That prices of alumina produced in the Government-owned plant in Arkansas be reduced. That the operations of the Government experimental plants, producing the alumina from clay and domestic ores, be continued. That the present duty on imported bauxite be repealed and that import duties on aluminum metal and fabricated aluminum be studied in relation to the comparative costs of manufacture in Canada and the United States. That a controlled program for disposition of scrap aluminum, at low but ruinously low prices, be adopted. That methods be adopted for conducting Government-financed research in the light metals industry. That engineering and economic investigations be made by Reconstruction Finance Corporation to find out what relocations and alterations of present plants should be undertaken. That studies be made of freight rates and Panama Canal tolls, with a view to the establishment of reasonable and nondiscriminatory levels. That electric power supply and rates be investigated and measures undertaken to supply the needs of the light metals industry at adequately low charges. And, finally, we suggest that terms of financing present plants, and of sale or lease to present and new independent operators, be made on a basis which will provide equality of competitive opportunity and encourage full production and employment. The recommendations of the Small Business Committee, like those of the Attorney General and the Surplus Property Administration, are aimed at getting action now. The national security and national welfare require that there be no delays. It is to be hoped that, with the help of the discussion and criticisms of these three reports which we will receive at this hearing, the committees will be able to recommend to Congress the measures which should be adopted in the public interest, to assure permanent United States leadership in the light metals industry. Senator O'MAHONEY. Thank you, Senator. You and I have not succeeded very well in provoking any interruptions. I hope that Mr. Symington may be more successful in that respect. Are you ready to proceed, Mr. Symington? Mr. SYMINGTON. Yes, sir. Senator O'MAHONEY. Please give your name and your official position to the reporter. STATEMENT OF W. STUART SYMINGTON, SURPLUS PROPERTY ADMINISTRATOR Mr. SYMINGTON. W. Stuart Symington, Surplus Property Administrator. As of September 21, the Surplus Property Board submitted its final report to Congress on the disposition of aluminum plants. This report covers the economic problems incident to the disposal of the Government's investment in these plants of over $700,000,000, and presents for the consideration of Congress a plan for their disposal. This report is a final report to Congress, not an interim report. Two other reports on this problem have recently been released by other Government agencies. They are the report of the Attorney General to Congress as required under section 205 of the War Mobilization and Reconversion Act of 1944, and the interim report of the Surplus War Property Subcommittee of the Special Senate Committee to Study the Problems of American Small Business. Our statement today will comment on the recommendations of these two reports as they relate to the report of the Surplus Property Board, and also the actions taken by the administration, successor to the board. The report of the Attorney General emphasizes that regardless of any plans for disposition of Government-owned aluminum plants, there will be no real assurance of competition, nor any atmosphere in which responsible operators will offer to run aluminum plants, unless and until the Aluminum Co. of America is dissolved into a number of smaller operating companies. The dominant position of the Aluminum Co., its strong financial resources, its excellent research and production staffs, and its established market position, make it difficult to obtain the interest of other companies from the standpoint of becoming a competitor of Alcoa. Senator REVERCOMB. Mr. Chairman, may I interrupt at that point? Senator O'MAHONEY. Yes, Senator Revercomb. Senator REVERCOMB. Mr. Symington, I understand from your report that you have made no effort yet to dispose of any of these plants. In other words, you haven't offered any of the plants in which the Government is interested, for sale to anyone. Is that correct? Mr. SYMINGTON. No, sir; I wouldn't say that that is correct because a part of any sale is the trade incident to the sale; and we have been trying very hard to get people, Senator, who would be interested in a purchase or lease. They know that we want to sell them or lease them. Senator REVERCOMB. Have you had any negotiations with the sale of any one for the sale