clear should be regarded as an attack upon the Aluminum Co. of America.

Senator WHERRY. Are you referring to me?

Senator O'MAHONEY. Certainly, Senator.

Mr. WILSON (continuing):

I. THE SIX-POINT SUBSIDY PROGRAM OF THE SURPLUS PROPERTY BOARD

SUBSIDY NO. 1. GOVERNMENT GUARANTY AGAINST LOSSES

The program contemplates the leasing of alumina and aluminum smelting plants on terms which give the operator 15 percent of the profits, but require the Reconstruction Finance Corporation to stand all losses, subject to a right in the Reconstruction Finance Corporation "to review and approve the price at which metal is sold, the top salaries, and extraordinary expenses."

There is no need for such a subsidy, and its consequences are indefensible. This subsidy is an invitation to reckless, extravagant, and calculated mismanagement. Less than a month ago you testified before the Mead committee in opposition to the very subsidy now proposed, stating:

"In our opinion-I think in the opinion of the committee at Spokane-some of that loss should be absorbed, even if it is only a very small percentage, by the company with whom an arrangement is made. If we can't get anybody to work on any other basis, we will accept an arrangement of that character, but it would seem that unless the company or companies that come in accept some of the loss, you are not likely to have good management as if they were responsible for some of it."

1. If the Government bears the losses, it is an inducement to the operator thus subsidized to capture customers of Alcoa and those of all other privately owned operations, or to create new markets by selling at a price no one can match and send the bill to the Reconstruction Finance Corporation. The operator can also build up an organization by hiring key men and the necessary multitude of technical operators from privately financed competitors, regardless of expense, and send the bill to the Reconstruction Finance Corporation, because it is not proposed to control the payments made to these many and vital men. Under the subsidy plan, only top salaries are Government controlled.

2. The program results in a direct or indirect Government price fixing of all aluminum products. A bureaucrat can ruin privately financed competitors-and there are many besides Alcoa-by approving low enough prices. Who will put a nickel in a privately financed competitive enterprise which is wholly at the mercy of the price policy of the Government-subsidized competitor, who cannot lose?

Senator O'MAHONEY. May I interrupt at that point to ask if you are aware of the testimony given by Mr. Husbands yesterday that the offer from the Reynolds Metal Co. had not been opproved, had not been accepted, and, if I remember correctly, that he was not at all interested in any such proposal as is contained in this paragraph of your statement?

Mr. WILSON. This statement, Mr. Chairman, is not based on any Reynolds proposal, which was not available to us at the time this letter was written. It is based on a recommendation in the report of the Surplus Property Board.

Senator O'MAHONEY. That is right. Then it is clearly understood that the testimony which you are now giving from a printed document, which evidently has been in the course of preparation for sometime because it is very carefully printed and contains some 45 pages, constitutes your interpretation and the conclusions which you have reached on the basis of the report of the Surplus Property Board, and not upon the basis of the testimony which has been evoked before this committee? Mr. WILSON. Very definitely, Mr. Chairman.

Senator O'MAHONEY. So that it is altogether possible that there may be broad changes required in the interpretation of your letter and your statement now?

Mr. WILSON. We sincerely hope there will be, Mr. Chairman. That is the object of filing this letter with the Surplus Property Administrator and bringing it to the attention of this joint committee, because we believe that the report of the Surplus Property Board is based on fallacious ideas and misunderstandings, and involves recommendations which we want the Congress to see what at least we think they mean and where they lead.

Senator O'MAHONEY. My purpose in interrupting you was merely to get it quite clear that anything you are presenting from this document is based not upon the testimony here but upon your interpretation of the report which was filed?

Mr. WILSON. That is correct.

Senator ROBERTSON. Mr. Wilson, may I ask this question? These changes which you suggest now will be brought about, in most cases, by the changes which, in your opinion, have been made by the Surplus Property Board during this hearing?

Mr. WILSON. Senator, I am not sure I get your point, but there are no changes in our letter here that are proper changes as comments on the Surplus Property Board's report, because that was filed, of course, before these hearings.

Insofar as there would be any modifications or changes, they would be for the reason that I think to some extent Mr. Symington has indicated, that he doesn't believe he has authority for certain things that, from his report, we obtained the impression that he was recommending. Senator ROBERTSON. So it is your impression of the change in Mr. Symington's testimony before the committee which will bring about any changes in this report?

Mr. WILSON. We think that that is one thing this committee has already accomplished; we hope it can accomplish much more.

