inflexible application of such a regulation would militate to the disadvantage of small business. Hence, the directions which the subcommittee has written into the bill have beem carefully qualified.

Moreover, the subcommittee has concluded that the effective role of the Smaller War Plants Corporation as an aid to the little purchaser will depend more on positive assistance than in preventive surveillance. In other words, representatives of the Corporation can do more by developing the small business marketsfinding buyers and making known to them the goods available and getting purchaser and property together, in coordination and cooperation with the field forces of the disposal agencies-than by merely policing these agencies. Since some of the disposal agencies are finding it important on occasion in the interest of dispatch, to conduct sales in the field, without waiting to complete their central inventories or awaiting specific direction from the central office in Washington, effective cooperation on the part of the Corporation should occur, it seems, on the administrative level, as well as with the policy-making officers. Specific directions on this score cannot well be written into general legislation, but the subcommittee has sought to suggest this character of cooperation in section 15 of the bill, and especially in paragraph (b) of that provision.

Under Public Law 603, the Corporation in 1942 was authorized to take prime war contracts from Government procurement agencies in behalf of small business. This authority was little exercised; nevertheless, in the opinion of the director of the corporation, it was of value in securing a more adequate share of war business for small plants. Despite some protest from disposal agencies and the present Surplus War Property Administrator, the subcommittee remains of the opinion that a similar authority should be conferred on the Corporation in the disposal of surplus property. Hence, it has included in the bill a provision to grant the Corporation the power to purchase surplus property for resale to small businesses, when in the opinion of the director such purchase is required to preserve and strengthen the competitive position of small business.

Believing that States, counties, cities, and tax-supported and non-profit institutions can provide a socially useful outlet for certain surplus property and substantial relief in solving the problem of disposal, the subcommittee has included provisions for donation to them of property acquired for school use. Donation of such property to private institutions not operated for profit has been placed in the discretion of the Commissioner of Education. Other property that could not profitably be placed on the market may also be donated to local governments, and institutions of this character will be allowed to buy surplus property at a 50-percent discount.

Moreover, and in view of the vry large amount of surplus medical supplies and equipment in prospect, the subcommittee has provided for their donation to taxsupported and nonprofit medical institutions under similar discretionary restric

tion.

While the subcommittee found the freezing of surplus war goods an untenable principle for general use, it is equally convinced that it has sound application in at least one instance. So varying is the nature of the property that will compose our war surplus that one might hazard the guess that there is scarcely any plan so far devised but that has some application somewhere.

In our opinion the plan for freezing surplus fits the situation with respect to stock piles of strategic minerals and metals and we have provided in section 19 of the bill that all Government-owned surplus accumulations of these minerals and metals be placed in the custody of the Treasury Department as a reserve for the Army and Navy for our security, not merely in the present war, but in the event of any future war.

We of course do not advance this plan as a definitive solution of the stockpiling question, but we believe it will fill the bill for the emergency.

There has been a good deal of discussion of the possible threat to our domestic economy and recovery from the return to this country of surplus property sold abroad. This occurred to some extent following the last war. There are some who think Congress should enact an unqualified, inflexible prohibition upon the reimportation of any of these goods. There are others, and I think some of the Surplus War Property Administrator's advisers are among them, who hold that if the disposal program is properly managed there should be no need for such a prohibition, that there should not be enough difference between sales prices at home and abroad to warrant reimportation.

While heartily agreeing with the desirability of the hypothesis of the latter group, we recognize existence of so many incalculable factors in the foreign field that we are convinced the Administrator should at least have some pro

hibitory authority to fall back on in case of need. We have included discretionary authority.

The subcommittee believes there is a common impulse among the civilian population of this Nation to grant, out of gratitude to the men who have borne arms in our behalf, a preference in the acquisition of surplus goods. In the interest of this special consideration, the bill directs the Administrator in cooperation with the Administrator of Veterans' Affairs to prepare and submit to Congress within 6 months a plan for distributing at a discount to servicemen and women goods of use to them in reestablishing themselves in our domestic economy. I have touched upon its most important and distinctiye features. The bill is at bottom a system of directions to the Administrator of Surplus War Property, with the injunction to take full charge of the job and do his best. But there remains one other assuring provision: I refer to section 5 of the bill providing for congressional surveillance, with specific responsibility fixed upon appropriate committees. He is to work, not only in a goldfish bowl but with a watchful Congress at its brim.

STATEMENT OF HON. ROBERT A. TAFT, UNITED STATES SENATOR FROM THE STATE OF OHIO

Senator TAFT. Mr. Chairman, may I answer Senator Revercomb, also?

