bring them into the country, and then resell for less than what you paid for them?

Mr. GIBSON. Yes, sir; that would be a subsidization.
Senator DIRKSEN. That is what it amounts to?

Mr. GIBSON. Yes, sir.

Senator DIRKSEN. Do you agree that there is a subsidy provision in this bill with respect to domestically produced materials-that is what the bill says. In your judgment does that include agricultural commodities?

Mr. GIBSON. Yes, sir.

Senator DIRKSEN. You agree then, that there is subsidy authority in this bill?

Mr. GIBSON. Yes, sir.

Senator DIRKSEN. Mr. Wilson of the Mobilization Office disagreed with that. He disagreed with that yesterday and I wonder who is right.

Senator BRICKER. I think it was the day before yesterday it was testified to that it does amount to a subsidy of agricultural products, because if you remember, and I think it was Mr. Wilson, if I am not mistaken, who said this would amount to the ability to put into effect the Brannan plan on a limited scale in fringe areas.

Senator DIRKSEN. The President's special message, however, merely implied that there would be a request, perhaps, for subsidy authority at a later date. Mr. Bergson took that view and did not believe, as I remember his testimony, and it was partly in response to my crossexamination, that there was any such authority in this bill. Now, then, is there such authority in the proposals now before us?

Mr. KENDALL. Senator, I did not hear Mr. Bergson's comment, but I am fairly certain I know what he was talking about. There is not a general subsidy authorization in this bill as it stands. There is a provision in the amendments which would allow the continuation of marginal production by, if necessary, by subsidization, but it would not make possible the bringing in of new producers; the amendment would not make that possible.

Under the existing act there is a very limited authority to bring in new producers, marginal producers, high-cost producers. That very limited authority, however, is in terms of there being no other way, simply no other way to increase production at less cost to the Government. The President, no doubt, had reference and Mr. Bergson had reference, to a substantially broader subsidy program.

Senator DIRKSEN. Mr. Kendall, how broad do you conceive the language to be with respect to the construction of Government plants under this bill?

Mr. KENDALL. I think it is a broad language.

Senator DIRKSEN. You do not use such qualifying words, for instance, as "strategic," so that the sky is the limit, is it not, under this bill as to what you can build? It does not necessarily have to have any strategic value?

Mr. KENDALL. It has to have defense value, as I remember the language, sir. I am not sure what your meaning of "strategic" is there.

Senator DIRKSEN. I was just wondering whether there was some qualifying language. It just looks to me like opening the authority

to build any kind of plant the Government wants, and for practical purposes, it is almost like the language of the original Spence bill some 2 or 3 years ago.

Mr. KENDALL. This is, of course, limited to the aid of the national defense on the first line.

Senator DIRKSEN. What is the limit to aid to national defense? The sky is the limit there, is it not? Is there any exception you can think of, outside of getting a haircut?

Mr. KENDALL. Yes; there are, as we remarked earlier today; things like perfumes, toys and decorative materials, and so on. I do not mean to say that this is not a broad provision, Senator Dirksen. It is broad. It is as broad as the one we used in World War II.

Senator DIRKSEN. Mr. Gibson, do you think it is necessary to contemplate the creation of all these corporations that they have in mind as vehicles for doing the job?

Mr. GIBSON. I do. There are not a great many of them, sir. There is this minerals reserve and materials reserve. I think it is necessary. We work very well with Mr. Larson and I hope we will always continue to, but the very reasons that he stated are the reasons that I think that type of corporation is going to be well, I won't say vitally necessary, but a very helpful thing in the obtaining of material for the war effort.

The other corporation is Defense Plant Corporation.

Senator DIRKSEN. Of course, I am not unmindful that the more corporations you create the more attractive the budget of the regular agencies look when they get before the appropriations committee.

Mr. GIBSON. I do not think that is the real object, sir.