Senator O'MAHONEY. I think, Senator Robertson, you don't mean to imply that there was any change in Mr. Symington's testimony. There was a report submitted here by the Surplus Property Board. I think the record will bear me out when I say that Mr. Symington's testimony from the very beginning has been altogether consistent. We are dealing here with interpretations, and it is going to be very important for all of us, if we are going to work out a solution of an administrative problem, to dissociate facts from conclusions, and I assume that that is what we are going to try to do.

Now, I have in mind this statement on page 6 which you have just read, under paragraph 2, "A bureaucrat can ruin privately financed competitors and there are many besides Alcoa-by approving low enough prices." "

How many competitors of Alcoa are there in the ingot field?
Mr. WILSON. Two in the ingot field today.
Senator O'MAHONEY. Who are they?

Mr. WILSON. Reynolds and Olin.

Mr. BORCHARDT. Is Olin still in operation?

Mr. WILSON. Yes; but this program carries over to fabricating plants, too, Mr. Chairman, and we have hundreds of competitors there. Senator O'MAHONEY. I wanted to make clear that when you used the word "many," in the ingot field you are applying to two.

Mr. WILSON. But this is not limited to the ingot field at all. Senator O'MAHONEY. I was limiting it to the ingot field, which is the field in which the highest legal authority in the land has held that there is a monopoly in Alcoa.

Mr. WILSON. May I correct the chairman on that?

Senator O'MAHONEY. Surely, I want to be corrected.

Mr. WILSON. The highest Court in the land decided that as of 1940 Alcoa had a monopoly in the ingot field. They carefully set out that they did not know what the situation, now tomorrow, is, and what the situation will be, until a program has been determined for the disposal of these Government facilities.

Senator O'MAHONEY. That is it. Depending upon whether or not the disposal of Government facilities strengthens the monopoly or introduces competition, then the further action of the Court will be guided?

Mr. WILSON. That is right.

Mr. HICKMAN. They will also be guided by the Reynolds situation. Their 1940 decision was before Reynolds started.

Senator O'MAHONEY. Of course-as to whether or not there would be competition in the field.

Mr. HICKMAN. That is right.

Senator O'MAHONEY. Naturally that would be the result.

Senator WHERRY. Mr. Chairman, let me get this straight. This statement is prepared by the witness, giving their interpretation of what recommendations were contained in the Symington report, the Surplus Property Board report; is that right?

Senator O'MAHONEY. That is right.

Senator WHERRY. Now, the fact that Mr. Symington or anybody else has testified to something which might change or might not change the recommendations, doesn't alter the testimony given here by Alcoa or Reynolds or any other company as to how they feel about the report, does it?

Senator O'MAHONEY. That is precisely what I said a few moments ago. I just wanted to make it clear on the record.

Senator WHERRY. Regardless of what Mr. Symington said this morning, that doesn't prevent Alcoa from giving their interpretations of what they think the Symington report meant when they made their recommendations.

Senator O'MAHONY. That is precisely what the Chair said.
Senator WHERRY. I understand it now.

THREE CONCERNS NOW PRODUCING ALUMINUM INGOT

Mr. ANDERSON. There is just one point of fact, Mr. Wilson, with respect to ingot production. You mentioned that there were three competing firms at the present time. My understanding is that Olin, one of the firms you mentioned, is not operating in that field at the moment.

Mr. WILSON. I can't speak authoritatively for Olin, but may I ask the Chair to call on the representative of Olin to ascertain that? Senator O'MAHONEY. That is a good idea. Can a representative of Olin answer that?

Mr. ROUSSEAU. To the best of my knowledge we are still operating. We have had some differences with labor at our East Alton plant for

the past month or so, and they saw fit to keep all of our executive personnel out of their offices.

Senator O'MAHONEY. The question is, Are you now producing aluminum ingot?

Mr. ROUSSEAU. We were 3 weeks ago when I last heard from headquarters. Nobody has been allowed to get in there for the last month

or so.

Senator O'MAHONEY. Then assuming that Reynolds is producing, we have three producers of ingot-the Aluminum Co. of America, Reynolds, and Olin. Now may I ask if you are producing under a Government contract?

Mr. ROUSSEAU. Yes, sir; that is a DPC-owned plant.

Senator O'MAHONEY. And you are producing under one of the RFC-DPC subsidy contracts which were made for the purposes of this war?

Mr. ROUSSEAU. I would rather skip that word; but we are producing under that contract.

Senator WHERRY. I want to thank the chairman for using the right word there. [Laughter.]