of any particular plant? Mr. SYMINGTON. I do not think it is fair to say we have had negotiations for sale, but we have had negotiations for lease. Senator REVERCOMB. You have had negotiations for lease? Mr. SYMINGTON. Yes, sir. Senator REVERCOMB. For what length of time? Mr. SYMINGTON. Well, that has been a subject for negotiation. I would say, 5 years. FUNCTION OF SURPLUS PROPERTY ADMINISTRATION IS TO LAY DOWN DISPOSAL POLICY Senator O'MAHONEY. May I interrupt, Mr. Symington, to say that the function of the Surplus Property Board, as I understand it, is to lay down the policy. The Defense Plant Corporation, or the RFC, is the disposal agency with respect to plants of this kind, I assume; is that not correct? Mr. SYMINGTON. That is correct, sir. The question of the nature. of the sale or lease would be so close to policy that the RFC and the Surplus Property Board have been working closely together. Senator O'MAHONEY. The report which you have laid before us is the outline of your disposal policy? 79912-45- 2 Mr. SYMINGTON. That is correct, sir. Senator O'MAHONEY. The problems of actual negotiation for lease or sale will, I take it, be discussed by Mr. Husbands. Mr. Husbands, are you not prepared to go into that at the proper time? Mr. HUSBANDS. Yes, sir. Senator REVERCOMB. Let me ask one further question: While you as the Administrator, Mr. Symington, would lay down the policy, you, as you say, work very closely, or would work very closely, with the RFC on the matter of any negotiations for sale, wouldn't you? Mr. SYMINGTON. Yes, sir. Senator REVERCOMB. Now the thought I am trying to get here is, how can you form a conclusion about whether or not these plants can be sold if you haven't negotiated for the sale of them? That is the thought I have. How can you say today that these plants that the Government will offer for sale cannot be sold to some groups that will undertake to operate them, if you haven't tried to sell them? Mr. SYMINGTON. Senator, I would like to answer that this way. Anybody who comes up for a lease of the plants we would like to sell, we would prefer to sell. Now again, as Senator O'Mahoney pointed out, as far as we are concerned we have to talk policy, but it is our understanding that there is nobody except Alcoa who would be willing, and perhaps able, to buy these plants at this time. Senator O'MAHONEY. Have you said, as the Senator's question might imply, that the plants cannot be sold? Mr. SYMINGTON. No, sir. Senator O'MAHONEY. That has not been said? Mr. SYMINGTON. Never. Senator O'MAHONEY. Has any offer to purchase been made? Mr. SYMINGTON. Not to my knowledge. Mr. Husbands would know that better than I would. Senator O'MAHONEY. Mr. Husbands, has any offer of purchase ever been made? Mr. HUSBANDS. No, sir. Senator REVERCOMB. Have you sent out invitations to bid on these plants? Mr. HUSBANDS. Yes, sir; we have advertised that we were ready to sell or lease, and we have had no offers to purchase except from Alcoa, which I think was made to Mr. Symington. Senator MITCHELL. I wonder if I could ask the witness to clarify the situation as to what companies have made definite offers and what terms they are seeking? Senator O'MAHONEY. Senator Mitchell, I wonder if you would permit Mr. Husbands to answer that question? Senator MITCHELL. Yes. I might say this, Mr. Chairman, that I would like to have a clear line of delineation here between the two. I think, as far as I have been able to determine, that they are working jointly on this problem. I would like to know whether they are or whether this is a responsibility of the RFC? Mr. HUSBANDS. Yes, sir. We have had only one definite offer. That was from the Reynolds Metals Co. on a lease basis, on what we speak of as the Alcoa-type contract, modified. Senator MITCHELL. That is somewhat in line with your proposal of last August? Mr. HUSBANDS. That is correct. Senator MITCHELL. Modified so that the company takes part of the risk? Mr. HUSBANDS. That is correct; yes, sir. That is the only definite offer we have received. I might say this, that we did have an offer 3 or 4 months ago from Mr. Gallagher's outfit-I have forgotten the name of the company-which involved something to the effect that the Government would guarantee to him delivery of alumina at a certain price. Senator O'MAHONEY. That is the Columbia Metals Co.; isn't it? Mr. HUSBANDS. Yes, sir. Senator MCCLELLAN. Mr. Chairman, may I ask a question in that connection? Senator O'MAHONEY. Senator McClellan. Senator MCCLELLAN. You said you had a definite offer from the Reynolds Metals Co. Was that for all of the plants in this program of disposal, or for specific facilities? Mr. HUSBANDS. I think we ought to say this: That