production aggregated 9,071,055 tons, a revised figure, on an operating rate of 102.4 percent. The average weekly production of steel in April was 2,059,000 tons, or 11,000 above the weekly average in March, when the month's output topped the 9,000,000-ton level for the first time in history. The average weekly production in April 1950, when the month's output reached 8,224,504 tons on a 100.6 percent rate, was 1,917,134 tons. Domestic production of steel in the first 4 months of the current year totaled 34,511,923 tons, an increase of nearly 4,045,000 tons, or more than 13 percent, above the output in the similar period of 1950. The production of steel thus far this year exceeded by several million tons the entire annual output in 1950 by Russia, the largest foreign producer. The following table shows the output of steel ingots and castings in net tons by months for the last 3 years: In the following table is shown the rate of operations in percentage of installed capacity by open hearth (O. H.), Bessemer (Bess) and electric (Elec.) furnaces by months for the last 12 months, with the total for the industry: Treasury Statement-Revenue receipts and expenditures, close of business, May 8, 1951 RECEIPTS 1 Daily comparative figures are not available on account of changes in classification. Adjustment is made on the last day of each month. Gross public debt this date, $254,512,664,117; year ago, $255,811,608,881 Assets: Gold, $21,754,937,594; year ago, $24,249,100,044; balance today, $6,563,831,171.20. Mr. GIBSON. That was at the end of 1952? Senator BRICKER. Yes. The CHAIRMAN. We had a lot of these records printed in Progress Report No. 7, that Mr. Wilson prepared for us with the heading of "Building America's might." I guess you are familiar with that. Senator BENTON. Mr. Chairman, as perhaps the oldest friend of Mr. Gibson in the room, may I congratulate him on his vitality and his continued resistance and his excellent performance this morning. Senator BRICKER. We all appreciate it very much. The CHAIRMAN. We are certainly happy to have had you here, Mr. Gibson, and I want to thank you, too. The only question I want to find out now from you gentlemen is what Senator Bricker and myself asked, and then at that time we might ask you some questions about the plan. Thank you, Mr. Larson. (The following information was submitted for the record: ) DEFENSE PRODUCTION ADMINISTRATION, OFFICE OF ADMINISTRATOR, Washington 25, D. C., June 4, 1951. Hon. BURNET R. MAYBANK, Chairman, Committee on Banking and Currency, United States Senate, Washington, D. C. DEAR MR. CHAIRMAN: During the hearings on the proposed extension and amendment to the Defense Production Act, several questions were raised concerning the administration of the tax amortization program. I hope that the following information will be of some assistance in that connection. The first point involves construction begun before the Korean invasion. As you know, the Revenue Act of 1950 included within the scope of section 124A all emergency facilities completed after December 31, 1949, whether initiated before or after passage of the act. In accordance with this provision, we are passing upon applications with respect to facilities begun before July 1, 1950, as well as those concerning expansion initiated after that date. The same tests are applied to each type since the statute clearly places them on equal footing. Even if it were possible in the face of the statute to make administrative distinctions based solely upon pre-Korean construction, it would seem to be discriminatory to do so now. Some essential projects initiated before July 1, 1950, have already been granted certificates and it would seem to be unfair to change the rules at this late date even though the expected total of pre-Korean expansions will amount to a relatively small part of the over-all program. The second point involves the possibility that one concern might receive more than one certificate for the same type of expansion before applications from other firms with the same sort of project are passed upon. This has happened in the past from time to time but in most cases, at least, the expansion of critical basic materials was involved and we knew that to meet our goals we would have to certify all reasonable projects for those materials as rapidly as possible. We have attempted in all cases to avoid such duplication to the extent possible at that stage of the expansion program. As we progress from the basic materials field to the expansion of facilities for the production of end products and components, and have a greater number of concerns applying for certificates for the same sort of productive facilities, it will be easier to meet our goals with little duplication. I have notified my own staff that as a general practice no applicant shall receive more than one certificate covering the same type of facility until after applications from all other firms dealing with similar projects have been considered. A firm would received a second certificate only if additional capacity is still needed. Excer tions may become necessary to meet special circumstances, but in general we will adhere to this policy. The agencies which recommend amortization assistance will also be informed of this policy and will be instructed to make their recommendations in accordance with it. The third point concerns the processing of small business applications. Naturally enough, very few of the applications from small firms involve the heavy industries to which most of our early attention has necessarily been given. Those that did apply were given full consideration. The bulk of the small firms, however, have made applications involving facilities in the lighter industries which, like other applications with respect to those industries, generally have not yet been considered. You will appreciate the difficulty of making an informed appraisal of any application for an end product facility, whether from a large firm or a small one, until the production of that industry could be considered as a whole. It would be a mistake, of course, to attempt to approve or deny any particular application before that time. However, as we move into the lighter industries, prompt consideration can and will be given to applications from small firms in those industries. I trust this information will be helpful and will be glad to submit any additional material you may require. Sincerely yours, E. T. GIBSON, Acting Administrator. Hon. BURNET R. MAYBANK, DEFENSE PRODUCTION ADMINISTRATION, OFFICE OF ADMINISTRATOR, Chairman, Senate Banking and Currency Committee, DEAR SENATOR MAYBANK: Your committe requested data on the issuance of certificates of necessity for accelerated tax amortization at the hearings at the beginning of this month. I am enclosing our latest tabulations of both applications and certificates issued. These include the breakdowns by State and by industry which your committee requested. The data are for the most part up to date as of May 7. 