were discussing only a 50-percent certificate, if the Defense Plant Corporation built the plant, let us assume it is not the plant they are building in a remote or uneconomic area for defense reasons. Rather, assume it is a plant that is economically located and soundly planned for long-time operation. If the Government built that plant and sold it for 60 cents on the dollar after the emergency, from the standpoint of Government finance, the effect would be identical. I mean, if the Government leased the plant to private operators during the war and sold the plant after the war for 60 cents on the dollar, the effect on Government financing would be identical in that the Government would lose 40 cents on the dollar under either method.

Mr. GIBSON. Of course, after a man has once depreciated his plant he then pays taxes on the total amount. Then he does not get any benefit. After the 5 years for future taxes he has no benefit at all from his tax amortization and must pay taxes if it were a 50-percent amortization with only normal depreciation on 50 percent.

Senator BENTON. Similarly, if the man buys the plant at 60 cents on the dollar he has then got to pay taxes on whatever he earns out of that plant, so it seems to me it figures out roughly the same. If the effect on Government financing is identical, the point at issue, then, is how do you get the greatest efficiency in operation during this phase of our defense economy, and the thing to examine is do you get greater efficiency because the man then knows he owns the plant, expects to own it permanently, or because he is leasing it and hopes perhaps he will buy it some day. I think you and I might agree the advantage may be somewhat on the former side, which is one of the arguments for the present policy.

But the second thing to examine is the anticipated long-range effect on the economy, and I would like to suggest from the anticipated long-range effect on the economy the possibility of selling these plants to independent manufacturers and smaller manufacturers can have highly beneficial effects when the time for conversion from the defense effort comes. Would you agree on that?

Mr. GIBSON. I would; yes. With regard to plants for the manufacture of production which will be needed; yes, sir.

Senator BENTON. If that is true and I am only suggesting that it might be worth examination and study, more study perhaps than has yet been given-whether you should not have a more liberal policy in the Defense Plant Corporation, more resembling that of the last war, instead of restricting yourself as tightly as the language Mr. Wilson's memorandum suggests. In other words, I am pleading for greater liberalization, because in my judgment, from the standpoint of the long-range effect on the economy, I think a very good case could be made for the factor of going too far with the certificates of necessity and not far enough with the building of Government plants for ultimate disposal to private individuals. Would you accept that as a theory or would you accept that as a question that should be explored more thoroughly?

Mr. GIBSON. Yes; definitely.

The CHAIRMAN. Senator Schoeppel.

Senator SCHOEPPEL. One other question, Mr. Gibson, and I think it is most important.

Do you intend to continue the use of the advisory committees of industry before you issue these orders?

Mr. GIBSON. Yes, sir.

Senator SCHOEPPEL. The reason I ask that question, Mr. Gibson, and I want to be very frank about it, is because numerous complaints have come in to this effect, namely: When these industry advisory committees come in here and go into their little discussions, they pull out an order that is already prepared. I think that is not quite in the spirit of the act that was passed by the Congress, and I wanted to be very sure that you give full faith and credit to what the Congress intended when we set up that industry advisory committee. That is all I had.

The CHAIRMAN. Mr. Gibson, Senator Douglas requested me to ask you to comment on a statement he made yesterday to Mr. Fleischmann that a directive be issued in granting future amortization certificates that priority be given to small businesses coming in for their first round over concerns which have already been granted certificates and who are applying for a second round. That was the suggestion he made here yesterday. He wanted me to ask you if you favored that.

Mr. GIBSON. I am in favor of that generally, sir, but there would have to be exceptions, of course, depending on the over-all require

ments.

The CHAIRMAN. I understand that. Senator Douglas requested I ask that for the record.

Senator BENTON. I think he asked that before he had heard Mr. Gibson's answer to my question which is the same kind of question. The CHAIRMAN. I understand. But when he went out of here he asked me to do that.

When you classify a business as a small business because it has 500 employees or less, do you consider whether it is an independent small business? Otherwise you could have a subsidiary of a large corporation employing less than 500 people. Have you given thought to that? Mr. GIBSON. Yes, sir. I am speaking of the independent business, not the subsidiary.

The CHAIRMAN. I am glad to hear that because I understood in some hearings the Appropriations Committee held on the Armed Services, or some report that was made, that that was not considered at the time.

Senator BENTON. Do you not like my phrase "small independent business" much better than the phrase "small business"?