This is the difficulty I see with a restriction on sale or any modification of a restriction: Nearly every class of surplus property is different and we cannot say which type shall be handled one way and which type shall be handled another way.

Senator REVERCOMB. I understand.

Senator TAFT. I agree with Senator Johnson's position in part, that some things shall be held off the market entirely. On the other hand, Congress cannot say which they shall be, and there are some that should be sold at once. For instance, we have discussed this matter with the representatives of the automotive industry and the general impression in the industry is that they would like to have everything that is to be sold, sold now, anything in the way of jeeps or extra trucks to be sold immediately. It is going to take them some time to build new ones anyway. They do not feel if those are put out it is going to interfere extensively with the new automobile market when it comes, and they want it out of the way.

Senator REVERCOMB. Will it interfere substantially with employment in the plants?

Senator TAFT. No, I do not think so. They will go right ahead and make new cars. There will be a demand for everything that is sold. Jeeps, if they are out for 2 or 3 years, will not be worth a scrap; they will be thrown away at the end of 2 years. They think people that will buy them will run them for a year or so and then they wil get tired of them and buy a new car.

I talked to men from the machine-tool industry yesterday. In the machine-tool industry you have probably one of the largest surpluses that there is. They said, "Yes; undoubtedly there will be some less employment, but we think they ought to be all out of the way. We want the machine tools sold, if they are to be sold. Most of our business anyway is going to be special work, and we will have that. There is going to be a great amount of special machines made for new tools, and as far as the special machines are concerned, they should be sold immediately." They think if they are held by the Government it will interfere just as seriously with the sales of new machines, because all of the plants that are thinking of buying new machines

98534-44-pt. 12

will figure, "Let us wait a year or two and then we can get the Government machines at half price." They said, "We would be better off probably to get the new ones in and let them replace the old machine tools with these." That is the opinion of these industries who are most concerned.

On the other hand, there may be others where they ought to be held off for some time. I don't know how you are going to handle that except to give discretion to the Administrator to determine it.

There is one thing I suggested after Senator Johnson's testimony. It seems to me we might do something like this, put in a clause that would say that the Director, if he finds that it will create a serious depression or serious unemployment in an industry, may retain these surpluses for any length of time, or he may spread it over so much every year, so he would have authority to do that and could not be blamed later for not having sold it.

I quite realize, with a bill like this, a Director of Surplus Property comes in and says, "My job is to get rid of this property, and I will be criticized if I do not get rid of it. If 3 years from now there is some big surplus on hand, I will be blamed."

I think we can put something in the bill to make it perfectly clear that under circumstances where there was serious unemployment threatened he had perfect authority to continue to hold that surplus. I think there is some such section inserted as (d) where the general policies are inserted at the end of section 14.

Senator REVERCOMB. What page?

Senator TAFT. On page 15. That would be a wise addition to the bill to meet this problem that the Senator has raised:

Now, there is one other respect in which we have met it, because we have provided

Senator JOHNSON. Pardon me, Senator Taft. Do you have a copy of the proposed section that you would insert there?

Senator TAFT. No; I have not, Senator Johnson. I am suggesting it to you, and I will submit it to the committee. I asked our people to draw it up last night, but they did not have time.

Now, in addition to that, of course, we have provided that the strategic minerals and metals, and even strategic mineral and metal scrap, shall all be frozen and put into a permanent stock pile of the Government.

That does not cover steel or steel manufacture, but it does cover lead, zinc, copper, and a long list of more or less other minerals. That is in section 19, on page 19.

So in that field there is a complete freeze. Those are just raw materials, of course, and scrap which may be the basis of raw materials. Senator JOHNSON. I want to ask Senator Taft a question if I may, Mr. Chairman.

Senator MURRAY. Yes.

Senator JOHNSON. The reason for transferring this scrap to the Treasury Procurement Division instead of letting the Administrator organize and develop and institute a scrap pile, what is the objective in that?

Senator TAFT. Well, we thought the Administrator was a temporary officer, that probably he would finish this job up in 3, 4, or 5 years, and this is a permanent thing that might go on for 50 years and

Treasury Procurement is probably the best place to put it in. We do not have a strong feeling about it.

Senator JOHNSON. Does the Treasury already have a stock pile of metals?

Senator TAFT. The Metals Reserve Company.

Senator JOHNSON. The Metals Reserve Company has stock piles of strategic and critical metals and materials.

