Mr. SMALL. Again we are talking about a legal thing. The word "materials" by striking the word "raw" is so defined that it would include such things as something that would be entirely no good in peacetime, like certain kinds of very miniature ball bearings. Senator CAPEHART. What you are really trying to do by amending section 303 is to give the Government the right to permit those producing these raw materials to participate in the machine-tool pool and the pool of other machinery. Is that not correct? Mr. SMALL. I think it is already here in the existing act, on page 20, where it says: The word "materials" shall include raw materials, articles, commodities, products, supplies, components, technical information, and processes. So if you strike the word "raw" out from in front of "materials" then you give us what we want. Senator CAPEHART. It gives you end products, and that is what you want. Is that right? Mr. SMALL. That is right. Senator CAPEHART. In other words, you want to permit these producers to participate in any machine-tools pool that the Government may have? Mr. SMALL. That is one phase of it. Senator CAPEHART. And give them other assistance, like electronic assistance, and so forth? Mr. SMALL. That is right. Senator BRICKER. This section was originally conceived to help those who were producing marginal raw materials, like rare metals that are in short supply in production in this country. Mr. SMALL. That is right. Senator BRICKER. There are a lot of claims now from the Second World War, under a similar section, which the Government said it. has no authority to consider. Do you not think it would be helpful in securing such a program to see that those were considered, and that the Government did equity to those people who did enter into the program and were getting their money invested when the war ended, and then the demand was cut off and they find they have no right to get compensation for the amount of money they have put in? There is such a bill before the Congress now, and I asked Mr. Wilson if he would not consider it. Mr. SMALL. I am advised that those claims for the most part arose where there had been no formal request from the Government for the action taken. What we are here contemplating would be formal requests from the Government. Senator BRICKER. That is true, but there are some of them in the other classification, where the orders have been actually placed. Maybe not. I do not know. But it is my understanding that the bill is introduced with the idea of taking care of those that the Government urged to go ahead in the production of these strategic materials, particularly minerals. Then, when the war ended, the Government said it had no right to compensate or pay them for any investment they had made. Mr. NIEDERLEHNER. Senator, If I may speak on that, those statutes make as a criterion for payment any representation of the Government, whether it be an exhortation by newspaper ad, or radio, or any other appeal to the producers to attempt to produce from the mine. In this situation we are contemplaing a case where the Government actually makes a direct contract with the producer to bring forth the marginal production of the mines. But I am familiar with the other situations. Senator BRICKER. You are familiar with them? Mr. NIEDERLEHNER. Yes, sir. Senator BRICKER. It is not necessary that the Government should have made a contract with the individual if he went forward on any representation that there was a need. I think at the end of the war the Government said it had no power to compensate. There are a lot of them hanging fire. I do not know the nature of them. There are a lot in Virginia. Senator Robertson was interested in it. Senator SCHOEPPEL. Mr. Chairman, I would like to ask a question because I am going to have to leave shortly. The CHAIRMAN. Do you want to go into this executive session? What is the wish of the committee? It is 12 o'clock. Senator SCHOEPPEL. I could remain for an executive session. The CHAIRMAN. All right. Go ahead. The committee says they do not think we will need to go into executive session. Senator BRICKER. If we could take a look at the stockpile program ourselves. Senator CAPEHART. What you are doing in amending this section 303 is giving the President the right to buy other than raw materials, which includes everything. Is that not right? Mr. SMALL. Yes, sir. Senator CAPEHART. That is what you are doing. To buy anything under the sun they might want to. Mr. SMALL. That is appropriate to this act and appropriate to this defense effort. Yes, sir. The CHAIRMAN. And it is subject to the Appropriations Committee, too. Senator CAPEHART. Of course; but that is all you do in that. That is the only amendment to it? Mr. SMALL. Yes, sir. Senator CAPEHART. It would enable you to purchase anything under