Mr. GIBSON. That is what I intended.

Senator BRICKER. Mr. Chairman, I would like to discuss the issue brought up by Senator Benton, but we do not have the time. There is one matter I would like to leave with you in connection with your testimony on page 17 in regard to the metals production program, a bill introduced by Senator Ecton in regard to some of the hang-overs from the last war. I would like you to look it over, Mr. Gibson. I am doing it at his request.

Then Mr. Chairman, may I have introduced in the record an article from the New York Times, supported by the Department of Commerce Survey of Current Business, showing the capacity of steel at the end of 1952, estimated to be 117,500,000 tons, which is 19,500,000 tons greater than the total production of the rest of the world. I think that is an authenticated article.

Also an article from the New York Times entitled "Steel Mills Continne Fast Pace," but indicating a slight drop in April output. (The articles referred to follow :)

[From New York Times, January 25, 1951]

OUR STEEL CAPACITY AT END OF 1952 TO BE 117,500,000 TONS A YEAR-THIS WILL BE 19,500,000 TONS MORE THAN OUTPUT LAST YEAR IN REST OF WORLD GAIN OVER 1940 PUT AT 45 PERCENT

The greatly accelerated expansion plans of steel companies in the last 3 months will raise the total annual steel capacity of the United States to a record high of 117,500,000 tons at the end of 1952.

More than 18,000,000 tons will have been added to the total annual capacity in 3 years from the start of 1950 to the end of 1952, accoring to an announcement yesterday by the American Iron and Steel Institute, which based the figures on its industry-wide survey just completed.

An increase of nearly 5,000,000 tons was achieved last year, with the result that the annual steel capacity of the United States now exceeds 104,000,000 tons.

The expansion to a capacity of 117,500,000 tons in two more years is more than 7,000,000 tons greater than was predicted last October by Secretary of Commerce Charles Sawyer. Subsequently, plans were completed for a number of large projects that were not visible in October. Among these are the programs announced by the United States Steel Corp., the Bethlehem Steel Corp., the National Steel Corp., and the New England Steel Development Corp.

By the end of 1952 steel capacity will have grown about 45 percent to nearly 36,000,000 tons since 1940. That increase alone exceeds the entire steel-making capacity of any other country in the world.

At full operation the 117,500,000 tons of capacity will enable the production of about 19,500,000 tons more steel than was made last year in all the world outside the United States, according to an average of world production estimates by two trade authorities. The high production will be about 28,000,000 tons more steel than was required by the United States in 1944, when the heaviest wartime output was reached.

MANY FACILITIES ENLARGED

To help support the great gains in steel capacity, the steel companies have been enlarging their blast-furnace facilities, coke-oven capacity, and rolling mills and other finishing facilities; also, more ore-carrying vessels and other transportation facilities are being added.

Blast-furnace capacity, rated at 72,471,780 tons at the start of this year-a record high level-will reach about 79,300,000 tons by the end of 1952.

More than 150,000,000 tons of iron ore will be required annually for full-capacity operations. Huge amounts of coal, limestone, manganese, scrap, and other raw materials will be needed, as well as record high amounts of natural gas, electric power, and fuel oil.

The extent of the steel companies' plans was announced by the institute after gathering expansion figures from the companies. It was the third survey in 6 months. The first survey last June showed that capacity at the end of 1952 was expected to exceed 105,000,000 tons. Subsequently, a number of additional large projects were announced.

Steel-making furnaces at present are being operated at the highest level ever attained. This week, for the first time in history, more than 2,000,000 tons of steel is scheduled to be poured in the United States. Such an output continued without interruption for a year would mean a total of 105,000,000 tons of steel.

[From New York Times, May 11, 1951]

STEEL MILLS CONTINUE FAST PACE, BUT APRIL OUTPUT DROPS SLIGHTLY

The Nation's steel mills continued to improve their productive pace during April, but the month's output of raw steel declined slightly below the record March total because of one fewer working day.

The mills turned out 8,832,000 net tons of ingots and steel for castings last month as operations averaged 103 percent of ingot capacity, the American Iron and Steel Institute reported yesterday. In the 31-day month of March their

production aggregated 9,071,055 tons, a revised figure, on an operating rate of 1024 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:

1951

- 114

1950

In the following table je sbows, the rate of opensation is pencer eapely by igen beri QE Beer Bay and everle by mratis fie the last 24 maths with the total for the industry:

1940

1949