around a big table, the more difficult it is to 
proceed. 

Mr. Worley. That is true. 

Mr. Fish. Mr. Chairman, may I ask a question? 

The Chairman. Mr. Fish. 

Mr. Fish. Mr. Clayton, I want to congratulate you and commend 
you. Tliis bill, as far as I have read it, is a sound proposition. My 
only criticism so far is that you may have too many on that Board, 
not too few, and it may be unwieldy. 

Mr. Clayton, there is a roll call in the House and I may have to 
leave, so I would like to ask you this question. Congress has been 
very bitterly criticized by the press for its delay in considering this 
bill as part of the post-war program legislation. Certainly there is 
no justification for blaming the Congress. We have been ready to 
oonsifler this bill for nionths, that is, the subcommittees in the House — 
I can't spefik for the Senate — and the delay certainly cannot be placed 
upon the Congress. 



POST-WAR ECONOMIC POLICY AND PLANNING 19 

Could you tell me, or the members of this committee, why it is that 
the Administration has taken all this time, months, actually, to present 
this hi^rhly constructive piece of legislation ? 

Mr. Clayton. Well, Mr. Fish, your statement that the press has 
Ven bitterly blamino- the Conjrress for delay in the consideration of 
this legislation is a surprise to me. The only criticism that I have 
seen in respect of legislation of this type has had to do with the 
contract-termination bill. 

If there is any criticism with reference to any delay in presenting 
a bill of this kind, I think I would have to take the responsibility and 
not the Congress, because in practically every committee before which 
I have apeared in the last 3 months I have been urged to submit recom- 
mendations as to legislation on surplus property disposal, and I have 
begged for a little more time because, following out the suggestion 
in the Baruch report that we should first get some experience in the 
matter before attempting to tell Congress what it ought to do, or sug- 
gesting to Congress what it ought to do, we have just tried to do that. 

We were created around the latter part of February by Executive 
order ; we have had a pretty difficult job of getting organized ; we have 
tried to attend to that, we have had a lot of what we call first things 
that had to be done in reference to fixing policies on surplus disposal. 

So that we felt that there was no very great hurry about legislation 
on this subject. 

Mr. Fish. That is the point I want to raise because I can't see how 
you can possibly get action on this legislation for 2 months. We are 
about to recess, and we can't do anything on it before the recess. We 
had hoped in the House to act today on the termination-of -contracts 
bill, we are considering it now, and we hope to get that through before 
we adjourn on the 23d, but there will be that delay after that, and it 
isn't the fault of Congress. 

I wish I could agree with you as to the press, because the press, edi- 
torially and otherwise, has come out sharply in criticism of what they 
call the delay of Congress. 

Senator Vandenberg. That might be an argument against the re- 
cess. 

Mr. Fish. It might be a strong argument against it. 

Mr. Clayton. I feel, as I have stated on several occasions before 
Senate and House committees, that prompt passage of the contract 
termination bill is very important, but I have asked for time in which 
to submit recommendations for legislation on surplus disposal, and 
if there is any blame that attaches to anybody, it attaches to me. 

Mr. Fish. Well, that is a very fair statement. 

Mr. CoLMER. May I speak in that connection, Mr. Chairman? 

The Chairman. Mr. Colmer. 

Mr. CoLMER. I would just like to be recorded as suggesting that you 
have used exceptionally good judgment in taking your time to make 
these recommendations, because I think I can see that this is a very 
complicated subject, and the more experience — actual experience — 
you have had, the more opportunity you have had to study the problem, 
the better able you are to make recommendations. 

Mr. Clayton. Thank you, sir. 

I would like to make this explanation about section 8 of the bill 
which provides for disposition by owning agencies. The first thing 
to notice about the provisions for sales by owning agencies is that 



20 POST-WAR ECONOMIC POLICY AND PLANNING 

section 8 (c) requires the Administrator to restrict these sales when- 
ever he deems it necessary to ejffectuate the objectives and policies of 
the act. 

With this power in mind we have tried to draft a provision which 
would not make mandatory the declaration as surplus by an owning 
agency, of property which it is accustomed to sell itself in the ordi- 
nary course of business. 

If the Administrator finds that such sales interfere in any way with 
the real surplus program, he can stop them, but he is not compelled 
by the statute to do so. For instance, it is hard to deny that, prima 
facie, anything which an agency sells, except perhaps directly for 
war production, must be surplus to its needs and responsibilities, and 
3^et without a section like section 8 (b), we would be driven to such 
absurd results as the following : 

1. The Army could not make contracts to dispose of garbage from 
its Army camps but would solemnly declare it surplus. 

2. T. V. A. would have to declare all its electric power as surplus, 
and sell it through the R. F. C. 

3. Government-owned plants in the regular business of manufactur- 
ing and selling fertilizer, or of smelting tin, would have to deal through 
a disposal agency. 

And so on. I think I have given sufficient examples to show the 
wisdom of this provision. 

The Attorney General has suggested — and I think properly so — that 
in section 8 (b) (5) the word "surplus" should be inserted just ahead 
of the word "property", so that that paragraph will read : 

(5) any otber class or tyj^e of surplus property designated by the Admin- 
istrator. 

Section 9 (a) provides: 

The Administrator, by regulations, shall designate one or more Government 
agencies to act as disposal agencies under this Act and shall prescribe the class 
or classes of surplus property to be handled by each such agency. 

We would like to suggest, Mr. Chairman, that the following be 
added just after the word "agency" in section 9(a): 

provided that merchant vessels or vessels capable of conversion to merchant 
use, shall be disposed of only by the United States Maritime Commission in ac- 
cordance with the provisions of the Merchant Marine Act, 1936, as amended, and 
other laws authorizing the sale of such vessels. 

I think that will be obvious, since Congress has already provided 
the disposal agency for merchant ships. 

Section 9 (b) merely provides that if the disposal agency is not 
prepared immediately to take over the physical care and handling of 
the property, that the owning agency shall continue in that respon- 
sibility until the Administrator shall find that the disposal agency can 
take it over. It also confers upon the disposal agency the respon- 
sibility and authority for the disposition of property reported to it 
by other agencies. 

Senator Re%tercomb. Mr. Chairman, 

The Chairman. Senator Revercomb. 

Senator Revercomb. Returning to section 8 (a), the only super- 
vision that the Administrator has over any owning agency is with 
respect to price policies in the disposal of goods; is that correct, sir? 

Mr. Clayton. That is true only with reference to contractor in- 
ventories which may be sold for war production. 



POST-WAR ECONOMIC POLICY AND PLANNING 21 

Senator Revekcomb. What is your thought on broadening that 
power of the Administrator not only to regulate price policies, but 
distribution policies ? 

I had in mind the thought that some particular agency of govern- 
ment in distributing this surplus property may dump the whole 
amount into the lap, or sell it to some particular company engaged 
in a particular work where there are several competitors. Don't you 
think that the Administrator should have some policy of distribution, 
some over-all policy of distribution, of even surplus goods ? 

Mr. Clayton. I would like to emphasize again that this section 
relates only to contractor inventories and not to what we ordinarily 
call surpluses out of supply, and in many cases this is property which 
is really not owned by the Government, or which the Government 
has no title to, but which will potentially be Government property. 
And the reason that we have left there a wide degree of discretion 
to the procuring or owning agency is this : That there is a provision 
now which the Army has put into the form of regulations, and which 
is provided by statute in the contract termination bill, that within 
60 days after a contractor submits an inventory of property which 
he will turn over to the Government in connection with the termi- 
nation of his contract, such property must be removed by the Gov- 
ernment, or the contractor will have the right to put the property out 
at the risk of the Government. 

Now, in view of the fact that you have a very short time within 
which to turn around, and in view of the further fact that while 
the war is on, the manpower situation is very critical, the storage 
situation is very critical and becoming more so, and it is highly 
important to get rid of this property if possible, for other war pro- 
duction, to other contractors, within that short period of 60 days, 
we have felt that there should be allowed to the owning agency a 
very wide degree of discretion except as to price, and we have pro- 
vided for the control of the pricing policies ; we have already issued 
regulations with reference to that. But for the reason which I 
have stated, and I can hardly exaggerate the importance of getting 
rid of this stuff while it is at the plant where the contract has been 
terminated, in order to avoid the necessity of using manpower, using 
transportation facilities, trucks, railroad cars, and so on, and what is 
perhaps even more important, trying to find some place to store it 
when you get it out of the contractor's plant, we have felt that this 
wide discretion was necessary. 

Senator Revercomb. Of course, I am approaching it from another 
viewpoint, Mr. Clayton. I am thinking of surplus property after 
the termination of contracts, let us say, which comes into the hands 
of the Government, and it is desired by some private enterprise, or a 
number of them in a particular field of work. Now, is the agency, 
say the Army, going to have the right to sell all of that material to 
one party in that competitive enterprise? 

Mr. Clayton. No, sir ; they must be governed by War Production 
Board priorities and allocations while the war is on, and since this 
refers only to sales for war production, I think that when the war is 
over obviously it no longer applies. 

Senator E,E^^ERCOMB. Thank you, sir. 

The Chairman. All right, proceed, Mr. Clayton. 

61846— 44— pt. 1 4 



22 POST-WAR ECONOMIC POLICY AND PLANNING 

Mr. CoLMER. I wonder if I may, Mr. Chairman, just follow the 
Senator's question a little further. Wliat will apply then, Mr. 
Clayton? 

Mr. Clayton. Then section 8 (c) comes into play, which reads: 

Whenever he deems such action necessary to effectuate the objectives and 
policies of this Act, the Administrator, by i-egulations, shall restrict the authority 
of any owning agency to dispose of any class of surplus property under sub- 
section (b) of this section. 

So that we can take complete jurisdiction of it at any time that 
we think it necessary to do so — I mean the Administrator can — and 
take it out of the category in which you find it in (b) . 

Mr. CoLMER. After it is finally declared surplus, at the termination 
of hostilities — is that what you have in mind, Mr. Clayton? 

Mr. Clayton. It doesn't really have to be declared surplus. Oh, 
yes; it would be surplus property. We could tell them not to sell 
it, or we could tell them to whom to sell it, or at what price to sell it. 
I think, under this, the Administrator could issue any regulations he 
saw fit. 

Senator Lucas. Isn't paragraph (c) a complete answer to Senator 
Revercomb's inquiry ? 

Mr. Clayton. It refers only to paragraph (b). Paragraph 8 (c) 
refers only to paragraph 8 (b), and I think the Senator was talk- 
ing about 8 (a). 

Senator Hawkes. Mr. Chairman, may I ask Mr. Clayton just one 
question ? 

The Chairman. Senator Hawkes. 

Senator Hawkes. To go back to that same point that I had in 
mind before — and I agree with you that that can wait for later con- 
sideration — but do I understand from what you just said that if 
there is a substantial amount of material in any plant, and the 
owning agency can authorize any contractor or subcontractor to 
take that material or dispose of it as he sees fit, that still the W. P. B. 
has the control of priority, as to where that goes during the war 
period? 

Mr. Clayton. Yes, sir. 

Senator Hawkes. -Because that is the point I have in mind, in con- 
nection with that. If they have the same right to govern that by 
priority in the disposal of surplus material as they had originally in 
granting the priority in allocation, then that protects the thing. 

Mr. Clayton. Yes, sir ; they do. 

Senator Efatrcomb. Then the distribution would be governed by 
the use of priorities ? 

Mr. Clayton. Yes, sir. 

Senator Hawkes. Thank you very much. 

Mr. Clayton. We have a clause in this act which so provides, and 
whether or not we had it in here, that would be the case. 

Ml'. WoL^TRTON. Mr. Chairman, may I ask a question? 

The Ch AiR^fAN. Yes. Mr. AVolverton. 

Mr. Wolverton. Mr. Clayton, I am somewhat concerned as to the 
period beyond the war. I can readily realize how, during the war,, 
whatever surplus materials a contractor may have would still be sub- 
ject to priority rules and regulations. But having in mind that the 
Senate has already passed, and the House is passing toda}'. the war 



POST-WAR ECONOMIC POLICY AND PLANNING 23 

contract termination bill, which, in a measure enables a contractor, in 
making his settlement, to take into consideration the surplus material 
that he may have on hand, when it gets to the point where there is no 
war, and there is a settlement of these canceled contracts, is there any 
provision then made as to the allocation of that surplus material? 
I don't think we can pass it off entirely with the thought that there 
may not be any need of priorities or allocations at that time. I am 
inclined to think that there may be a shortage in some particular field. 

May I illustrate my point by giving this example ? Suppose a re- 
frigerator company is now engaged in some war activity that has given 
it a preference or a priority in the obtaining of steel. If, on the termi- 
nation of its contract, it can hold all the surplus that it has on hand at 
the time the contract is terminated, what do we do for the other com- 
petitor who may have been engaged in manufacturing some other war 
product which didn't require that large surplus of steel? Would it 
not give the first a preference over the second, unless there is some 
system of allocation or priorities ? 

Mr. Clayton. I think that is a very pertinent question. 

To begin with, the contractor, under section 8 (a), who might wish 
to withhold the inventory for his own use, could do so only through 
agreement with the procuring agency, the contracting officer who was 
engaged in negotiating the termination of the contract. 

Now, your question relates to the post-war period ? 

Mr. WoLVERTON. Yes. 

Mr. Clayton. In that period, if there were no longer any regula- 
tions of the War Production Board with reference to priorities and 
allocations, under this act the Surplus Property Administrator 
could take over that function himself, by regulations which he would 
issue. 

Mr. WoLVEETON, Is it your opinion that the War Surplus Director 
could do it better than the W. P. B. which made the original alloca- 
tions ? 

Mr. Clayton. No, sir ; I certainly don't think we could do it as well 
at the present time, because the W. P. B. has an organization for that 
purpose ; it has had a great deal of experience, and we would much 
prefer to have that agency do it. 

Mr. Wolverton. The testimony of Mr. Nelson before the House 
committee a few days ago seemed to indicate that there was some ques- 
tion as to whether he would have that power in the post-war period, 
and it seemed to some of us that it would be logical to continue that 
in his hands in view of the fact that he had made the original alloca- 
tions. 

Mr. Clayton. Yes, sir. Congress might want to do that, and so far 
as we are concerned we would be glad to see that done in reference 
to the matter of priorities and allocations, because it takes a good deal 
of machinery, it is a very difficult thing to do, and as I said a moment 
ago, W. P. B. has had the experience and it has the organization. 

Mr. Wolverton. This bill, then, does not attempt to deal with that 
particular question? 

Mr. Clayton. No, sir; but we can deal with it under the act as 
drawn in the post-war period, unless CongTess should act otherwise 
and continue the powers, in that field, of the War Production Board. 

Senator Revercomb. Mr. Chairman, one more question to clear up 
this very point. 



24 POST-WAR ECONOMIC POLICY AND PLANNING 

The Chairman. Senator Revercomb. 

Senator Revekcomb. Do I understand that in the bill submitted by 
you this morning there is a provision that the disposal shall be made 
under the priorities of the W. P. B. ? 

Mr. Clayton. Yes, sir. 

Senator Revercomr. Is that expressly stated ? 

Mr. Clayton. Well, we just preserve the act. That is contained in 
section 24 (b) on page 21 : 

Nothing in this Act shall impair or affect the provisions of the Emergency 
Price Control Act of 1942, as amended ; or the Act of October 2, 1942, * * * 
as amended ; or of section 301 of the Second War Powers 'Act — 

which is the allocation section under W. P. B. 

Senator Revercomb. Now I asked that question because if you wilj 
turn to section 11 (a) on page 10, you will see this language: 

Wherever any Government agency is authorized to dispose of property under 
this Act, then, notwithstanding the provisions of any other law but subject to 
tlie provisions of this Act, the agency may dispose of such property — 

Do you construe that to mean that the agency is not authorized to 
dispose of surplusproperty until the W. P. B. says it may do so ? 

Mr. Clayton. The agency may dispose of it, but the buyer is on 
notice that he can use it only in accordance with the priority allocations 
of W. P. B. That is why we put it at the end of the bill, because 
it ])rotects every provision of the bill in reference to that question. 

Senator RE^•ERCOMB. You think the two provisions are consistent 
for the reasons stated by you ? 

Mr. Clayton. I think they are. 

Mr. Chairman, I think we had stopped at section 9 (b). 

Section 9 (c) says : 

The Administrator, by regulations, shall prescribe policies, standards, methods, 
and procedures to govern the exercise by any disposal agency of its authority 
under subsection (b) of this section. 

Section 10 provides for transfers between agencies. I don't think 
that it is necessary to discuss that. 

Section 11 provides for methods of disposition. 
. Section 11 (a) reads as follows: 

Wherever any Government agency is authorized to dispose of property under 
This Act, then, notwithstanding the provisions of any other law but subject to 
the provisions of this Act. the agency may dispose of such property by sale, ex- 
change, lease, transfer, or other disposition, for cash, credit, other property, or 
otherwise, with or without warranty, and upon such other terms and conditions, 
as the agency deems proi>er. 

That, I would like to say. is still subject to regulations by the Ad- 
ministrator. I mean that the Administrator can control the exercise 
of the discretion by the disposal agency under that section, as under 
every other section. 

Senator Vandenberg. Could you give it away under that section, 
a la lend-lease? 

Mr. Claiton. It doesn't say so, and they certainly couldn't do it. 
Senator, if they would sell it for anything at all, because that woula 
be inconsistent with the stated objectives of the act, and the policies 
as outlined in section 12 of the act, which we will come to a little 
later. 

Mr. De\\t:t. Mr. Chairman, may I inquire of Mr. Clayton on this 
point? 



POST-WAR ECONOMIC POLICY AND PLANNING 25 

The Chairman, Mr. Dewey. 

Mr. Dewey. There is a suggestion of gift in section 11 (b), and I 
presume that subsection (c) of the same section is going to carefully 
supervise any gift, distribution, or such. It says that you shall do 
that? 

Mr. Clayton. Yes, sir, 

JVlr, Dewey. And that would be the guarding clause? 

Mr, Clayton, Mr. Dewey, you said there was a suggestion of gift 
in what section of the bill ? 

Mr. Dewey. Subsection (b) of section 11 — 

* * * the agency may donate such property to any agency or institution 
supported by the Federal Government of any State or local government. 

Mr. Clayton. Yes. 

Mr. Dewey. And I notice that in the next section you are to pre- 
scribe regulations and safeguard that? 

Mr. Clayton. Yes, sir. I think, if you have no further questions 
about subsection (a) of section 11, 1 had better read subsection (b). 

Whenever the Government agency authorized to dispose of any property finds 
that it has no commercial value or that the cost of its handling and sale w^ould 
exceed the estimated proceeds, the agency may donate siich property to any 
agency or institution supported by the Federal Government or any State or 
local government, or to any nonprofit educational or charitable organization, 
or, if that is not feasible, shall destroy or otherwise dispose of such property. 

The question has been raised as to whether that would be broad 
enough to permit the destruction of plants, and I understand that 
possibly some clarifying amendment may be offered by one of the 
other agencies on that section. Of course we do not think that it is 
broad enough to permit the destruction of any plant because before 
you can destroy it, under this section, you have to try to give it 
away, and I can hardly imagine that there is any plant that woudn't 
be of some value. 

Senator Murray. Mr. Chairman, may I ask a question ? 

The Chairman. Yes, Senator Murray. 

Senator Murray. In the disposal of these large war plants, does 
3'our bill take into consideration the possibility of dividing them up 
and permitting a number of smaller concerns to use them in a sort of 
tenancy in common ? 

Mr. Clayton. The bill certainly would permit it, Senator Murray. 
I don't think it specifically giveis that power, but it certainly would 
permit it, and we are actively studying just that question now. 

Senator Murray. There is some study being given to that by some 
outside organizations, as I understand, to create a sort of industrial 
market out of some of these very large buildings dividing them up 
among a group of manufacturers, like the Furniture Mart, for in- 
stance, in Chicago, or something of that kind. 

It would seem to me that that would be a feasible way of permitting 
the smaller plants of the country to utilize some of these large war 
plants. 

Mr. Clayton. It is an extremely interesting idea and, I think, has 
great possibilities, and we are studying it right now. Obviously, 
some of these big plants, as, for example, the aircraft plants, the alumi- 
num plants, and others, we all know cannot, in peacetime, be continued 
in the production of the same thing that they are now producing today. 
There simply will not be a sufficient peacetime market for aircraft. 



26 POST-WAR ECONOMIC POLICY AND PLANNING 

aluminum, or magnesium to absorb the output of these plants. There 
is not even enough wartime market to absorb all of the aluminum. 

So we have to do something else with those plants, and we are 
considering right now, and will continue to consider actively, the best 
way of disposal ; and, as I say, the idea which you have just referred to 
is extremely interesting in that regard. 

Senator Murray. An experiment has taken place up in Massachu- 
setts, I believe, in the case of the Amoskeag plant, where the com- 
munity has taken over that plant and divided it among a number of 
concerns, and I understand that it has worked out very satisfactorily. 

Mr. Clayton. Yes, sir. Th^re are numerous examples of that 
kind. I understand that in England it was done in quite a number of 
cases before the war started. So we have some history of the move- 
ment to refer to, and some people who have had experience in those 
things will, of course, be consulted. 

The Chairman. The terms of the bill are broad enough to permit 
the Administrator to deal with that problem ? 

Mr. Clayton. Yes, sir; section 2 (g) defines care and handling. 

The term "care and handling" includes repairing, converting, rehabilitat- 
ing, operating, maintaining, preserving, protecting, insuring, storing, packing, 
handling, and transporting. 

So that we think it is quite broad enough to permit making a change 
in plant, altering it in such a way that instead of being used for one 
large integrated operation, it can be used for several smaller opera- 
tions, even though we might have to spend some money to do it, and 
of course we would. 

Senator Lucas. With respect to section 11, the powers delegated to 
the Administrator under that section for the disposition of surplus 
jDroperty are almost unlimited, are they not? 

Mr. Clayton. Yes, sir. 

Senator Lucas. In other words, if section 11 should become the law, 
the Administrator would have practically the same power to make 
disposition of surplus property as an individual would have to make 
disposition of his own property ? 

Mr. Clayton. Well, hardly, I think. Senator Lucas. He would 
have to act under the stated objectives of the act and the policies out- 
lined in the act. 