Senator TAFT. They are no more than the custodian for the exclusive use of the Army and Navy, so the Army and Navy have a complete hold on them. It would seem to be foolish for the Army to set up one kind of a stock pile and the Navy another kind. They ought to both be able to draw, if necessary, from the Procurement Division, but I do not think that is a very material matter.

Mr. Chairman, if I might go on, I would like to discuss a little of section 16, on page 17. One of the difficult problems here is the disposition of these plants in such a way as not to create a monopoly. We lay down the general principles. In some of these bills it is said none of the plants should be disposed of until a report is made as to method, that it should come back to Congress and Congress itself pass on it.

There has been a lot of objection to that on the theory that a number of these plants ought to be put to work immediately. We have given authority to dispose of those plants. We require that the Administrator shall submit to the Attorney General the question of the proposed sale or transfer, and we require the Attorney General, within a reasonable time, to advise the Administrator whether the proposed sale or transfer will either violate the antitrust laws or encourage monopoly, or undue concentration of industry or commerce, or restrain competition substantially. The Attorney General objected to giving an opinion, but we felt that the Government should be advised before it sold it.

It is not a question of advising the purchaser or protecting the purchaser so much as it is a question of not having the Government go ahead and sell something if it is violating the antitrust law, and even if it goes further than that, if it is tending to monopoly. So we require the Attorney General to advise the Administrator. That does not have to be a formal opinion. The Attorney General does not want it brought up in some future antitrust suit.

I do not greatly object to that. Antitrust depends on motive, intention, a lot of things that perhaps the Attorney General could not find out.

As we say, the sale of the plant might be a violation of the antitrust laws, as far as the purchaser is concerned, but I think he can show, since the Attorney General advised it was not in violation of the law, that would be a fairly good defense in any attempt later to charge him with a violation of the law in buying the Government plant, unless there were some facts brought out that the Attorney General did not know, in which case he perhaps should be convicted of violating the law. The Attorney General now has agreed to this. He is willing to have this requirement that he advise the Government official whether this is tending to monopoly or not, but he did not want to be required to render a formal opinion of record, and we have not so required.

Senator JOHNSON. Mr. Chairman, may I ask Senator Taft if transfer, as used in his bill, also includes lease?

Senator TAFT. Yes; it does. I think it is so defined in the back, Senator.

Senator JOHNSON. Perhaps it is my own misunderstanding, but I understood Senator Stewart to say that Congress retains jurisdiction over plants costing more than $1,000,000, and that they could not be transferred without the specific approval of Congress, and I understand you now to say just the opposite.

Senator TAFT. I think you misunderstood Senator Stewart. Later on he is required to make a report, on pages 20 and 21 he is required to prepare and submit to Congress within 6 months a report as to these properties, but he does not have to wait for that report before disposing of any particular property.

Senator JOHNSON. He does not have to wait for an act of Congress? Senator TAFT. No; all he has to wait for is an opinion of the Attorney General advising him that it is not a violation of law; it is not a monopoly. It really puts it up to the Attorney General to pass on that question.

Senator JOHNSON. On that one point?

Senator TAFT. On that one point, that is right.

There are one or two other points. I want to call your attention to the fact that some of the bills have provided the Smaller War Plants Corporation shall have the right to buy surpluses. We do not do that. We simply give him the power to buy. The Administrator still has the discretion whether he will sell or will not sell to the Smaller War Plants Corporation.

We do, however, give them the power to purchase if it is sold at auction, they can put in a bid at auction if they wish, or if it is sold at a private sale and they can persuade the Administrator to sell to them, they can buy it, but they have no absolute priority or preference in the purchase of any particular surpluses.

There is one thing that I think should be discussed with the committee, the provision for donation or disposal to local governments, on page 12. It is rather limited. The surplus property which has been acquired for school classroom or other educational use may be transferred to the Office of Education for donation to tax-supported educational institutions, and so forth.

There is a very large demand from the schools for tools, machine tools particularly, for vocational education, and I am inclined to think we should consider whether those also ought not to be donated. This is confined now to surplus property acquired for school classroom or other educational use.

If it was acquired for training purposes, it could be given away but if it was acquired for some other manufacturing purpose, it could not. I think it might well be extended to tools suitable for use in vocational educational training. We have extended it also to institutions not for profit that are approved by the public officials.

There is one other question that I think is, in a way, an important question of policy to be decided by the committee. That is the matter referred to by Senator Stewart, the declaration of surplus. That is a matter to which there might be some opposition.

In general, every Government agency has the duty to survey the property and declare a surplus. As far as the Army and Navy are