fective midnight August 31. These were, as I recall it, Queens and Burlington. The Riverbank, Calif., plant was terminated and withdrawn from the lease effective August 31, so that those plants would be out from the formula of 40 percent.

Senator REVERCOMB. The part I am getting at is if one may judge by what may happen in the future, it was more reasonable to believe it would stay below 40 percent after VJ-day than it was before; is that correct?

Mr. HUSBANDS. I could answer that this way: As I stated a moment ago, Mr. Davis told me they were not disposed to give up these plants. That was in July. Of course, they could continue to operate Government plants and reduce operations in their own plants, in order to hold these plants.

Senator REVERCOMB. Would they have made more money doing that? Mr. HUSBANDS. I don't know.

· Senator REVERCOMB. They got their whole profit from their own plant and gave you most of the profit from the Government plants. It is not reasonable to assume they would do that, is it?

Mr. MOMENT. In drafting this report, we were under the distinct impression, as a result of conferences between RFC and the SPB with Alcoa, that Alcoa was pursuing the specific policy of holding onto these plants in order to avert the prospect of some new competition coming in. Senator REVERCOMB. You got the impression that was the motive? Mr. MOMENT. We got that impression from the point that Mr. Husbands first made regarding his conversation with Mr. Davis.

Senator REVERCOMB. That they would close up their own plants in which they received 100 percent of the profit to operate plants of the Government when the Government received 85 percent of the profit?

Mr. MOMENT. That question was not involved, because there was no expectation they would cut down all of their production following the end of the war.

Senator MCCLELLAN. Were you under the impression, or did you proceed on the basis that you could better negotiate the sale or lease of these plants to others after you got Alcoa out of possession? Do you have some information or statements to that effect from prospective purchasers or operators of the plant?

Mr. HUSBANDS. I think I can answer your question this way, Senator. We are conducting lots of negotiations on plants. We find that where a plant is in operation and the closing down of the plant is indefinite, it is almost impossible to get a definite proposition out of the proposed purchaser or lessee because he wants to know when he can get the plant. Prior to the cancellation of the contract, the date as of which any proposed lessee could get a plant was very indefinite because Alcoa's firm contract would not expire until 1947 in one instance and 1948 in the other. Therefore, we were disposed to say, in talking to lessees, "We don't know when you can get this plant." Therefore, they would not get right down to brass tacks and make a proposition. Senator REVERCOMB. Is it not true that some of those who have since made a proposition told you they would not submit one until you got Alcoa out?

Mr. HUSBANDS. No; I never had that statement made to me by anyone, sir.

Senator WHERRY. The committee is very much indebted to you, Mr. Husbands. You have been able to answer the questions without notes, and you seem to know precisely what was done. I think you are to be complimented.

General Sorensen, do you care to go on now?

General SORENSEN. That will be satisfactory.

Senator O'MAHONEY. Will you proceed? Will you give the reporter your name and the position you hold with the War Department? STATEMENT OF BRIG. GEN. EDGAR P. SORENSEN, OFFICE OF THE UNDER SECRETARY OF WAR

General SORENSEN. Brig. Gen. Edgar P. Sorensen, from the Office of the Under Secretary of War, stating the War Department's view with respect to the disposition of aluminum producing plants, including alumina plants.

The interest of the War Department is based upon a need for assurance that materials will be available quickly at the time of any future emergency.

Because of the critical requirement for aluminum for air forces, the first essential in defense of the United States, any foreseeable lack of availability must be avoided. The War Department, therefore, believes that any disposition made of the Government-owned alumina and aluminum plants should be that their continued availability as sources of aluminum production would be assured.

If disposal cannot be made on such assurance, the War Department urges that approximately 450,000,000 pounds per annum, which is approximately 50 percent of the Government-owned plants, be retained in stand-by condition.

That really states the War Department's position, as far as retention or continued production is concerned. We are concerned with it simply because of the national defense requirement, which may come suddenly or without much time to build it up.

Senator O'MAHONEY. Thank you very much, General Sorensen. Mr. ANDERSON. I didn't hear all the General's testimony, but do I take it that the War Department or the Army-Navy Munitions Board has not as yet developed implementation of a stock-piling program? General SORENSEN. No, that is not true. They have made their plans for stock piling, and because of the better quality of at least some of the imported bauxite, the plan thus far contemplates stock piling of a good bit of bauxite.

Mr. ANDERSON. For an imported bauxite?

General SORENSEN. That is right.

Mr. TROY. What tonnage?

General SORENSEN. I don't know for sure but I believe that figure is confidential. I would rather not quote it. It is rather substantial, however.

There is also a provision for a certain amount of metal, aluminum metal, in a stock pile. However, there is a maximum stated rather than a minimum, and I think it is primarily to encourage the importation of a certain amount of good bauxite while we can.

Mr. TROY. Is that figure also not available, the stock pile of the metal, itself?

General SORENSEN. I think that is confidential, too.

Mr. ANDERSON. You say, General, the figure on the amount and the type factor in stock piling, both bauxite and metal, could be made available to the committee?

General SORENSEN. Oh, yes; I am sure it could.

Mr. ANDERSON. Will you see that we get it?

General SORENSEN. Yes, sir.

Senator O'MAHONEY. General, we are very much obliged to you. I have here a communication from Mr. Henry J. Kaiser stating his inability to accept our invitation to appear before us at this time, which I ask be incorporated in the record.

(The communication referred to is as follows:)

Senator JOSEPH C. O'MAHONEY,

KAISER COMPANY, INC.,

IRON AND STEEL DIVISION, Oakland, Calif., October 16, 1945.

