in a condition currently to produce its product at not less than its assigned annual capacity or so that it can be placed in a condition so to produce within 180 days after notice from the Government. The Government has the right to inspect the facility at any time and, in the event of default in the required maintenance, has the unconditional right to possession and use for the purposes of restoring the facility. Any such restoration is to be at the purchaser's sole expense.

The national security clause, drafted in conformity with section 7 (h) of the Disposal Act, contains no recapture provisions, since the language of section 7 (h) and the legislative history of the statute clearly negative necessity for inclusion of any such clause in the contract of sale. (It will be noted that the Disposal Act, in section 9 (f), requires, in leases on the alcohol butadiene plants, a recapture clause as well as a national security clause.) In the event of national emergency, existing statutory controls over production can reasonably be expected to be supplemented as they have been in the past (such as along the lines of the War Powers Acts of World War II), and the Government would proceed thereunder to take any necessary action to insure that the essential production would be forthcoming.

The second type of situation wherein the Government could repossess the property occurs in connection with sales where purchase money mortgages are being taken back. The mortgages include the conventional events of default customarily found in like instruments, and upon failure of the mortgagor to cure any such default within the period specified in the mortgage, the Government is entitled to immediate possession where local law permits, or to obtain the property through foreclosure or by exercise of power of sale.

Question No. 15

If our sources of natural rubber in Indochina and Malaya were entirely eliminated, would the Commission still recommend the sale of the facilities, bearing in mind that section 2 of the Disposal Act does not contemplate such a situation? Answer.-In formulating its disposal program, the Commission had before it the policy declaration of the Congress in section 2 of the Disposal Act that sale of the Government-owned rubber producing facilities pursuant thereto was consistent with the national security and would further affectuate the policy set forth in section 2 of the Rubber Act of 1948, as amended, with respect to the development within the United States of a free competitive synthetic rubber industry. The Commission is convinced, as its report to the Congress of January 24, 1955, discusses fully, that the requirements of the Disposal Act are adequately protected by the national-security clause included in each contract of sale. The Commission is further convinced that the purchasers in their operation of the facilities under private ownership will assure their availability to meet wartime needs and will have the incentive to construct additional capacity if that appears indicated. Thus the Commission would favor transfer of the plants as scheduled, but in so stating appreciates fully that the question of possible total elimination of overseas supplies of natural rubber poses problems of an overall security nature which fall within the purview of those agencies of the Government responsible for the formulation of recommendations on national policy under such circumstances for consideration of the President and the Congress. The Commission itself is in no position to furnish other than an expression of its opinion, and that only in the light of the limited information available to it.

Question No. 16

How much interest may the Government expect to receive over a 10-year period from the purchase money mortgages for the facilities?

Answer. All of the purchase money mortgages permit prepayment by the mortgagor without penalty. Assuming no such prepayments, the table below presents a close approximation of the interest the Government will receive over the 10-year period. The amounts are somewhat understated because the notes and mortgages will cover, and interest will be payable as well on the cost of, net capital additions as of the transfer date. Shell Chemical Corp. is not included in the following table because, since the submission of the Commission's report,

Shell has elected to pay all cash for the plants it has contracted to purchase (which privilege is available to all buyers who originally requested mortgages):

The CHAIRMAN. All told, I am of the firm conviction that these plants should be sold to private industry in accordance with the philosophy announced in the Rubber Act of 1948 and the Disposal Act of 1953.

Now, that is my statement, members of the committee.

Now, I think at this point

Mr. SHORT. Mr. Chairman.

The CHAIRMAN. Mr. Short.

Mr. SHORT. Not only has the Commission done a marvelous job, but I think our able and distinguished chairman is to be congratulated. I am sure he has the appreciation and gratitude of all members of this committee for the masterful presentation that he has made.

Just two other names, I think, for the record should be added, in this whole program, and that is big Bill Jeffers and our late and lamented colleague and friend, Paul Shafer.

The CHAIRMAN. Thank you.

Now, members of the committee, as I stated at the outset, is to consider the report and consider a bill. Now, our colleague from Texas, Mr. Thomas, and Mr. Brooks are very much concerned in regard to Baytown.

Now I think I can expedite the issue, as I have studied this matter, again to the best of my ability, if I make a little brief statement in regard to this Baytown.

Now, you bear in mind Baytown is where the colymer plant is that the Commission did not sell because the Commission, in its judgment, did not get what it considered was a proper amount for it.