83762-51-pt. 1--16 We will have a new set of tables next week covering our activities through May 25, and I shall forward these to you as soon as they are available. Also enclosed is a special study of certificates issued, classified by size of firm. These data are subject to several unavoidable limitations which are outlined in the enclosure, and we have not as yet released them elsewhere. Senator Douglas requested an additional breakdown showing whether the construction covered by an application for a certificate of necessity was started before or after the start of hostilities in Korea in June 1950. We have had a special group of 25 people going through the operating files to ascertain this information and shall tabulate it for both certificates issued and applications pending. I regret that this work will not be completed until early next week. I hope that this information will fulfill the needs of your committee. Sincerely yours, E. T. GIBSON, Acting Administrator. CERTIFICATES OF NECESSITY AND THE SIZE OF COMPANY Great difficulty is encountered in classifying certificates of necessity by size of firm receiving the certificate. The application did not call for the size of the company requesting a certificate. The number of workers now employed on the facility would be an inadequate measure because it bears no reference to company employment or even to the employment of a given plant. No clear definition exists as to exactly what constitutes a facility. For example, one steel company may request a certificate of necessity for an entirely new integrated plant treating it as a single facility. In another instance a facility may be merely the addition of a group of open-hearth furnaces to a previously constructed plant. Workers on an entirely new facility would be reported at the time of filing of the application as zero. A tabulation by size of application would not necessarily be correct because a large company may request a certificate for a small addition. Likewise, a small company might request a certificate for a completely new plant. The average certificate size does not increase directly with the size of firm when the latter is measured in terms of employment. It was necessary to classify the plants in terms of data which were not immediately available from the application forms. The Bureau of the Census undertook to match the names of firms receiving necessity certificates with companies reporting to the Bureau in the Census of Manufactures. All plants have been grouped with the parent company wherever possible. A necessity certificate received by a subsidiary has been classified in terms of the total employment of the parent company. While the basic employment record is for 1947, the Bureau of the Census has managed to keep the size estimate up to date by using other source data. Certificates of nonmanufacturing companies such as railroads, etc., have not been classified by size at this time since the Bureau of the Census maintains only records of manufacturing firms. Of the 1,235 certificates issued through May 7, the transportation industry received 192. It was possible to identify 791 certificates of the remaining 1,043 certificates approved in such a way that company size tabulations might be made. The 444 certificates which have not been classified by size of firm show a lower average amount of investment per certificate than those tabulated, and it may therefore be assumed that there is a larger proportion of small firms in this group than in the group for which data are given below. Of the 791 certificates so identified, 69 percent were issued to firms with the total number of employees in excess of 500. These same companies accounted for 87 percent of the total proposed investment. This is because the average value of applications was only $1,975,000 for the smaller firms as compared with about $6,082,000 for companies with more than 500 employees. In terms of the amount which may be amortized at the accelerated rates, the large firms accounted for about 88 percent of the total as a result of the slightly more favorable tax amortization percentage granted to the smaller firms as a whole; namely, 75 percent as compared with 70.5 percent for the larger firms. TABLE 1.-Certificates of necessity by size of company approved through May 7, 19511 1 Excludes 444 certificates which could not be identified as to size of company from previous Census of Manufactures records. 192 of these are in the field of transportation. The higher tax amortization rate for small companies was not a deliberate policy of the Defense Production Administration until recently, but it may have resulted from the complex of the industries involved in each size group. Table 2 presents a more detailed tabulation of the certificates of necessity approved through May 7, 1951. Companies with less than 100 employees received 108 of the 791 certificates which have been identified as to size. However, it is to be noted that companies with 10,000 employees or over have received the greatest number of certificates; namely, 231 or 29.3 percent of the total issued. In terms of proposed investments, the certificates received by this group of companies calls for an expenditure of $2,046,000,000 or 54 percent of the total proposed investment covered by this tabulation. TABLE 2.—Certificates of necessity by size of company approved through SUPPLEMENT-FEDERAL AIDS TO FACILITIES EXPANSION, MAY 17, 1951 NOTE. Defense Production Administration, Washington Data on certificates of necessity for accelerated tax amortization inIcluded in this report are based on the first machine tabulation by the Bureau of the Census, Department of Commerce, and, consequently, may not be, in all cases, directly reconcilable with figures previously published.-Office of Reports and Analysis, Defense Production Administration. FEDERAL AIDS TO FACILITIES EXPANSION The Government offers the following aids for facility expansion: I. Accelerated tax amortization 1. Certificates of necessity for accelerated tax amortization are granted under authority of section 124A of the Internal Revenue Code. |