the sun that would apply in the procurement of raw materials. Just why do you want to do that? Mr. SMALL. The thing is working out very well in the field of minerals and metals in a certain area. We believe we should have the right to use the "rifle shot" approach on an individual product. Let us say it is some small precision bearing, or a type of resistor, which is extremely short, or something else that is a bottleneck. Senator CAPEHART. You want the right to buy materials irrespective of whether they are raw or otherwise, that is, finished materials? Mr. SMALL. If there is a bottleneck on it, and if that is the way to break it. That is all we want-the mechanism to break it. Senator CAPEHART. Do you not have that right under the authority to requisition? Mr. SMALL. No, sir. Senator CAPEHART. I see no particular objection to eliminating the word "raw," but it is not clear to me why. That is all the questions I have. Senator SCHOEPPEL. Mr. Small, before I go, getting back to the question of condemnation again, with that over-all broad, inclusive power permitted in there, do you contemplate, by the greatest stretch of imagination, from any practical standpoint taking over a utility, or a dam site, or transmission lines, or something like that under this? Mr. SMALL. I could not possibly conceive of it. No. Senator SCHOEPPEL. I am glad to have that in the record. Senator DIRKSEN. I think we ought to have one question at this point, since we talked about Mr. Small acquiring this and that. The CHAIRMAN. Go ahead. Senator DIRKSEN. Under the act which created the Munitions Board, you actually have no acquisition power at all, do you? Mr. SMALL. We have no power to operate. We are strictly policy. Senator DIRKSEN. That is right. Now, in addition thereto what powers have been delegated to you by the President under the Defense Production Act? Mr. SMALL. No power to operate. Senator DIRKSEN. No power to acquire? Mr. SMALL. No power to acquire. Senator DIRKSEN. So you are still a procedural agency, coordinating activities? Mr. SMALL. That is right. Senator CAPEHART. You get your authority to stockpile from the National Defense Establishment? Mr. SMALL. Yes; but we do not acquire. GSA acquires. Senator CAPEHART. You tell them the quantities? Mr. SMALL. We tell them the quantity and when we need it. Senator CAPEHART. And they actually do the buying? Mr. SMALL. That is right. Senator BRICKER. After it is once acquired you determine the policy of disposition and utilization? Mr. SMALL. Once acquired the material stays in the stockpile until the President personally releases it. Senator BRICKER. Of course, that is under your direction? Mr. SMALL. I am confident he would not release it unless we recommended it. Senator CAPEHART. Does he release that directly through you? Mr. SMALL. Yes. Through me. Senator CAPEHART. Directly through you? Mr. SMALL. Yes, sir. Shall I go on? The CHAIRMAN. Go ahead, Mr. Small. Mr. SMALL. A second major addition to the present authority is the creation of a new section 303 (c). By the terms of this proposed section the President could make provision for subsidy payments on domestically produced materials, both raw materials and manufactured end items, in the meaning of the term under this act. This is a matter within the responsibility of the Defense Production Administration and they will explain the implementation of this authority. However, I would like to state that I do not understand that this is a general subsidy proposal. Moreover, it is my understanding that this form of aid would be used sparingly and only after a finding of fact. I might also point out that in the case of extremely critical minerals such as tungsten, cobalt, and manganese, which I have just mentioned, the authority already exists under section 303 (a), and is continued under the amendments, to increase production from marginal sources by Government contracts, although this authority has been but sparingly used. The proposed amendments to sections 303 (d) and 304 (a), of the Defense Production Act, would give the President authority to aid facilities expansion by authorizing him to construct, operate, and leaseindustrial facilities, when, in his judgment, to do so would aid the national defense. Carrying out this additional authority he would be able to utilize existing Government corporations or to create new ones, if necessary. The CHAIRMAN. I happened to notice the testimony of the Secretary of the Interior sent down here this morning. He is going to be a witness before this committee and he has quite a lengthy statement on just what you are talking about. Mr. SMALL. I would think he would. The CHAIRMAN. As you said earlier, he would probably know more about this than anybody else. Mr. SMALL. That is right. The CHAIRMAN. That is about the marginal