Senator Lucas. I understand that, sir. You believe, though, that 
this power is absolutely essential in order to eflSciently and economi- 
cally, and with some expedition, make disposition of this surplus 
property ? 

Mr. Clayton. Yes, sir ; I do. 

The Chairman. All right, Mr. Clayton, I think perhaps you had 
finished Avith section 11. unless there are some other questions. 

Mr. Clayton. I think I should read all of section 12, "Policies gov- 
erning disposition." 

Sec. 12. In formulating regulations to govern the care and handling and dis- 
position of surplus property under tliis Act, the Administrator shall be giiided by 
the objectives stated in section 1 of this Act, and shall give effect to the following 
policies to the extent feasible. 

I call attention. Senator Lucas, to that language that states that the 
Administrator shall be guided by the objectives stated in section 1 
of his act and shall give effect to the following policies to the extent 
feasible. 



POST-WAR ECONOMIC POLICY AND PLANNING 27 

Then section 12 continues : 

(a) To facilitate transfers of surplus property of oue Government agency to 
other Government agencies for their use. 

(b) To afford public, governmental, educational, charitable, and eleemosynary 
institutions and cooperative organizations an opportunity to fulfill their legiti- 
mate needs for surplus property. 

(c) To afford returning veterans an opportunity to establish themselves as 
proprietors of agricultural and business enterprises. 

(d) To afford smaller business concerns and agricultural enterprises generally 
an opportunity to acquire surplus property on equal terms with larger competitors, 
and to discourage sales to speculators, by assuring reasonable notice of such 
dispositions, by disposing of such property in appropriate quantities, by using 
commercial channels of distribution to the maximum extent consistent vpith eflS- 
cient and economic distribution, by collaborating with Smaller War Plants Cor- 
poration, or by other appropriate means. 

You may want to discuss subsection (d) a little. 

Take, for example, the reference to speculators, "to discourage sales 
to speculators." The word ''speculator," I expect, is rather difficult to 
define. We have adopted this policy in our operations under the 
Executive order, particularly with reference to discouraging sales to 
speculators, and I have often been asked what a speculator is. 

We think that, for example, if you have two or three million 
pairs of shoes to sell, the obvious way is to work with the wholesale 
shoe dealers. If some man comes along who is a casual trader, not 
regularly in the shoe business, and he wants to buy two or three million 
pairs of shoes, or whatever it is that you have to sell, we look upon 
him as a speculator. 

Of course there is a certain element of speculation, I sitppose, in 
nearly all commercial transactions. If a wholesale shoe dealer bought 
two or three million pairs of shoes, he might be speculating somewhat. 

But what we have in mind, and what we think is the idea of the 
public and of Congress, as expressed in these hearings and in the mail 
that we get, and the newspaper editorials we read concerning specula- 
tors, is that these casual traders who come in and want to try to buy 
Government property cheap, and mark it up and distribute it at a con- 
siderable profit, are people that we don't want to deal with regularly. 

Still, I don't think it would be wise to shut them out entirely because 
the regular fellows might not offer what you think the property is 
worth, that is the regular shoe wholesalers. There is always, of course, 
the possibility, if you provide that you shall deal only with the regular 
commercial channels of trade, that there might be some collusion. 

So that if the wholesale shoe dealer offered $2.25 a pair for the shoes, 
and that was the most you could get from any of the wholesale shoe 
dealers, and some fellow came along who wasn't a regular shoe dealer 
and offered $3 a pair for them, I would think that it is in the interests 
of the Government to sell them to him. 

We had an example a short time ago that the Treasury reported to 
me of some surplus refrigerators that it had for sale. That De- 
partment finally got $55 apiece for them from a man who wasn't 
a regular distributor of refrigerators, while the most it could get 
from the regular dealers was something under $50. The Department 
felt it was right to sell them at $55 to the other man, and I felt it was 
right, too. 

I don't think that we should draw the act, or that we should draw 
our regulations in such a way that we are absolutely tied to refusing 
to trade with people of that kind. 



28 POST-WAR ECONOMIC POLICY AND PLANNING 

Senator Murray. Mr. Clayton, would it not be possible to prevent 
speculators from making any huge profits on the resale of any of 
this jDroperty by providing a tax, an excess-profits tax, on any profit 
that they made beyond a reasonable amount ? 

Mr. Clayton. Do you mean, Senator, a tax that would be different 
from the existing excess-profits tax and more onerous ? 

Senator Murkay. A tax on the resale of surplus property purchased 
from the Government. 

Mr. Clayton. Well, as a merchant in surplus property, trying to 
sell it, I don't think I would be quite in favor of that because it seems 
to me that it would be a discrimination against a man who was buying 
from the Government, and in favor of one who might be buying it 
from a manufacturer. 

Senator Murray. Well, I don't quite understand what you mean. 
It seems to me that if a person was able, as a speculator, to purchase 
a huge quantity of shoes, for instance, at a dollar a pair, and then 
undertook to sell them for $4 a pair, that he would be making an 
unconscionable profit on the transaction, and with a provision in 
there that upon the resale of any purchased surplus property the seller 
would be required to pay a tax beyond what would be a reasonable 
profit to be allowed, wouldn't that handle it? 

Mr. Clayton. Isn't he required to do that now, under the revenue 
laws? 

Senator Murray. Well, no; I don't understand so. There is a tax 
on his profits, of course, on his entire business, but I am talking about 
this particular speculation that he would be engaged in. 

Mr. Clayton. Well, Senator Murray, that certainly might be worth 
considering, but I would just like to point out that on a resale of 
that kind, while the O. P. A. statute is in existence, it, of course, 
would be under its price ceilings, and if the O. P. A. statute were 
not in existence we could always provide in the sale a limitation on 
the mark-up that the buyer could put on the goods. 

Senator Murray. I see. 

Mr. Colmer. Mr. Chairman, may I address the witness? 

The Chairman, Mr. Colmer. 

Mr, Colmer. Mr. Clayton, I am very much impressed with the obvi- 
ous necessity for great leeway and discretion on the part of the Admin- 
istrator in disposing of this property. Yet I must say that I think it 
must ever be borne in min.d that the public will be very conscious and 
will react very unfavorably to any speculative profits, and the press 
will play up these so-called atrocity cases. In fact, we have already 
had a few of those. So I think that if any safeguard such as Senator 
Murray has suggested — I don't know whether that is feasible or not — 
could be added, it would be worth considering. 

Ml'. Clayton. Yes, sir; I think any device to prevent windfall 
profits in these transactions is well worth considering. Of course, 
we must bear this in mind, that speculators do not always make profits, 
sometimes they suffer losses, and if you limit the opportunity for 
some who profit too greatly, you would thereby limit our market for 
disposal. 

But I want to repeat that we don't ordinarily deal with specula- 
tors, we try to avoid dealing with them, but in the examples that I 
gave, sometimes you feel that in the interests of the Government and 
the taxpayer you must deal with them. 



POST-WAR ECONOMIC POLICY AND PLANNING 29 

Senator Vandenberg. Would a fly-by-night merchant, who oper- 
ates under the name of an Army and Navy store, for instance, be a 
speculator ? 

Mr. Clayton. Well, Senator, if he is a fly-by-night merchant, I 
would think so, yes; but many of these stores, a good many of the 
so-called Army and Navy stores, have been established for a long time. 
But most of the consumer goods that we would sell, which would be 
sold by the disposal agencies, I would think would be disposed of 
through wholesalers, most of the consumer goods in large quantities, 
the reason b^ng that it just isn't possible for the Government to build 
an organization of sufficient scope to deal direct, certainly, with its 
130,000,000 citizens, and it would be extremely difficult to build an 
organization that could deal direct with the hundreds of thousands of 
retailers that w^e have over the country. 

Senator Vandenberg. Senator Kilgore wanted me to ask you whether 
the bill deals in any w^ay with the disposition of patents. 

Mr. Clayton. No, sir; it doesn't mention patents anywhere in the 
bill. Of course, patents are property, I take it, and I would think 
that this bill would be broad enough to include patents. 

The Chairman. If any of the Federal agencies were the owners 
of patent rights, yes ; but only then. 

Mr. Clayton. Yes ; it only deals with Federal agencies. 

Senator Pepper. I am a member of the Patents Committee and am 
interested in that subject. The War Production Board has had a 
very fine subdivision, I understand, which has done a lot of very effec- 
tive research work, stimulated a lot of effective research work. I am 
sure that many other agencies of Government have done the same 
thing. They will have knowledge of processes, even if they don't 
have technical ownership, which may be . subject to disposition. I 
am sure there will be very valuable property interests which the 
Government would have the control of. 

Now if you think there is any question about the lack of authority 
to deal with that subject adequately, on the part of the Adminis- 
trator, it might be well to see to it that it is clarified. Wouldn't 
you think so? 

Mr. Clayton. Yes. 

Senator Pepper. If I may interrupt the committee further, at the 
bottom of page 11, under the heading "Policies Governing Disposi- 
tion," it says: 

In formulating regulations to govern the care and handling and disposition 
of surplus property under this Act, the Administrator shall be guided by the 
objectives stated in section 1 of this Act, and shall give effect to the foUov^^ing 
policies to the extent feasible. 

Then over on the following page, subsection (e) , line 20 : 

To afford former owners of surplus real property acquired by the Government 
by the exercise of its war powers an opportunity to reacquire such property. 

I think where real estate has been bought by the Government to 
build an Army camp or for some other purpose, and the needed use 
for it has passed, that it is perfectly proper, upon reasonable terms, 
to give the previous owner the first opportunity to reacquire it. 

But I am wondering whether we should add a further limitation 
after the word "feasible," at the bottom of page 11, so that it would 
read in part : 

* * * to the extent feasible in the public interest — 
61846 — 44 — pt. 1 5 



30 POST-WAR ECONOMIC POLICY AND PLANNING 

I suggest that to take care of this sort of a situation. I know of 
some cases where toll bridges have been taken over, there have been 
some taken over in my State by the War Department, I mean by the 
Government under the certificate of the Secretary of the Navy or the 
Secretary of War, 

Now where a toll bridge is taken over and freed for public use, 
and it has already been acquired half by the State and half by the 
Federal Government, under a law which authorized that and pro- 
vided for the freeing of that bridge and the maintenance of it by, say, 
the State, I would want to be sure that that didn't give any necessary 
legal right to the former owner to come in and say, "You must sell 
this back to me," 

If you find it in the public interest 3^ou might have authority to 
sell it back, but I wanted to be sure that there was no mandatory 
power on the Administrator to make him turn back all such public 
property, if it might not be in the public interest to do that. 

Mr. Clayton. I think your suggestion is good as to the addition 
of those words at the end of section 12, page 11, after the word 
"feasible," but, in the example that you give I think that a toll bridge 
probably wouldn't be surplus property. 

Senator Pepper. Well, it might not be, I wouldn't consider it so, 
but I just happened to think of that. 

The Chairman. There might, however, be come instances involving 
surplus property where you would of course look to the public inter- 
est. Senator Pepper's suggestion, I think, has a great deal of merit 
in it. 

Mr. Clayton. Yes ; I think it is quite pertinent. 

Senator Murray. Mr. Chairman, Senator Lucas has a bill pending^ 
S. 1775, to provide for restoring real property acquired by the United 
States for military purposes, to the former owners thereof. 

I would like to inquire if you have access to Senator Lucas' bill? 

Mr. Clayton. Yes, sir; I am familiar with it, Senator Murray, and 
we have discussed that principle a great deal ; we have thought about 
it a great deal. I have a good deal of sympathy for the idea that a 
farrner, for example, who had to sell his property, his farm, perhaps 
under condemnation proceedings, to the Government for war pur- 
poses, should have an opportunity to repossess it when it is no longer 
needed by the Government. It would be our idea — and in fact we are 
following that policy now in the sale of surplus real property as dis- 
tinguished from industrial property — to give the former owner the 
first opportunity to repurchase, but on equal terms. 

We have no authority to give any preference in price, of course, and 
we do not recommend that a price preference be given. If you do 
that, of course, you introduce several elements into the situation. You 
introduce the element of adverse selectivity against the Government 
always. 

The former owner, who now feels that his property is worth more 
than it was when he sold it to the Government, would of course want 
to take it back. In those cases where the property is not worth so 
much as it was when he sold it to the Government, he wouldn't take it 
back. 

Then, administratively, it is extremely difficult to work out. In 
most cases the physical character of the land has been changed, you 
have taken structures off and you have put new structures on, and you 



POST-WAR ECONOMIC POLICY AND PLANNING 31 

have built roads, and so on. So that administratively it is an ex- 
tremely difficult thing to do, to say that the former owner would have 
the right to ref)ossess the land at the price at which he sold it to the 
Government. 

Senator Pepper. If I may interrupt you right there. Would it be 
possible for the Administrator to fix a price, which would be to the 
Government a fair price, and then if the owner were willing to pay 
the fair and fixed price so that the Government would be protected, 
then he would get first choice; but if he were not able or willing to 
pay, that then it would be a matter of sale at public auction ? 

Mr. Clayton. Yes, sir ; that would be possible. Of course, the only 
way in which we can determine the market price of any property is to 
work the market, and test the market thoroughly. 

Senator Pepper. Well, you would have the advantage, in the first 
place, of the appraisal of that property when it was acquired — there 
generally would have been an appraisal either in court or through 
governmental agencies. 

Mr. Clayton. That is right. 

Senator Pepper. And you would know what you had actually paid 
for it and the time which had elapsed since that purchase, so you would 
have a standard, which you don't have in the ordinary case, to know 
what a piece of property was worth. 

Mr. Clayton. Yes, Senator Pepper, but a good deal of this property 
was bought back in the early part of 1942, over 2 years ago, and there 
has been, as you know, a substantial change in values in that time, par- 
ticularly in good farm lands, so that in many cases lands which were 
purchased for, say $150 an acre, may now be worth $250 an acre. 

Senator Pepper. Yet you have this sort of moral, or if not moral, 
morale feeling — take in many of our States — there have been home 
owners, farmers, who have been dispossessed of their property in order 
to serve the public interest during the war. I regret to say that in 
many cases they have had to wait months, and sometimes a year or two 
to get their money, and they have been seriously inconvenienced. 

Now, then, after the war is over, maybe when they haven't found a 
satisfactory opportunity to reestablish themselves, for that man to see 
somebody from the city, or somebody from another community, or even 
some man who didn't have to give up his property in the same com- 
munity, come in and, because he is able to pay a little more than the 
original owner, buy the property out from under him — it would be 
perfectly legal, but you can understand how that fellow would feel, 
"Well, I gave up my property for the war, and the war is over now, 
and if I am willing to pay a reasonable price to buy it back, it looks to 
me like I should have the first chance." 

You can understand how natural that feeling would be? 

Mr. Clayton. I certainly can, and I sympathize with people in that 
position, particularly people who, as you say, had to give up their 
property under condemnation proceedings, and people who perhaps 
had to dispose of their farms which had been in the same family maybe 
for three generations — you can understand their wish to repossess that 
property. 

I, personally, would certainly not be opposed to a provision which 
would state that the Administrator, in such cases, would put on the 
property a fair and equitable valuation and offer it to the original 



32 POST-WAR ECONOMIC POLICY AND PLANNING 

owner at that price. But I do think, Senator Pepper, that it would 
not be administratively feasible, and I doubt the advisability of saying, 
that he should repossess the property that he formerly had at the price 
at which he had sold it to the Government, even though it had been 
under condemnation. 

Senator Peppek. I agree to that. I didn't know about that bill 
of Senator Lucas, but don't you think that all of this should be 
headed under one authority? You shouldn't have one law dealing 
with the disposition of real-estate surplus, and another law dealing 
with patent surplus, and another law dealing with something 
else. Wouldn't you think it desirable that this whole subject of dis- 
position of surplus property should be headed up under one authority? 

Mr. Clayton. Yes, sn- ; I think that would be preferable. 

Senator Murray. Mr. Claj^ton, there are a number of bills pending 
purporting to deal with the disposal of surplus property. 

Mr. Clayton. Yes, sir. 

Senator Murray. You have seen all those bills, I suppose ? 

Mr. Clayton. I am afraid I haven't seen all of them, Senator 
Murray, but I have had digests of most of them furnished me. 

We come now, I think, to section 13, disposition of plants. [Read- 
ing:] 

Sec. 13. (a) The Administrator shall exercise supervision over dispositions 
of surplus Government-owned plants to insure that such dispositions do not 
foster monopolies, undue concentration of industry or commerce, or restraint 
of competition. 

(b) Whenever the Administrator considers that any proposed disposition 
of a Government-owned plant or group of plants, except pursuant to an option 
therefor, may violate the antitrust laws, he shall notify the Attorney General 
of the terms of the proposed disposition before it is made. If the Attoi'ney 
General reports in writing that, in his opinion, the proposed disposition will 
violate the antitrust laws, the disposal agency shall not carry it out. If the 
Attorney General fails to make such a report within thirty days after the 
receipt of the notice of the proposed disposition or within such additional 
period, not exceeding thirty days, as he may specifically request, the disposal 
agency may proceed with the disposition. The failure of the Attorney General 
to make a report hereunder shall not bar any prosecution for violation of the 
antitrust laws. 

I would like to comment on that section, which is based on a pro- 
vision which appears in several of the pending bills. 

The section is designed both to require the Administrator to 
scrutinize all dispositions of industrial plants in order to avoid 
monopoly, concentration, or restraint of competition, and requiring 
him to submit to the Attorney General in advance any proposed 
disposition which he considers may violate the antitrust laws. 

As Ave all know, any such provision for advance submission to the 
Attorney General is novel. He is charged with the administration 
pf the antitrust laws and can sue or prosecute for violation at any 
time. 13 ut ordinarily he acts after the fact and not before. Obvi- 
ously, advance submission to him of every case where there is a 
doubt in the Administrator's mind will frequently delay disposals 
and may sometimes prevent them in cases where time is of the 
essence. 

Tile Attorney General, in a letter to me, of which copies have 
been submitted to several of the committees, has suggested an alterna- 
tive provision which would not require advance submission in any 
case, but would clearly preserve his duty to enforce the antitrust 



POST-WAR ECONOMIC POLICY AND PLANNING 33 

laws. I think his proposed provision is preferable to section 13 in 
the bill before you, and I recommend that you give it careful con- 
sideration. Our reason for presenting to you section 13 as written 
is that in several pending bills, Members of Congress have indicated 
a belief that some such provision is desirable. 

Section 13 of the draft bill goes as far along the path indicated 
by these pending bills as we felt was possible without seriously 
interfering with the job of plant disposal. 

I would like to discuss briefly the corresponding provision of the 
Kilgore bill, to indicate our reasons for this feeling. 

The Kilgore bill requires advance submission of every proposed 
disposition of a plant costing over $1,000,000. This is a mandatory 
delay of at least 30 days, and in most instances 60 days, in the sale 
of every plant that amounts to anything, even though it is perfectly 
clear that the proposed sale could not possibly result in any restraint 
on competition. Many buyers simply would not be interested under 
those conditions, and the Government would lose desirable sales for 
no good reason. 

The Kilgore bill extends the Attorney General's function beyond 
that of ruling on questions of law, and gives him a veto power over 
the Administrator on questions of policy. Such a divided responsi- 
bility would never work, and the prospect would not be inviting to a 
buyer who was trying to negotiate a firm business deal. 

The Kilgore bill would require certain limitations to be included 
as conditions of every sale of a plant, which we strongly feel would 
so cloud the title of a purchaser that no responsible buyer would risk 
his money on a purchase. 

These conditions would limit the purchaser's right to resell the 
property and even subject him to the danger of losing his plant if he 
could not get business enough to operate at full capacity. The buyer, 
under those conditions, would almost be buying a liability rather 
than an asset. Every corporate balance sheet of a purchaser would 
have to have a footnote indicating that the corporation did not really 
own its plant and could not freely sell or mortgage it. 

Under such conditions, I am afraid there would be very few sales 
of plants. 

These latter provisions indicate clearly the force of my opening 
statement, that we must face the facts. The policy embodied in these 
provisions is desirable and is clearly stated in the draft bill, that 
sales shall be made to people who will themselves put the plant to 
full productive use, and are not buying as dummies for resale to a 
monopoly, nor as speculators for a quick profit. You can so instruct 
the Administrator, and the draft bill does so do, and he will be bound 
to carry out your instructions ; but if you instruct him by mandatory 
provisions under which no one will buy, plants will be idle and peo- 
ple will be unemployed and, it seems to me, you will thereby have 
defeated your own purpose. 

Senator Pepper. Mr. Clayton, what was that change? I am not 
sure that I got the technical significance of it. 

Mr. Clayton. The Attorney General's suggestion? 

Senator Pepper. Yes. 



34 POST-WAR ECONOMIC POLICY AND PLANNING 

Mr. Clayton. The Attorney General suggests this substitute for 
the section that I read : 

Nothing in this Act shall impair, amend, or modify the antitrust laws or limit 
or prevent their application to persons who buy or otherwise acquire property, 
or any interest therein, under the provisions of this Act. Upon the request of 
the Attorney General, the Administrator, or any other Government agency, shall 
furnish or cause to be furnished to the Attorney General such information as 
the Administrator or any such agency may possess which the Attorney General 
determines to be pertinent to the application of the antitrust laws to the" dispo- 
sition of surplus property under the provisions of this Act. 

Senator Pepper. So that the buyer simply buys at his own risk, 
so far as subsequent prosecution is concerned? 

Mr. Clayton. That is right; and this suggested substitution is 
entirely satisfactory to us. 

Mr. CoLMER. That would leave the Attorney General just where 
he is. 

Mr, Clayton. Yes, sir. 

The Chairman. But the purchaser would get no immunity by 
virtue of having bought from the Administrator. 

Mr. Clayton. No, sir; none. 

Senator Hawkes. That would leave the purchaser in the same po- 
sition as he alwaj's has been, under the antitrust laws; if he violates 
them he is subject to prosecution. 

Mr. Clayton. That is right. 

Senator Hawkes. It does not change the ordinary status of oper- 
ation. 

Mr. Clayton. There is no change whatever. 

Senator Pepper. Mr. Clayton, referring to section 13 (a) again, 
you have made the criterion whether the acquisition of the plant by 
the purchaser would constitute a violation of the antitrust laws. 

