Senator MCCLELLAND. Here is what has occurred. Not only are the folks who were working at the alumina and aluminum plants out of employment, but this thing has repercussions further back in the gas industry on these other people who are out of work because of it. I think there was a real obligation on the part of this Government and possibly on the part of Alcoa, to the people down there to keep these plants operating. I think there has been a complete failure somewhere on the part of someone to do it. Now, you say that Alcoa wouldn't come back after you sent this letter and gave them 60 days' operation opportunity, and that is just what it amounted to if you canceled in 60 days, and Alcoa took the position that you didn't want them to have it anyhow. Both of you just went apart, and the result is we have had this impact on us of unemployment with these plants closing. What I want to ask is where the fault lies that some real, sincere and genuine effort wasn't made to keep these plants in operation? Mr. HUSBANDS. I think the answer is that after my conference with Mr. Davis there were a number of conferences with the Surplus Property people. They took it that it was their obligation to see that these plants were put into the hands of private people, other than Alcoa, and at their request we canceled the contracts. I was not present when the conferences was held between Mr. Symington, his counsel, and Mr. Davis and his counsel. Mr. Goodloe, our general counsel, was present at one conference with the counsel, I understand, for Alcoa. Mr. Goodloe stated this morning that after the conference they discussed the possibility of Alcoa having a long temporary period, I think 120 days, or even 6 months or a year. Counsel for Mr. Davis, I think, stated he didn't understand that they had talked about a year, but only 120 days. Senator MCCLELLAN. That very conference took place here this morning, and what little information I have been able to get about it clearly indicates to me that this matter, having the importance and significance it does, was not given any consideration by the Government in a sincere effort to try to keep the plants in operation, but that you are more interested in getting them out of business and canceling the lease than in getting some basis where they would continue in operation and continue in employment. PURPOSE OF TERMINATION NOTICE TO ALCOA FURTHER EXPLAINED Mr. GOODLOE. I think there is a good deal of misunderstanding about what is the nature and purpose of the notice of termination given to the Alcoa lease on August 30. The purpose was to get a permanent 60-day cancellation in the lease, but otherwise to leave the lease in full force and effect. That is made perfectly clear by the following paragraph of the notice of termination itself: Notwithstanding this notice of termination and in order to assist in providing continued employment for aluminum workers until arrangements are made the disposition of these plants in accordance with the Surplus Property Act of 1944, offer is hereby made to Alcoa to permit Alcoa to continue to lease any or all the plants affected by this notice for a period of 1 year commencing September 1, 1945, and ending August 31, 1946, on the same terms and conditions as set forth in the agreement of lease as supplemented, except for the provision of paragraph 13 which is the termination and the 40 percent formula regarding regulation of production shall be waived in the entire and deemed to be of no further force or effect; and in lieu thereof either party, by giving 60 days' written notice, may terminate the lease with respect to plant or plants on which this offer if accepted any time during such year. In other words, under our view of the interpretation of the Alcoa lease and the application of the 40 percent formula, they have been operating under the lease subject to a 60-day cancellation clause for several months before the notice was given. I do not mean to imply by that they ever agreed with our interpretation of the contract and formula, but assuming our interpretation was correct, they had been subject to 60-day notice of cancellation for some time. Senator O'MAHONEY. It is only fair to state, Mr. Goodloe, that the Surplus Property Board, the Defense Plant Corporation, or the RFC were operating under an express statute passed by Congress, a fact which was recognized in this notice of termination, because you say there: Notwithstanding this notice of termination and in order to assist in providing employment for aluminum workers until arrangements are made for the disposition of these plans in accordance with the Surplus Property Act of 1944 * I was just reading it again for emphasis. You had your orders from Congress, so you are not to be condemned, it strikes me, for attempting to carry out a policy which was laid down by Congress. Mr. GOODLOE. All we wanted to do with get a cancellation notice, and as Mr. Cox testified this morning, we were certain that if we gave notice prior to September 1 we could cancel on 60 days' notice. We were by no means sure that if we did not give the notice prior to that date, we should ever again exercise the right, so we asked not for a termination of the lease but an amendment to provide for a 60-day right of termination by either party. The notice of termination was accompanied by a letter written to Mr. Davis, which is very short. Senator O'MAHONEY. Please read it. Mr. GOODLOE. Yes. The letter reads as follows: RECONSTRUCTION FINANCE CORPORATION, Mr. ARTHUR V. DAVIS, Aluminum Co. of America, Pittsburgh, Pa. DEAR MR. DAVIS: This is to confirm the following statements made orally today when I handed Mr. Arthur Hall, your Washington representative, an executed duplicate copy of the enclosed notice of termination of RFC's agreement of lease, dated August 19, 1941, with the Aluminum Co. of America covering certain aluminum reduction plants and certain alumina plants: 1. Because of the time element we are giving the notice of termination now for the purpose of protecting and preserving what we think are our legal rights under the contract. 