Senator DIRKSEN. I notice you stated in your remarks, that by using certain of these powers you can be assured of the development of certain commodities like castor bean oil, for instance, a field into which we do not venture too much in this country. Suppose, now, that we encourage American producers to go into the castor bean business for the purpose of producing oil. What do you see in the future for these people when the impact of the emergency is over? Do we liquidate them as we did before, the minute they develop some techniques in that field? Do we, by developing reciprocal trade agreement programs, make it impossible for them to continue on the ground that it is a marginal industry for America? We pretty nearly did that with the hemp program in World War II. We had about 40 hemp mills around the country that were sold for a song, and now we are in the business of encouraging people to produce sisal and other fibers because of domestic needs. Are we going to liquidate it after it is over, or are you looking down the road that far?

Mr. GIBSON. Undoubtedly the quantities and the amounts built up could not be used. Now just exactly what we would do when that time comes I do not think I have looked that far myself, and I have not heard much discussion about it.

Senator DIRKSEN. One other question: Are you reasonably sure now that the so-called controlled materials plan will be operating July 1?

Mr. GIBSON. It will be in force. The operations, however, are going to be very difficult to get really working during the third quarter.

Senator DIRKSEN. With respect to steel, would you prefer that I address this question to somebody besides you, or can you answer them?

Mr. GIBSON. If there are any questions about steel I can answer I will be very happy to do so.

Senator DIRKSEN. Well, I see varying figures that steel capacity in America, productive capacity, is rated, I suppose maximum, at roughly 117 million tons a year. Is that correct?

Mr. GIBSON. That will be the capacity when these steel plants that have been certified are in production.

Senator DIRKSEN. What is the present capacity of our steel mills? Mr. GIBSON. I think the capacity pre-Korea was 100 to 104 million

tons.

Senator DIRKSEN. What was actual steel production for the calendar year 1950?

Mr. GIBSON. I do not have that figure in mind. It was close to 100 million, or ninety-some million tons.

Senator DIRKSEN. I think it was 101 million.

Senator BENTON. I think that is right.

Senator DIRKSEN. Roughly what proportion of that steel production is being taken by defense today?

Mr. GIBSON. I think about 20 percent.

Senator DIRKSEN. In the case of special steels how high would that go?

Mr. GIBSON. I cannot answer that question. It varies from one kind of steel to another.

Senator DIRKSEN. Does that 20-percent figure include exports of steel to allied nations?

Mr. GIBSON. Yes; it does; I am sure it does.

Senator DIRKSEN. On the basis of present production, then, there should be, roughly, 75 or 80 million tons of steel available for civilian needs.

Mr. GIBSON. That is right.

Senator DIRKSEN. What has happened to that steel and why is it that even in little companies they cannot get enough steel, it seems, to keep their doors open in some cases?

Mr. GIBSON. That is something that we do not fully understand. We and the NPA are making investigations to find out whether it is going places it should not go and whether there are greater quantities we fear it is possible that some concerns with orders are getting more steel than they really need, and it is not going to the places where it could be used. In other words, there is a tendency to try to get what you think you will need, rather than what you actually need at the moment.

Senator DIRKSEN. Do you have an enforcing arm in DPA?

Mr. GIBSON. No; we do not.

Senator DIRKSEN. Do you have a field service?

Mr. GIBSON. The NPA has a field service.

Senator DIRKSEN. You have no field service whatsoever?

Mr. GIBSON. No, sir. We use the NPA field service whenever we need a field service. That is, the regional offices.

Senator DIRKSEN. At present there is little or no check-up on the distribution of steel to find out whether there is or is not a very active gray or black market in steel?

Mr. GIBSON. There has not been enough; no, sir. That has got to be set up and is being set up.

Senator DIRKSEN. Do you know whether there is an active gray market in steel today, or shall I say "black market"?

Mr. GIBSON. I would say there is a gray market; yes.
Senator DIRKSEN. Is that a hearsay answer?

Mr. GIBSON. That is a hearsay answer, not a knowledgeable answer.
Senator DIRKSEN. That is your opinion?

Mr. GIBSON. Yes, sir.

Senator DIRKSEN. Is there any place in Government where they have an opinion based upon fact as to whether there is a black market or not?

Mr. GIBSON. I would say the NPA would have that. Mr. Fleischmann or the Steel Section of NPA should know about that.

Senator DIRKSEN. Do you know of any remedial or enforcement action that has been taken, if it can be taken, with respect to that situation?

