Arkansas produced bauxite "faster than Alcoa expected". Additional statement of Francis C. Cary, metallurgist, Wilming- 323 ALUMINUM PLANT DISPOSAL MONDAY, OCTOBER 15, 1945 JOINT HEARING OF THE SUBCOMMITTEE ON SURPLUS PROPERTY DISPOSAL OF THE COMMITTEE ON MILITARY AFFAIRS, THE SPECIAL COMMITTEE TO STUDY AND SURVEY PROBLEMS OF SMALL BUSINESS ENTERPRISES, AND THE INDUSTRIAL REORGANIZATION SUBCOMMITTEE OF THE SPECIAL COMMITTEE ON POSTWAR ECONOMIC POLICY AND PLANNING UNITED STATES SENATE, The committee met, pursuant to call, at 10:30 a. m., in the caucus room, Senate Office Building, Senator Joseph C. O'Mahoney (chairman of the Subcommittee on Surplus Property Disposal) presiding. Present: Senators O'Mahoney (chairman), Murray, Hill, Wherry, Austin, and Revercomb. Also present: Senators Hayden, McClellan, Maybank, Mitchell, and Robertson; Congressmen Savage, Horan, and Angell; Kurt Borchardt, counsel, Surplus Property Subcommittee of the Committee on Military Affairs; Dewey Anderson, executive secretary; C. E. Childs, consultant; and Thomas J. McBreen, Jr., chief of information, Senate Small Business Committee. Appearances on behalf of governmental agencies: James P. McGranery, the Assistant to the Attorney General. Irving Lipkowitz, Antitrust Division, Department of Justice. W. Stuart Symington, Surplus Property Administrator. H. B. Cox, general counsel, Surplus Property Administration. N. H. Bell, Director, Plants Division, Surplus Property Administration. Donald McCormick, Deputy Administrator, Industrial Property, Surplus Property Administration. Samuel Moment, Surplus Property Administration. Col. John M. Redding, Surplus Property Administration. Sam H. Husbands, member, Board of Directors, Reconstruction Finance Corporation. G. F. Buskie, Executive Director, Office of Surplus Property, Reconstruction Finance Corporation. Fred E. Berquist, Acting Deputy Director, Office of Surplus Property, Reconstruction Finance Corporation. Irving Gumbel, Office of Surplus Property, Reconstruction Finance Corporation. Lt. H. P. Caulfield, Jr., United States Naval Reserve, Property Disposition Branch, Office of Assistant Secretary of Navy. Brig. Gen. Edgar P. Sorensen, United States Army, Office of the Under Secretary of War. Lt. Col. Owen C. Holleran, Air Corps, Office of the Under Secretary of War. Robert L. Sebastian, technical adviser, War Production Board. J. Morman Romoser, Chief, Facilities Branch, Aluminum and Magnesium Division, War Production Board. A. H. Galbraith, War Production Board. A. B. Menefee, War Production Board. Walton Seymour, Director of Power Utilization, Tennessee Valley Authority. W. K. McPherson, Chief, Industrial Economics Division, Tennessee Valley Authority. Robert B. McCormick, Metals Division, United States Tariff Com mission. John C. Russell, Metals Division, United States Tariff Commission. Arthur Goldschmidt, Director, Division of Power, Department of the Interior. Douglas G. Wright, Administrator, Southwestern Power Administration, Department of the Interior." Robert M. Weidenhammer, Metals and Minerals Unit, Department of Commerce. J. P. Albey, Bonneville Power Commission. E. Robert de Luccia, Chief, Bureau of Power, Federal Power Commission. Alex. Daspit, Office of War Mobilization and Reconversion. Harrison F. Houghton, economist, Office of Reports, Smaller War Plants Corporation. W. D. McFarlane, Surplus Property Division, Smaller War Plants Corporation. Donald D. Kennedy, Chief, Commodities Division, Department of State. Appearances on behalf of industry: I. W. Wilson, vice president, Aluminum Co. of America. Leon E. Hickman, of Smith, Buchanan & Ingersoll, Pittsburgh, Pa., counsel for Alcoa. Marion M. Caskie, vice president, Reynolds Metals Co., 200 Southern Building, Washington, D. C. J. O. Gallagher, president, Columbia Metals Corp., Seattle, Wash. E. N. Rousseau, Washington representative, Olin Industries, Inc. Lawrence A. Harvey, executive vice president, Harvey Machine Co., Los Angeles 3, Calif. Francis C. Cary, Hybinette & Cary, Wilmington, Del. Ernest E. Debs, member, California State Legislature and chairman of State aviation committee, Sacramento, Calif. STATEMENT OF SENATOR O'MAHONEY Senator O'MAHONEY. Now it has been the experience of the chairman in the past hearings that little advantage is obtained when the presentation of a point of view depends solely upon the uninterrupted testimony of a witness, or the reading of a paper. It is to be hoped that we can develop this as a round-table discussion, and I hope that witnesses will be willing to be interrupted, not only by members of the committees, but also by informed members and representatives of in dustry and representatives of Government who are gathered around the table, so that we may get the very best possible results out of the presentation of this problem. Last night I wrote an opening statement and I want those present to understand that the chairman is subject to the rule which I have just announced. I have no objection to being interrupted at any time. SURPLUS PROPERTY ACT A MANDATE In passing the Surplus Property Act of 1944, Congress laid a mandate on the Surplus Property Administrator to dispose of the property no longer needed in the common defense in such manner as— * to give maximum aid in the reestablishment of a peacetime economy of free, independent enterprise to stimulate full employment disstrengthen and preserve the competiand promote production and utilization resources of the country. courage monopolistic practices tive position of small business * of the productive