up, you wouldn't sell the plant to Alcoa until you were advised that you could by the Attorney General?

Mr. SYMINGTON. That is right, sir.

Senator O'MAHONEY. Mr. Cox, do you have a copy of the decisions of the United States circuit court of appeals?

Mr. McGRANERY. We have one, Mr. Chairman.

Senator O'MAHONEY. Well, I think that it would be appropriate to quote from that decision. There is a quotation in the report, is there not?

Senator WHERRY. Not in his report. I am perfectly willing to let this go until Mr. McGranery comes up, if that is for him to handle. It is all right with me. If the policy of the Administrator is to put it up to the Attorney General's office, that is what you are going to be governed by and you are not going to accept that responsibility? Mr. SYMINGTON. I understand that.

Mr. MCGRANERY. As part of the opinion of the Circuit Court of Appeals for the Second Circuit, it is stated

Senator O'MAHONEY. In other words, what you are referring to now is not the opinion of the Attorney General or the opinion of the RFC, or the opinion of the Surplus Property Administrator, but it is the opinion of the court?

Mr. MCGRANERY. The Circuit Court of Appeals for the Second Circuit.

Senator O'MAHONEY. Will you read that into the record?

Senator WHERRY. Before he does that I would like to ask this question: Where, in that opinion, do you get the basis for advising the Surplus Property Administrator not to sell one of these plants to Alcoa in the event a competitor has not made an offer for the plant? Mr. McGRANERY. Right here, sir. [Reading:]

Finally, no disposal agency

Senator WHERRY (interposing). Will you give me the page of the opinion, and the section, so that I can check it?

Mr. McGRANERY. It is page 1254, about midway down the page, Senator. It is the case of United States v. Aluminum Company of America et al.

Senator O'MAHONEY. Decided when?

Mr. McGRANERY. Argued January 2, 3, and 4, 1945, and decided March 12, 1945.

It states here:

Finally, no disposal agency shall even begin negotiations to sell a plant which has cost over a million dollars without advising the Attorney General of the probable terms or conditions of the sale; and he in turn must tell the agency whether the proposed disposition will violate the antitrust laws. The act must not be read to impair, amend, or modify those laws, or to prevent their application to purchasers of surplus property.

In view of these declarations of the purpose of Congress, the agency which the Board designated to dispose of the plaintiff's aluminum plants and facilities may well believe that it cannot do so without some plan or design for the industry as a whole some comprehensive model which shall, so far as practicable, reestablish free independent private enterprise, discourage monopoly, strengthen small competitors, foster independents and not foster monopoly or restraint of trade. If it should find this method desirable, it would have to learn what purchasers were in the market, how strong they were, what units they could finance and operate, and in what position they would be to compete.

In such a model or design the agency would have to assign a place to Alcoa, and that place no one of course can now anticipate. Conceivably Alcoa might be left as it was; perhaps it might have to be dissolved; if dissolved, the dissolution would depend upon how the other plants were distributed. If the agency should find it wise to proceed in this way, it may succeed in inducing Alcoa to accept the place assigned to it, particularly if the plan has not been prepared ex parte. If it does not succeed, then, but then only, will it be appropriate for the district court to act. We do not of course mean that in deciding whether to dissolve Alcoa, or how to do it, that court must be governed by any plan which the agency may have devised, if it does devise one. But, plan or no plan, it must wait until it learns what the agency has in fact done. Moreover, if the agency does form a plan, it will have been an attempt to realize the same objectives for which the court itself must strive; and the court may well feel that it should accord to the agency's plan that presumptive validity which courts are properly coming more and more to recognize in the decisions of specialized tribunals. Nothing which we now say ought in any measure to limit the discretion of the agency to proceed in this way. Therefore we shall merely reverse the judgment, so far as it held that Alcoa was not monopolizing the ingot market, and remand the case to the district court.

From what we have already said, we must deny the plaintiff's prayer that those shareholders who own shares in both Alcoa and Limited, shall dispose of one or the other. Since we have affirmed all the findings as to unlawful practices except the price squeeze, again it follows that no injunction will go to these.

I think that is far enough, as it gets into the question of price there. In other words, Senator, there is no plan. In answer to your question, if there were no other bidders but Alcoa we would have to go right back to the second circuit and say, "Here is our plan; can Alcoa acquire it, or can't they?"

Senator WHERRY. And as I get the procedure, the Surplus Property Administrator, if he had to sell a plant costing over a million dollars, would go to the Attorney General and the Attorney General would be asked as to whether or not he should sell the plant in view of his policy and then what does the Attorney General do?