Now I want to call this to the attention of the committee. This plant is operating now. The other copolymer plant is in standby condition.

This plant is located down somewhere in Texas. I don't know where, but nevertheless it is down in Texas, at a place called Baytown. [Laughter.]

And it is producing 44,000 tons of rubber.

Now to put it in a standby condition will cost $275,000. To maintain it in a standby condition will cost annually $200,000.

Now, Mr. Thomas, looking at his constituents' welfare and wanting to see this plant operate, because it contributes 44,000 tons of rubber a year and which will be of aid to small business, introduced a bill. Here is what supposing you go ahead.

I will say this, members of the committee, I think the bill should be changed.

He proposes that the disposal group be changed. He proposes that the rubber corporation that now manages it should be the sales agent. I don't find myself in agreement with him on that. I think if the committee and the Congress decides to pass the bill, it should be by the same group that disposed of the other facilities. And I talked to Mr. Thomas about it and he is in agreement with me.

Now what have you to say, Mr. Thomas?

Mr. THOMAS. Mr. Chairman, thank you very much. I won't take your and your distinguished committee's time to exceed 3 minutes.

But I can't resist the opportunity of commending the chairman on that very, very able statement. And may I say to the committee that whatever you do with this program, the House is going to back you up, because it is to this committee that goes the very great amount of credit that is due for this fine workable program that you have nurtured and mothered and guided for the last 10 years.

Mr. Chairman, here is a little bill. I might say I don't want to confuse this little bill with anything that may or may not relate with your final big overall question. Whatever you do, this little bill has nothing to do with your overall problem.

Change the bill any way you want to. All we want to do is to be put in the same barrel with everybody else. You know what the facts. and the figures are, its production, its standby cost, which would be an economic waste, and over a 10-year period you would just have to wipe the whole thing out because it would be worth nothing.

We are not seeking special favors. Why the operator of this plant didn't bid what it is worth, I don't know.

I am advised by some of our local people that we have some 3 or 4 people who are ready and willing to pay what it is worth.

So we do hope that you give these people an opportunity to come in and bid.

Now, some of these local people here-and they will so testify; if the chairman and the committee would like to hear them, they are available. If you do not, we will rest our case with you.

The CHAIRMAN. I will say this, Mr. Thomas. I think the proper cause for the committee to pursue is to have the bill amended. I am very anxious to see that this plant is continued in operation. As I stated, it produces 44,000 tons. It cost $270,000 to get it in standby. It will cost $200,000 annual. We need this 44,000 tons.

Mr. THOMAS. Of course, we do.

The CHAIRMAN. When we get through with this rubber disposal committee report, I am going to ask the committee to act favorably on it.

Mr. THOMAS. That is fine. Thank you very much. [Laughter.] I learned a long time ago-don't talk yourself out of your case. Mr. BRAY. A smart lawyer.

Mr. GAVIN. Mr. Chairman.

The CHAIRMAN. Yes, sir.

Mr. GAVIN. I heartily concur, Mr. Chairman, in everything that you say. And in my district I have the Rex-Hide Rubber Co. at East Brady, Pa. It is a small town. And several hundreds of people are dependent upon that industry for their very existence. And they are dependent upon this Baytown plant, that it be kept in operation.

Now, I want to read in the record

The CHAIRMAN. If you will just bear with me, we will get the Baytown bill on the calendar.

Mr. GAVIN. I want to read into the record what they say so the committee can recognize the importance of keeping this plant in operation and expediting this matter.

However, one plant at Baytown, Tex., was not sold because no buyer could be found at that time. Baytown has been making a different type of material than has been made at the other plants. That is what is known as oil extended black master batch. Our entire production equipment is set up on the basis of using that material. Of all the plants sold, the one at Borger, Tex., is the only one that has the equipment to make this type of material, but they tell us that they have already contracted for their entire production.

So it is very important to us that the Baytown plant either be sold or kept in service and there are some other companies in the country who are in the same position as we are with reference to Baytown. We understand a bill has been introduced in the Congress to reopen the sale of the Baytown plant and that a buyer has been found if this bill is passed. Certainly, it is to the advantage of the Government and tremendous advantage to us if the plant would be sold.

And, therefore, I want to call to the attention that not alone this little company, but many other companies similarly situated are dependent upon early action to expedite the sale of this plant and continue its operation so these various plants scattered around the country can continue.