capacity and the natural These words of the statute itself leave no doubt of what the legislative intent was. This intent, however, was made doubly clear in section 19 of the act which provides not only that the Surplus Property Administrator should make a report to Congress with respect to all plants costing $5,000,000 or more before disposing of them but that a disposal plan shall be laid before the Congress "consistent with the policies and objectives set forth in this act." Specific as this language is, it is not the only recent declaration of Congress on the subject. The War Mobilization and Reconversion Act of 1944 is equally definite. In section 205, this law directs the Attorney General to make surveys for the purpose of determining any factors which may tend to eliminate competition, create or strengthen monopolies, injure small business, or otherwise promote undue concentration of economic power in the course of war mobilization and during the period of transition from war to peace and thereafter. Thus by laws which are as yet scarcely 1 year old, the Congress has left no loophole for misunderstanding its purposes. It has instructed the executive arm of the Government to use the powers of government to help bring about reestablishment of a competitive economy in which it will be possible for "new independent enterprise" to develop. If new independent enterprise is not permitted to develop in the United States of America it is difficult to see where else in the world it can develop and can be protected, because the obvious trend in Russia, in Britain, in Europe, and everywhere except where the United States is endeavoring to carry out the policy of freedom in competition, it is becoming more and more difficult for the individual or small organization to compete with either cartels upon the one hand, or authoritarian government upon the other. In compliance with the laws to which I have referred, the Surplus Property Administrator and the Attorney General have transmitted to Congress their respective reports on the aluminum industry and both of these documents have been referred to the Surplus Property Subcommittee of the Senate Committee on Military Affairs. This hearing is being held under the sponsorship of this subcommittee and jointly with the Select Committee on Small Business and the Industrial Reorganization Subcommittee of the Select Committee on Postwar Economic Policy and Planning. All three of these committees participated in preparing both the War Mobilization and Reconversion Act and the Surplus Property Act. It is appropriate that they, therefore, should now examine the two reports which have been transmitted to Congress under these acts and that they should afford a full opportunity to the representatives of industry, labor, and Government publicly to discuss the problems raised by the two reports. DISPOSAL OF ALUMINUM PLANTS COULD WELL SERVE AS PATTERN FOR DISPOSAL OF ALL GOVERNMENT FACILITIES The disposal of Government-owned aluminum plants may well be the pattern for the disposal of all the facilities constructed by the Government for the purposes of war. On what is done with respect to these facilities may depend the success or failure of the clearly announced congressional policy for the preservation of free enterprise. It would be dangerous to minimize the task. It is not too much to say that both the economic and the political future of this country will be deeply affected by what is done with these Government-owned facilities. Their output enabled us to produce the equipment without which the United Nations could not have prevailed in the war. Because of them we were able to manufacture almost 300,000 military planes, more than 70,000 warships, 315,000 pieces of artillery and mortars, 86,000 tanks, 64,000 land ships, and unimaginable amounts of ammunition and other material and equipment-all of a total value of $186,000,000,000. The industrial achievement of the United States between July 1, 1940, and July 31, 1945, was made possible by the investment of approximately $15,000,000,000 of public funds in the construction and expansion of industrial plants and by the exercise of Government controls over the entire economy, controls of such a degree as never before were attempted in this country. Mr. J. A. Krug, Chairman of the War Production Board, in his report only last week on wartime achievements and the reconversion outlook, declared: To an extent unprecedented in our history even in previous wars national economy has been guided by Washington. Every industrial plant built in the United States in these past few years has had to have Government authorization. Scarcely a ton of steel, or copper, or aluminum could be fabricated without Government approval. These controls have now, for the most part, been scrapped. The principle on which reconversion has proceeded as been te abandonment of regimentation by government. Freedom of enterprise is being restored with such speed that more than 200 Government orders and regulations which were in effect on VE-day were canceled before VJ-day and only a few contorls of limited scope and purpose now remain. But there still is with us the gigantic national debt, the debt which was incurred to make war production possible. It has already exceeded $260,000,000,000 and is still climbing, but the national income is falling off because production is falling off. The national debt is a mortgage on future production and therefore it becomes a primary postwar objective to maintain production. It is this simple fact that |