.4 A239 ญ MOBILIZATION AND DEMOBILIZATION PROBLEMS MONDAY, JUNE 12, 1944 UNITED STATES SENATE, WAR CONTRACTS SUBCOMMITTEE OF THE The subcommittee met, pursuant to notice, at 10 a. m., in room 357, Senate Office Building, Senator James E. Murray (chairman) presiding. Present: Senators Murray (chairman), Revercomb, George, Lucas, Kilgore, Austin, Vandenberg, and Shipstead. Senator MURRAY. The committee will come to order. Before calling upon Mr. Justice Byrnes, Director of War Mobilization, who will testify this morning, I wish to call attention to the fact that there is a widespread demand throughout the country for swift action on the legislation pending before this committee. We are rapidly approaching the final stage of the war. Our troops are now engaged in the invasion of Hitler's Europe. While the possibility of protracted resistance by the German Army must be taken into consideration, an early victory is the fervent hope of every American. Unfortunately, our plans for peace have not kept pace with the progress of the war. Thus far, congressional action on post-war problems has been limited to veterans' legislation, which has just been agreed upon in conference committee, together with the legislation providing for the settlement of terminated contracts and the removal of termination inventories. The contract termination bill does not deal with the subject of providing civilian production to take the place of production under war contracts as they are being cut back or canceled. The G. I. bill does not deal with the subject of providing employment-either for veterans or for labor as a whole. While both of these bills are of great importance, it is most essential that the Congress promptly enact a broad post-war adjustment measure that will meet the problems we will be called upon to face and provide confidence in the future. Such an act must include at least the following: (1) A strong and effective Office of War Mobilization and Post-War Adjustment to formulate and carry out the plans that are needed to achieve post-war prosperity and full employment. (2) Clear-cut policies and procedures for handling the curtailment of war production and the resumption of civilian production, with full and complete protection for workers and small businessmen. 477 (3) A strong and effective system of unemployment compensation to protect the living standards of American labor by providing for complete coverage of all workers and 52 weeks of substantial benefits over a 2-year period. (4) Advance planning for a long-range housing program, and for a sound public-works program to be held in readiness to meet any possible development of unemployment. (5) A constant check by the Attorney General, with regular reports to the Congress, on all trends toward the extension of monopoly or increased concentration of economic power. The War Contracts Subcommittee has been working on this legislation for many months. We have had many weeks of public hearings and have consulted broadly with Members of Congress, Government administrators, and representatives of labor, industry, and agriculture. The subcommittee is anxious to have the views of Mr. Justice Byrnes on this proposed legislation, before reporting to the full committee. The experience of Mr. Justice Byrnes as Director of War Mobilization, and as a legislator of long standing, eminently qualifies him to advise the committee on these measures. Following the testimony of Mr. Justice Byrnes, the subcommittee will report to the full committee as promptly as possible. Mr. Justice Byrnes. STATEMENT BY JAMES F. BYRNES, DIRECTOR OF WAR MOBILIZATION Mr. BYRNES. Mr. Chairman and gentlemen of the committee. Last December I discussed with you in executive session the problems of contract termination and the disposition of surplus property. I told you that, while waiting for the enactment of legislation which we agreed was essential, I would proceed as far as possible under existing law. In December we established the Contract Termination Board. Mr. John Hancock has been acting as chairman. Progress has been made, but to operate efficiently legislation is necessary. The bill passed by the Senate provides the necessary machinery for contract terminations, and I hope it will soon be acted upon favorably by the House. In February by Executive order there was established the Surplus War Property Administration. Mr. William L. Clayton was appointed Administrator. The experience of the Administrator should be helpful in the drafting by your committees of the bill providing for the disposition of surplus property. The Baruch report recommended the establishment of a Work Director. By Executive order the Retraining and Reemployment Administration was established. Brig. Gen. Frank T. Hines was placed in charge of this work. He is making progress, and I understand has appeared before your committee as to certain phases of his work. The Post-war Adjustment Unit established last fall has been under the direction of Mr. Bernard M. Baruch, with the assistance of Mr. Hancock. Having filed their report some weeks ago, they advised me there was no reason for the continuance of the Unit and requested that it be discontinued. This request was agreed to. Mr. Baruch continues as special adviser to the Office of War Mobilization, the position he has occupied since the establishment of the Office. I have recited the status of these agencies under the direction of O. W. M. and concerned with the reconversion program before presenting to you my views as to the bill you have invited me to discuss, S. 1730. When the Office of War Mobilization was created and until quite recently, the procurement agencies were engaged in developing many new programs. Now their programs, with a few exceptions, have reached a peak. The job is to maintain that peak. If the Congress intends to recess within the next 2 weeks, one would be an optimist to expect this bill to become law until after the recess. Certainly, by that time, the