Judge Holmes, you know, said one time that everything from the 
"12" tables to the present time is a matter of degree. 

Now, I am sure there are degrees of concentration of economic 
power which are not in the public interest, and yet perhaps do not 
constitute a violation of the Sherman Antitrust Act. I wonder, there 
again, if there might be a little larger discretion vested by the lan- 
guage of the act in the Administrator, something again about the 
public interest? 

For example, you may. think that a given commodity — we will take 
aluminum — of course, as all of us think, it has been selling too high, 
the price has been kept up, there hasn't been a wide enough use of the 
substance aluminum by the public ; and that if there were more people 
in the business they would use the product, which has been so mar- 
velously developed during the war, to a Avider public interest. 

Now, shouldn't you have that consideration in mind also? You 
have that authority, of course, as a part of your general authority. But 
1 should like to keep in mind, in the disposition of this propertj^, what 
is going to be the public effect from your disposition — whether it is 
gong to result in wholesome competition and the fullest use of the 
resources that we have, in the public interest, in keeping prices down 
to where you can get the largest possible consumption. Every house- 
wife, I presume, would like to have aluminum pots and pans if she 
was able to pay for them. 



POST-WAR ECONOMIC POLICY AND PLANNING 35 

Now we have it, I dare say, to a point where the prices can be 
very much lower than they were before the war. I would like to see 
those considerations in the mind of the Administrator, as well as 
whether or not it would constitute a violation of the antitrust law for 
somebody to acquire it, 

Mr. Clayton. I agree witli everything you say, Senator Pepper, 
and think that any Administrator under this statute would be com- 
pelled always to take those considerations into account in making 
disposition of surplus property. 

Senator Pepper. Have we any language in our declaration of policy 
or objectives that would suggest those considerations ? 

Mr. Clayton. I think so ; yes, sir. 

For example, in the objectives, section 1 (e) says — 

to discourage monopolistic practices, preserve, and strengthen the competitive 
position of small business, and promote fair prices to consumers ; 

I think that is exactly what you have just stated. 
Senator Pepper. Yes ; I think that covers it. 
Mr. Clayton. And (c) says — 

to promote production, employment of labor, and utilization of the productive 
capacity, and the natural and agricultural resources of the country ; 

Senator Pepper. Yes; those are very good objectives. 

Senator Johnson. Mr. Chairman, may I ask a question? 

The Chairman. Yes, Senator Johnson. 

Senator Johnson. I don't find anything in section 13 or section 14 
with respect to the dislocation of pre-war industries. I notice in sec- 
tion 1(d) one of the objectives is "to avoid dislocations of the domestic 
economy and of international economic relations." 

But there is nothing in either section 13 or section 14 which gives 
any assurance against the dislocation of pre-war industries in the 
disposition of these plants. 

Mr. Clayton. That is correct. Senator, and I think that such a 
provision in language of that kind might be undesirable, because it 
might subject the Administrator to a great many pressures which 
would make it difficult for him to make disposals. He certainly 
would, under the objectives named in the act and the policies, have to 
take such matters into consideration in making disposals. But I am 
afraid if a specific language provision were inserted to that effect, it 
might subject him — he is going to be subjected to plenty of pressure 
on that ground in any case, because in disposing of this property, 
especially in the post-war period, whether it be personal property or 
real property, plants, or whatever it may be, one of the great burdens 
of the Administrator is going to be to have to listen to pressure groups 
who will feel that the disposition of the property will put them out 
of business or will interfere with their business. 

The Chairman. All right, Mr. Clayton. We may be keeping you 
longer than you intended. 

Mr. Clayton. Oh. no, sir ; I have plenty of time. 

Mr. Colmer. Senator George, if I may, we have the contract termi- 
nation bill up on the floor of the House, and I find it necessary to 
leave. I dislike very much to leave this very interesting meeting, but 
I must go. 

The Chairman. We thank you for coming over, Mr. Colmer. We 
will provide you with a full transcript of the record we make today. 



36 POST-WAR ECONOMIC POLICY AND PLANNING 

Mr. CoLMER. Tliank you. 

Mr. Clayton. Section 14 is an important section, and reads: 

Sec. 14 (a) No Government agency shall dispose of any surplus Government- 
owned plant for the production of synthetic rubber, or aluminum, vfhich orig- 
inally cost the Go^'ernment $5,000,000 or more, except in accordance with this 
section or pursuant to an option therefor. 

(b) The Administrator may authorize any disposal agency to lease any such 
surplus plant for a term of not more than 5 years subject to the provisions of 
section 13. 

The Attorney General has suggested that that period be left open 
within the discretion of the Administrator, instead of being limited 
to 5 years ; and that is agreeable to us, if Congres wishes so to legislate. 

(c) The Administrator shall prepare and subnsit to Congress a report setting 
forth a proposed plan of disposal for each class of such property. After 6 
months from the submission of his report, unless the Congress provides other- 
wise by law, the Administrator may authorize the appropi-iate disposal agencies 
to dispose of such property in accordance with the plan proposed in the report 
to Congress. 

(d) The Administrator may authorize any disposal agency to dispose of any 
materials or equipment related to any surplus plant covered by subsection (a) 
of this section, if such materials and equipment are not necessary for the opera- 
tion of the plan in a manner for which it is designated. 

(e) This section shall not apply to any Government-owned equipment, struc- 
ture, or other property operated as an integral part of a privately owned plant 
and not capable of economic operation as a separate and independent unit. 

— what we ordinarily refer to as scrambled facilities. 

The Chairman. That is a rather important provision in the bill. Of 
course, you are dealing here with the synthetic rubber and aluminum 
plants; and our policies, of course, haven't been very well defined so 
far as, for instance, synthetic rubber is concerned. We have a great 
many related problems that will be up for consideration sooner or 
later, and here you simply are trying to have the lease or disposition 
outlined, in plan, with ample opportimity to study it and for the public 
agencies, including Congress, of course, to study it, before there is a 
final disposition of the property. 

That. I take it, is the real purpose of this provision. 

Mr. Clayton. Yes, sir ; it is. 

Senator Pepper. Does that mean there would be no major disposi- 
tions of property until that 6 months' period has elapsed ? 

Mr. Clayton.' Of the synthetic rubber or aluminum plants only. 

The reason we included that provision with reference to those two 
types of plants only, is this: We felt that as to synthetic rubber, that 
was a type of plant that perhaps the public was more interested in than 
any other character of plant that had been built by the Government 
during the w^ar, particularly with reference to post-war disposal and 
use, Futhermore, it may be that the question of the S3mthetic rubber 
plants may be included in international agreements or arrangements 
of some kind. I don't know, but that is possible. 

So that we felt that as to synthetic rubber, Congress would certainly 
want to have a look at the proposed plan of disposal or operation of 
those plants, and had a right to do so; and that no Administrator 
would want to dispose of them on his own. 

As to aluminum, I think it is more or less obvious why we included 
the aluminum plants in that provision— because, up to the beginning 
of the war, the private production of aluminum in this country was 
pretty much in the hands of one corporation, and the Government 



POST-WAR ECONOMIC POLICY AND PLANNING 37 

now owns, I think, about two-thirds of the total aluminum-producing 
capacity of the country. And we felt that Congress would want to 
luive a look at any plans for the disposal of those plants. 

The Chairman. All of those plants cost $5,000,000 or more, did they 
not, Mr. Clayton? 

Mr. Clayton. Yes ; I don't think there is one that cost less. 

The Chairman. I assumed that they would all have cost the $5,000,- 
000 or more that you had included in the bill. 

Senator Pepper. Is steel not in the same category ? 

Mr. Clayton. We don't think so, Senator Pepper. Some of the 
other bills included in that category steel plants, oil pipe-lines, ships, 
and maybe one or two other types of property or plants. We don't 
think steel is in that category. The steel industry in this country is 
less centralized today than it was 40 years ago, a good deal less cen- 
tralized or concentrated than it was 40 years ago. And we don't 
tliink 

Senator Pepper (interposing). Do you happen to recall offhand 
what percentage of the present plant productivity the Government 
owns ? 

Mr. Clayton. I do not. I would like to ask Mr. Klagsbrunn, if 
he is here, what percentage of the total productive steel capacity of 
the country is owned by the Government ? 

Mr. Klagsbrunn. Approximately 10 percent. 

Senator Hawkes. May I ask Mr. Clayton a question? 

The Chairman. Yes, Senator Hawkes. 

Senator Hawkes. Do I understand that under section 14 (b), you 
have the power to go ahead and lease a plant, so as to keep up em- 
ployment and production, for any time from nothing up to 5 years; 
while this provision to sell or dispose of the plant is being put before 
the Congress for its consideration? 

Mr. Clayton. Yes, sir. 

Senator Hawkes. So that nothing in this bill would disturb em- 
ployment and the carrying on of the operations, if that was deemed 
advisable and necessary? 

Mr. Clayton. That is right, Senator. 

The Chairman. All right, Mr. Clayton. 

Mr. Clayton. Of course, Senator, it might be that you could sell 
the plant, but couldn't lease it : or the situation might arise that there 
wouldn't be a customer for a lease 

Senator Haavkes (interposing). Yes, I understand that. But I 
mean, if you could find a lessee or a person who would lease the plant 
from you and continue to operate it, then you have the power under 
this clause to do that thing ? 

Mr. Clayton. That is correct; yes, sir. 

Senator Hawkes. That is all I wanted to know. 

Mr. Clayton. If there are no other comments on section 14. I will 
go to section 15 : 

Sec. 15. No option of any person to purchase or otherwise acquire Govern- 
ment-owned property shall be honored except in strict conformity with the price 
and other terms of such option. If any such option is not exercised, the prop- 
erty shall be disposed of in accordance with the provisions of this Act. 

I would like to comment a little bit. Mr. Chairman, on that section 
15, and without going into questions of language or draftsjiianship, I 

61846 — 44— pt. 1—6 



38 POST-WAR ECONOMIC POLICY AND PLANNING 

would like to explain our intentions in dealing with the subject of 
options. 

Most contracts under which the Government has financed industrial 
plants or equipment to be operated by private companies contain pro- 
visions permitting the private operator to buy the property when it 
is no longer needed for war production. The price is usual h^ clearly 
specified in the contract, and is usuallj' cost less depreciation or cost 
less amortization, whichever gives the greater return to the Gov- 
ernment. 

The executive agencies whose contracting officers signed the con- 
tracts embodying such options are certainly contractually committed 
to carrying them out in accordance with their terms. 

The feeling of the majority of the committee which drafted the 
proposed bill was that a surplus-property act was not an appropriate 
vehicle either for clearing up any doubts which may exist as to the 
validity of such options, and the possibility of antitrust liability re- 
sulting from their exercise, or for casting any doubt on the question. 
We therefore have provided, first, that such options shall be honored 
only in strict accordance with their terms ; and, second, that the pro- 
visions in sections 13 and 14, which restrict sales of industrial plants 
in certain instances, shall not apply to the exercise of an option. 

It was our intention, and we believe the language carries it out, 
thus to leave the options where we found them. If anyone is now 
entitled to question whether an option is valid, or to assert after its 
exercise that an antitrust law violation has resulted, the proposed 
bill is not intended to alter that situation. 

But it did not seem proper to place, by provisions such as those of 
sections 13 and 14, obstacles in the way of an agency Avhich regarded 
itself as contractually bound to carry out an option which it had 
signed. 

We thought that to include options in the procedural requirements 
of sections 13 and 14 would be affirmatively to cast doubt upon them, 
and that this would depart from our desire not to affect them one 
way or the other. 

i may add that we do not regard section 15 as important. It 
merely declares what we feel would clearly be the law without it. 
It was inserted mainly because several of the bills now pending have 
included it. We would not object to its deletion. 

A number of the agencies, however, would strongly object to sub- 
jecting options to the provisions of sections 13 and 14. 

Senator Pepper. What are the terms, generally, of the options with 
respect to plants 'i 

Mr. Clayton. It gives the contractor an option to purchase, within 
a certain short period after the termination of the war, at cost less 
depreciation or cost less amortization — which means the rentals that 
have been collected on the plant — whichever gives the Government 
the more money. 

The CHAiR3rAN. We were advised earlier in our inquiries, Mr. Clay- 
ton, that few, if any, of these options would be exercised. 

Mr. Clayton. We expect. Senator George, that will bo the case. 
We don't expect to sell many plants by the taking up of the options. 
The prices are too high in most cases. 

The Chairman. There might be, of course, some instances where 
they would exercise the option. 



POST-WAR ECONOMIC POLICY AND PLANNING 39 

Mr. Clayton. Yes, sir. 

Senator Austin. What is an example of "otherwise" acquiring — an 
option to "otherwise acquire"? 

Mr. Clayton. Where is that, Senator Austin? 
Senator Austin. In line 7, on page 15 — 

No option of any person to purchase or otherwise acquire Government-owned 
property — 

what is an example of that? 

Mr. Clayton. I would like to ask our general counsel, Mr. Scott, to 
reply. 

Mr. Stuart N. Scott (general counsel, Surplus War Property Ad- 
ministration). Under the emergency plant facilities contracts, the title 
to the facilities remains with the contractor during the 5-year period 
in which the Government reimburses him for the cost of it, 60 months, 
one-sixtieth each month ; and at the end of that period the option then 
comes into effect. But in effect, it is an option to retain rather than 
an option to acquire. It reads that the title is transferred to the Gov- 
ernment unless he exercises his option and pays the Government back, 
rather than the right to acquire. That was the reason for that 
language. 

Senator Austin. Thank you. 

Mr. Clayton. If there are no further comments on section 15, the 
next two sections of the act, Mr. Chairman, deal with regulations of 
the Administrator and general provisions, and I think we might skip 
those and go down to disposition of proceeds, on page 17 : 

Sec. 18. (a) All proceeds from any transfer or disposition of property under 
this Act shall be deposited and covered into the Treasury as miscellaneous re- 
ceipts, except as provided in subsections (b), (c), (d), and (e) of this section. 

(b) From the proceeds of such transfers or dispositions, the agency may 
deduct all expenses incurred for the care and handling, completion, and trans- 
fers or dispositions of such property under this Act, and may reimburse the fund 
or appropriation bearing such expenses, or the corresponding fund or appro- 
priation currently available at the time of reimbursement. 

(c) Where the property transferred or disposed of was acquired by the use 
of funds either not appropriated from the general fund of the Treasury or ap- 
propriated from the general fund of the Treasury but by law reimbursable from 
assessment, tax, or other revenue or receipts, then upon the request of the inter- 
ested agency the proceeds of the disposition or transfer remaining after any 
deductions under subsection (b) of this section shall be credited to the reim- 
bursable fund or appropriation or paid to the owning agency. 

(d) To the extent authorized by the Administrator, any Government agency 
disposing of property under this Act (1) may deposit, in a special account with 
the Treasurer of the United States, such amount of the proceeds of such dispo- 
sitions as it deems necessary to permit appropriate refunds to purchasers when 
any disposition is rescinded or does not become fioial, or payments for breach of 
any warranty, and (2) may withdraw therefrom amounts so to be refunded 
or paid, without regard to the origin of the funds withdrawn. 

(e) Where a contract or subcontract authorizes the proceeds of any sale of 
property in the custody of the contractor or subcontractor to be credited to the 
price or cost of the work covered by such contract or subcontract, the proceeds 
of any such sale shall be credited in accordance with the contract or subcon- 
tract and shall not be subject to subsection (a) of this section. 

The use of appropriated funds is, I think, the usual one. 
The delegation of authority : 

Sec. 20 (a) The Administrator may delegate any authority and discretion con- 
ferred upon him by this Act to any Deputy Administrator, and may delegate 
such authority and discretion, upon such terms and conditions as he may pre- 
scribe, to the head of any Government agency to the extent necessary to the 
handling and solution of problems peculiar to that agency. 



40 POST-WAK ECONOMIC POLICY AND PLANNING 

(b) The head of any Government agency may delegate, and authorize suc- 
cessive redelegations of, any authority and discretion conferred upon him or his 
agency by or pursuant to this Act to any officer, agent, or employee of such 
agency or, with the approval of the Administrator, to any other Government 
agency. 

(c) Any two or more Government agencies may exercise jointly any avithority 
and discretion conferred upon each of them individually by or pursuant to this 
Act. 

Applicability : 

Sec. 22. All policies and procedures relating to surplus property prescribed 
by the Surplus War Property Administration, created by Executive Order Num- 
bered 9425, dated February 19, 1944, or any other Government agency, in effect 
upon the effective date of this Act, and not inconsistent with this Act, shall re- 
main in full force and effect unless and until superseded by regulations of tlie 
Administrator or of the agency in accordance with this Act. 

Sec. 23. (a) Nothing in this Act shall limit or affect the authority of com- 
manders in active theaters of military operations to dispose of property in their 
control. 

(b) The provisions of this Act shall be applicable to dispositions of property 
within the United States and elsewhere, but the Administrator may exempt 
from some or all of the provisions hereof, dispositions of property located out- 
side of the continental United States or in Alaslia, whenever he deems that such 
provisions would obstruct the efficient and economic disposition of such property 
in accordance with the objectives of this Act. 

Sec. 24. (a) The authority conferred by this Act is in addition to any author 
ity conferred by any other law and shall not be subject to the provisions of any 
law inconsistent herewith. This Act shall not impair or affect any authority 
for the disposition of property under any other law, except that the Administra- 
tor may prescribe regulations to govern any disposition of surplus proi)erty un- 
der any such authority to the same extent as if the disposition were made under 
this Act, whenever he deems such action necessary to effectuate the objectives 
and policies of this Act. 

Then subsection (b) is one which I read previously, which states 
that the sales and disposition are under the O. P. A. and the W. P. B, 
regulations as to priorities and allocations. 

I think the rest of it is more or less routine. 

The Chairman. Yes; it would seem to be. 

You haven't 3'et supplied the penalty provisions? 

Mr. Clayton. No. sir ; that is in preparation. 

Senator Reatrcomb. ^Mr. Chairman. 

The Chairman. Yes, Senator Revercomb. 

Senator Reat:rcomb. Is there any provision here for accounting by 
the agencies of the Goverument to the General Accounting Office? 

Mr. Clayton. No ; there is no such provision. 

Senator Revercomb. Do you not think there should be accounting 
for these transactions ? 

^Ir. Ci.AYTON. That, of course, is, I believe, quite a controversial 
subject. I don't think we ought to have anything in this statute relat- 
ing to it. There must be other statutes relating to the subject, and I 
think that we should avoid putting any provision in here 011 that 
subject. 

Senator Rfvercomb. That would permit the agencies to go ahead and 
di.spose of this property, collect the money and dispose of it, according 
to the terms of the act, without showing an accounting therefor. 

Mr. Clayton. I don't so understand, but I may not be thoroughly 
familiar — I know I am not thoroughly familiar — with the statutes on 
that subject. I Avould dislike very much to see any provision in this 
law which might be construed as casting any cloud on a title wliich any 
agency might be able to give to any property that it might dispose of. 



POST-WAR ECONOMIC POLICY AND PLANNING 41 

Senator Revercomb. I am not thinking of a cloud on the title, but I 
am thinking of clearing the transaction through the agency. I don't 
believe it would affect the right or the title of the purchaser, but it 
would simply be an accounting, as ever}^ business transaction should 
be accounted for. 

Mr. Clayton. I have heard — I don't know how important it is — 
that a good many business people fear that in the purchase of this — 
at any rate, contract termination property — that some question might 
be raised later, if the property is supposed to have been purchased too 
cheaply, as to whether the buyer might be subjected to penalties or 
have to pay a higher price, or something of that kind. 

Senator Revercomb. That would be well taken care of, because if I 
remember correctly, in S. 1718 — which was passed by the Senate — the 
only ground upon which the transaction could be disturbed would be 
fraud ; and that is always a sound ground for disturbing a transaction. 

Mr. Clayton. Certainly, I agree. 

Senator Revercomb. And the accounting would be more or less a 
relation between the selling agency of the Government and the people. 
I suggest that you give consideration to that, sir. 

Mr. Clayton. Well, do not existing statutes cover that point? 

Senator Revercomb. I am not able to say whether any statute covers 
that point. But I am impressed with the thought that in a statute as 
broad as this, reference should be made to it. 

I am advised that the general statutes on accounting for transactions 
of this kind do not cover transactions under this bill. 

Mr. Clayton. May we consider that point ? 

Senator Revercomb. I would be very happy if you would do so, 
because I think it is important. 

Mr. Clayton. We will do that. 

The Chairman. Are there any further questions that anyone wishes 
to ask of Mr. Clayton ? 

(No response.) 

Mr. Russell. Mr. Chairman, a good many of the agencies — I think 
all of them — that are represented on Mr. Clayton's Board, cam.e in to 
offer their views to the committee; but the committee was so inter- 
ested in Mr. Clayton's testimony that I assume you cannot wait longer 
to hear them. If you would appoint a time for them to come back 
and present their views, I think it would give the committee the full 
picture. 

The Chairman. I would be glad to, Mr. Russell, at the earliest con- 
venient time, because we would like to get early action on this bill. 

Mr. Russell. Suppose I undertake to find out when the earliest con- 
venient time will be, rather than attempt to appoint that time at the 
moment, and advise you so that you can call the meeting ? 

The Chairman. I think that would be desirable; but if possible, 
at a very early date, because we would like to proceed with this. 

Mr. Russell. I would like to do it during the early part of the 
week. 

The Chairman. And you can't wait until too late in the week, be- 
cause we have a convention. 

Mr. Russell. Would Tuesday, tentatively, suit the chairman? 

The Chairman. Yes. 

Mr. Russell. Suppose we tentatively set it for Tuesday, then, Sen- 
ator, and call it for that time. 



42 POST-WAR ECONOMIC POLICY AND PLANNING 

The Chairman. That would probably be all right, say at 10 o'clock 
on Tuesday. 

Mr. Russell. And we will ask the House committee to come back 
over. 

The Chairman. Yes ; we would be glad to have the House com- 
mittee present, and any of the other committees that wer^ invited ^here 
today. 

Mr. Clayton, we want to thank you for your appearance here, for 
your statement to us, and for the very valuable assistance that you 
are rendering in this rather important field. 

Mr. Clayton. Thank you, Mr. Chairman. 

