Senator BENNETT. Mr. Sawyer, I am interested to know whether there is in operation in the Department of Commerce a study or a program looking forward to the day when this CMP must come off. You are concerned with getting it on, and I think business is very much concerned to know under what circumstances it will come off. Suppose we could sit down here and say that on January 1, 1953, we would have an adequate steel supply to take care of the military and, say, maintain civilian business at the current 1951 level, Would you be interested then in removing the controls on steel? I do not want to put words in your mouth, but is there any study going on against that time?

Secretary SAWYER. First, may I say, Senator, that I am very skeptical about studies.

Senator BENNETT. Maybe that is the wrong word, then.

Secretary SAWYER. I have spent 3 years here in Washington as Secretary of Commerce, and have seen literally dozens of studies which have cost the American taxpayer millions of dollars, employed large staffs who have spent a great deal of time and consulted many economists, lawyers, and others, the net result of which is the study was put on the shelf and was never looked at at all; or, if it was it was not looked at at the right time.

My feeling about the problem that you suggest, as far as I am concerned, is that I do not want my Department cluttered up with people who are making studies. I want them to get the work done. I want them to put controls on as they are needed; I want them to take them off as rapidly as they can, and I do not mean by that, of course, that the thing should not have thought and planning. It is getting it now; and, as far as the time when we will not need controls, I myself am not wise enough to know, and I doubt very much whether anybody else is. I think it would be a waste of the taxpayers' money and of your and my time for us to undertake to make a study as of today as to the time when we can begin to take off steel controls.

After World War II, or as it closed, you know there was a great deal of concern about reconversion and how rapidly business would be able to come back and absorb labor and go from war to peace, and all that. In my opinion, if the public officials who exercise the control adopt the policy which I shall adopt-and I have no reason to think that they will not-that is, to decontrol as rapidly as possible, I think the American businessman will be able to take care of himself when that happens, even if he does not have a 2-year notice on it.

Furthermore, if he has a 2-year notice that you are going to decontrol, there is not any force in the world that can make you go through with that program if subsequent events prove that it is unwise.

Senator BENNETT. My use of the word "time" was probably illadvised. But I am concerned with the fact that when we pass laws and set up controls they have a way, apparently, of staying and staying on. At least, that has been my impression of it, and it takes almost an earthquake, or something of that kind, to shake them loose.

I have been in business until I came to the Senate, and we faced in our little business, which was a paint-manufacturing business, during World War II some shortages of raw materials because some of the materials we made paint out of were needed in the airplane industry

for another purpose. We would have liked to have had some assurance that when the production of titanium dioxide, for instance, might reach a certain figure, we could have some hope that thereafter we might come back into the picture and get some titanium dioxide, or that the allocations might be lifted. Is it not possible-not today, perhaps, but far enough in advance of that day-to give small businesses and big business the hope that when a certain production goal is reached there is some chance the material will be available for general use?

Secretary SAWYER. You have my promise right now that the decontrols will be applied as rapidly as they can be; but, as I understood you-and I certainly did not intend to misconstrue what you saidI thought what you were suggesting was that we undertake a study now of the date at which we could decontrol a certain commodity.

Senator BENNETT. As I say, that was a poor expression on my part. But I am concerned with the fact that American business should not have to put up a political fight to get controls lifted. We should have assurance when we go into this process that when conditions are right the controls will more or less automatically be removed.

Secretary SAWYER. You have my promise, as far as my controls are concerned, that that will happen, and my own feeling is that we need worry much more about getting rid of new agencies than we do about getting rid of controls. As a matter of fact, I think the American people are pretty likely to insist on decontrol as soon as the occasion justifies it. But, regardless of that type of pressure, which I think will be adequate and I can speak only for my own Department; I will not need a study to tell me-these industry committees are meeting all the time, and if they come in and demonstrate that controls are no longer needed we will get rid of them or we will reduce them.