big task will be planning for demobilization. Should the bill then pass, I do not want to be immodest and assume that the President would offer to appoint me to the office the bill creates, but if, because I am Director of War Mobilization, he should do so, Í feel that at that time the mobilization situation will be such I could decline to accept, and I would so decline. I make this statement so you will know that any opinion I may express about the bill is not influenced by a personal interest in the office it creates. I believe that the George-Murray bill which you have under consideration is a step forward in the right direction. It should help in the development of unified and consistent policies and programs for the post-war period without interference with the war effort. As I understand the bill, it gives statutory authority to the Office of War Mobilization and Post-war Adjustment to exercise the warmobilization powers now exercised by me under Executive order and, in addition, to exercise somewhat comparable powers in the field of demobilization and post-war adjustment. It is highly desirable that such important powers of direction and planning whether for mobilization or demobilization should be defined and confirmed by the Congress. Extensive reorganization of Government agencies was necessary to build up effective governmental machinery for war. Extensive reorganization and consolidation of Government agencies will be necessary to streamline and simplify the governmental machinery for peace. Some of this remolding of governmental activity can be achieved under existing law, some of it will require legislation. It is important, in my judgment, to have an office like the proposed Office of War Mobilization and Post-war Adjustment with statutory authority to guide and supervise the development of over-all policies and programs in close cooperation with the Congress without itself directly taking on the burden of detailed administration. I hope that you will retain, in the bill, provisions supplementing the existing Federal social-security legislation. These provisions should (1) induce the States to liberalize their unemployment insurance laws during the period of readjustment and demobilization, and (2) enable the States to secure reimbursement from the Federal Government to the extent necessary to prevent the State unemployment funds being unduly depleted by reason of the increased burdens imposed on such funds. Assuming that Germany is still at war with us when we reach the fourth quarter of this year, we must expect cut-backs in some programs that will necessarily cause many persons to be unemployed in certain industries and in certain areas. When Germany surrenders, cut-backs will probably increase, and when peace comes we must expect considerable unemployment. To lessen this unemployment, it is important, first of all, to provide for the intelligent conversion of industry to peace. If men are to be employed, we must have employers, but we must realize that, notwithstanding what we may do to facilitate reconversion, we are bound to have some unemployment. The extent of that unemployment is dependent upon too many factors for one to hazard an estimate. My opinion is that if reconversion is handled intelligently, the unemployment will be of relatively short duration. I do not believe that we can leave entirely to industry or to local governments the burden of alleviating the distress that will result from unemployment caused by the cancelation of the contracts of the Federal Government. If we agree that the Federal Government has a duty to perform, the question is, How shall that duty be discharged? Because I believe the unemployment will be of relatively short duration, I do not think the Congress should revive the Works Progress Administration. Nor do I think you should authorize the payment to employees of dismissal wages, to be charged up to contracts. That would offer relief only to a portion of the unemployed. It would mean the payment of a bonus to some employees who might get a job the following week while other employees might be unemployed for months. I believe that unemployment insurance should be our first line of defense. In a speech in New York last April I expressed the view that existing State unemployment insurance laws were framed to meet local conditions of temporary unemployment and are not adequate to deal with the Nation-wide problem of reemployment. I stated that demobilization must be regarded as a national problem and its costs as part of the costs of the war. I suggested that the State unemployment insurance plans should be supplemented by Federal support to the extent necessary to give practically all workers, during the transition from war to peace, suitable unemployment benefits. I am in substantial accord with the provision of the George-Murray bill on this subject. It is evident to me that an effort has been made to develop a plan which would most smoothly gear into the operation of existing State unemployment insurance laws. It does not propose, and it is not necessary, to federalize the State unemployment insurance laws for this purpose. By its terms the proposed legislation is limited to the emergency period, terminating 2 years after the cessation of hostilities, and requires specific and affirmative action of the Congress for its continuance. In order that some States may not receive more favorable treatment than others, the bill wisely provides that the State laws be required to meet the following minimum standards during the period of transition from war to peace: First, workers in covered occupations, of employers of one or more workers, instead of eight or more (as now provided by Federal law), must be eligible for unemployment benefits. This simply makes the incidence of unemployment insurance the same as old-age insurance. It is estimated that this would bring 3,000,000 workers now unprotected under the protection of the unemployment insurance laws. |