The Chairman. Thank you very much. 

Mr. Clayton. Thank you for your patience in listening to me. 

(Whereupon, at 1 p. m., the committee recessed until Tuesday, June 
20, 1944, at 10 a. m.) 



POST-WAK ECONOMIC POLICY AND PLANNING 



TUESDAY, JUNE 20, 1944 

Congress of the United States, 
Committees on Post-War Economic Policy and Plannincx, 

Washington^ D. C. 
executive session 

The committees met, pursuant to adjournment, at 10 a. m., in room 
312, Senate Office Building, Senator Walter F. George (chairman 
of the Special Committee on Post- War Economic Policy and Plan- 
ning of the United States Senate) , presiding. 

Present: Senators George, Barkley, Vandenberg, and Kevercomb; 
Kepresentatives Colmer (chairman of the Special Committee on Post- 
War Economic Policy and Planning of the House of Representatives) 
and Lynch. 

Also present: Mr. Scott Russell, counsel for the Senate Post-War 
Economic Policy and Planning Committee. 

The Chairman. The hearing will be in order, please. 

We are continuing the consideration of this proposed bill to provide 
for the disposal of surplus Government property and plants. 

I see, listed first. Captain Strauss. Captain Strauss, you may come 
around here, please, sir. 

STATEMENT OF CAPT. LEWIS L. STRAUSS, NAVY 'DEPARTMENT 

The Chairman. Captain, we will be glad to have you proceed di- 
rectly in your own way with reference to this proposal which was dis- 
cussed by Mr. Clayton at the last meeting of the committee. 

Captain Strauss. Thank you, Mr. Chairman. 

I assume Mr. Russell has explained that I am a witness for another 
Senate committee this morning. 

Tlie Chairman. Yes, sir. 

Captain Strauss. I have a statement, sir. It is brief, and with your 
permission, I will read it. 

The Chairman. Yes, sir. 

Captain Strauss. The Navy Department is glad of an opportunity 
to be recorded as urging the prompt enactment of legislation which 
will provide for the organization and policies to govern the disposal 
of property surplus to the needs of the Naval Establishment. The 
Navy Department early advocated centralized disposal of surplus as 
a means of avoiding duplication of effort and competition among the 
owning agencies of the Government. 

Representatives of the Navy Department have collaborated in draft- 
ing the proposed bill which Mr. W. L. Clayton, Surplus War Prop- 

43 



44 POST-WAR ECONOMIC POLICY AND PLANNING 

erty Administrator, has submitted. We regard it as a sound and prac- 
tical measure, which, while affording necessary administrative flexi- 
bility, nevertheless prescribes the definite congressional framework of 
policies and principles which are to govern administrative action. 

The task is of huge dimensions and there will naturally be some 
period of trial and error, already begun under Executive order, and 
from which experience will be gained for the larger operation that 
lies ahead. Much has been accomplished by Mr. Clayton's organiza- 
tion, but it is evident that the successful completion of this essential 
part of our eventual conversion from a war economy can only be 
achieved with the aid of enabling legislation such as is now before 
you. 

The Chairman. Are there any questions, gentleman ? 

Senator Vandenberg. Do I understand that statement, Captain, to 
mean that you approve the Clayton proposal? 

Captain Strauss. Yes, sir. I realize the language is pretty sweep- 
ing, and it is a sweeping approval, sir. 

We think it is a good bill. 

The Chairman. The Department collaborated in the preparation 
of the bill? 

Captain Strauss. The Department did. Several of the officers con- 
nected Mith the legal establishment in the Department and with the 
Industrial Readjustment Branch, of which I am the head, have col- 
laborated in the preparation of the bill. 

Senator Vandenberg. Are you familiar with the so-called Kilgore 
bill ? _ 

Captain Strauss. I am. sir. 

Senator Vandenberg. You prefer this bill? 

Captain Strauss. I do, sir. 

Senator Vandenberg. Does that mean that you oppose the Kilgore 
bill? 

Captain Strauss. I do not know whether the Navy Department has 
yet taken an official position with respect to the Kilgore bill. I per- 
sonally 7-egard it as unworkable. I am sorry that there is not an 
officer here who might be able to supplement my opinion. I don't 
know whether a letter has been written by the Secretary on the subject 
of the Kilgore bill. 

Senator Barkley. The Kilgore bill deals with a great many more 
subjects than surplus property. 

Captain Strauss. Yes, sir. 

The Chairman. Anv other questions? 

Mr. CoLMER. This bill is pretty broad in its discretionary power, is 
it not, Captain ? 

Captain Strauss. You are talking about the committee print? 

Mr. CoLMER. Yes. 

Captain Strauss. Yes, sir. 

Mr. CoLivfER. Do you think it would be practical for Congress to 
write standards and tighten the thing up a bit. or do you think it is 
essential in a matter of this sort, in an untried field, meaning thereby 
more or less pioneering in this field, for the Administrator to have 
broad discretionary powers? 

Captain Strauss. My personal preferences, Mr. Colmer, are al- 
ways for less administrative leeway, and more specific direction from 
the Congress. I think in a field as uncharted as this, and in a 



POST-WAR ECONOMIC POLICY AND PLANNING 45 

subject as complex as this one is, that the administrative flexibility 
in this bill is not excessive. 

As a matter of fact, I think it is the minimum with which a fair 
administration of the job can be done. 

Mr. CoLMER. That is all. 

The Chairman. If there are no other questions. Captain, we thank 
you very much for your appearance. 

The War Production Board is represented by Mr. Hawes, I be- 
lieve, this morning. 

STATEMENT OF ALEXANDER HAWES, ASSISTANT GENERAL 
COUNSEL, WAR PRODUCTION BOARD 

Mr. Hawes. My name is Alexander Hawes. I am assistant gen- 
eral counsel. 

Mr. Chairman, Mr. Nelson regretted very much his inability to 
appear this morning because of another engagement, and he asked me 
to state that the War Production Board favors the enactment of this 
bill. 

It seems to us to contain the minimum procedures necessary to 
handle the situation. We believe that it provides an effective method 
of dealing with surplus property. 

I think that is all I have to contribute. 

The Chairman. Are there any questions? 

Senator Vandenberg. Are you familiar with the Kilgore bill, the 
comparable sections of the Kilgore bill? 

Mr. Hawes. I am not, Senator. 

Senator Barkley. Did the War Production Board sit in on the 
framing of this legislation? 

Mr. Hawes. Yes; we had representatives both on the subcom- 
mittee which worked over the bill, and also on the board which later 
considered the draft. 

Senator Barkley. Do you know how many of the departments of 
the Government or agencies collaborated in the preparation of this 
bill? 

Mr. Hawes. I cannot tell. It is my impression about a dozen, 
but Mr. Clayton undoubtedly can tell you more about that. 

Senator Revercomb. I note that in the proposed draft of the bill 
which you have before you, there is no provision for an accounting. 
That is, the General Accounting Office, after the transaction is ap- 
proved, does not have to go over the transaction and approve it as an 
accounting transaction. 

Do you think there ought to be some provision for that ? 

Mr. Hawes. I do not believe. Senator, that that represents any 
change in present procedure. I may be wrong about that. 

Senator Revercomb. The general laws would not cover the ac- 
counting of this bill ? 

Mr. Hawes. I cannot express an opinion on that point. 

Senator Revercomb. All right. 

The Chairman. Thank you very much, Mr. Hawes. 

Mr, Cox, from the Department of Justice, is not here at the pres- 
ent time. We will next hear from the War Department, General 
Clay. 



46 POST-WAR ECONOMIC POLICY AND PLANNING 

STATEMENT OF MAJ. GEN. LUCIUS D. CLAY, DIRECTOR OF 
MATERIEL, ARMY SERVICE FORCES, WAR DEPARTMENT 

The Chairman, General, will you give us your views on this 
measure ? 

General Clay. Mr. Chairman, the War Department, as probably 
the largest holder of the property that is going to become surplus, 
has, of course, a very deep interest in its disposal. We have advo- 
cated for many months the establishment of a central disposal agency 
to be charged with the disposition of surplus property. 

We are not equipped to handle it in the War Department. We do 
not think we should handle it while we are fighting the war, and we 
certainly do not think we should handle it after the war is over. 

AVe participated in the subcommittee which Mr. Clayton set up to 
draft these proposals, and we are very, very much in favor of the 
bill. Not only do we recognize the need for temporary legislation; 
we think it might well, at some time, be made into permanent 
legislation. 

The disposal of surplus property is a matter of current magnitude 
within the War Department. I think some figures that we have here 
might be of interest in pointing out the extent of the problem even 
at the present moment. 

In the last half of 1943 — and it was in the middle of 1943 that it 
first became a problem — and through the first quarter of 1944, over 
a period of 9 months we have actually redistributed or otherwise dis- 
posed of approximately $261,000,000 of property. Actually it is a 
business now that is running in the neighborhood of $35,000,000 a 
month. 

Of course, we have for many months transferred all of our con- 
sumer-goods items to the Treasury Department for sale, as our own 
selling has been confined to salvage and scrap, which we believe we 
will have to continue to sell, because it accumulates in so many dif- 
ferent places throughout the country and abroad, and the authoriz- 
ing of sales to our contractors under termination proceedings. 

We estimate that we now have in termination equipment property 
still not disposed of, but which will become available for disposal at 
an apparently early date, as the result of terminations now in proc- 
ess, approximately $296,000,000 worth of property. That, of course, 
is a current problem. 

We must terminate these contracts promptly, and we must move 
the property promptly to continue the contractors in the Avar business. 
With the end of the war, of course, that problem of moving property 
promptly will be even more acute to permit rapid and prompt recon- 
versions. We think it is probably the main problem in reconversion. 
We face the acute problem of storage. There is a very great diffi- 
culty even now in obtaining storage space. That problem will, of 
course, be even more acute when the war ends. 

For these reasons we are convinced there must be a responsible 
■central agency set up and established to move property promptly and 
with sufficient authority within its discretion to permit flexible sales 
policies and flexible price policies to permit the rapid movement of 
this property. 

We have a very vital interest, I think, sir, in one of the questions I 
heard raised at the first meeting of this committee on the question of 
Avho should declare property surplus. 



POST-WAR ECONOMIC POLICY AND PLANNING 47 

We do have a feeling in the War Department that the declaration 
of military surplus should rest within the War Department as this 
bill provides. After all, we cannot, any of us, foretell at this particular 
l^eriod what the conditions will be even with the coming of the peace. 
We do not as yet have from the Congress naturally a future national 
defense policy. Until those factors are decided, and we know a great 
deal more than we do now, we believe that the guarding of the military 
surplus for national defense should rest in the hands of those who are 
responsible for national defense until congressional policy has been 
formulated, and the requisite report can be submitted to the Congress. 

I believe that covers all the statement that I have to make. 

The Chairman. Any questions, Senator Barkley ? 

Senator Barkley. Your attitude in regard to the War Department 
declaring its own surplus — you are more familiar with it — of course 
that applies to other departments in the same situation, does it not? 

General Clay. Yes, sir. 

Senator Barki^y. Have you any idea, that you would be willing to 
express, as to what the total value of surplus property will be when 
this war is over ? 

General Clay. No, sir. We have made many efforts even to esti- 
mate it. 

As a result of the cessation of contractual work in process, and based 
on the percentage of work in process that we have taken over on termi- 
nations up to date, I would estimate that there would perhaps be from 
three to four billion dollars of work in process that would result from 
the termination of contracts. Of course, the facilities in machine tools 
that have been provided for the Government run up into the figiu'e of 
some 16 billion dollars, much of which will become surplus. 

Up to the present time we have issued and made available to our 
troops somewhere in the vicinity of 35 billion to 40 billion worth of 
equipment. How much of that will become surplus will, of course, 
depend on obsolescence, on the size of the Army after the war, and on 
many other factors that are unknown at the present moment. 

Manifestly, though, the figure will be a very, very substantial one. 
Perhaps, as far as the War Department is concerned, it is a good 
educated guess somewhere in the neighborhood of 10 billion to 12 
billion dollars. 

Senator Barkley. For the War Department? 

General Clay. Yes. 

Senator Barkley. The total amount has been so much guessed at 
by various people that it will run from 10 billion to 75 billion dollars 
altogether. That gives enough margin to absorb the earth. 

General Clay. I guess if you take the very major military items of 
equipment, you would reach the $75,000,000,000 figure, but that is 
taking in j^our tanks, self-propelled vehicles, and many other major 
items of cost. 

Senator Barkley. It might include plants ? 

General Clay. That is right, sir. Many of those will not become 
surplus as I see the picture for many years after the war, 

Mr. Russell. That $75,000,000,006 figure has always been based on 
original cost, too, has it not. General? 

General Clay. I think it really represents the total cost of the end 
iteras^produced by all contractors. 



48 POST-WAR ECONOMIC POLICY AND PLANNING 

We have brought up here, sir, and we thought it might be helpful, 
an exhibit of various and sundry types of property in the back of the 
room, showing the original cost, and what we have been able to get 
on sales. The problem is particularly acute on gages, jigs, dies, and 
fixtures. 

I think it is well to know that since Pearl Harbor, we have prac- 
tically equipped our Army with weapons. There is hardly a major 
weapon that we have today that was in production at Pearl Harbor. 

AVe are on our fourth model of the medium tank and the third 
model of the light tank. With everyone of those changes of models, 
5'ou have a tremendous accumulation of jigs, dies, fixtures, and work in 
process. That accounts, in large part, for this $298,000,000 of termi- 
nated property. 

Senator Reveecomb. General, may I interrupt ? 

General Clay. Yes. 

Senator Reveecomb. What have you been doing with these obsolete 
tanks and guns? 

General Clay. In general we have not as yet done anything with 
respect to these obsolete tanks and guns, because, while they are not 
as good as the newer models, they still constitute a very worth-whilo 
war reserve for us to use. 

Senator Revercomb. You have not discarded them ? 

General Clay. Xo, sir ; we have not discarded them. We have main- 
tained them as a war reserve. They have, of course, reduced ma- 
terially the need for the building, in number at least, of the newer 
weapons, because we have used the obsolete type for our reserves. 

Senator Reveecomb. Do you have any depots or stations where you 
do place obsolete material, such as tanks, guns, or any equipment of 
that kind? 

General Clay. Well, they are placed in our ordinary depots. Cer- 
tain of the space in all of the depots is devoted to that type and kind 
of equipment. That is true in the signal equipment field, particularly 
in radar, where a new and improved model is coming out almost 
every month. 

Senator Reveecomb. What have you done with the old radar equip- 
ment ? 

General Clay. Quite a bit of it is still in use, because we have 
never been able to completely replace it with the new type of equip- 
ment. 

Senator Reatecomb. Some of it has been discarded? 

General Clay. Some of it has been discarded, and the rest of it ia 
in reserve in our depots. A good deal of the radio equipment we have 
dismantled and are using the parts in the building of newer and better 
types of radio. 

Mr. Colmer. General, it is rather difficult, from your point of view, 
for the War Department to say just what is surplus and what is not 
surplus at this time, is it not? 

General Clay. It is extremely difficult, sir, with the exception of 
the terminated contracts, where we have work in process on an early 
model. Where an end item is concerned, it is impossible to say what 
is surplus, because we get requisitions that we must meet from the 
various theaters of war daily. 

Mr. Colmer. You have to proceed with considerable caution as to 
the declaring of certain materials as surplus, do you not ? 



POST-WAR ECONOMIC POLICY AND PLANNING 49 

General Clay. Yes, sir. 

Mr. CoLMER. I recall that I was out, as you were, to Detroit a couple 
of weeks ago, and I saw your exhibit of the surplus from one of the 
Ford plants where you were making tanks. That plant was closed 
down several months ago, was it not? 

General Clay. Yes, sir. 

Mr. CoLMER. On the theory that you were not going to need those 
tanks. 

General Clay. Closed down approximately a year ago; yes, sir. 

Mr. CoLMER. I read in the news dispatches this week that we had 
ordered the tank production stepped up as the result of the experience 
in France. I merely mention that to emphasize that it is rather diffi- 
cult to say what is surplus and what is not. 

General Clay. Well, it runs all across the line that way. We have 
right now a very increased demand for heavy artillery. We do have 
an increased demand for tanks, which we are going to meet in large 
part by the rehabilitation and modernization of the large number of 
tanks which we have on hand. 

Mr. CoLMER. I was very much impressed with your exhibit on sur- 
pluses out there. I was convinced that it is going to be necessary to 
give the administrator considerable discretionary power in the dis- 
posal of these surpluses. 

The Chairman. Does anyone else have any questions ? 

Thank you very much. General. 

General Fleming, from the Federal Works Agency. 

STATEMENT OF MAJ. GEN. PHILIP B. FLEMING, ADMIN- 
ISTRATOR, FEDERAL WORKS AGENCY 

General Fleming. The Federal Works Agency has a twofold in- 
terest in the proposed legislation for the disposal of surplus Govern- 
ment property. Under the program authorized by the Congress under 
title II and title IV of the Lanham Act, we have provided many com- 
munity facilities to meet war needs. When these war needs cease to 
exist we will have the responsibility of disposing of this property as 
surplus. On the other hand, we are responsible through our con- 
stituent administrations, the Public Buildings Administration and 
the Public Roads Administration, for large peacetime construction 
programs. These constructon programs of highways, and grade sep- 
arations and of post offices and other Federal buildings, are the po- 
tential users of large quantities of surplus material, equipment, and 
supplies. 

Our interest, therefore, is both. as an agency responsible for a war 
activity which will cease with the end of the war need with property 
that must be disposed of, and as the peacetime construction agency of 
the Federal Government. In studjdng the proposed legislation from 
both points of view, we feel that it is legislation under which a good 
administrator can operate and carry out the j)olicies and objectives set 
forth and under which equitable consideration can be given to agencies 
having surpluses and to agencies and the general public wishing to 
acquire surpluses. 

We feel the fundamentals of sound management have been in- 
cluded in the legislation whereby the administrator has been given a 
statement by the Congress of the objectives and policies to be carried 



50 POST-WAR ECONOMIC POLICY AND PLANNING 

out and then ^iven broad discretionary authority to issue necessary 
rules and regulations for meeting the many ditt'erent problems that 
will arise in carrying out these policies and objectives. 

You have been through the legislation in detail and Mr. Clayton has 
explained to you the provisions from his standpoint as the present 
Administrator under the Executive order. I should like to further 
emphasize the fundamental policies in legislation from the standpoint 
of the Federal Works Agency, which, through its constituents will be 
both declaring certain classes of property surplus and will be in the 
market for other classes of property. 

The legislation places full responsibility for administration of the 
act in the Administrator and provides an advisory board but does not 
create divided responsibilit3\ The board will function purely in an 
advisory capacity. I think that this is sound and that the Admin- 
istrator should be held finally accountable to the President and to 
the Congress for his administration. 

In section 7 (a) the responsibility for determining surpluses is 
placed on each owning agency. This follows the same pattern of 
IDlacing responsibility where it belongs — on the head of each agency 
and does not diffuse responsibility. The Administrator is authorized 
by regulations to establish policy methods and procedures, to carry 
out the purposes of the act, and to designate disposal agencies. We 
believe this is eminently sound. The Federal Works Agency believes 
it can convince the Administrator of the adequacy of our own meth- 
.ods and procedures and of the service we can render him as a disposal 
agency, and we have confidence in his final judgment on these matters. 

We feel that the provision with regard to the transfers between 
Government agencies is sound and that the responsibility should be 
placed directly on the head of each Government agency to make the 
fullest practical use of surplus property. We further believe that 
the general policy providing transfers between Government agencies 
based upon payment by the acquiring agency and all sales to local 
public agencies and individuals at fair values is fair to ever3^one. We 
have dealt with practically every county and municipality in the 
United States and its territories, and we feel that the best interest 
of both the Federal and local units of Government will be served by 
i-equiring payment for all surplus rather than any general provision 
for gift and donation to any class or group. 

I do not want to suggest anything which would delay the passage 
of this legislation. I think it is sound and is needed now. On the 
other hand, as one of the chief liquidators of the Federal Government, 
I think the Congress should also give consideration to the over-all 
problems of property management of the regular departments in their 
normal peacetime operations. 

We have practically completed the liquidation of the W. P. A. We 
will have returned to the Treasury over $120,000,000 in this process and 
we transferred to other agencies prior to the issuance of Executive 
Order 9235 hundreds of thousands of dollars' w^orth of equipment. 
There was no provision for the sale of this equipment to the local 
communities. We are now in the process of liquidating the P. W. A. 
and will return to the Treasurv shortly after the close of this fiscal 
year $10,000,000 of unused funds. Recently the X. Y. A. and the 
C. C. C. have also been li(|uidated. In each one of these instances the 
person in charge of liquidation had to proceed under limited legisla- 



POST-WAR ECONOMIC POLICY AND PLANNING 51 

tive authority the agency had, and there was no sound basis for an 
over-all governmental policy. 

If it is feasible, I think the President's recommendations of June 
13 reporting on Senate Resolution 195 should be carried out and leg- 
islation similar in type to H. R. 27'95, as it affects the permanent agen- 
cies of the Government, should be considered. I believe that the funda- 
mental policies established in the surplus property legislation which 
places the full responsibility for property management upon the head 
of each department should be carried over into any modification of 
H. R. 2795. 

I hope these combined committees will give legislative authority 
to the excellent work that Mr. Clayton is now doing under Executive 
order and will establish a permanent policy for management of Federal 
property by modifying H. R. 2795 to meet the principles in this pend- 
ing bill. Perhaps 2795, which has passed the House, could be amended 
and have this legislation added as a separate section. 

The Chaieman. You refer to the O'Leary bill ? 

General Fleming. Yes. I have been a member of Mr. Clayton's 
advisory committee under the Executive order since this office was 
established, and participated in the forming of this bill. I want to 
say the Federal Works Agency is very much in favor of it. 

The Chairman. Any questions of General Fleming? 

Senator Vandenberg. No. 

The Chairman. Thank you very much. General, for your appearance. 

The Reconstruction Finance Corporation, Mr. Klagsbrunn. 

STATEMENT OF HANS KLAGSBRUNN, DEPUTY DIRECTOR, SURPLUS 
WAR PROPERTY, RECONSTRUCTION FINANCE CORPORATION 

The Chairman. Will you give the reporter your name and position 
with the Reconstruction Finance Corporation ? 