Senator SCHOEPPEL. Do you not, Mr. Secretary, agree with me that it is a pretty good thing to write into all of these emergency measures complete cut-off dates?

Secretary SAWYER. You mean as to the life of the law?

Senator SCHOEPPEL. Yes, and I think our great laxness in protecting a lot of the things we are falling into now has been due to the fact that these old emergency measures went on and on and on, and we have to go through legislative channels and a lot of other difficulties to get them off. If we could take it strictly on the basis of putting a stopgap in there with opportunity for review, that is the best incentive possible for a reevaluation of the necessity of a lot of these things. Do you not agree with me, sir?

Secretary SAWYER. I quite agree, and we have a very good example of it in connection with export control.

Export control has been on for specified periods, not permanently at all, but it has worked, apparently. The Senators think so, and the House committe thinks so; and, as far as I know, without objection it is going to be renewed. But at least the Congress has the opportunity to look it over, so to speak.

The CHAIRMAN. I feel the same way about it, when we rewrote in committee the Defense Production Act of 1950 last year that you voted for, Senator. We not only limited the date of it but we gave the Congress the right to strike out any section of that bill they wanted to without the President's approval or disapproval, and I think that

is one of the first bills ever written around here that carried all that to protect the business people.

Secretary SAWYER. Well, perhaps you answered the question of the Senator that you have the power to stop it whenever you want to.

Senator BENNETT. That does not answer it completely, because the Banking and Currency Committee is now wrestling with the question of whether it should continue an agency that was set up for 1 year, in 1932, in an emergency, and after 19 years we have not had the courage to face it and cut it off, and there have been many times in those periods when its life was questioned.

Secretary SAWYER. I said a moment ago, Senator, that I thought much more profit might be derived from terminating the life of a temporary agency than talking about controls. Of course, I do not have any idea what agency you are talking about, but that applies to all temporary agencies, as far as I am concerned.

Senator BENNETT. The problem is, as a newcomer to the Senate, I am learning fast that there is no such thing as a temporary agency. The CHAIRMAN. We did away with the OPA after the last war, Senator. You, Mr. Secretary, did away with import controls last year, before the pertinent law expired.

Secretary SAWYER. And I might say we took the controls off of tin, for instance, although we did not have to. I think our record, Senator, is pretty good on decontrolling as rapidly as we can.

Senator BENNETT. You are satisfying me with your expression of policy that you are concerned with eliminating the controls on a specific area when they are no longer needed, and that is what I am concerned with. I am really concerned with the fact that it would not require specific action of Congress to stop these processes once we start them.

Secretary SAWYER. Senator Schoeppel has given the idea. You just give this law certain life, and at the end of that time, regardless of what anybody may wish, if you do not renew it, the controls end. It is just that simple.

Senator BENNETT. I do not trust my fellow Senators that they will always remove it; so, I have got to trust you administratively.

Secretary SAWYER. Well, I trust the Senators.

Senator BENNETT. I am through, sir.

The CHAIRMAN. I have nothing further to ask.

We appreciate your appearance here, Mr. Secretary, and again thank you for the information you have given us, and we look forward to receiving that little memorandum from you. We hope we might do something for small business.

Secretary SAWYER. Thank you very much, Mr. Chairman.

The CHAIRMAN. We will recess now until 10:30 tomorrow morning, when we will hear Mr. Fleischmann, and tomorrow afternoon we will hear Secretary Tobin.

(Whereupon, at 4:45 p. m., the committee recessed until 10:30 a. m. of the following day, Tuesday, May 8, 1951.)

DEFENSE PRODUCTION ACT AMENDMENTS OF 1951

TUESDAY, MAY 8, 1951

UNITED STATES SENATE, COMMITTEE ON BANKING AND CURRENCY, Washington, D. C.

The committee met, pursuant to adjournment, at 10:30 a. m., in room 301, Senate Office Building, Senator Burnet R. Maybank (chairman) presiding.

