Mr. HARRISON. Quite true, Senator. Senator CAPEHART. And it ought to be easier to control the black market in steel under this section than it is under price control, in my personal opinion. Mr. HARRISON. I would like the privilege of sending to the committee the particular orders that deal with the inventory control on steel and the other items. Could Mr. Fleischmann say a word about the price angle of it? Senator CAPEHART. Let me finish this. For example, if you find an organization has a certain amount of steel on hand and they are not manufacturers, they are not processors, they simply have this steel in a warehouse and they are selling it at twice or three times the published list price, they are hoarding under this section and can be prosecuted. Mr. HARRISON. Might I say, sir, please? Mr. HARRISON. At the time we issued our steel warehouse order, which was to make available to steel warehouses a given amount of steel each month, I did discuss the matter with Mr. Valentine, with respect to the pricing, and we worded in our press release recognition of this price phase. Now, at that time, sir, it was our feeling in our shop that it would be unwise for us to go any further with respect to the price phase. Senator CAPEHART. For example, suppose you found a warehouse some place at the moment that had X amount of steel, let's say 20,000 tons, or 10,000, or let's say five or let's say a thousand tons of steel, and they were selling that steel, or trying to, and they are, at twice or three times or four times the market price. Now, under this section you could prosecute. You could put a stop to it. There are quite a number of such cases in the United States at the moment. Mr. HARRISON. We have talked that over several times. Could Mr. Fleischmann talk to that point, please? Senator CAPEHART. Yes. Mr. FLEISCHMANN. Let me tell you the reason again, in a little different way, why we did not invoke it at the outset. This does not mean we will not invoke it. Senator CAPEHART. I understand. Mr. FLEISCHMANN. Of course, we are doing first things first, as well as we can judge them. Senator CAPEHART. I know you have got a big job and it takes time. Let me say first that I appreciate that as much as you do, or anybody in this room. Mr. FLEISCHMANN. Senator, one of the reasons which we have not mentioned why we did not invoke this at the outset was a technical difficulty which I think I should describe, and that is this: One of the things we did not want to stop, even for a minute, was the import of any of these scarce materials. Acting under section 101 we felt we could make an exception for the importation of all of the materials. In other words, we felt even if the man did hoard it, our international situation was such that it was wise to get this stuff into the country just as fast as we possibly could. So we have allowed in practically all of our orders an exception for anybody who imported; not that he could hold and hoard them, but that he could bring them into the country in any amount that he could. Now, we could not see, the lawyers with whom I talked, including Mr. Kendall from NSRB and Mr. Hale and myself-we could not see that we could make that kind of an exception under section 102. We did not feel we had power to grant exemptions by regulation under that. So we have gone rather slow. Now, what we did, addressing ourselves to this specific problem, was to send out a questionnaire to a very large group of these metal middlemen that I think you are talking about, sir, and that we are all focusing our attention on, to try to find out the location and the dimensions of the problem. What we had in mind was this: If we located any of these hoards of scrap that there must be around the country, we were going to make an offer to purchase at a reasonable price, something like what he had paid for it; and if that was refused, we have the power to requisition. Now, up to date, as General Harrison has said, the returns we have had from this report have indicated declining inventories. Now, it is true, and here is exactly the point we are at now, some of these people did not answer the questionnaire. The CHAIRMAN. Those are the people we are after. Those are the ones we want. Mr. FLEISCHMANN. We are at that point now. Senator CAPEHART. You are talking, I think, about the legitimate steel warehouse, the legitimate man. I am thinking in terms of the fellow that does not deal in new steel, he deals in scrap, he deals in anything he can deal in, see. Mr. FLEISCHMANN. Senator, if I may say a word on that? Mr. FLEISCHMANN. The list we got was primarily designed to hit exactly the people you are interested in-the fly-by-night broker, who advertises he will fly people to Texas to get steel. We have all heard those stories. We are trying to get those exact firms to report. We are going to make them report. The CHAIRMAN. You say some have not reported? Mr. FLEISCHMANN. That is right. The CHAIRMAN. You are going to make them report? Mr. FLEISCHMANN. That is right. When they do, we have legal means to make them disgorge what they have. Senator CAPEHART. There is no reason why there should be any excess. In fact, there is no reason why there should be any steel in any warehouse in the United States today at all, if those hoarding it would sell it at the regular list price, because if they did, the legitimate manufacturers and processors who badly need it would pick it up right now. Mr. FLEISCHMANN. Except that we are taking steps to see that legitimate warehouses are getting a steady flow of steel which they need. Senator CAPEHART. I appreciate that, and that is the proper way to do it. I know of a particular situation at the moment where if they would sell the steel at the regular published price, it would go out to people that badly need it, and it would put men back to work within 24 hours; that is if they would sell it at the regular price, but they are holding it for three and four times the published price. CONTENTS Statement of— Harrison, William H., Administrator, National Production Au- Page 2 2, 8, 9, 11 Letters, statements, exhibits, etc., submitted for the record by- Transportation Order T-1. Transportation Order T-1, interpretation__ Executive Order 10161.. 19 32 |