Mr. Klagsbrunn. Hans Klagsbrunn, Deputy Director of the Sur- 
plus War Property, R. F. C. 

The Chairman. All right, Mr. Klagsbrunn, we are very glad to 
hear you with respect to this problem that is covered in this suggested 
draft, discussed by Mr. Clayton at the meeting last week of this 
committee. 

Mr. Klagsbrunn. Thank you. Senator. 

I should like to join Mr. Clayton and other witnesses in recom- 
mending an early enactment of this legislation. We think it is a 
good bill. It sets a broad but specific framework of policy, and it 
provides a flexible, workable administration which we feel is abso- 
lutely essential in a situation where there is such a variety of problems 
of property, and of circumstances that will arise. 

It also eliminates various minor but troublesome hurdles, and in 
that way, too, we feel it will very materially expedite and simplify 
the handling of surpluses in an orderly fashion. 

Accordingly, we favor its early passage. 

The Chairman. You collaborated in its preparation? 

Mr. Klagsbrunn. We did. We collaborated in the preparation of 
the legislation and in the consideration of the draft. 

The Chairman. Are there any questions? 

Senator Barklet. Were there a good many divergent views among 
the various people who collaborated, as you started out? 



52 POST-WAR ECONOMIC POLICY AND PLANNING 

Mr. Klagsbrunn. As I recall it, the views were not seriously diver- 
gent. There might have been differences as to how a particular ob- 
jective should be accomplished, and the bill represents, in some re- 
spects, compromises; but it was in relation to matters which did not^ 
to me, at least, appear to be fundamental. 

Senator Barklet. Whatever differences there were in the begin- 
ning were ironed out and you came to a common understanding as to- 
the best way to handle it? 

Mr. Klagsbrunn. That is my understanding. I think Mr. Clay- 
ton, in the meeting of last week, stated an agreement between the 
agencies had been reached, with the exception, I believe, of the Smaller 
War Plants Corporation, which had a matter they felt could be han- 
dled efficiently by administrative regulations rather than by legis- 
lation. I believe the record so indicates, Mr. Clayton's statement. 

Senator Barklet. AVas that matter left to administrative regulatioiii 
in the bill ? 

Mr. Klagsbrunn. Yes. 

The Chairman. Are there any further questions? 

We thank you very much. 

Mr. Russell. Mr. Leland is going to appear for the Foreign Eco* 
nomic Administration and is the next one you have on the list. 

The Chairman. All right, Mr. Leland. 

STATEMENT OP ROBERT LELAND, OFFICE OF THE GENERAL 
COUNSEL, FOREIGN ECONOMIC ADMINISTRATION 

The Chairman. Will you identify yourself for the record, and your 
position with the Foreign Economic Administration ? 

Mr. Leland. My name is Eobert Leland. I am in the office of the 
General Counsel. 

Mr. Crowley has authorized me to say that the Foreign Economic 
Administration is in favor of the enactment of this bill. We think it 
is by far the best of some 80 or 90 bills introduced on this subject. 

"\Ve are particularly pleased with its recognition that there is a for- 
eign disposal problem as well as a domestic one. 

In that connection, I might point out that there is a matter that 
has not been touched on in the bill that the Administrator and Con- 
gress may wish to consider, and that is whether or not the Adminis- 
trator should be authorized to prevent the return to tliis country of 
certain goods he decides to sell abroad. 

The Tariff Commission and we favor power in the Administrator 
when he finds it necessary to prohibit tlie reentry of certain goods; 
we do not favor any complicated system of tariff barriers, setting- 
duties on surplus goods. 

There is another point raised by a suggested amendment of ther 
Maritime Commission, and that has to do with ships — the disposal of 
mei-chant sliips. 

Mr. Crowley feels that this matter should be considered further by 
Mr. Clayton and the Maritime Commission, and plans to discuss it 
with them. 

The Chairman. I believe Mr. Clayton suggested in his discussion 
that the (lisjjosal of shijDS be left Avith the Maritime Commission under 
existing law. 

^Ir. KussiXL. That is risht. 



POST-WAR ECONOMIC POLICY AND PLANNING 53 

The Chairman. Is it believed that existing law is adequate to cover 
that? 

Mr. Leland. I do not have the precise language of the amendment, 
but if it is more restrictive than existing law — I am not sure it is — but 
if so, I think it would concern the Foreign Economic Administration. 

Some of our allies have lost their merchant fleet in substantial part. 
We have a tremendous merchant marine in varying degrees of utility, 
and it might be to the country's interest to sell some such ships to some 
foreign purchasers. As I say, that is a matter we haven't thoroughly 
gone into, and Mr. Crowley wants to discuss it further with the agen- 
cies most involved before saying anything definite on it. 

Senator Baekley. Isn't therefore the question involved in the prob- 
lem. How big a merchant marine are we going to have when the war is 
over ? 

Mr. Leland. Yes. 

Senator Barkley. To what extent are we going to furnish ships to 
■our competitors? We probably cannot use all we have for war pur- 
poses, but in determining what the policy should be, we ought to take 
a long view of it with reference to our future trade. 

Mr. Leland. Those elements are certainly a most important part 
of it. 

Mr. Russell, Mr. Chairman, in that connection, 1 have just gotten 
the language of Mr. Clayton's proposed amendment, agreed to by 
Admiral Land, and it does not change the present law in any way. 

It says : 

Provided, that merchant vessels or vessels capable of conversion to merchant 
use shall be disposed of only by the United States Maritime Commission in ac- 
cordance with the provisions of the Merchant Marine Act of 1936, as amended, 
and other laws authorizing the sale of such vessels. 

So it puts it exactly under the present Maritime Commission, as 
Mr. Clayton proposed. 

Mr. Leland. If it does not further restrict foreign disposal, we have 
no objection to it at this time. I point out that there is a very com- 
plicated subject involved here. There are bills introduced that 
change the existing laws in some respects and the Foreign Economic 
Administration has an interest in it. 

I think that is all. I would like to emphasize again that we stand 
with the other agencies that have expressed their approval of this 
bill. We think it is workable, and a very necessary bill. 

Senator Vandenberg. Do I understand you think there should be a 
section added covering the discretionary authority to prohibit the 
reentry of surplus property from abroad ? 

Mr. Leland. I think quite likely. A committee Mr. Clayton has 
designated is studying that matter right now. About all the com- 
mittee has come to at this point is that the tariff barrier type of con- 
trol would not be appropriate for this type of property. I just point 
out that authority in the Administrator to prohibit reentry, or permit 
it on certain conditions, where goods were sold abroad because there 
was a decision not to. sell them here, might be necessary in order to 
carry out that policy. 

Senator Vandenberg. There is not any language available at the 
moment that would cover the point ? 

Mr. Leland. I believe the Tariff Commission, in connection with 
another bill, has suggested some language, or will soon do so. 



54 POST-WAR ECONOMIC POLICY AND PLANNING 

Senator Vandenbekg. It is your view, Mr. Clayton, that should 
be covered in this bill ? 

Mr. Clayton. I do not think so, Senator Vandenberg. We can pro- 
vide that these sales made abroad should carry a condition that the 
goods shall not be reshipped to the United States. There are other 
suggestions or means of providing for that situation, and, as Mr. 
Leland has said, the committee is now studying that question, along 
with other questions relating to the disposal of surpluses abroad. I 
think a bill has been introduced, or is to be introduced, dealing with 
that subject. I could not say definitely now that we would or would 
not think that the provision should be included in this bill. 

The Chairman. Are there any other questions of Mr. Leland? 

Thank you very much, Mr. Leland. 

The State Department, Mr. Jackson. 

STATEMENT OF WAYNE JACKSON, OFFICE OF WARTIME ECONOMIC 
AFFAIRS, STATE DEPARTMENT 

Mr. Jackson. Mr. Chairman, I think all I need to say is we have 
gone over this bill in the State Department and it is satisfactory, as 
far as our interests are concerned. I would recommend the enact- 
ment of legislation of this type at as early a time as is possible. 

The Chaieman. Are there any questions you wish to ask Mr. Jack- 
son ? 

Senator Vandenberg. No. 

The Chairman. Did the State Department participate in the 
preparation of this bill ? 

Mr, Jackson. We were not represented on the drafting committee. 
However, the various drafts of the bill, as they were prepared by the 
committee, were shown to us and we had our opportunity to make our 
comments as we went along, and did so. 

The Chairman. If there are no more questions, Mr. Jackson, we 
thank you very much. 

Senator Vandenberg. There is too much unanimity around here. 
There must be something wrong. (Laughter.) 

The Chairman. The Treasury Department, Mr. Olrich. 

STATEMENT OF E. L. OLRICH, PROCUREMENT DIVISION, TREASURY 

DEPARTMENT 

The Chairman. Will you give us the views of the Treasury Depart- 
ment on this proposed measure ? 

Mr. Olrich. The Treasury Department, Procurement Division, is 
now functioning as a disposal agency under the Executive order, and 
if we are so designated by the Administrator under this proposed act 
the Procurement Division of the Treasury Department believes it can 
function efficiently and satisfactorily under its framework, and the 
Treasury Department approves the bill in general. 

The Department participated in the discussions leading to the for- 
mulation of this proposed legislation. 

The Chairman. Are there any questions? 

Thank you very much, INIr. Olrich. 

The Civil Aeronautics Board, Mr. Adams. 



POST-WAR ECONOMIC POLICY AND PLANNING 55 

STATEMENT OF KUSSELL B. ADAMS, ASSISTANT DIRECTOR, 
ECONOMIC BUREAU, CIVIL AERONAUTICS BOARD 

The Chairman. Mr. Adams, did the Civil Aeronautics Board par- 
ticipate in the drafting of this measure or the study of it ? 

Mr. Adams. They did not participate in the drafting of it. They are, 
however, familiar with it. 

The Chairman. Yes, sir. 

Mr. Adams. The Civil Aeronautics Board is neither an owning nor 
a disposal agency for surplus property. The Board does, however, 
have a great interest in the utilization and disposition of surplus air- 
craft and parts. There will be literally thousands of aircraft which 
will become surplus. It will become necessary to dispose of these air- 
craft with economic and political wisdom in a world-wide market. 
Political and economic conditions are apt to be changed rapidly. It 
is necessary, therefore, that the disposal agency for surplus aircraft 
have wide administrative discretion in meeting the problems of surplus 
aircraft disposal. 

The present bill appears to provide the powers necessary to under- 
take an intelligent program of disposal of surplus aircraft. It may 
be necessary at some later date, and after a further study, to request 
additional legislation relating specifically to problems of surplus air- 
craft disposal. The need for such specific legislation is not clearly 
defined at this time, however, and the Board hopes that the present bill 
will be passed. 

The Board is today holding a very important and previously 
scheduled oral argum.ent, and it is for that reason that the Board has 
authorized me to present the Board's statement. The Chairman of 
the Board, Mr. Pogue, is a member of Mr. Clayton's Surplus War 
Property Policy Board, and is also chairman of the Surplus Aircraft 
Advisory subcommittee appointed by Mr. Clayton to study the special 
problems of surplus aircraft disposal. I have assisted Mr. Pogue in 
that work. Mr. Pogue and the Board have, however, requested me to 
tell the committees that they would be very glad to make themselves 
available to the committees at any time, if they should so desire. 

The Chairman. Any questions ? 

Senator Vandenberg. When you say political conditions will be 
changed rapidly, I suppose you refer to external conditions ? 

Mr. Adams. That is right. 

Senator Vandenberg. Not in the United States. 

Mr. Adams. Precisely. 

The Chairman. Has Mr. Cox reported ? 

Mr. Russell. Not yet. 

The Chairman. Mr. Maverick. We will be ready to hear the 
Smaller War Plants Corporation. 

STATEMENT OE MAURY MAVERICK, CHAIRMAN, BOARD OF 
DIRECTORS, SMALLER WAR PLANTS CORPORATION 

Mr. Maverick. Mr. Chairman, in my opinion this bill is inadequate, 
and the inadequacy of the bill lies rather in a substantial omission of 
clauses urgently needed for the protection of free competitive economy 
during the critical period of transition from war to peace. 

I want to especially call to the attention of this group that, as the 
representative of the Smaller War Plants Corporation, I am not ask- 
ing for any special favors in charity, or special rights of any kind. 



56 POST-WAR ECONOMIC POLICY AND PLANNING 

Now, this concerns surplus property and I want to present to you 
four points for legislation. If I were voting and were a member of 
this body, I would make a motion to recommit; but I do not know 
exactly all the clauses that would be in it, because I think they are, you 
might say, just beginning to be framed. I would want to submit four 
points that apply to this as well as other legislation. 

First of all, the legislative power of the United States Congress 
should be jealously guarded. I do not subscribe to the theory that 
we should, because of the unanimity of agencies, adopt any legislation. 
Legislation is not adopted by votes of agencies but by votes of Sena- 
tors and Congressmen. 

The second thing is that before you legislate you should investigate 
the past and present methods and see if improvement can be made. 

Third, small business, not as a special interest but as. a part of the 
American economy, should be specifically pointed out and protected. 

The fourth point is that we should specifically see to it that there 
is widespread publicity and notices; that there is widespread distri- 
bution of properties, and that sales are made in the smallest localities 
to little concerns. 

When the contract-termination bill came up, it was, like all legisla- 
tion, in a formative period. As adopted by the House of Representa- 
tives yesterday it is one of the greatest pieces of legislation ever 
adopted in America. The reason for this is that the Senate and House 
of Eepresentatives proceeded slowly and saw to it that subcontractors 
and little businessmen were properly protected. That bill fairly 
teems with protection for the free-enterprise system and for small 
businessmen, and that is one reason why it is such an excellent piece of 
legislation. 

I would like to point out to this committee that little business is 
getting the worst of it now, has been for some time, and especially since 
the beginning of the war. Manufacturers in metal products are get- 
ting less than half the proportionate amount of business they got when 
the war broke out. There is a great concentration of wealth and 
industry still going on — all of which makes the future for little busi- 
ness and free enterprise very dark. 

This committee undoubtedl}^ realizes that after the war we may have 
great convulsions in our economic and political systems. Certainly we 
should begin now to plan a legislative program to prevent such upsets. 

In this legislation the free-enterprise economy is vitally concerned 
with the disposition of surpluses; and you gentlemen must realize that 
we are in a great period of scarcity in this country. Because of this 
scarcity we have rationing so that all may share equally. 

There are three things that must be done in this bill. We must 
prevent large suppliers favoring big customers. We must prevent 
inflation, and we must prevent the disturbance of markets. Therefore, 
we must see to it that the small businessmen have a chance to purchase. 
It is not equality nor justice to say that the small businessman has an 
equal right with the big businessman if he has to come in and buy very 
large lots. 

We must see to it that there is no inflation and we must see to it 
that there is a regularity of markets. 

I want to emphasize to this committee that, with conditions as they 
are. it would be a very simple matter to move surpluses and to get the 
ceiling prices. At the same time 70 percent of the goods would prob- 



POST-WAR ECONOMIC POLICY AND PLANNING 57 

ably go to the 100 leading buying groups in the country, just as in the 
earlier days of the war 70 percent of the prime war contracts went to 
the 100 largest producers. There was some excuse for that then, but 
there is no excuse for it at this time. At that time, we at least had the 
excuse that the pressure of war necessitated such procedure. But 
there is no such excuse in regard to the disposal of the vast bulk of sur- 
pluses, because those goods are not needed for war production. I have 
no intention to interfere in the slightest degree with disposals for war 
production. Let them go through the regular channels, as they must. 
Even there we might be careful to remember the small, as well as the 
large. But the vast bulk of these surpluses are not needed for war 
uses. That is why they are being sold and disposed of, and we cer- 
tainly should never tolerate for a moment confiining this distribution 
to the largest purchasers and crowding out the vast bulk of small and 
middle-sized businessmen. 

I would like to go into some detail on notices, advertising, publiciz- 
ing, which are basic to this bill and to the free-enterprise system. 
The products which are sold should not be sold in large blocks. We 
should see to it that credit is extended to the small businessman. He 
cannot go to Wall Street or to LaSalle Street and be financed for large 
operations. I want to make it very plain that we are not asking any 
favor at all for the small businessman. 

I would like to quote some of the testimony by Mr. Clayton. In 
making this statement I want you to know that I have the very 
highest regard for him. I had it before I ever came to Washington, 
and I still have it. I think he agrees that honest differences of 
opinion are not harmful to a democracy. Mr. Clayton said : 

The third fundamental is that there is only one interested group to whicli 
everyone belongs, and that is the taxpayers' group. Provided the economy is 
not otherwise adversely affected, that group is primarily interested in seeing 
that sales of surplus property are made in such a way as to recoup as much 
as possible of the money already spent. Every dollar that accrues to the benefit 
of any other group, however large and however meritorious, in the form of price 
reductions or gifts of property which could be sold at a higher price, is a dollar 
lost to the largest group of all. Price preferences to any group are just as much 
gifts of public funds as if they were made in cash. 

Mr. Clayton continues : 

The making of such gifts is the prerogative of Congress, and there are groups 
who deserve special consideration. But in almost every case where Congress 
desires to confer benefits on a particular class of citizens, it can do so much more 
equitably and satisfactorily by specific separate legislation designed for that 
purpose than by giving them preferential right to acquire surplus property. 

Now, this refers to the taxpayers and to various classes of American 
citizens, and recommends that certain separate legislation should be 
passed according to the prerogatives of Congress. So I want to repeat 
again very forcibly that we are not asking charity for the small 
businessmen of America ; we do not want them on the W. P. A. We 
are not asking for anything which will hurt the taxpayer. 

If surpluses are sold widely and distributed in small lots you will 
get a higher unit price than if you sold in huge quantities. The aggre- 
gate financial return will be greater — and that is a benefit to all the 
people. 

Another thing of great importance is that through proper distribu- 
tion of surplus property you will raise the standard of living. For 
instance, if you sell a very large number of shoes, as did a high officer 



58 POST-WAR ECONOMIC POLICY AND PLANNING 

of the Government who was in the Cabinet during the last war, to one 
group, he can go out and disturb the market for years afterward by 
dumping shoes in little towns and big towns. On the other hand, if 
you sell these at $1.75, $2, and $2.50 a pair a great number of people will 
be able to buy shoes. And the market is not glutted. 

As far as the taxpayer is concerned — well, everybody pays some 
kind of taxes — and so if we prevent inflation and convulsions in our 
economic system the taxpayer will be helped. 

The Smaller War Plants Corporation is not seeking added responsi- 
bilities, but, at the same time, we do not shrink from any. And any 
that are given we gladly assume. 

All agencies of Government, in order to widely distribute and pub- 
licize this, should be utilized for the effective distribution of surplus 
property. We have 112 offices throughout the United States. These 
men know small businessmen and they know their problems; most of 
them themselves have been small businessmen. We can, like the Re- 
construction Finance Corporation and the Defense Plants Corporation, 
supplement publicity, or help, or we could even purchase amounts for 
wide distribution. 

Now, I want to make one reference, and that is to page 12 of the bill 
where it says : 

To afford smaller business concerns and agricultural enterprises generally 
an opportunity to acquire surplus property on equal terms with larger competitors, 
and to discourage sales to speculators, by assuring reasonable notice of such 
dispositions, by disposing of such property in appropriate quantities, by using 
commercial channels of distribution to the maximum extent consistent with 
efficient and economic distribution, by collaborating with Smaller War Plants 
Corporation, or by other appropriate means. 

I think possibly Congress might set out what they mean by "equal 
terms." Does it mean that a small businessman who lives in Pecos, 
Tex., or way up in the Smoky Mountains, or some place like that, that 
he has the right to go to Philadelphia and buy something for $10,000,- 
000 ? What does it mean ? For that reason t think you should study 
that particular point, 

I wish to make reference now to section 20, on page 19, especially 
section (b) , which is on page 20. On page 20 it says : 

The head of any Government agency may delegate, and authorize successive 
redelegations of, any authority and discretion conferred upon him or his agency 
by or pursuant to this Act to any officer, agent, or employee of such agency or, 
with the approval of the Administrator, to any other Government agency. 

I do not know exactly what that means, but when you talk of dele- 
gating power and redelegations and successive redelegations, you 
finally get down to the proposition where the Fair Employment Prac- 
tices Committee will be deciding whether you are discriminating 
against somebody for not letting him have a delegation of power. That 
may sound facetious, but frankly that is a queer sort of provision. I 
merely suggest the study of that question. 

Mr. CoLMER. If you will pardon me, Mr. ISIaverick, I am not so sure 
but that the F. E. P. C. would not want to get in on that. 

Mr. Maverick. Maybe I should not have brought that up. 

Now, there has been such a tremendous unanimity that I think I 
ought to say a word about it. I think the Congressmen and the Sen- 
ators can understand this. In the executive branch of the Government, 
when you disagree with a man you have a tendency to feel that maybe 



POST-WAR ECONOMIC POLICY AND PLANNING 59 

3^011 do not like each other ; so I wish it to be recorded in the minutes 
of this meeting that I like everybody that I am doing business 
with; and there is not the semblance of any hard feeling. But one 
by one they come up here with clocklike precision and testify to 
exactly the same thing. I do not know whether that could be pre- 
vented by the Sherman Antitrust Act or what could be done about it. 
There is nothing bad about it but, nevertheless, they all believe that 
way. I want it on the record that I am not reflecting on anybody. 
I repeat I have the highest opinion of Mr. Clayton, whom I have 
known all my life as a very fine gentleman. The same applies 
to all the others. However, the tendency of a person in the execu- 
tive branch of the Government is to have carte blanche law. I don't 
want to hamstring the Administrator of this act, but I am hired to 
represent small business in a free-enterprise system and I don't want 
to see the same mistakes made that were made in the last war. 

I would like to submit an amendment, which would take me a couple 
of minutes to read, and then I will be through. It starts off this way : 

(a) It shall be the duty of the Administrator and he is hereby authorized 
and directed to devise ways and means and prescribe appropriate regulations 
and directives to prevent any discrimination against small business concerns in 
the disposal and distribution of any Government property covered by this Act. 
To that end the Director shall cause the owning and disposal agencies to adopt 
and pursue the following measures : 

(1) Arrange for the widest practicable notice by advertisement or otherwise 
to be issued and disseminated by the agencies so that large and small concerns 
will be reasonably informed of the property offered for sale and the terms and 
conditions thereof. 