mining, and defense plants, and so forth. Mr. SMALL. That is within his field. The CHAIRMAN. Go ahead. Mr. SMALL. In short, these two amendments to sections 303 (d) and 304 (a) would provide the authority for a program of expansion of facilities, such as was carried out in World War II by the Defense Plant Corporation. Under existing statutory authority, Government aid to the expansion of productive capacity is confined to the indirect encouragement provided by accelerated amortization deductions for tax purposes, and by direct or guaranteed Government loans. The military departments have authority and appropriations for certain types of expansion of facilities by contract, to meet the increased demand for military end items. In each of these cases the Government participates in an expansion by private industry. As distinguished from these activities, under special authorization, some expansions of facilities are undertaken directly by the military services, usually by contract, in areas where there is no civilian counterpart for the item produced, for example, ammunition depots and shell-loading plants. Senator BRICKER. They have full authority for that now in that field? Mr. SMALL. Yes, sir. Senator BRICKER. Where are some of the instances where it would be necessary for the Government to go directly into the production program? Mr. SMALL. For example, take a plant producing a component which goes into a wide variety of military things, not only Army, and not only Navy, and not only Air Force, but also into some of the other agencies, like atomic energy or MDAP, or possibly into civilian defense, where it is not strictly military, and the product would have no earthly use, and the plant would have no earthly use come the end of the emergency. In such a case you could not get private capital to undertake it. Senator BRICKER. Could you give us some examples? Mr. SMALL. I will pick one out of the air. This is an example. One is titanium, which we believe is going-due to the shortages of other critical materials we are going to have to turn more and more to titanium. An experimental plant will have to be set up because this is a new technology, and undoubtedly the plant you would set up would have a relatively short life of 1, or 2, or 5 years, at the most. Now, why should private enterprise under these indirect inducements do it? The Government may have to do it. Senator CAPEHART. Mr. Small, would you yield? Mr. SMALL. Yes. Senator CAPEHART. If I understand, the amendments you are asking for to these sections give you the broad power, if you wanted to, to build any kind of a plant. It is that broad. Would it not be possible at the moment for the National Defense Authority to designate the products or the kinds and types of factories that they feel they need at the moment or might need in the future, and simply write them specifically into the law? Mr. SMALL. I do not believe So, Senator. Senator CAPEHART. Why? Mr. SMALL. I was just going on to say here-and I will give you some other examples of this-I was going to say this is another thing which you can ask Mr. Chapman about. Senator CAPEHART. I understand that. You are naming some, and you are going to name others. Now, why could they not all be named and written into the bill? Mr. SMALL. These are typical of the kinds of things that you might be called upon to do. I believe I'mention it later on here, but I do not think there is going to be any great number. Senator CAPEHART. I do not either. Mr. SMALL. I personally would not know how to write the words. which would give you the flexibility to meet it. Senator CAPEHART. If you will yield a minute, will you agree with me first, you and your counsel, that under the amendments to the sections we are talking about, it does give the President the right to build any sort of a facility and manufacture anything that he might care to manufacture, including toothpaste? Is that right? Mr. SMALL. As a layman, I think so. Mr. SCANLAN. I would say you could not put that statement in a vacuum. You would still have to put it in the frame of reference of national defense, and a toothpick would not fit that. Senator CAPEHART. What is it that is not used in national defense? Mr. SCANLAN. We agree, Senator, that the language of a statute of this type is necessarily broad. Senator CAPEHART. He certainly could build a factory to build automobiles, trucks, steel, bearings, rubber tires, clothing, shoes, and so forth, under the proposed amendments, could he not? Mr. SCANLAN. Theoretically I suppose he could. Senator CAPEHART. Yes. He would be given the right to do it. I think he ought to be given the right to build possibly some specific types of plants to produce specific types of articles, particularly such things that when the emergency is over can only be used for one pur |