Present: Senators Maybank, Robertson, Sparkman, Frear, Douglas, Bricker, Schoeppel, and Bennett.

The CHAIRMAN. The meeting will come to order.
Mr. Fleischmann, please.

STATEMENT OF MANLY FLEISCHMANN, ADMINISTRATOR, NATIONAL PRODUCTION AUTHORITY

The CHAIRMAN. I want to say that I am very much distressed and sorry that Senator Capehart entered the hospital yesterday afternoon and will be absent for some time. I know the committee will want to send their deepest sympathy. In the meantime I have told his administrative assistant to be here so that he can keep the Senator advised. The Senator wanted the record to show his sickness and his absence.

Mr. FLEISCHMANN. Mr. Chairman, if it meets the wishes of the committee, I would like to confine myself at the outset to those provisions of the amendment which have to do primarily with the priorities and allocation power, as that is the subject on which I have been most strenuously concerned during the past month.

I would like to make this very brief statement which I prepared for incorporation in the record, after which I think it would be most useful if I answered questions which the committee may have.

The CHAIRMAN. That will be quite all right, Mr. Fleischmann. You may proceed in your own way.

Mr. FLEISCHMANN. The bill which is before this committee makes no amendments of importance with respect to the priority and allocation powers granted the President by title I of the Defense Production Act, 1950. These powers are basic to any rearmament program, and their lapse, even for a few days, would certainly have a farreaching and adverse effect on the progress of the present program. Generally speaking, in times of scarcity many industrial concerns prefer to devote a large portion of their limited facilities and materials to the production of goods for their civilian customers. Under the Defense Production Act, however, all American industry is required

to meet the needs of the mobilization program first by regulations applicable to all and having the force of law. If that law should lapse, patriotic motives might keep the rearmament program on schedule for a brief time, but it can be confidently predicted that our present military production goals could not be met over any substantial period. Any mobilization program must have the following primary objectives:

1. The first objective is the completion, on schedule, of the direct military program, including the guns, tanks, and aircraft needed for ourselves and our allies. In order to meet these schedules, American industry has been required to accept all defense orders, and, in addition, to channel materials and components to this program in preference to less essential needs.

2. No rearmament program can be restricted to production of munitions of war alone. Such a program requires increased industrial activity of many additional kinds. For example, we need more ships, more freight cars, and more machine tools to turn out jet engines. At the same time, we need to keep up the manufacture of farm machinery to cultivate and harvest the increased crops which are an essential part of any mobilization program. These vital supporting industrial needs are second in importance only to the prime military requirements.

3. The third essential objective of the mobilization program is the expansion of the Nation's capacity to produce basic materials, such as steel, aluminum, and chemicals. The expansion program is now well under way, and if it is completed on schedule the period of scarcity will be comparatively brief, unless a general war should break out. This expansion program has been supported by priority action taken under the Defense Production Act. It is certain that this vital industrial expansion will be delayed many months if the authority to require preferential treatment for the program should lapse.

4. The demands of military production and the supporting programs which I have mentioned necessarily cut down the amount of certain basic materials available for civilian use. In a free scramble for this reduced supply of material, great inequalities in distribution inevitably appear. Accordingly, Congress has wisely provided in the Defense Production Act that such materials must be equitably distributed among civilian users after the essential military and industrial demands are satisfied. No such power to control the distribution of materials would exist if the priority and allocation powers now given by the statute should lapse.

5. As a corollary to the point just discussed, the power to provide for an equitable distribution of scarce materials is particularly indispensable to the goal of maintaining small independent enterprise during the mobilization period. Any mobilization program inevitably places particular burdens and disadvantages upon small business concerns. In the first place, they are not able to compete for the largest prime military contracts, such as tanks and airplanes, because of their limited physical, financial, and technical resources. Second, in a free competitive market, when the available supply is greatly reduced, the small concerns inevitably receive less than their fair share because of the superior purchasing power and customer relations of the larger concerns. In order to counteract this tendency,