2. We are perfectly willing and indeed are anxious to discuss the matter with you and your attorneys and if possible to adjust the whole matter on an amicable basis. 3. In the event we can arrive at a mutually satisfactory basis for adjusting the matter or should you convince us that we are wrong in our present position, we will withdraw the notice of termination. While I am certain that Mr. Hall will convey this information to you as requested, I am taking the liberty of confirming it to you directly because we do not want you to feel that today's notice of termination is being given in a spirit of antagonism. Very truly yours, (Signed) JOHN D. GOODLOE, General Counsel. In the subsequent discussion with Mr. Hickman, at the time he delivered the acceptance of the Alcoa to the termination, we discussed whether or not there was any basis for their continuing on a 60-, 90-, or 120-day notice, and the statement was made that they were not even offered as much as 1 year. I would like to insert in the record a memorandum which I wrote, following that conference, approved by Mr. Cox and your directors and included in the minutes. Senator O'MAHONEY. It may be received. (The memorandum referred to reads as follows:) SEPTEMBER 8, 1945. MEMORANDUM FOR THE DIRECTORS Re Plancor 226-Notice of termination of the lease of certain aluminum reduction plants and alumina plants-Aluminum Co. of America Reference is made to my memorandum of August 31, 1945, regarding the captioned subject. At noon Thursday, September 6, Mr. Hickman, one of the attorneys for Alcoa, whom I had met for the first time at the Spokane hearing on August 21, called on the telephone to say that he would like to come by the office late that afternoon and talk briefly with me in advance of the meeting scheduled for 2:30 p. m., Friday, September 7, between representatives of RFC, representatives of the Surplus Property Board and representatives of Alcoa. I told Mr. Hickman I would be glad to see him but that I would not be in a position to discuss with him any aspects of the matter except the legal basis for the notice of termination of the lease. When Mr. Hickman arrived he stated that he had assumed that the basis of the notice of termination was that the Maspeth, N. Y., Burlington, N. J., and River Bank, Calif., plants having remained technically under the lease, that their productive capacity or a substantial part of it had been included in our application of the 40 percent formula for the period ending July 31, 1945. I showed him the attached statement of the production figures and the analyses of them which led us, with the concurrence of counsel for the Surplus Property Board and representatives of the Department of Justice, to the conclusion that RFC was in a position to terminate the lease by giving Alcoa the 60 days' notice. Mr. Hickman next inquired concerning what we may have had in mind in regard to the statement made in our letter to Mr. Arthur Davis of August 30, 1945, that we were anxious to discuss the matter with representatives of Alcoa and if possible to adjust the whole matter on an amicable basis. He was informed that our objective was solely to obtain an arrangement whereby the lease could be terminated as to any plant or plants upon 60 days' notice so that we would be in a position to entertain negotiations for the disposition of the plants in accordance with the Surplus Property Act of 1944. He was advised further that if Alcoa would agree to an amendment or supplement to the present lease to provide such a 60-day termination notice, we were perfectly willing to withdraw the notice already given for the termination of the lease in its entirety as of midnight October 31, 1945. Mr. Hickman indicated that representatives of Alcoa would like very much to ascertain before discussing the notice of termina tion an official and current statement as to the attitude of the Government in regard to negotiating with Alcoa for the acquisition of any of the aluminum plants and facilities which they had operated for the account of the Government. He was advised that that was a matter which they should discuss with the Surplus Property Board and the Attorney General. Mr. Hickman left saying that he would attend the meeting at 2:30 on Friday but that he did not know whether or not Messrs. Davis, Wilson, and other representatives of Alcoa who were in town would attend that meeting. Mr. Hickman was the only representative of Alcoa that appeared at the 2:30 meeting on Friday. Others present were Hugh Cox, Esq., general counsel, Surplus Property Board, Robert Barnard, his assistant, and Edgar A. Stansfield, assistant chief counsel, Office of Defense Plants. Mr. Hickman presented the attached letter from the Aluminum Co. of America which he stated represented Alcoa's considered and final conclusion with respect to the notice of termination. In the discussion which followed, Mr. Hickman stated that Alcoa would not be interested in discussing any short-time lease or other arrangement for a temporary or interim operation of the leased plants, even on a basis of termination by either party on as much as 1 year's notice. He indicated further that while it might prove to be difficult for Alcoa to remove its property and equipment from the leased plants and be in a position to turn them over to the Corporation as of midnight October 31, Alcoa would make every effort to do so and would not want or accept any extension of that date. It was explained to Mr. Hickman that no difficulty or embarrassment would result if Alcoa could not complete the removal of its property and equipment from the leased plants by midnight October 31, 1945. About 3: 15 p. m., Friday afternoon there was delivered to Mr. Hickman by messenger from the Washington