Mr. GIBSON. I doubt whether anything has been done at the time, but there are inventory limitations, yes. But how much check has been made on that, sir, I think I would have to inquire of NPA, and I think they are the people that can and should give the answer to that.

Senator BRICKER. Would not this hoarding provision, under the present law, be applicable to hoarding for the black market? Mr. GIBSON. Oh, yes, we could take it.

Senator SCHOEPPEL. Will Senator Dirksen defer for one question? Senator DIRKSEN. Yes.

Senator SCHOEPPEL. Mr. Gibson, before a Select Committee on Small Business hearing not too many days ago, I asked the question of the very agency you were talking about now, whether they had pursued a policy to determine what the inventories of steel happened to be. They said they would furnish that to that committee. I am wondering if you know about that, and if you think that might not be helpful, right in line with what Senator Dirksen has just mentioned here.

Mr. GIBSON. It would be helpful, yes, sir.

Senator SCHOEPPEL. Do you not think that is a very necessary thing for us to know?

Mr. GIBSON. Yes, sir.

Senator BRICKER. May I clarify one point, Senator Dirksen?
Senator DIRKSEN. Yes.

Senator BRICKER. You mentioned that the present facilities contemplated or authorized for expansion in the steel industry would amount to 117 million tons of capacity. Is it not estimated by the end of this year that that will be the rated capacity of steel production in this country?

Mr. GIBSON. I doubt if it is this year. I think that will be sometime in 1952 before that is reached. I think the rolling will be accomplished before the end of this year, the rolling of steel for the new facilities.

Senator BRICKER. I understand that by the end of the year the production capacity of steel in plants in this country would be approximately 117 million tons.

Mr. GIBSON. That is not my understanding, Senator, that will be as high at that time.

Senator BRICKER. It is only what I have seen in the public press. The CHAIRMAN. Senator Benton.

Senator BENTON. Mr. Chairman, may I congratulate you on this new plan you have worked out for sending out the mimeographed statements of the witnesses in advance. It gave me a chance to read Mr. Gibson's testimony last night, even though I was not able to get here in time to hear him summarize it. I think it is a fine new system and of great help to the whole committee.

As an old boyhood friend of Mr. Gibson, I have been particularly interested in the comments this morning about the fact that faces change pretty fast and all these things are going to happen when he is not here. I earnestly hope his experiences in Washington have not led him to think he may be a participant in bringing to fruition any such implied prophecies on the part of the committee.

Mr. Gibson, I have only one line of inquiry, and it has already been opened up by Senator Douglas, Senator Dirksen, and Senator Schoeppel. I agree with Senator Dirksen wholly that the most difficult questions that come into my office are from manufacturers, and Connecticut is even more highly industrialized, per capita, than Illinois. In fact, it is the most highly industrialized State. These questions are from the smaller manufacturers, often very substantial, old, good, wellfinanced people, who cannot understand why they are about to be greatly restricted or put out of business, because of the inability to get materials which they see going to the bigger manufacturers. We feel it acutely in Connecticut, in copper. I had the case of a small rubber-heel manufacturer that I brought out before the Small Business Committee. He sees the rubber going to the tire manufacturers at Senator Bricker's Akron, Ohio, to be used in rolling around on Sunday on our automobiles, and he cannot get the rubber for heels even though the shoes are in the warehouse waiting for these heels, and he is being shut down.

Yesterday Mr. Fleischmann, according to this morning's paper, testified that the big businesses were naturally in first because they had their Washington representation and the skill and know-how to get the defense contracts. Similarly, they are in first, I assume, with getting processed the amortization certificates. I have two questions growing out of that fact in line with the interests of many members of the committee in small business.

Could not you instigate a system of giving immediately a much higher and more rapid priority for the consideration and processing of certificates of necessity for amortization for the small businesses? Would that come too radically in conflict with defense production needs?

Mr. GIBSON. No, sir. I think that we are now in a position where we can move along that line, certainly, and I would feel that we could also take applications from small business and see that they were rapidly processed.

Senator BENTON. In line with your statement before the Select Committee on Small Business yesterday, that you had adequate authority, this is something you could do. Do I understand that you think that is a good suggestion and you propose to try and move ahead more rapidly on that?