Senator O'MAHONEY. I always try to, Senator Wherry.

Mr. ROUSSEAU. Senator, may I add that I have just checked with Dr. Sebastian, of the War Production Board, who have control over this plant as I understand it, and he says we are still producing.

Mr. TROY. Would the gentleman from Olin state whether they intend staying in the business of producing aluminum; is it their intention to continue as a producer in the future?

Mr. ROUSSEAU. Senator, I happen to be only an observer here. We have a staff executive who is in charge of all of this and who had intended to come to all of these meetings, but again due to these differences between labor and management nobody has been able to get in his office for the last month.

Senator O'MAHONEY. I think it becomes clear as we go along that those who are in charge of the Government's interests in this field must expect to negotiate at arm's length with all of those who are seeking to acquire the facilities.

Mr. TROY. Still further with reference to Olin, the information has gotten around that Olin will not continue as long as they do not have their own independent bauxite supply. I wonder whether anything is known about that?

Mr. ROUSSEAU. Senator, we submitted some testimony here before the Small Business Committee. I wouldn't say at all that we have lost our interest in it. We expressed our position at that time as to what we would need to go in without subsidy and operate with our own funds, and as far as I know that condition still prevails.

Senator O'MAHONEY. Thank you very much.

You may proceed, Mr. Wilson.

Mr. WILSON (continuing):

3. Cost-plus contracts are always an invitation to increased costs and lowered efficiency. Can it be any different in a plant in which the Reconstruction Finance Corporation foots the losses?

4. It is wholly misleading to say that Alcoa operated Government-owned plants during the war on the same basis as is now proposed. It had built the plants for the Government, without fee or profit, and made available all the experience and know-how acquired over more than 50 years. Alcoa was required to reduce

its ingot price to 15 cents a pound and to submit to governmental price controls on all products manufactured in the leased plants. Alcoa was also required to sell the output of these plants for war purposes on Government allocation of the War Production Board.

Senator O'MAHONEY. I am prompted to inquire, just as a matter of information: Were these contracts subject to renegotiation?

Mr. WILSON. I am not sure. My counsel here says "Yes."
Mr. HICKMAN. Yes, they were, Senator.

Senator O'MAHONEY. Were they renegotiated?

Mr. HICKMAN. Yes.

Senator O'MAHONEY. Do you know whether or not the contract with Aluminum Limited of Canada was renegotiated?

Mr. HICKMAN. I know no more about it than you-if you know nothing about it.

Senator O'MAHONEY. I know nothing about it.

Mr. TROY. The Small Business Committee brought out that it was not renegotiated.

Senator O'MAHONEY. There was a purchase there, by the Government of the United States, as I recall it, of some million pounds— Mr. TROY (interposing). It went to a billion.

Senator O'MAHONEY. That is right, a billion pounds of aluminum. Senator WHERRY. We went into that very thoroughly in the Small Business Committee, and when they found that there was a surplus they canceled the contract and they got over the fence and out as quickly as possible; isn't that true, Mr. Anderson?

Mr. ANDERSON. Yes.

Mr. GOLDSCHMIDT. I understand that the escalator clauses in that contract were renegotiated.

Senator O'MAHONEY. I think that is aside from the question.

ALCOA'S PROFITS ON GOVERNMENT CONTRACTS NEARLY $30,000,000

Mr. ANDERSON. On your point 4, Mr. Wilson, yesterday we had testimony from the RFC and other people present to the effect that the Government, in its relationship with Alcoa with respect to Government-owned plants, made a very handsome profit of many millions of dollars in the wartime production of aluminum. The Government was paying 15 percent of the profit and retaining 85 percent of the profit, as I understand it, on the operation. Could you supply the committee for the record with the amount of profit taken from the operation of Government-owned aluminum plants by Alcoa during the period of its leased operations?

Mr. WILSON. I have that over-all figure in mind now, and it appears later in the statement. It is nearly $30,000,000-$29,000,000 plus. Mr. ANDERSON. Alcoa did not sustain any losses, then, but made a profit of approximately $30,000,000 in the operation of these Government-owned plants?

Mr. WILSON. No, indeed; the $29,000,000 plus was the gross payment by Alcoa to the Government for operating the alumina and aluminum smelting plants.

Mr. ANDERSON. What kind of a profit did Alcoa make from the operation of these Government plants?

Mr. WILSON. Before taxes the corresponding profit to Alcoa was about $6,000,000, I believe. That is not the exact figure, but it would be in that neighborhood.