(2) Reduce lots or blocks of any items offered for sale to the smallest prac- 
ticable units so that tliey will be within the reach of small business concerns. 

(3) In appropriate cases, in tlie discretion of the agency or the Administrator, 
arrange for sales on credit or time bases or such other terms or conditions as 
will preserve the competitive position of small business concerns in the purchase 
or acquisition of surplus property and accord them a fair opportunity for the 
acquisition thereof. 

(b) Subject to the authority of the Administrator, the Smaller War Plants 
Corporation is hereby specifically charged with the responsibility of cooperating 
with the owning and disposal agencies, of making surveys from time to time, 
and bringing to the attention of the agencies, or the Administrator, any cases 
or situations which have resulted in or would efifect discrimination against small 
business concerns in the purchase or acquisition of Government property by them 
and in the disposal thereof by the agencies. 

(c) Subject to the authority of tlie Administrator, the Chairman of the Smaller 
War Plants Corporation shall have the right in behalf of the Corporation to ac- 
quire any surplus property for sale or other transfer to small business, or to 
make other suitable arrangements, when, in his judgment, such acquif?ition or 
other arrangement is required to preserve and strengthen the competitive posi- 
tion of small business, or will facilitate the Corporation in tlie discharge of the 
duties and responsibilities imposed upon it under Public Law 603, Seventy-seventh 
Congress. 

(d) At least ten days before advertising for bids or posting notices of sale or 
transfer by other means, every owning and disposal agency shall notify the 
nearest regional office of the Smaller War Plants Corporation of the proposed 
items to be sold, the terms of disposal specifying the minimum quantities on which 
bids or offers shall be received and the credit terms, if any, for the purpose of 
permitting the Smaller War Plants Corporation to advise the disposal agencies 
if, in its judgment, the propo.sed terms discriminate against small business pur- 
chasers, or otherwise to perform its functions under this statute. Any differences 
or disputes that may arise hereunder shall be resolved by the Administrator. 

(e) Wherever any industry committees are created for the purpose of advis- 
ing owning or disposal agencies, or the Administrator, as to methods and means 
of disposal or any other matters relating to sales of war materials, reasonably 
adequate representation on such committees shall be accorded to small business 
concerns, and the Chairman of the Smaller War Plants Corporation shall be 



60 POST-WAR ECONOMIC POLICY AND PLANNING 

notified and furnished a list of the members thereof and shall have the right 
upon request to have the Smaller War Plants Corporation represented thereon 
for the purposes of safeguarding the interests of small business concerns. 

Now, in reference to this I might make this comment : I generally 
favor the Kilgore bill, but I think maybe the Kilgore bill goes too far 
in some particulars. If you would ask me the details of the bill, I 
could not answer the question because it would be difficult to answer 
without a specific analj'^sis of the bill in front of me. I believe that 
the Kilgore bill, in certain portions of it, should be considered, and this 
amendment also should be considered. We might as well be frank 
about it. People say it is absolutely essential that this legislation 
be passed immediately. I think it is absolutely essential, like every- 
body else. The Congress will be in session until Saturday of this week. 
I cannot ask the Senators and Congressmen questions, I haven't got 
that right, but were I to have the right to ask that question, I doubt 
if they would say this bill can be enacted by Saturday of this week. 
I don't want to frustrate that plan. If Congress wants to pass the 
bill by Saturday, I certainly would not oppose it, because then I 
could come in afterward and ask for amendments. But considering 
the time necessary for debate and consideration, I do not think it can 
be passed by Saturday. 

I think the bill as presented to you has many good qualities, but 
I believe time for consideration should be extended, so that the very 
best bill possible can be enacted. The contract-termination bill is 
excellent legislation — and as you know, it was carefully studied at 
length before being passed. 

The Chairman. Thank you. Are there any questions of Mr. 
Maverick ? 

Mr. CoLMEK. Mr. Maverick, I am very much impressed with the 
objective which you seek and with the argument which you make ; but, 
in the final analysis, there has to be substantial leeway and discre- 
tionary power left with the Administrator, hasn't there? 

Mr. Maverick. Yes, sir. 

Mr. CoLMER. And in effect that is what you do with your proposed 
amendment; is it not? 

Mr. Maverick. I do what ? 

Mr. CoLiMER. You leave the discretion, in the final analysis, with 
the Administrator. 

Mr. Maa-erick. Yes, sir. Now, I would like to explain it this way : 
The pArt in the bill there that expresses a sort of a horror of monopoly 
and love of small business is something like a speech. The House of 
Bepresentatives and the Senate, the Congress of the United States is 
not supposed to legislate speeches but is supposed to legislate legisla- 
tion; and this amendment of mine is written in terms of legislation 
and not in terms of a speech or pious phrases. 

Mr. CoLMER. But in the final analysis it would have about the same 
effect ; would it not? 

]\Ir. Maverick. It would have a better effect, because it is a little 
more detailed. 

Mr. CoLMER. The point I am making is — and again I reiterate I 
am in sympathy with the objective, and I am very sincere in that — 
but, in the final analysis, there has to be discretion left with the 
Administrator. As I understand the amendment from your reading 
of it, you merely emphasize and point out that certain things ought 



POST-WAR ECONOMIC POLICY AND PLANNING 61 

to be done, but, in the final analysis, it is left to the discretion of the 
Administrator. Is that right ? 

Mr, Maverick. Yes, sir; that is right, but it sets it out in more 
detail and sets it out more specifically and not in general terms. 

Mr. CoLMER. I should like very much, if it were possible, for the 
Congress to write the details into the law, but you realize — I think 
you agree with that — that it is impossible for the Congress to under- 
take to legislate in detail upon the disposition of so many and mul- 
titudinous details of the disposition of these surpluses. 

Mr. Maverick. Mr. Colmer, I might say that the amendment that 
I offer is not very long. It is written in rather cryptic form and, 
should it be added the bill would still be a short bill. 

Mr. CoLMER. Don't misunderstand me. I have no objection, so 
far as I am concerned, to your amendment. The fact of the matter 
is I don't think it would have much force and effect, but I would 
still like to see it written into the bill, as far as I am personally 
concerned. 

Mr. Maverick. I think it would have full force and effect for the 
reason it has specific statements in there. 

The Chairman. Are there any further questions ? 

Mr. Lynch. Mr. Maverick, as the bill stands now, there isn't any- 
thing in it that specifically aids small business ? 

Mr. Maverick. I would not think so. 

Mr. Lynch. Your suggestion in this proposed amendment is to 
make a definite declaration of policy on the part of Congress that 
small business should be taken care of in this disposal of surplus 
property ? 

Mr. Maverick. Yes, sir. 

Mr. Lynch. So tliat we will not be confronted with the same situa- 
tion with respect to small business that we had when the war broke 
out ; when the various heads of the procurement divisions expressed a 
great desire to help small business when, in fact, nothing was done 
for months and months after the war started. 

Mr. Maverick. That is more or less a leading question, but I would 
like to answer it. I would like to say something right there. The an- 
swer, of course, is "Yes.'' I am fuU}^ in accord with the attitude that 
the military authorities took at the outbreak of tlie war, because they 
very ably and patriotically got the job done; but, as somebody said, 
the Smaller War Plants Corporation was created 2 years too late. It 
should have been created 2 years earlier. We have time enough now 
to study the economic effect of the convulsion that is bound to come 
after the war and attempt to prevent that convulsion. 

There is an idea on the part of some people, and I do not cast any 
reflection on them, that when you have surplus property you ought 
to get rid of it at once just like they had the idea to get hold of arms 
and ammunition to kill Japs and Germans. The idea of immediate 
action was good for war — but it is not sensible to do the same thing 
when you are disposing of surplus property. So I think it is the ab- 
solute duty of Congress to see to it that disposal of surplus properties 
is carefully planned. 

Mr. Lynch. Let me ask you this: In subdivision (e) you say, "sub- 
ject to the authority of the Administrator," in your proposed amend- 
ment. 

Mr. Maverick. Yes, sir. 



62 POST-WAR ECONOMIC POLICY AND PLANNING 

Mr. Lynch, Just what do you mean by that? That the Administra- 
tor is going to have the right to say whether or not you shall be per- 
mitted to make purchases on behalf of small business? 

Mr. Ma\^rick. I will ask Mr. Podell to answer that. 

Mr. PoDELX.. It had to be drawn that way, otherwise you would place 
the Smaller War Plants Corporation in a position where it practically 
could acquire unlimited quantities of merchandise. The Smaller War 
Plants Corporation does not desire that. The program is for the 
Smaller War Plants Corporation to make surveys to determine what i& 
needed, so tliat the Smaller War Plants Corporation could act as a 
medium for wide distribution where the number of small purchasers 
in the aggregate requires large quantities. 

Mr. Maverick. I think we might add to that, too, that we do not 
seek any vested rights or any superior rights over the Administrator. 
We should be subordinate, like all other agencies. 

Mr. CoLMER. I would like to ask the $64 question. 

Mr. Maverick, have you submitted this proposed amendment tc> 
Mr. Clayton ? 

Mr. Maverick. Yes, sir. We participated in the deliberations. 

Mr, CoLMER. This was apparently voted down ? 

Mr. Maverick, This was voted down with a minority of one. Mr^ 
Clayton said that he did not object to it in principle, but said it should- 
be included in the regulations, if that were to be adopted. 

Mr. CoLMER. Personally, I see no objection to it. 

The Chairman. You are upon the Surplus Property Board ? 

Mr. Maverick. Yes, sir. 

The Chairman. You were placed specifically on that Board? 

Mr. Maverick. Yes, sir, and I am on that Board now, and we have a 
very pleasant time. We all get along w^ith each other fine, but I would 
like to have this included in the bill. 

The Chairman. You think if it were included in the bill, it would 
be helpful? 

Mr. Maverick. Yes. 

Mr. Russell. Let me ask you one question about section (e). A 
similar provision is in the Kilgore bill, as you know. What has dis- 
turbed me is the possibility that, if the Smaller AVar Plants Corpora- 
tion had an overriding priority for scarce materials, that that might 
result in shutting down very large plants that would employ a great 
many people. 

Mr, Maverick, Mr, Podell will answer that, 

Mr, Podell. We expressly excluded, Mr. Russell, the priority pro- 
vision for that reason practically All we ask here is that, subject to 
the authority of the Administrator, we may purchase surplus prop- 
erty for the purpose of disposal. 

Mr. Russell. It says you shall have the right, in behalf of the 
corporation, to acquire any surplus property for sale or other transfer 
to small business. 

Mr. Podell. If the Administrator was willing to give it to us. 

Mr. Russell. You say "subject to the authority of the Adminis- 
trator." Why would not that have to be "subject to the approval of 
the Administrator"? 

Mr. Podell. We will not object to that change. 



POST-WAR ECONOMIC POLICY AND PLANNING 63 

Mr. Russell. You have given the Smaller War Plants a specific 
grant of right here with no counteracting authority in the Admin- 
istrator, or anyone else, as I see it. 

Mr. Maverick. I would like to say, if you want to change the word- 
ing of that, we will be very happy to agree to it. 

Mr. PoDELL. At the present time we have no power, under the ex- 
isting law, to purchase. 

Mr. CoLMER. As I pointed out a moment ago, it all goes back to 
the Administrator. He has to have his authority. 

Mr. Maverick. If he has certain guiding principles set out by Con- 
gress, he is more likely to follow it than he otherwise might be. 

Senator Vandenberg. If you had this amendment in the bill, would 
you still prefer the Kilgore bill ? 

Mr. Maverick. I don't know enough about that bill. Senator, to 
answer that question ; but I think this would make it all right. 

Senator Vandenberg. I am very hospitable to these Texas revolu- 
tions these days. 

Mr. Maverick. I appreciate very much not only the part of the 
country that it came from but the political disposition that it came 
from. 

The Chairman. With no further questions, thank you very much, 
Mr. Maverick. 

The Chairman. Mr. Cox. 

STATEMENT OF HUGH B. COX, ASSISTANT ATTORNEY GENERAL, 
DEPARTMENT OF JUSTICE 

Mr. Cox. Mr. Chairman, I am sorry I was not here when I was first 
called; but it was a matter that concerned contract termination that 
occupied my attention earlier in the morning. 

On June 1, the Attorney General wrote a letter to Mr. Clayton com- 
menting on the draft of the legislation which is now embodied in this 
committee print. I think it would probably serve a useful purpose if 
I turned that letter over for your record this morning, because it states 
in summary form, I think, the essence of our position on the bill. So 
with your permission I would like to do that now. 

The Chairman. You may do so. 

(The letter referred to follows:) 

June 1, 1944. 
Hon. W. L. Clayton, 

Administrator, Surplus War Property Administration, 
Washington, D. C. 

Db^b Mk. Clayton: I have received your letter dated May 30, 1944, in which 
you ask for my views on the revised draft of the Surplus Property Act of 1944. 
The purpose of this proposed legislation is (a) to confer authority upon a central 
administration and upon various Government agencies to manage and to dispose 
of Government property, and (&) to prescribe general policies and standards that 
the agencies shall follow in exercising this authority. I approve this purpose 
and the general plan that the statute adopts to accomplish it. There are, however, 
a number of respects in which I find the substance of the present draft objection- 
able. They are: 

1. Section 13 raises difficult questions of construction. In its present form the 
section may create doubts as to the effect of the statute upon the enforcement of 
the antitrust laws and upon the responsibility of the Attorney General for the 
administration of those laws. I suggest, therefore, that section 13 be eliminated 
and the following provision be substituted therefor : 

"Nothing in this act shall impair, amend or modify the antitrust laws or limit 
or prevent their application to persons who buy or otherwise acquire property or 



64 POST-WAR ECONOMIC POLICY AND PLANNING 

any interest tberein under the provisions of this act. Upon the i-equest of the 
Attorney General the Administrator or any other Government agency shall furnish 
or cause to be furnished to the Attorney General such information as the Admin- 
istrator or any such agency may possess which the Attorney General determines 
to be pertinent to the application under the provisions of this act. As used in 
this section, the term "antitrust laws" includes the Act of July 2, 1890, ch. 647, 26 
Stat. 209, as amended, the Act of October 1-5, 1914 ch. 323, 38 Stat. 730, as 
amended, the Federal Trade Commission Act, and the act of Aug. 27, 18&4, ch. 349, 
sees. 73, 74, 28 Stat. 570, as amended." 

2. I object to section 15 for the following reasons : It is not clear whether this 
section is intended to ratify and confirm all existing options. Section 17 (f) 
provides that the legislation shall not impair any valid contract or any provision 
in any contract and it would seem to follow that section 15 is unnecessary if its 
sole purpose is to preserve existing rights. If the section is intended to ratify 
the options, I believe that this purpose should be stated clearly and explicitly 
so that there will be no necessity for subsequent construction or interpretation of 
the provision. Furthermore, if section 14 is intended to ratify and confirm the 
options, its scope should be clearly defined. The section in its present form, taken 
together with the definition of the word "option" in section 2 (h), may be con- 
strued as ratifying and confirming the .so-called "first-refusal" clauses although 
I am informed that this is not its purpose. I suggest, therefoi'e, that this section 
should either be eliminated or changed to remove all doubts as to its scope and 
purpose. 

I am not now prepared to express my views on the question whether, as a 
matter of policy, all of the options should be ratified and confirmed. I prefer to 
withhold this comment until ,1 can consider the question on the basis of a provision 
whose purpose and scope is clearly defined. I think I should say at this point, 
however, that if it is proposed to ratify all the options, it is my view that the 
ratification should be so framed that agreements tainted with fraud or other 
illegality are not covered by its terms. 

3. For the reasons that I have stated in paragraph 2, I object to the words 
"or pursuant to an option therefor" in sub.section (a) of section 14. 

4. Section 11 (b) directs Government agencies to destroy or otherwise dis- 
pose of property if it has no commercial value or if the cost of handling 
and sale would exceed the estimated proceeds and if it is not feasible to donate 
the property to certain designated institutions. It is undoubtedly true that 
some property, such as certain kinds of combat equipment, may have to be 
destroyed for reasons of safety or national security. It is true also that some 
kinds of property may be more useful as scrap than in any other form. Sec- 
tion 11 (b) in its present form, however, is so broad that it authorizes the 
destruction of plants, machine tools and other capital equipment. I do not 
favor any provision that authorizes the destruction of plants, machine tools, 
and other capital equipment before a report has been made to Congress de- 
scribing the property and stating tlie reasons for its destruction. Furthermore, 
I am inclined to believe that before any plant is destroyed the approval of 
Congress should be obtained. 

In view of the suggestion in your letter that it is not now necessary to 
comment on matters of form or language, I am reserving my comments of that 
kind for a later date. There are a number of minor suggestions as to the 
substance of the legislation which I shall also reserve for later discussion. 
Sincerely yours, 

Francis Biddt.e. Attornei/ General. 

The CHAiR^fAx. Would you mind stating to us substantially the 
position of the Department? 

jNIr. Cox. I shall do that now. We stated in the letter that we 
approve the general purpose and plan of the legislation, and then 
proceed to make a number of comments as to points in the draft which 
we think are objectionable in their present form. I think, probably, 
that it is unnecessary for me to review all of those, because Mr. Clay- 
ton commented on a number of the more important ones when he 
testified in the executive session the other day — particularly the point 
about section 13, which is the section that deals with the antitrust 
laws and duties of the Attorney General thereunder. Mr. Clayton 
read at that time our suggestion for substitution for that section 
in its pre-i^ent form. 



POST-WAR ECONOMIC POLICY AND PLANNING 65 

We also point out that we are very doubtful about section 15 in its 
present form, which is the section that appears on page 15 of the 
committee print. We are doubtful about that, not because of any 
doubts on the policy question that is involved, but because we think 
the section in its present form is so ambiguous that we are not sure 
what its effect may be, or, indeed, what its purpose is. Three pur- 
poses have been suggested. Mr. Clayton's view of the section was 
stated the other morning. He construes it as merelv preserving the 
present options. We, of course, would have no objection to that^ 
but there is another provision in the bill which seems to us to do 
that, which is the provision of section IT subparagraph (f), which 
provides that no valid contract should be impaired. 

Two other suggestions have been made about the meaning of the 
purpose of section 15. One is that it is intended to ratify and confirm 
the existing options. Without expressing any opinion on the policy 
questit)n that is involved in that, we suggest that if that is the purpose 
of the section, then it should be clearly cast in that form, so there 
is no doubt as to what it is intended to do. 

Another suggestion that has been made is that the section is in- 
tended to prevent the holder of an option from negotiating a more 
favorable option, or more favorable terms of sale from the owning 
agency. That provision might, it seems to us, raise grave administra- 
tive problems. But. again, if that is what the section is intended to 
do, we think it should be stated more clearly so there w^ill be no 
necessity for construction or possibility of dispute. Our view really 
about that section is that if it is merely intended to preserve the exist- 
ing options it is unnecessary and should be eliminated, and if it 
stays in the bill in its present form it may breed confusion and doubt 
about its interpretation. 

The other comments that I think I should like to make this morn- 
ing are that our Department believes that there is a real possi- 
bility that section 11 (b) can be construed as authorizing the destruc- 
tion of Government plants and other capital equipment, and it is the 
Attorney General's view that certainly as to plants it would be de- 
sirable to provide that no Government-owned plant should be 
destroyed without the consent of Congress. 

In the case of machine tools, he has also suggested, in this letter 
to Mr. Clayton, it might be desirable to have a provision that re- 
quires at least notice to Congress before machine tools or capital 
equipment of that kind is destroyed. 

There are two more general observations that I should like to make, 
and then I think I shall have finished my statement. 

The Department of Justice, because of its responsibilities under 
the Slierman Act, is of course very sympathetic with Mr. Maverick's 
interest in preserving the position of small business. Because the 
Attorney General is a member of the Policy Board, but under the 
executive order and through legislation, he will, so far as he can, 
influence the policy of the Administration, try to see that those poli- 
cies are adopted, so far as it is feasible to do so. At the same time, 
the Attorney General feels — and he emphasized this in his testimony 
before Senator Murray's committee, to which I now respectfully 
direct the attention of the committee — that, because of the size of the 
problem and diversity of the property involved, the legislative di- 
rections which are given with respect to the policies concerning small 



'66 POST-WAR ECONOMIC POLICY AND PLANNING 

business must be oast, he believes, in such form that the Administrator 
is given enough discretion so that he will be able to operate in a 
practical Ava3\ 

The other general observation that I think I should like to make 
is this, and this again is developed at some length in the Attorney 
General's testimony before Senator Murray's committee, and in tlie 
report that we afterward submitted to Senator ISIurray, and that is 
there is a grave need for some kind of enabling legislation, so far as 
the authority to sell is concerned. That is particularly true of real 
estate, because at the present time you have a hodgepodge of specific 
statutes, none of Avhich are really designed to deal with a problem of 
this kind, some of them authorizing the sale of particular property 
quite clearly so there is no doubt as to the authority, but they are still 
inadequate for dealing in an orderly and ex]:)editious Ava}' with the 
problem of surplus property that is going to face us when tlie war is 
over, and for that reason, simply so far as the legal problenis are 
concerned, there is, the Attorney General feels, a real and pressing 
need for some kind of enabling legislation which Avill remove the doubts 
as to the authority that an owning agency has. 

Tlie Chairman. Did the Attorney General suggest any form of 
enabling authority? 

Mr. Cox. He did not suggest a specific statute. I might sav, sir, that 
the enabling provisions in this statute seem to us to be adequate to 
satisfy that need. 

The Chairman. In this draft? 

JVIr. Cox. In this draft ; yes. 

The Chairman. I see. 

Mr. Cox. There are, I may add, a rather large number of details 
in which we think that the language of this committee ]:)rint might be 
clarified, but we have been in close consultation with Mr. Clayton's 
counsel. "We are working on those matters now and we assume there 
will loe an opportunitv for us to work those out. I am confident we can 
do so, so I am not going to discuss those this morning. Most of them 
do not affect matters of substance but simply clarify language and 
remove ambiguities. We have been, as I say, working closely with Mr. 
Clayton's counsel on matters of this kind. 