Mr. MCGRANERY. Alcoa can go in, or we can, and ask the second circuit, "Here is our plan: can Alcoa acquire these properties; will she be a monopoly if they are acquired?"

Senator WHERRY. The same thing would be true with respect to Reynolds?

Mr. MCGRANERY. Well, Reynolds was not before the court.

Senator WHERRY. Well, you are developing a policy; this plan is going to sell these plants. Now what I want to know is this-and it seems to me that it is wholly within the realm of the Attorney General-if and when no competitor offers to buy, are you going to tell the Surplus Property Administrator that he can't sell it to Alcoa because of what you read from that opinion?

Mr. McGRANERY. We wouldn't say he couldn't sell it to Alcoa, but we would go right to the court and say, "Here is our plan; does this come within the purview of the court's ruling?"

Senator WHERRY. Just what is your plan, briefly? Are you going to give your plan when you testify?

Mr. MCGRANERY. No; we have no plan.

SENATOR O'MAHONEY EXPLAINS POLICY AS INVOLVING A BETTER ECONOMY UNDER FREE ENTERPRISE WITHOUT MONOPOLY

Senator O'MAHONEY. Senator Wherry, may I interrupt to say that in order to clear up this situation it should be borne in mind first of all that Congress, in passing the Surplus Property Act, clearly stated

what it believed the policy should be, and that policy was to support and reestablish the competitive system. Secondly, Congress directed the Attorney General to make a report to Congress as to the effect of any action upon the competitive system, upon little business, and upon the concentration of economic power.

Now as I see it, in compliance with this directive-to use the modern word-of Congress, both the Surplus Property Administration and the Attorney General have made their reports to us. We are now reviewing those reports. So that we should not, it seems to me, approach this from the point of view of a fixed purpose.

The Attorney General has recommended the dissolution of Alcoa. Perhaps Congress may come to the conclusion that Alcoa should not be dissolved. We can determine that only upon the facts. Now that was the position which the circuit court of appeals took. It declined to order the dissolution of Alcoa in this case, decided last March, although it found that Alcoa was a monopoly, because it was unable to foresee what the effect would be upon the whole situation of the disposal of the plants.

I find this sentence in the decision under the heading, "The remedies":

Dissolution [meaning the dissolution of Alcoa] is not a penalty, but a remedy; if the industry will not need it for its protection, it will be a disservice to break up an aggregation which has for so long demonstrated its efficiency. The need for such a remedy will be for the district court in the first instance, and there is a peculiar propriety in our saying nothing to control its decision, because the appeal from any judgment which it may enter, will perhaps be justiciable only by the Supreme Court, if there are then six Justices qualified to sit.

If ever there was a time when the phrase that Grover Cleveland made famous, is applicable, I think it is here. He said, "We are facing a condition and not a theory." Now the theory of Congress has been that we can get a better economy and more prosperity under the free enterprise system, without monopoly. The court has observed that because of the tremendous expansion of the aluminum industry by Government investment, conditions have been created which will enable the Government through its disposal agencies to restore competition in this industry; and what we are doing here, as I see it, is to gather the facts as best we can to determine, in the last analysis, what is best for all the people in the United States.

I might point out, since Alcoa is so important an element in this discussion, that the greatest benefit which was ever extended to the petroleum industry was, I think, the decision of the Supreme Court which ordered the dissolution of the old Standard Oil trust. When that old Standard Oil Co. was broken up into its various units, each of the units, because there was freedom of enterprise, became more powerful and a better employer of labor, a better purveyor of business, than the original company was.

So that that, I take it, may be what the Court had in mind when it was saying, even to Alcoa, that dissolution is not necessarily a penalty but a remedy, and it may be a very beneficial remedy. Senator WHERRY. May I say a word, Mr. Chairman?

Senator O'MAHONEY. Certainly.

Senator WHERRY. I think I understand the explanation given by Senator O'Mahoney. I believe that the Small Business Committee put in about as much time hearing the evidence on all phases of this ques

tion as any committee we have in the Senate, and I attended most, if not all, of those meetings. I am interested in the private enterprise system, intensely interested, and that is the reason I asked the question, and I think the record ought to be straight here. I am a member of the Small Business Committee and I have seen its report. I can wholeheartedly go along with all of that report because I am satisfied that we gave an exhaustive study as to the monopoly here of Alcoa and of the Reynolds people. We didn't find any monopoly in the control of bauxite, we didn't find any monopoly in the control of the water power of this country; we didn't find any control, either by Alcoa or Reynolds, of alumina, and the only place where there was any question of monopoly was in the primary aluminum, and it was upon that opinion, then, that they were to go in and find out if it would be a disservice whether or not Alcoa would be permitted to come in and buy.