Chairman, Joint Senate Committee on Aluminum, Washington, D. C.:

I greatly appreciate your invitation for me to appear during your present hearings on the disposal of Government-owned aluminum plants. Unfortunately I have just returned here after several weeks absence and due to previous and important commitments find it impossible for me now to be in Washington. Our interest in certain Government-owned aluminum plants is still the same as stated by our Mr. Calhoun at the subcommittee hearing of the Meade committee at Spokane, Wash., August 22, and which is part of that record. Our studies which he stated then were underway are not yet complete. My absence from your hearing should not be interpreted as a lack of interest. I will not be able to finally evaluate the basis for any proposal to the Government until our studies are completed and we have had an opportunity to analyze them.

HENRY J. KAISER. Senator O'MAHONEY. The committee will stand recessed until 10 a. m. tomorrow morning, in room 224.

(Whereupon, at 4:30 p. m., a recess was taken until 10 a. m., Tuesday, October 16, 1945, in room 224, Senate Office Building.)

(By direction of the chairman, the following material, relating to the termination clauses in the agreement of lease between the Defense Plant Corporation and the Aluminum Co. of America, is inserted at this place in the hearings:)

TERMINATION PROVISIONS OF ALCOA LEASING CONTRACT

The original agreement of lease between the Defense Plant Corporation and the Aluminum Co. of America, dated August 19, 1941, provides, in paragraph 13:

that if such production shall for any six (6) months' period average less than forty percent (40%) of aggregate productive capacity, either party hereto may, at its election, terminate this agreement upon sixty (60) days' written notice to the other.

Article 22, of the same document, carries the following:

Notwithstanding the other provisions herein contained, Defense Corporation, by notice in writing, may cancel this agreement in the event (a) that a receiver or trustee is appointed for Alcoa or its property, or Alcoa makes an assignment for the benefit of creditors, or Alcoa becomes insolvent, or a petition is filed by or against Alcoa pursuant to the provisions of the United States Bankruptcy Act, as amended, for the purpose of adjudicating Alcoa a bankrupt, or for the reorganization of Alcoa, or for the purpose of effecting a composition or rearrangement with Alcoa's creditors, and any such petition filed against Alcoa is not dismissed within sixty (60) days; or (b) of any violation of any terms, conditions, or covenants of 79912-45-9

Senator WHERRY. The committee is very much indebted to you, Mr. Husbands. You have been able to answer the questions without notes, and you seem to know precisely what was done. I think you are to be complimented.

General Sorensen, do you care to go on now?

General SORENSEN. That will be satisfactory.

Senator O'MAHONEY. Will you proceed? Will you give the reporter your name and the position you hold with the War Department? STATEMENT OF BRIG. GEN. EDGAR P. SORENSEN, OFFICE OF THE UNDER SECRETARY OF WAR

General SORENSEN. Brig. Gen. Edgar P. Sorensen, from the Office of the Under Secretary of War, stating the War Department's view with respect to the disposition of aluminum producing plants, including alumina plants.

The interest of the War Department is based upon a need for assurance that materials will be available quickly at the time of any future emergency.

Because of the critical requirement for aluminum for air forces, the first essential in defense of the United States, any foreseeable lack of availability must be avoided. The War Department, therefore, believes that any disposition made of the Government-owned alumina and aluminum plants should be that their continued availability as sources of aluminum production would be assured.

If disposal cannot be made on such assurance, the War Department urges that approximately 450,000,000 pounds per annum, which is approximately 50 percent of the Government-owned plants, be retained in stand-by condition.

That really states the War Department's position, as far as retention or continued production is concerned. We are concerned with it simply because of the national defense requirement, which may come suddenly or without much time to build it up.

Senator O'MAHONEY. Thank you very much, General Sorensen. Mr. ANDERSON. I didn't hear all the General's testimony, but do I take it that the War Department or the Army-Navy Munitions Board has not as yet developed implementation of a stock-piling program? General SORENSEN. No, that is not true. They have made their plans for stock piling, and because of the better quality of at least some of the imported bauxite, the plan thus far contemplates stock piling of a good bit of bauxite.

Mr. ANDERSON. For an imported bauxite?

General SORENSEN. That is right.

Mr. TROY. What tonnage?

General SORENSEN. I don't know for sure but I believe that figure is confidential. I would rather not quote it. It is rather substantial, however.

There is also a provision for a certain amount of metal, aluminum metal, in a stock pile. However, there is a maximum stated rather than a minimum, and I think it is primarily to encourage the importation of a certain amount of good bauxite while we can.

Mr. TROY. Is that figure also not available, the stock pile of the metal, itself?

cost to the purchaser, all aluminum so purchased at the plant or plants in which it is produced so long as the lease of said plant or plants to Alcoa continues in effect.

(2) Defense Corporation shall have the right to direct Alcoa in writing to cease operations in any leased aluminum smelting plant or part thereof, and Alcoa agrees to cease operations in the plant or part thereof so designated as rapidly as raw materials then on hand can be used up, but in no event later than three (3) months after the date of said direction.

(3) In the event any such leased aluminum smelting plant after it shall be ready for substantially full operation has not been operated, or has been shut down pursuant to the provisions of paragraph (1) or (2) of this article IV, for a period of three (3) successive months, either party hereto may at its election terminate the lease as to such plant upon thirty (30) days' written notice to the other, and after the date of said notice Alcoa agrees to remove its property from such plant as promptly as reasonably possible, but in no event later than three (3) months from the date of said notice.

(4) If any aluminum smelting plant leased by Defense Corporation to Alcoa shall, after it has been placed in operation, be shut down for a period of one (1) month, operation of such plant shall not be resumed without the written consent of Defense Corporation.

(5) In the selection by Defense Corporation of Alcoa of aluminum smelting plants in which production is to be reduced, or operations terminated, the general principle to be followed shall be to eliminate the plant or plants or parts thereof least economical to operate.