The Chairman. Any questions of Mr. Cox? 

If not, thank you very much, Mr. Cox. 

Mr. EussELL. jNIr. Chairman, that completes the witnesses, but 
Judge Marvin Jones, the War Food Administrator, has asked that this 
letter from him be read into the record. 

The Chairman. Yes; you may read it in. 

Mr. Russell. It is addressed to Hon. AV. L. Clayton, Sur]:)lu9 War 
Property Administrator, Washington, D. C, and is dated June 1, 
1944. 

Drar Me. Clayton : The revised draft of a proposed Surplus Property Act 
of 1944 received with your letter of :May 30, 1044, has been reviewed by repre- 
sentatives of tbe War Food Administration and of the Department of Agricul- 
ture find in ueneral its provisions have our approval. We have, of coiu'se, con- 
sidered the bill not only from the point of view of an owning agency and an 
acquiring agency, but also in contemplation of assuming the responsibilities as 
the disposal agency for all food (as defined in Executive Order 9280), naval 
stores, and agri<ultural and forestry lands. 

Thf^ sale of large quantities of surplus foods in a well-supplied marlcet will 
undoulitedly have an adverse effect upon market prices. We have a con- 
gressional mandate to support at .specified levels prices for agricultural commod- 



POST-WAR ECONOMIC POLICY AND PLANNING 67 

ities through loan, purchase, and other oyerations for at least 2 years follow- 
ing the war. In order to avoid additional operations in carrying out this man- 
date, the disposal agency for food should have broader authority to make food 
available for relief purposes than the bill presently contemplates. A requirement 
that food be sold in such cases would serve only to increase our responsibility 
to engage in other operations to counteract these sales. Further, under the 
provisions of the Agricultural Adjustment Act of 1938, as amended, and an item 
recurring in annual appropriations, there are certain price and quantity restric- 
tions on sales by the Conunodity Credit Corporation after they have been de- 
clared to be surplus and are for disposal under the terms of the bill. These, of 
coarse, are matters which can be dealt with at the time of tlie hearings on the 
bill. 

We question the advisability of including in a general bill of this kind specific 
reference to the Smaller War Plants Corporation unless similar consideration is 
given to other agencies which are also charged with the responsibility of pro- 
viding for the welfare of segments of the national economy. 

In view of your suggestion that clarifying changes in the bill may be made 
later, we shall not set forth here a number of changes in language which we 
think would be desira1)le to make clear the provision for development of new 
and alternate uses of war materials, appropriate opportunity for the acquisition 
of property in connection with Government assisted or financed programs, oppor- 
tunity for State and local governmental units to fulfill their legitimate needs, 
and other items of this character. 

I should like to take this opportunity to point out that in my opinion the 
responsibility of the allocation of all foods, irrespective of location or point of 
distribution, should be centralized in one agency. In view of the broad scope of 
our responsibilities under war powers and permanent legislation for the allocation 
of food, we believe that we should have the same power with respect to surplus 
food. 

Secretary Wickard concurs in the views which I have expressed. 
Sincerely yours, 

Mz\RviN Jones, War Food Administrator. 

It might be heli^ful to ask Mr. Scott, Mr. Clayton's counsel, to tell 
the committee just what area of difference there is with the War 
Food Administration, inasmuch as they do not care to be heard. 
Doubtless these differences have been discussed, have they not? 

Mr. Scott. Yes, sir; but not in very great detail. As far as I 
am able to ascertain, there is nothing in this bill that would cut across 
any statutory obligation of either the War Food Administration 
or the Commodity Credit Corporation. I do believe, however, that 
this bill, as now drafted, would not permit the donation for relief 
purposes of food and, in that respect, it is contrary to the belief 
that the War Food Administrator has, because it would require 
them on the one hand to sell and by the same token to purchase in 
order to maintain prices. 

We very carefully kept away from making any suggestions for 
donations of any kind beyond the one provision in the bill which 
relates to property which has no commercial value, on the theory 
that was entirely a matter for Congress, if they felt they wanted 
to authorize broader donations. For that reason we have not in- 
cluded any such provision in the bill. I do not feel, in that specific 
instance, that we have any objection to it, but we thought provisions 
for that type of donation did not properly come from us. 

Mr. Russell. Mr. Chairman, I am also authorized to say that Ad- 
miral Land is in accord with the bill, with the amendment dealing 
with the disposal of ships referred to earlier in the hearing. 

The Chairman. Is there anything else? 

Mr. CoLMER. Mr. Chairman, I have a letter from Congressman 
Robinson, of Utah, written to Congressman Patton, chairman of the 



68 POST-WAR ECONOMIC POLICY AND PLANNING 

Select Committee of the Smaller Businesses, of the House, and I would 
like that to be made a part of the record. 

The Chairman. Yes. Furnish that to Mr. Russell and have it in- 
serted in the record. 

(The letter referred to folloM's:) 

Sklect Committee on Small Business of the 
House of Representatives of the United States, 

WasMnijton, D. C, Jufw 18, 19^. 

Re Surplus property legislation. 

Hon. William M. Colxier, 

Chairman, Special Committee on Post-war Economic Policy and Planning, 
House of Representatives, Washington, D. C. 

Dear Bill: Your letter of the 9tli addressed to Cliairman Wright Patman of 
this committee is being answered by me in my capacity as acting chairman 
of the House Small Business Committee during the chairman's absence from 
the cit.v. 

You indicate that you would like our chairman to attend a joint meeting 
of the Senate and House Post-war Economic Policy and Planning Committees 
on June 16 at which meeting Mr. W. L. Clayton, Surplus War Property Admin- 
istrator, will appear to discuss the proposed surplus property bill, copies of 
which he has already furnished to this committee. 

You also indicate that you are very hopeful that the various interested com- 
mittees of the House may reach some uniform conclusion for the handling of 
this type of legislation. On that point, I feel that this committee is in full 
agreement. 

I assume that the staff of your committee has kept abreast of the various 
actions taken by the House Small Business Committee on this subject and has 
kept you currently advised on that subject. In case such is not the case, I 
would like to review briefly our actions and position to date. 

After several hearings held last fall, this committee issued a brief report to 
the House calling attention to the immensity of this surplus-disposal problem 
in all of its aspects and recommending early consideration of the matter by 
the Congress. In order to advance consideration of the matter, the committee 
unanimously endorsed a bill, H. R. 3873, which Chairman Patman introduced 
in December of last year. 

The bill which Mr. Patman introduced was primarily designed to protect the 
interests of our smaller businesses in the matter of surplus disposal. As later 
modified, a revision known as H. R. 4420, it did not attempt to cover the sub- 
jects of plant and real-estate disposal, but confined itself to the disposal of 
consumers goods and other movable surpluses. 

The Banking and Currency Committee was engaged in holding hearings on 
this latter bill when the greater urgency of the Office of Price Administration 
legislation forced temporary discontinuance of those hearings. The last two 
witnesses to he heard by the Banking and Currency Committee were Mr. Clay- 
ton and Mr. .John jM. Ilancock. coauthor of the Baruch-Hancock Report. 

Subsequent to the above hearings, on March 9. 1044. the Small Business 
Committee issued anotlier report to the House entitled, "The Surplus Property 
Problem From the Viewpoint of Small Business." As has been the case in all 
of our committee repoi-ts, this report also represented the unanimous opinion 
of all members of the committee. 

Fpon receipt of the copies of the bill which INIr. Clayton had prepared and 
upon notice that the bill was evidently receiving the serious consideration of 
certain committees in the Congress (see the June 5 report of the War Con- 
tracts Subcommittee of the Senate ^Military Affairs Committee which printed 
a copy of the bill) the House Small Busine.ss Committee undertook to reex- 
amine its position to see if its thinking on this vital subject could be reconciled 
witli the thinking expressed by the Clayton bill. 

I nin authorized to state that it is the unanimous opinion of the House Small 
Busine.ss Committee that: 

1. The Clayton draft does not offer sufficient guaranties in the way of 
specifip principles or pror-odurps to be enacted into law by the Congress to 
assuro us that eithor the legitimate, competent small businessman or the return- 
ing servicomen will be .-ifforded the opportunities to acquire the fair share of 
these surplus items to which they are entitled. 



POST-WAR ECONOMIC POLICY AND PLANNING 69 

2. The Clayton draft totally disregards the major recommendations contained 
in the Marcii 9 report of this committee which were offered with a view to 
providing adequate protection in this matter to small business firms. 

3. For these and other detailed reasons, the House Small Business Committee 
opposes tlie adoption of the bill in question in anything like its present form. 

It is not my desire to burden you with a lengthy list of the various detailed 
reasons upon which we base our objections, but a brief summary of our reasons 
might be of interest to you right at this time. Our principal objections are as 
follows : 

(a) With all due deference to Mr. Clayton, whose ability and integrity are 
unchallenged as far as this committee is concerned, the committee feels that it 
is inappropriate to delegate all of the power and discretion outlined in this bill 
to any one man. For that reason, the committee still holds to its original view 
that the supreme authority for the handling and disposition of these surpluses 
should be vested in a Surplus Property Board possessed of more than purely 
advisory authority. 

(b) Bt'cause this is primarily a problem which concerns businessmen, large 
and small, retailers, wholesalers, and manufacturers, the committee feels that 
specific provisions should be written into any law of this type whereby business 
advisory committees are appointed for each separate class or type of property. 
We have been unable to find a definite statement covering this point in the bill 
in question. 

(c) The bill is not sufficiently specific in respect to giving prior right of pur- 
chase to established trade channels, all things being equal. The bill says that 
commercial channels of distribution should be used to the maximum extent con- 
sistent with efficient and economic distribution. This clause, on the face of it, 
might not seem objectionable, but in the absence of a provision which would 
limit the purchases to be made by any one purchaser to an amount not to exceed 
the amount of similar purchases made by him in any single year prior to the 
war, the above clause might be easily interpreted to mean that the most efficient 
and economic distribution could best be secured by favoring the large chains 
and mail-order houses to the near exclusion of small distribution outlets. 

(d) Speculators are not sufficiently penned off from active participation in 
these sales in the early stages of disposal proceedings. 

(e) Surpluses sold abroad should not be reimportable into this country to 
the possible detriment of local markets. Surpluses sold abroad should be sold 
first, where possible, to firms in which American nationals have a substantial 
share in the management or the ownership. This suggestion is made in the 
interests of those of our citizens who might seek employment abroad for them- 
selves or their employees in the event that the post-war period finds us in an 
economic condition where such employment would be helpful in warding off too 
much unemijloyment in this country. 

if) No surpluses of any sort should be disposed of to the public by either the 
War or the Navy Departments. Under this bill, as under procedures presently 
approved by Mr. Clayton, these departments would be permitted to continue to 
<>lassify themselves those items which they feel to be surplus and could sell 
themselves items which they classified as scrap, waste, or salvage. The Utah 
battery case is still too close in my own memory to permit me to welcome any 
continuance of this policy. In addition, surpluses developed in the course of 
settlement of terminated contracts should not be sold by the contractors but 
should be acquired by the contracting officers for the account of the central dis- 
posal agency in the opinion of this committee. 

{{/) Whereas the bill in question makes it mandatory for the Administrator 
to confer with Congress in the case of large rubber and aluminum plants which 
he might have for sale, no such conferring seems to be required in the case of 
chemical plants, airplane plants, and other large and valuable properties. Fur- 
thermore, whereas the lAdministrator may consult the Attorney General as to 
possible violations of the antitrust laws which might accrue as the result of 
such sales as he might make of these large plants, such consultation is appar- 
ently not mandatory. 

(?i) There seems to^be no way wherein a small firm or other party whose best 
interests might not be served by the consummation of a sale to others may appeal 
or prevent such a sale from taking place if the Administrator desires to carry 
it through. 

The foregoing represent a few of the principal objections this committee has to 
this particular bill. In listing these and taking this position, the committee 
wishes to make clear its desire to do anything within its power to expedite early 



70 POST-WAR ECONOMIC POLICY AND PLANNING 

passage of any bill which will provide an orderly program for the disposal of 
surpluses which will protect the Government and will, at the same time, protect 
the small businessman and the returning serviceman within reasonaV)le limits. 

To this end. there is attached herewith a suggested revision of the two bills 
already introduced by Chairman Patman at the request of this committee. This 
revision, not yet introduced, is an attempt to reconcile our original views with 
those which we believe are implied in the general statement of principles em- 
bodied in fhe Clayton bill. 

Also attached is a copy of the March 9 report of this committee, previously 
referred to. 

It woiild be deemed a favor, if you consider it proper, if you wouhl include 
this letter and the attachments in the printed copy of your .ioint hearing 
scheduled for Friday, the Ifith, to which you so kindly Invited our chairman.. 
As stated previously, this letter is written with the knowledge and full approval 
of all members of the House Committee on Small Business. 

With kindest personal regards and an assurance of the willingness of this com- 
mittee to cooperate with your committee in any way consistent with the above- 
staten'^ents. I am. 

Sincerely yours, 

J. W. ROBTNSON. 

Acting Chairman^ 



78th CoxfinEssl XT T> 

2d Ses.sion j J-J-' -Li'. 



IN THE HOUSE OF REPRESENTATIVES 

Mr. Patman introduced the following bill ; which was referred to the Committee 

on Banking and Currency 



A BILL To amenci tlie Reconstruction Finance Corporation Act by adding a new title thereto 
relating to the sale or other disposition of surplus property of the United States 

Be it enacted by the Senate and House of Representatives of the United States 
of America in Congress assemMcd, That the Reconstruction Finance Corporation 
Act, as amended, is amended by inserting "Title I." immediately before the first 
section thereof, by striking out the word "Act" wherever it appears therein as a 
reference to such Act (except in the short title of such Act), and inserting in lieu 
thereof the word "title," and by adding at the end of such Act, as amended, the 
following new title : 

"Title II 

"short title 

"Skc. 201. This title may be cited as the 'Surplus Movable War Goods Act of 
1944.' 

"definitions 

"Sec. 202. As used in this title— 

"(1) The term 'surplus movable war goods' means any movable equipment, 
machines, acces.sories, parts, assemblies, products, commodities, supplies, and 
materials (raw, semifinished, and finished), including shipyard facilities, owned 
or controlled by any Government agency, whether new or used, in use or in storage, 
which are in excess of the needs of such agency and are not required for the 
performance of the duties and functions of such agency and which are determined 
to be surplus to th<' function, aftivity, or project in connection with which the 
goods were acquired or accrued : Prnridcd. hoicercr. That this term shall not 
apply to ships, water-borne craft, real estate, and permanent improvements to 
real estate. 

"(2) The term 'Government agency' means any executive department of the 
Government or any administrative units or subdivision thereof, any independent 
agency, regulatory commission, or board in the executive branch of the Govern- 
ment, and any corporation owned or controlled by the United States. 



POST-WAR ECONOMIC POLICY AND PLANNING 71 

"(3) The term 'disposal' means sale, conditional sale, or lease, for cash, credit,, 
or other property ; donation ; or any other transfer. 

" (4) The term 'disposal agency' means the Reconstruction Finance Corporation 
or any Governmental agency which has been assigned the operating function of 
disposal of any surplus movable war goods by the Reconstruction Finance Corpo- 
ration. 

"surplus property poocy board 

"Sec. 203. (a) There is hereby established a Surplus Property Policy Board 
(referred to in this title as 'the Board'), which shall consist of an official of the 
Government to be designated by the President who shall be the Chairman thereof, 
the Secretary of War, the Secretary of the Navy, the Secretary of the Treasury, 
and three individuals to be appointed by the President, by and with the advice 
and consent of the Senate. The three individuals so appointed shall be business- 
men who have had at least five years' experience in the business of the sale and 
distribution of merchandise. 

"(b) The Board (1) shall have general supervision and direction of the han- 
dling and disposition of surplus movable war goods ; 

" (2) Shall have general supervision and direction of the transfer of any surplus 
movable war goods in the possession of any Government agency to any other 
Government agency ; 

"(3) Shall determine the surplus movable war goods imder the jurisdiction of 
the various Government agencies that should be sold, leased, or otherwise disposed 
of, and shall inform the Reconstruction Finance Corporation as to every such 
determination : Provided, however, That no such determination shall be made 
which does not meet witli the approval and consent of the agency currently owning 
or controlling said property ; 

"(4) Shall prescribe regulations and issue dii'ectives necessary to provide, so 
far as practicable, for uniform and wide public notice concerniug disposal of 
surplus movable war goods, and for unifovni and adequate time intervals between 
notice and disposal so that all interested and qualified purchasers shall have a 
fair opportunity to acquire, and to make public the results of such disposals of 
property by giving the name of the buyer, and the prices paid, immediately 
after disposals are consummated ; 

"(5) Shall determine and prescribe policies, methods, regulations, and pro- 
cedures, including the fixing of prices and the prohibition of disposals where 
necessary, which shall govern the disposal of surplus movable war goods during 
contract termination proceedings and such policies, methods, regulations and 
procedures shall be binding upon the Joint Contract Termination Board, its 
successor agencies, the procurement agencies, and all prime and subcontractors, 
invfdved in contract termination proceedings ; and 

"C(>) Shall prescribe regulations and issue directives necessary to effectuate 
the objectives of this title, and no Government agency shall make disposal of 
surjilus movable war goods in contravention thereof. 

"duties of governmental agencies 

"Seo. 204. (a) It shall be the duty and function of the Director of the Bureau 
of the Budget — 

"(1) To coordinate the inventory records of surplus movable war goods in the 
possession or control of Go'^'ernment agencies ; 

"(2) After consultation with such agencies and with the Board, to prescribe 
suitable standards and procedures which, so far as practicable, shall be uniform, 
for the inventory, classification, and transfer from one Government agency to 
another of surplus movable war goods ; and to devise and prescribe the forms 
and records to be used and kept in connection with disposal so as to insure proper 
and uniform accountability control; 

''(3) To prepare for the Board such consolidated reports as it may require of 
all operations under this title; 

"(4) To receive and review applications of Government agencies for sxirplus 
movable war goods for the purpose of acquiring such property in their behalf 
from other Government agencies ; 

"(■5) Subject to the approval of the Board, to acquire any surplus movable wai- 
goods for transfer to any Government agency needing such goods, providing 
that such transfers shall only be made upon such terms and with such chai;ges to 
the appropriations of the transferees in question for the value thereof as the- 
Bui'eau of the Budget shall prescribe in accordance with existing law. 



72 POST-WAR ECONOMIC POLICY AND PLANNING 

"(b) Every Government agency (1) shall make and maintain accurate inven- 
tories of suiplus movable war goods in accordance with the instructions of the 
Director of the Bureau of the Budget; (2) shall submit to the Board such infor- 
mation and I'eports with respect to surplus movable war goods in such form and 
at such times as the Board shall direct; (3) shall cooperate wath the Board for 
the purposes of determining the surplus movable war goods under its jurisdic- 
tion; (4) when requested by the Board, shall execute such documents for the 
transfer of title or shall take such steps as the Board shall determine to be 
necessary or proi)er in connection witli the disposal of surplus movable war 
goods: and (")) shall cooperate with the Reconstruction Finance Corporation in 
connection with Ihe storage, sale, lease, or other disposition of surplus movable 
war goods under this title. 

"DUTIES OF THE RECONSTRUCTION FINANCE COItroRATION 

"Seo. 205. (a) Surplus movable war goods shall be sold or otherwise disposed 
of by the R-.^construction Finance Corporation, except as otherwise hereinaftel 
provided, in n manner consistent with the provisions of this title. 

"(b) The Corporation shall appoint an advisory committee for each class of 
property which is to be sold or otherwise disposed of. The members of each such 
advisory committee shall be appointed from among persons who, by reason ol 
their business experience, are familiar with the handling and marketing of such 
class of property, or similar property, and shall include several representatives 
of etsablished retail and wholesale distribution firms. Representatives of manu' 
facturing firms normally engaged in the production of such class of property, or 
similar property, may also be appointed on such a committee. In the appoint' 
ment of such a committee, at least two small businessmen shall be appointed to 
represent each class of firm represented thereon in the case of manufacturers, 
wholesalers, or letailers, in the event that any or all of these three classes are 
otherwise represented on such committee. 

"(c) The Corporation shall appoint a sales officer for each class of property 
to be sold or otherwise disposed of. Each sales officer shall consult regularly with 
the advisory committee for the particular class of property, the orderly disposal 
of which is his principal duty. He shall (1) keep the advisory committee con- 
stantly advised as to nature and amounts of surplus goods coming within his 
jurisdiction for disposal, and (2) shall meet at any time with the advisory com- 
mittee upon request of a majority of the committee's members. 

"(d) No movable war goods reported as surplus by any Government agency 
shall be disposed of to the public until it has been determined, under regulations 
of the Board, that such property is not needed by any other Government agency. 

"(e) Surplus movable war goods shall be disposed of expeditiously and so as 
to use their economic value, but shall not be disposed of at times or in quantities 
.so that the civilian market cainiot absorb them without unduly disturbing trade 
and commerce, or so that factories producing them are forced to close down. 
Any surplus movable war goods which cannot be rttsposed of domestically thi-ough 
established trade channels within a reasonable time without disrupting the 
economy may be sold abroad and, if sold abroad, shall not be reimported into the 
United States or its territories or insular possessions. In the event that surplus 
movable war goods are sold abroad, prior right of purchase, all other conditions 
being equal, shall be given to firms in which citizens of the United States shall 
have a substantial share in both the management and ownership of said firms. 

"(f) In the sale or other disposition of surplus movable war goods, the Recon- 
struction Finance Corporation shall be governed by the following considerations: 

"(1) Established business concerns which normally trade in the particular 
class of goods in question, all other conditions being equal, shall have the prior 
right of purchase; and in every instance of sales where individual bidders and 
such established business concerns are involved, such business concerns shall not 
only have prior purchase right, but also the right of usual trade discounts. 

"(2) The acquisition of large quantities of such property for speculative pur- 
poses shall not be permitted. If, however, there shall develop substantial quan- 
tities of surplus movable war goods which, after a thorough testing of markets, 
cannot be disposed of through established trade channels for reasons of age, 
obsolete style, semi-proces.sed state, or similar factors, these surpluses may be 
offered and sold or otherwise disposed of to firms and individuals other than those 
regularly engaged in the distribution of the class of property in question; pro- 
vided that any such sale or other disposition shall not be otherwise inconsistent 
with the provisions of this title. 