we are speaking of those plants which we think might be economically operated at the present time. Those are the aluminum-reduction plant at Spokane; the aluminum-reduction plant at Troutdale, Oreg.; the aluminum-reduction plant at Jones Mills, Ark.; and the alumina plant at Hurricane Creek. Those are the four plants that interest has been expressed in up to the present time. Senator MCCLELLAN. By the Reynolds Metals Co.? Senator O'MAHONEY. Have you concluded, Senator Mitchell? On the basis of that am I to infer that the complete responsibility for the disposal rests with the RFC? Mr. HUSBANDS. No, sir. Under the directive of the Surplus Property Administrator all aluminum plants costing over $500,000 must be also approved by the Administrator. Senator MITCHELL. That is all. Senator O'MAHONEY. You may proceed, Mr. Symington. ANTITRUST QUESTIONS ARE FOR ATTORNEY GENERAL TO DECIDE Mr. SYMINGTON. It is not the business of the Surplus Property Administration, however, to decide whether Alcoa should be dissolved, or whether changes should be made in its structure and methods of operation. These are questions which have to do with the enforcement of the antitrust laws, as decided by the courts. The Attorney General controls all antitrust litigation. He decides what steps must be taken to correct violations of the law. Our report, therefore, did not include any recommendations about this problem. The court of appeals in New York did not state it was the duty of the Surplus Property Board to reach any decision about dissolving Alcoa, or enforcing the antitrust laws. It did indicate, however, that it was the duty of the Board to dispose of these aluminum plants in accordance with the objectives of the Surplus Property Act; and suggested that in doing so the Surplus Property Board seek to accomplish the same objectives to which the court was committed. Senator WHERRY. You said that you had definite offers from Alcoa for some of these plants? Mr. SYMINGTON. Senator, I don't know exactly what you would call "definite." Senator WHERRY. That was your testimony. Mr. SYMINGTON. They expressed an interest in the plants. I would rather pass that one to Mr. Husbands. Senator WHERRY. Have you had, Mr. Husbands, some definite offers by Alcoa for some of these reduction plants? Mr. HUSBANDS. I am going to have to pass the buck on that because the offer, I think, was made to Mr. Symington. Mr. SYMINGTON. It depends on what you would call "definite." Could I read the record as we put it into the report? Senator WHERRY. Yes. I didn't mean to interrupt you. What I meant was, in the event you have had definite offers by Alcoa-then, according to your recommendations in your report, carrying out the purposes of the report, you would offer these plants to competitors of Alcoa first. That is right, isn't it? Mr. SYMINGTON. Yes, sir. QUESTION RAISED AS TO WHETHER PLANTS CAN BE SOLD TO ALCOA UNDER ATTORNEY GENERAL'S DECISION Senator WHERRY. What I want to know is, If you have had those definite offers, and no competitors have offered to take these plants, have you then had any negotiations with Alcoa as to sales to them? Mr. SYMINGTON. I have had no negotiations Senator WHERRY (interposing). Well, who would have? Mr. SYMINGTON. Could I go along with that thought first? Mr. SYMINGTON. We have one company which is interested in obtaining the plants in which Alcoa is interested. Senator WHERRY. Let me ask you a pointed question. In the event that no competitor offers to buy these plants, is it going to be your policy to sell these plants to Alcoa on the definite offers they have made, or are you going to withhold that and attempt to sell them through some other method or policy than you have referred to in your report? Mr. SYMINGTON. It is our understanding, sir, that we cannot sell the plants to Alcoa, as the result of a decision of the Attorney General. Senator WHERRY. What decision? Mr. SYMINGTON. I will have to apply for a little legal aid on that. Senator O'MAHONEY. Mr. McGranery, the assistant to the Attorney General, can refer to the decision of the circuit court of appeals. Senator WHERRY. Then Mr. McGranery will answer that question for me is that right? Have you based this report of yours on your own investigation of facts, or are you basing it on somebody else's facts? Mr. SYMINGTON. Well, it would seem to me that the question of whether or not you could sell the plant would not be one of fact. It would be whether the Attorney General said we could, or not. Here is our general counsel, Mr. Cox, who might answer that; I am not a lawyer. Senator WHERRY. What that means is this: That if you have a definite offer from Alcoa, and in the event a competitor doesn't show |