The CHAIRMAN. Thank you very much, Mr. Gavin.

Now, is Mr. Brooks of Texas in the committee room?

Mr. BROOKS. Yes, sir, Mr. Chairman.

The CHAIRMAN. Come around, Mr. Brooks.

Mr. BROOKS. Yes, sir.

I do want to take but one minute for thanking you for the opportunity to appear and to concur in Mr. Thomas' statement and to add my thanks to his for the very able job you and your committee have done on the rubber disposal program and that fine dissertation on the rubber facilities that you rendered earlier at this meeting.

The CHAIRMAN. We are going to do our level best to keep this plant operating if it can be done

Mr. BROOKS. Thank you very much.

The CHAIRMAN. Now, members of the committee, we have this morning our distinguished colleague, chairman of the Judiciary Committee, Mr. Emanuel Celler, and we will be pleased to have him make any observation in regard to the Commission's report on the disposal. Now, Mr. Celler, it will be a pleasure to hear you.

Mr. CELLER. Mr. Chairman and members of the committee, there are some antitrust and small-business facets in the rubber-producing facilities disposal program which I would like to comment upon. The CHAIRMAN. Let there be order in the committee.

Now go ahead, Mr. Celler. It will be a pleasure to hear you. Mr. CELLER. There are some antitrust and small-business facets in the rubber-producing facilities disposal program which I should like to comment upon.

When we passed Public Law 205 in the 83d Congress, the development of a free competitive synthetic-rubber industry was stressed by section 3 (c) which reads as follows:

(c) From the time of its appointment and throughout the course of the performance of its duties, the Commission shall consult and advise with the Attorney General in order (1) to secure guidance as to the type of disposal program which

would best foster the development of a free competitive synthetic rubber industry, and (2) to supply the Attorney General with such information as he may deem requisite to enable him to provide the advice contemplated by this section and sections 9 (a) (4) and 9 (f) of this Act.

Section 17 of the act reads as follows:

SEC. 17. The following criteria, together with such other criteria as the Commission deems necessary or desirable to best effectuate the purposes of this Act, shall be used by the Commission in arriving at its recommendations for disposal:

*

(3) That the recommended sales shall provide for the development within the United States of a free, competitive, synthetic rubber industry, and do not permit any person to possess unreasonable control over the manufacture of synthetic rubber or its component materials;

Most of these plants are scheduled for transfer to companies and entities which, to say the least, have a very bad antitrust record. That augurs little if any expectation for free and open competition in the synthetic-rubber industry. The prospective plant purchasers include rubber and oil companies whose records raise serious doubt that their operations will make for a competitive synthetic-rubber industry.

Each of the Big Four rubber companies, Goodyear, Goodrich, Firestone, United States Rubber, among the successful bidders, has lost 4 to 6 antitrust suits in this country and Canada since World War II. Several of the other rubber companies and chemical companies participating in the proposed purchase also have been branded as offenders in one or more antitrust suits in recent years.

Significantly all but one of the oil companies involved in the purchase are even currently defendants in a Federal antitrust suit or a State of Texas antitrust suit or both, and several of the oil companies in addition have lost 1 or 2 other such suits in the past 20 years. In effect, the present disposal program would transfer almost the entire synthetic rubber industry to corporations which in the past have taken active steps to limit competition, to fix prices, to establish quotas all to the detriment of a free enterprise system and to the detriment of small business and with a consumer-be-damned attitude.

One cannot easily swallow the Attorney General's opinion in approval of the disposal program that these companies will best foster the development of a free competitive synthetic-rubber industry.

Let me point out specifically some of the cases brought by our Government against these companies which indicate that they have actively combined and conspired to restrict competition and to fix prices in rubber products and petroleum products and chemicals, and in such minor items as storage batteries, brake lining, and peachpitting machinery. One of the parent companies of the lesser participants stands accused in a pending suit monopolizing air transportation.

Here are some of the cases:

1. In United States v. Rubber Manufacturers Association et al., the Big Four, Firestone, Goodrich, Goodyear, and United States Rubber Co., plus Dayton, Seiberling, and others, were charged with combination and conspiracy in restraint of trade in tires and tubes, from 1935 to 1947. They pleaded nolo contendere, and were fined $5,000 each.

2. In United States v. The Metropolitan Leather & Findings Association, Inc., in 1948, Goodyear and others were charged with price fixing in rubber heels and soles, and were fined.