POST-WAR ECONOMIC POLICY AND PLANNING 73 

"(3) No purchaser of surplus movable war goods, except an honorably dis- 
charged member of the armed forces, shall be permitted to acquire, in any one 
year, a larger quantity of surplus goods than the amount of goods of the same 
kind handled by such purchaser during the year immediately preceding December 
7, 1941. An honorably discharged member of the armed forces shall be per- 
mitted to acquire sufficient amounts of surplus movable war goods to enable him 
to set up and maintain an individual enterprise to be conducted personally by 
him and not as a part of a chain or in conjunction with silent partners, subject 
to such terms and conditions as may be necessary to insure that the setting up 
and maintenance of such enterprise will not unduly disrupt normal trade and 
commerce. 

"(4) Such property shall be sold or otherwise disposed of at prices low enough 
to facilitate the disposition thereof, but high enough to enable the United States 
to secure a fair return therefor. 

"(g) The Corporation may, at its option, and with the consent and approval 
of the Board, assign certain classes of surplus movable war goods for disposal 
by other Federal agencies: provided, however, that such assignment of respon- 
sibility for disposal shall result in the centralization of responsibility in one 
disposal agency for the sale, lease or transfer of all surplus movable war goods 
of the same type or class, and, so far as possible, in the utilization, for disposal 
of any type or class of property, of the agency to which there has been assigned 
under Executive Order 9425, dated February 19, 1944, the function of making 
disposition of such type or class of property. In the event that the Corporation 
elects to assign its responsibility for disposal of any class of property to another 
agency, the sales officer of the Corporation for the class of property in question 
may be selected from or be employed by the agency named to act as disposal agent 
for the Corporation for the class of property in question. Such disposal respon- 
sibility shall be assigned to any agency only with its consent but. in so consent- 
ing, such agency must agree to be bound by all of the provisions of this title. 

"(h) The sale or lease of surplus movable war goods shall be in accordance 
with such regulations, not in conflict with the provisions of this title, as the 
Board shall prescribe )-egarding the times, places, quantities, and terms and 
conditions of the proposed disposition of such property; and such regulations 
shall require advertising for competitive bids except in such cases and with 
respect to such property as the Board determines that sales or leases by com- 
petitive bids would be contrary to the public interest. 

"exclusive method of disposing of surplus movable war goods 

"Sec. 206. No surplus movable war goods shall be sold, leased, or disposed of 
otherwise than in accordance with provisions of this title, except that where 
provisions of law are in force specifically authorizing the sale or other disposition 
of any particular property or class of property, such property or class of property 
may be sold or otherwise disposed of in accordance with such provisions of law 
if the Board approves such action as being consistent with the public interest. 

"disposition of nonsalable property 

"Sec. 207. Notwithstanding any othel- provision of this title, surplus movable 
war goods which is not salable, or which for any other reason it is impracticable 
to transfer, sell, or lease as provided in this title, shall be repaired, rehabilitated, 
donated, destroyed, or disposed of in accordance with such regulations as the 
Board shall prescribe. 

"proceeds from sale or lease of surplus PKOPEaJTY 

"SE|a 28. All proceeds from the sale or lease of surplus movable war goods 
under this title shall be deposited and covered into the treasury as miscellaneous 
receipts. 

"misceixaneous 

"Sec. 209. (a) The Chairman of the Board shall receive compensation at the 
rate of $12,0C0 per annum and shall receive no other compensation as an officer 
or an employee of the United States. He shall also act as the executive officer 
for the Reconstruction Finance Corporation in its discharge of the duties and 
functions assigned to it under this title. 



74 POST-WAR ECONOMIC POLICY AND PLANNING 

"(b) The Board, tlie Reconstruction Finance Coorporation, and any other 
agencies to whom disposal responsibility is assigned under the provisions of 
this title are authorized to appoint and fix the compensation, subject to the Civil 
Service laws and the Classilication Act of 1923. as amended, of such employees 
as may be necessary for the performance by the Board, the Corporation and 
the other agencies of their i-espective functions under this title; provided, how- 
ever, that the sales officers of tlie Corporation may be employed and their com- 
pensation fixed by the Cori)oration without regard to the Civil Service laws and 
the Classification Act of 1923. as amended. 

"(c) The Board, the Corporation, and the other agencies to whom disposal 
responsibility is also assigned under the provisions of this title may make such 
expenditures for supplies, facilities, storage, and services, as may be necessary 
to carry out the provisions of this title. 

"(d) Eadi member of the Board appointed thereto by the President, by and 
with tlie advice and consent of the Senate, shall be paid comiDensation at the rate 
of $25.00 per diem when actually engaged in the performance of his duties under 
this title, and shall be allowed necessary traveling expen.ses and subsistence ex- 
penses, not in excess of $6.00 per da,v. incurred when absent from his place of 
I'esidence in connection with the performance of such duties. 

"(e) There are authorized to be appropriated such sums as may be necessary 
or appropriate to carry out the purposes of this title." 



[H. Rept. No. 124.5, 78th Cong., 2d sess.] 

FIFTH INTERIM REPORT OF THE HOUSE SMALL BUSINESS COM- 
MITTEE— THE ST'RPLUS PROPERTY PROBLEM FROM THE VIEWPOINT 
OF SMALL BUSINESS 



March 9, 1944. — Committed to the Committee of the Whole House on the state 
of the Union and ordered to be printed 



Mr. Patman, from the Committee on Small Business, submitted the following 

INTERIM REPORT 

[Pursuant to H. Res. 181 

The following report is submitted as a supplement to the Third Interim Report 
of the House Committee on Small Business and represents the unanimous ex- 
pression of all members of the committee, who are as follows: Wright Patman 
(Texas), chairman; J. W. Robinson (I'tah) ; Eugene J. Keogh (New York); 
Henry M. Jackson (Washington) ; Estes Kefauver (Tennessee) ; Charles A. 
Halleck (Indiana): Leonard W. Hall (New York); Walter C. Ploeser (Mis- 
souri) ; William H. Stevenson (Wisconsin). 

Introduction 

For several months various committees of the Congress, including the House 
Committee on Small Business, have engaged in serious study of the problems 
arising from the foreseeable accumulation of huge stocks of Government-owned 
surpluses and the need for devising an orderly program, through legislation, for 
their control, disposition, and sale. The third interim report of this committee, 
i.s.sued November 1, 1943, quoted the view of numerous authorities that this 
probable holding in surplus materials, plants, tools, mobile equipment, real estate, 
and other items would total many billions of dollars by the time the end of the 
present hostilities is reached. 

Some of these congressional committees have concerned themselves prin- 
cipally with the problems of plant and real-estate disposal. Others have devoted 
more thought to consumer goods. Others have boldly encompassed both of these 
fields and have also included such diverse items as ships, food, and machine 
tools in their consideration of the subject. 



POST-WAR ECONOMIC POLICY AND PLANNING 75 

When we consider the mnltiplieity of items involved in any detailed study 
of this problem, when we add to this the identification of scores of different 
industry groups whose problems both of manufacture and distribution are often 
unrelated and often competitive, one with the other, it is small wonder that the 
next evidence of this congressional study by the several committees has been 
a series of legislative proposals offering administrative prescriptions not all of 
which are compatible one with the other. 

It is, therefore, quite possible that the members of these various committees 
viewed witli mingled feelings of fear and relief the recent publication, on Febru- 
ary 15, of the vigorous report of jMessrs. B. M. Baruch and John M. Hancock 
to the Director of War Mobilization, whicli covered in considerable detail this 
very vital subject. That report, with its many evidences of careful study, 
tempered by seasoned judgment, when taken in conjunction with the subsequent 
Executive order creating the post of Surplus Property Administrator in the 
Ofiice of War Mobilization, has undoubtedly done much to help crystallize both 
congressional and business thought on this major question. 

The House Committee on Small Business feels that the time has come for a 
careful review of all pending legislative proposals relating to surplus property 
disposal. It feels that such review should be taken not only in the light of the 
Baruch report and its accompanying Executive action, but especially from the 
viewpoint of the small businessman. The committee feels that it would be 
delinquent in its appointed duty at this time if it did not point out that it 
feels that much of the proposed legislation on this subject fails to provide ade- 
quate guaranties designed to protect the small businessman and assure him 
proper consideration in the disposal of these surpluses. 

Further, with no intended rellection on either the integrity or the ability of the 
one just appointed to the post of Surplus Property Administrator, the committee 
feels that it has not yet seen visible evidence that the Administrator has been 
provided with or has prepared any book of procedures designed to give adequate 
protection to small business. He is working under an implied mandate in the 
Baruch report which says, "the Surplus Administrator should sell all he can 
as early as he can." Much of the physical detail of selling is apparently still to 
be vested in some of those Federal agencies which have shown definite evidence 
of ineptness and disregard of small business interests in the past. The very mag- 
nitude of the problem precludes the personal supervision of all sales and their 
supporting statements of justification by the Administrator. Therefore, this 
committee feels that it is the positive duty of the Congress to agree on and pass 
immediately such legislation as will include full and adequate protection of small 
business interests in the sale of any or all Government-owned surplus property. 

I'OINTS OF AgKEEMENT 

It is gratifying to note that not only the Baruch report but the majority of 
the proposed legislative measures have certain excellent points in common upon 
which there seems to be mutual agreement. Some of these include — 

1. The establishment of a Surplus Property Policy Board, consisting of several 
cabinet-level ofiicials and qualified appointees to come from private industry. 

2. The delegation of responsibility for actual surplus disposal to one central 
agency. 

3. The advisability of appointing business advisory committees for each type 
of property to consult with and advise the disposal agency as to time and method 
of sale of the items in question. 

4. The utilization of established trade channels in the disposition of these 
surpluses. 

5. The prohibition of the sale of surpluses to speculative interests. 

6. Selling in small lots in order to permit participation in purchases of small 
businesses as well as large ones. 

7. Wide publicity on all sales, both before and after, and the granting of 
sufiicient notice to permit all interested parties ample time in which to prepare 
proposals for purchase. 

Recommendations 

1. Each of the above seven points of agreement should be included in greater 
detail in any measure passed by the Congress covering the disposal of any type 
of Government-owned property declared surplus. 



I 



76 POST-WAR ECONOMIC POLICY AND PLANNING 

2. The Surplus Property Policy Board should be the final voice in all surplus 
property matters and the Administrator or General Manager should have full 
and adequate, but not final, authority. 

3. Sujaller War I'lants Corporation should be given a membership on the 
Surplus Property I'olicy Board and should not be represented by or through 
War Production Board. 

4. Title to all surpluses should he vested in the central disposal agency which 
should supervise and approve all sales of all surplus items. The central agency 
should consult with but not be bound by the advice of the agency from which the 
surpluses were received. 

(In this connection, it is assumed that the closest working arrangements of 
a more than temporary nature would be established between the central agency 
and the respective agencies which have declared as surplus the items in which 
they have a common interest.) 

5. The counsel and data supplied to the central agency by the business advisory 
committees covering each type of property, in the absence of provable informa- 
tion to the contrary, shall be held the sole basis for the time, place, method, 
manner, and amount of sales to be held by the central agency, provided that 
the adoption of such recommendations shall produce the maximum returns to- 
the Government consistent with a policy of using normal trade channels in such 
a manner that the sales will not unduly disrupt normal trade and commerce. 

6. Provision shall be made in the appointment of these business advisory 
committees for the seating thereon of manufacturers, wholesalers, retailers, or 
other established distribution firms. No such committee shall be appointed which 
does not include as members at least two small businessmen who are rep- 
resentative of each of the above classes. 

7. Provision shall be made for the lease or sale on credit of these surpluses 
to thus expand the opportunities of small business. 

8. Provision shall be made for the lease or sale on credit of these surpluses 
to returning servicemen who can present evidence of capability to utilize 
such surpluses in the establishment or maintenance of their own businesses 
in such a manner that will not unduly disrupt normal trade and commerce. 

9. Provision shall be made for the temporary enjoining of surplus sales 
through appeal to the Surplus Property Policy Board in those cases where 
it may be held that the holding of such sales would prove detrimental to the 
best interests of any firm in the industi-y in question or where large interests 
were apparently about to be given undue preference over small firms through 
the holding of such sales. 

10. The patents and other properties now held by the Alien Property Custodian 
for which there is no obvious military use shall be declared surplus and trans- 
ferred as to title to the central disposal agency and treated in the same manner 
as other surpluses. 

11. Studies should be made before sale of the Government-owned plants 
as to possibilities of subdividing the very largest units in order to make them 
available for acquisition by small business. An easement to the patent rights 
covering the products manufactured in any Government-owned plant during 
wartime shall accompany the sale of the plant or any parcel thereof when the 
plant and its manufacturing facilities have been established for some special- 
ized maniifacturing use. 

12. Due consideration should be given by the Congress to provisions already 
contained in H. R. H873, a copy of which is attached as exhibit A in this report. 

(It should be noted that this committee, which acted as sponsor for this 
measure, no longer urges the inclusion of section 205 (c) (3) in any final 
measure to be approved by the Congress in this connection. 

Conclusion 

This committee recommends the careful reading of the Baruch-Hancock 
report, War and Post-War Adjustment Policies, by every person concerned 
with the vital question of Government-owned surpluses. That report defines 
small business as "the broad backbone of enterprises, scattered throughout the 
country, which rely largely on the initiative and resourcefulness of their in- 
dividual proprietors." With such a definition, this committee is in full agree- 
ment. The report also makes several other recommendations designed to fur- 
ther the cause of small business which are worthy of serious consideration 
by all who have an interest in the future of this important segment of our 
economic structure. 



POST-WAR ECONOMIC POLICY AND PLANNING 77 

Notwithstanding this committee's admiration for the Barucli-Hancock report 
and its obvious clarity, it feels that it cannot and should not be taken as the final 
woi'd on this subject. 

Experience in the past shows us that it has never been suflBcient to confine our 
interest in the problems of the small and weaker elements in our society to general 
statements of acquaintance and affection. To protect and nourish these elements, 
we must at times take positive action and implement our principles by a state- 
ment of specific policies and procedures. To this end, we commend this vital prob- 
lem to the immediate and diligent attention of the Congress for handling in a 
matter consistent with 4he foregoing recommendations. 

Exhibit A 

[H. R. 3873, 78th Cong., 1st sess.] 

A BILL To amend the Reconstruction Finance Corporation Act by adding a new title 
thereto relating to the sale or other disposition of surplus property of the United 
States 

Be itenacted by the Senate and House of Representatives of the United States of 
America in Congress assembled, That the Reconstruction Finance Corporation 
Act, as amended, is amended by inserting "TITLE I", immediately before the 
first section thereof, by striking out the word "Act" wherever it appears therein 
as a reference to such Act (except in the short title of such Act), and inserting in 
lieu thereof the word "title", and by adding at the end of such Act, as amended, 
the following new title : 

"Titus II 

"short title 

"Sec. 201. This title may be cited as the 'Surplus Property Act of 1943'. 

"definitions 

"Sec. 202. As used in this title — 

"(1) The term 'property' means any supplies, materials, or equipment, includ- 
ing real estate and improvements thereon or tangible property owned by the 
United States, or by any corporation owned or controlled by the United States, 
which is under the jurisdiction or control of any governmental agency. 

"(2) The term 'surplus property' means any property which has been declared 
to the central agency handling surplus property to be surplus to the function, 
activity, or project in connection with which it was acquired or accrued. 

"(3)" The term 'Government agency' means any executive department of the 
Government or any administrative units or subdivision thereof, any independent 
agency in the executive branch of the Government, and any corporation owned or 
controlled by the United States. 

"surplus property policy board 

"Sec. 203. (a) There is hereby established a Surplus Property Board (referred 
to in this title as "the Board"), which shall consist of the Chairman of the feoard 
of Directors of the Defense Supplies Corporation who shall be the Chairman 
thereof, the Secretary of War, the Secretary of the Navy, the Secretary of the 
Treasury, and three individuals to be appoined by the President, by and with the 
advice and consent of the Senate. The three individuals so appointed shall be 
businessmen who have had at least five years' experience in the business of the 
retail sale and distribution of merchandise. 

"(b) The Board (1) shall determine and prescribe the methods to be used by 
governmental agencies in making and maintaining inventories of property, and 
(2) shall determine the surplus property under the jurisdiction of the various 
governmental agencies that should be sold or leased, and shall inform the Recon- 
struction Finance Corporation as to every such determination. 

"duties of governmental agencies 

"Sec. 204. Every governmental agency (1) shall make and maintain accurate 
uniform inventories, in accordance with methods determined and prescribed by 
the Board, of property under its jurisdiction ; (2) shall cooperate with the Board 



78 POST-WAR ECONOMIC POLICY AND PLANNING 

for purposes of dt'terminiiig wliich of the property niuler its jurisdiction is surplus 
property; and (3) sliall cooperate with the Reconstruction Finance Corporation 
in connection with the sale or lease of surplus property pursuant to the provisions 
of this title. 

"duties of the keconstkuction finance corporation 

"Sec. 205. (a) Surplus property which the Board has determined should be 
sold or leased shall be sold or leased by the Reconstruction Finance Corixtration 
in a manner consistent with the provisions of this section. 

"(b) The Corporation shall appoint an advisory committee for each class of 
property which is to be sold or leased. The members of sucli advisory committee 
shall be appointed from among persons who, by reason of their business experi- 
ence, are familiar with the handling and marketing of such class of proj^rty, or 
similar property. It shall be the duty of the Corporation, in selling or leasing 
surplus property, to consult with the appropriate advisory committee or commit- 
tees so appointed as to the price, time, method, and manner of disposing of such 
property. 

"(c) In the sale or lease of surplus property pursuant to this title, the Recon- 
struction Finance Corporation shall, so far as practicable, be governed by the 
following considerations : 

"(1) Distribution of such property should be through established trade 
channels. 

"(2) The acquisition of large quantities of such property for speculative pur- 
poses should not be permitted. 

"(3) The prices at which any particular property or class of property is sold or 
leased should be uniform. 

"(4) Such property should be sold or leased at prices low enough to facilitate 
the disposition thereof but high enough to enable the United Stares to secure a 
fair return therefor. 

" (5) The sale or lease of such property should be at a rate which will not unduly 
disrupt trade and commerce. 

"(6) The sale or lease of such property should take into consideration the 
need for facilitating and encouraging the establishment in the various communi- 
ties in the sevei-al States by membei's of the armed forces of the United States 
upon their discharge or release from active duty, as well as by others, of small 
business enterprises and with a view to strengthening small business enterprises. 

"(d) The sale or lease of surplus property shall be in accordance with such 
regulations as the Board shall prescribe regarding the times, places, quantities, 
and terms and conditions of the proposed disposition of such property : and such 
regulations shall require advertising for competitive bids, except in such cases 
and with respect to such property as the Board determines that sales or leases 
by competitive bids would be contrary to the public interest. 

"exclusive method of disposing of surplus property 

"Sec 206. No surplus property shall be sold, leased, or disposed of otherwise 
than in accordance with the provisions of this title, except that where provisions 
of law are in force specifically authorizing the sale or other disposition of any 
partigular property or class of property, such proi^erty or class of property may 
be sold or otherwise disposed of in accordance with such provisions of law if tlie 
Board approves such action as being consistent with the public interest. 

"TRANSFERS BETWEUSN GOVERNMENTAL AGENCIE^S 

"Sec. 207. Notwithstanding any other provisions of this title, governmental 
agencies shall make the fullest practicable utilization of surplus property in order 
to avoid waste and unnecessary expense, and for such purposes surplus proijerty 
may be transferred from one goverimiental agency to another in lieu of its sale 
or lease pursuant to the provisions of this title. Such transfers shall be made 
subject to such regulations as the Board shall prescribe. 

"disposition of nonsalahle property 

"Seo. 20S. Notwithstanding any other provision of this title, .surplus property 
which is not salable, or which for any other reason it is impracticable to transfer. 



POST-WAR ECONOMIC POLICY AND PLANNING 79' 

sell, 01' lease as provided in this title, shall be repaired, rehabilitated, donated, 
destroyed, or disposed of in accordance with such regulations as the Board shall 
pi'escribe. 

"proceeds from sale or lease of surplus property 

"Sec. 209. All proceeds from the sale or lease of surplus property under this 
title shall be deposited and covered into the Treasury as miscellaneous receipts. 

"miscellaneous 

"Sec. 210. (a) The Board is authorized to appoint and fix the compensation, 
subject to the civil-service laws and the Classification Act of 1923, as amended,, 
of such employees as may be necessary for the performance by the Board of its 
functions under this title. 

"(b) Each member of the Board appointed thereto by the President, by and 
with the advice and consent of the Senate, and each member of any advisory 
committee appointed by the Reconstruction Finance Corporation under this 
title, shall be paid compensation at the rate of $ per diem when actually 

engaged in the performance of his duties under this title, and shall be allowed 
neces.sary traveling expenses and subsistence expense (not in excess of $ 
per day) incurred when absent from his place of residence in connection with 
the performance of such duties." 

The Chairman. Is there anything else? 

Mr. Russell. Mr. Clayton, would you like to make any further 
statement ? 

Mr. Clayton. I do not believe so, Mr. Russell, unless the committee 
would like to ask me some questions. 

Senator Vandenberg. I would like to know one thing, Mr. Clayton, 
in respect to the time element involved in this legislation. How much 
time is there safely at our disposal to perfect the bill ? 

Mr. Clayton. Senator Vandenberg, I do not think the time element 
is so important in this bill as it was in the contract termination bill. 
We have, I think, ample authority under the Executive order to act. 
There are some questions that I think the bill helps in materially : In 
respect, for instance, of giving the different disposal agencies the 
power to grant title to any party to whom it may sell. Some people 
have some question about that now but I do not think that is very 
serious. Of course, if the war should end in Europe rather suddenly, 
I think it would be very desirable that we have legislation. 

Senator Vandenberg. If you get it in 30 days, would that, in your 
judgment, be within the line of safety? 

Mr. Clayton. Yes, sir. 

The Chairman. Thank you very much, Mr. Clayton. That com- 
pletes the hearing, then. 

(Whereupon, at 11 : 45 a. m., the committee adjourned.) 

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