I am perfectly willing, and want the chairman and everybody here to know that I don't want any monopoly-I certainly do not-but we get back to the point of whether we are going to subsidize business go in or whether we are not; and that is what it amounts to.

to

I just wanted to know, in your opinion, Mr. Symington, or upon the advice of the Attorney General, in the event a competing company, say Reynolds or anybody else that came in, did not make an offer, just how you would be guided in the sale of one of these plants. You have told me the Attorney General also stated what they were going to do, and I think we understand it, and I want to thank you for it.

Mr. SYMINGTON. Thank you, sir.

Senator O'MAHONEY. Proceed.

Mr. SYMINGTON. The Court then pointed out that it was necessary to postpone any decision on the question of dissolution until the Surplus Property Board had worked out a plan for disposing of these Government-owned plants.

EFFORTS LOOK TO SALE OF PLANTS TO ALCOA'S RIVALS AS MATTER OF DUTY UNDER ACT OF CONGRESS

The Surplus Property Administration is trying to dispose in accordance with the objectives of the act.

Once the plants have been disposed of, the job of the Administration is done; and the question of what happens in this litigation will be decided by the Court.

We are trying to sell or lease these aluminum plants to competitors of Alcoa, believing this our duty under the act.

This should be done as quickly as possible, in order that the plants can be working at the earliest possible time. It would be unfortunate if the disposition of the plants had to wait on the disposition of the lawsuit.

The Attorney General recommends that the Surplus Property Board be guided by the necessity of creating competition in the production of aluminum.

This is our prime objective. We make all other objectives subservient to it; and therefore the Administration has canceled the Government leases of ingot plants with Alcoa, has actively negotiated with other companies, and is trying to arrange with these other companies suitable terms for lease or sale.

Our report to the Congress recommended priorities in plant disposal which would give first preference to competitors of Alcoa, and second preference to Alcoa, only provided the Attorney General was satisfied any terms conferred no competitive advantage to Alcoa.

ADMITS CONFUSION OVER WHAT TO DO IF ALCOA'S COMPETITORS FAIL TO MAKE AN OFFER

The Surplus Property Administration now faces the practical question of what shall be done with any of the facilities if no competitor to Alcoa offers to take over said facilities except under terms of outright subsidy, with a guaranty against all loss. Frankly, we do not yet know how to meet this problem, although the Attorney General's report would indicate that leases should be arranged, even if on unfavorable financial terms to the Government.

Senator MITCHELL. Of course, you do have an offer now from Alcoa, which offers to assume the risk; is that not true?

Mr. SYMINGTON. I don't think we have one, Senator, from a company-again I would defer to Mr. Husbands-that offers to assume all the risk.

Mr. HUSBANDS. No, we have not.

Senator MITCHELL. Or to assume some portion of the risk—is that the situation?

Mr. HUSBANDS. I think they proposed to lease the plant provided the Government will guarantee them alumina at some set price, the rental to be set at so much per pound of alumina, but that rental to be

Senator MITCHELL (interposing). Don't they, in their offer, seek to purchase the alumina plant, too?

Mr. HUSBANDS. No, sir; it is not a purchase, it is a lease.

Senator MITCHELL. I mean to say lease. Don't they want to lease the Hurricane Creek alumina plant together with the reduction plants? Mr. HUSBANDS. Yes, sir.

Senator MITCHELL. And they assume that they can produce alumina at a certain cost?

Mr. HUSBANDS. I think I should get this over, Senator, before we go further into the details on this, because I think we ought to discuss that at length. I know you are referring to the Columbia Metals. That is correct, isn't it?

Senator MITCHELL. No.

Mr. HUSBANDS. To whom are you referring?

Senator MITCHELL. Reynolds.

Mr. HUSBANDS. I have got their offer before me, if you would like to into that now.

go

Senator MITCHELL. Mr. Chairman, I don't want to interpose here

Senator O'MAHONEY (interposing). I think it would be more appropriate to go into that a little later.

Senator REVERCOMB. Mr. Chairman, let me ask a question.
Senator O'MAHONEY. Yes, Senator.

Senator REVERCOMB. I am impressed here that you have more or less laid down the policy of leasing, rather than sale. Is that correct?

Mr. HUSBANDS. No, sir; we will do either, but we have had no offers to purchase, no interest in purchasing by anyone.