office of Alcoa draft of a press release which he stated Alcoa was planning to release immediately for the morning papers. He allowed us to read the proposed Alcoa press release. Both Mr. Cox and I asked that the release be held in abeyance for at least 24 hours in order that each of us might report back to our respective Boards but Mr. Hickman insisted that such would serve no useful purpose in that there was no area left for further discussion of negotiation and that Alcoa could not afford to withhold the issuance of its press release. It was quite apparent that Mr. Hickman was fearful that the Government might in the meantime issue its own statement to the press regarding termination of the lease. Finally, upon assurance from both Mr. Cox and me that such was not the purpose of the request and that such would not be done insofar as we were able to control it, Mr. Hickman indicated that the request was not unreasonable and he discussed the matter on the telephone with Mr. Arthur Hall, assistant secretary of Alcoa. A few minutes later Mr. Hickman, after talking again with Mr. Hall, advised that Alcoa would be agreeable to not issuing its release until 11 a. m., Saturday, September 8, provided definite assurance was given that none of the Government agencies at all would release a statement to the press on the termination of the Alcoa lease for use by the press earlier than Monday, September 10. Mr. Hickman was advised that such an understanding would not be at all satisfactory and he left. Following Mr. Hickman's departure Mr. Cox and I met with Mr. Husbands and Mr. Mulligan in Mr. Husbands' office and a few minutes later we were joined by Mr. W. Stuart Symington, Chairman of the Surplus Property Board, whom Mr. Cox had reached on the telephone and asked to come to Mr. Husbands' office at once. Mr. Cox and I made a full report of the discussion with Mr. Hickman following which the attached press release was drafted and issued by the Corporation, with the approvel of Mr. Symington and Mr. Cox. (Signed) John D. Goodloe, JOHN D. GOODLOE. Senator REVERCOMB. May I interrupt just a moment? When you speak of a 1-year notice of termination, what terms are you going to make? What terms would be continued? Mr. GOODLOE. We had a conference to find out whether there was any area in which there might be further discussion. There was no proposition made whatever. We had no authority to make an offer on behalf of RFC, nor did Mr. Hickman, I presume, on behalf of Alcoa. Senator REVERCOMB. The whole discussion here has been concerning the offer made to Alcoa with the idea of an extension of 1 year or a new lease for 1 year with the 60-day termination. You say you discussed with the representative of Alcoa a 60-day basis, a 90-day basis, a 120day basis, and a year's basis for notice of termination. Now, would you have a year's notice of termination in a year's lease? Mr. GOODLOE. You could not. I did mean to imply that the discussion had reference to actual negotiations with reference to the particular offer that had been made. It was whether or not there was any basis for further discussion on a short-term basis. Senator O'MAHONEY. This is not a new lease you are talking but an extension of an old lease which would not have terminated, unless you canceled it, until sometime in 1948? Mr. GOODLOE. Either way it made no difference whether it was an extension of an old lease or a new lease on the same terms and conditions. Senator O'MAHONEY. You were impelled by the conviction, as a lawyer, that unless a cancellation notice were given, you would not have an opportunity again to cancel the lease which might otherwise then have run until 1948? PURPOSE OF NOTICE WAS NOT TO TERMINATE LEASE BUT MAKE POSSIBLE FURTHER NEGOTIATION Mr. GOODLOE. That is correct. In other words, what I am trying to get across is that the purpose, as I understand it, of the notice of termination was not to terminate the lease but to get a 60-day cancellation provision in the lease so that we would be in a position to negotiate under the Surplus Property Act. Senator O'MAHONEY. In other words, your right to cancel was running out, as you saw it. VJ-day had come, and you were uncertain as to how long it would be proper to continue the manufacture of aluminum, and you didn't want to close the plants. You wanted to keep them working. In order to save the right of the Government to cancel these leases you wrote this letter, in which you stated that you were anxious to negotiate a satisfactory basis with Alcoa to keep the plants running. Mr. GOODLOE. Precisely. I might say that we endeavored to get them to agree to accept the 60-day cancellation clause, making the statement that we were reasonably sure the notice could not be given until such time as a deal had been worked out for disposition under the Surplus Property Act. Senator REVERCOMB. I am very much interested in the summary of your statement made by the able chairman, which, for a question, was just a little leading. Senator O'MAHONEY. Leading in the right way, I might say. Senator REVERCOMB. When we talk about VJ-day having come and talk about your losing your right to give notice under the lease, that right to give notice continued as long as they were below 40-percent production in those plants? Mr. GOODLOE. For a 6 months' period on the average. Senator REVERCOMB. VJ-day had not come, and yet it was not reasonable to think that in the future there would be a demand for more aluminum. Before VJ-day it had dropped below 40 percent, and it certainly would have stayed below 40 percent after VJ-day, wouldn't it? Mr. GOODLOE. There was a discussion of that this morning. I am not prepared to discuss that. The whole basis for the application of the 40-percent formula, though, would have changed. Two of the plants that had been subject to the lease and as to which the 40-percent formula applied were terminated and withdrawn from the lease ef |