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country for manufacturing field artillery and especially for manufacturing the guns as distinct from the carriages and other vehicles. For the project that we are contemplating the amount that it is necessary to invest in plant, for both the forging and machining of guns, is somewhere near $26,000,000, which can be divided into two parts, covering the machining and the forging. For forging plant extensions there will be required the sum of approximately $9,000,000 and for machining plant extensions there will be required approximately $17,000,000. The greater part of this capacity will be required at private establishments, but at the expense of the Government, as has been explained to the committee.
Mr. SHERLEY. Did you tell us as to the ownership of the plants?
Gen. CROZIER. I think so, but I will repeat it. The arrangement is that these additional plants will remain the property of the United States and if not otherwise disposed of at the conclusion of work with them, within a reasonable time will be removed by the United States. When I say "otherwise disposed of," I mean that they may be sold to the companies on whose ground they are located, but that arrangement will depend on the outlook at that time.
Mr. SHERLEY. Does not the Government put itself in a rather disadvantageous position in having buildings upon land that it does not own?
Gen. CROZIER. It does; yes.
Mr. SHERLEY. And without, therefore, the ability to continue the plant and force it, practically, to either sell it as junk or make whatéver arrangements it could with the manufacturers?
Gen. CROZIER. It is under that disadvantage; yes.
Mr. SHERLEY. What is to be said, then, in defense of that arrangement?
Gen. CROZIER. That the projects are necessary for the prosecution of the war and that we have not been able to devise any better one.
Mr. SHERLEY. Could not stipulations be made at the time of the erection of the plants touching the right to either buy the land or to sell the plant?
Gen. CROZIER. No arrangements looking to the selling of the plant could be made because the plea of the manufacturer, under which the Government is to furnish the money for the erection of the plants, is that they will not be useful after the war for any purposes of the manufacturers.
Mr. SHERLEY. They will be useful for the purpose for which they were created ?
Gen. CROZIER. Yes; but after the war the demand for artillery will be very much less, of course. We are making now a very considerable installation for the purpose of getting the equipment of artillery in a very short time. If this had been spread over a series of years, say, 10 or 15 years, a much less plant would have sufficed. Now we have to create a degree of plant of which there is no prospective necessity, for the purpose for which it is created, after this war is over.
Mr. SHERLEY. That is on the assumption that there will be no demand anywhere else for this kind of material?
Gen. CROZIER. Yes.
Mr. SHERLEY. That is a consummation devoutly to be wished, but not one necessarily to follow the termination of the war.
Gen. CROZIER. If there shall be a demand for this kind of equipment after the war, either in manufacturing guns or doing other work for which a part of it will be appropriate, there will be a sale for this machinery particularly and perhaps a sale for the buildings; but as there is risk involved in that no private parties are willing to take that risk, and it seems that the Government will have to assume it.
Mr. SHERLEY. The thing is complicated by virtue of the fact that the ownership of the land remains in these corporations whereas the ownership of the buildings and all the machinery is in the Government.
Gen. CROZIER. It may be that in some cases land will be leased for the purpose and it may be that in these particular cases we may arrange to lease the lands for the companies, but it will be doubtful whether there will be any advantage in that, because we can not prescribe a term in the lease of any very great length, and when the lease should have expired we would be in the position of owning buildings on leased land.
Mr. SHERLEY. Except you might have an option to continue the lease, so that if the Government desired it could continue the operation of these plants without being subject to a holdup under the terms of the lease.
Gen. CROZIER. Well, that is possible, but I have not considered that there was any kind of probability that we would need these plants after the war to any considerable extent, except as to an installation which I am going to speak to you about now, and that is the installation of an additional gun-making plant in excess of this $750,000 worth of plant which I have an estimate in for at the Watervliet Arsenal.
Mr. SHERLEY. But before we get off of this other proposition-because it is a matter that will probably provoke inquiry-even if the Government were not to operate these plants afterwards and somebody else desired to operate them, either for the original purpose intended or some other purpose for which they were adaptable, the ability of the Government to assure such person of a leasehold right along with the building and machinery might be a very valuable factor in making a sale. You can not have, to my mind, a more unfortunate situation for the Government to be in, when it comes to disposing of or continuing the use of these plants, than the ownership of the plant and the equipment and yet a tenant at will or sufferance touching the land.
Gen. CROZIER. Yes; that is not a very advantageous situation.
Gen. CROZIER. I should think that probably the best thing the Government could do in such a case as that would be to buy the land and own the property, but we are proceeding, and have made some progress already, without specific authority from Congress for what we are doing; we are proceeding on the general authority that is contained in the appropriations. We have interpreted that general authority to be sufficient to enable us to put up temporary buildings and to equip them with machinery on other people's land, but we can not strain it to authorize us to purchase the land.
Mr. SHERLEY. I am not prepared to say that a purchase of land ought to be made, but I am pursuing this line of inquiry in the hope
that the suggestions made here may be of sufficient value to warrant the Government, when it enters into these contracts, in safeguarding its rights in connection with the leasehold and the extension of that leasehold, if need be, or, where it is practicable, a provision touching the right to buy or sell made with the manufacturer; in other words, I think that all of those matters are matters that should properly claim the attention of the Government in connection with this work, and while they are not matters that ought to control the Government so as to interfere with the very much more important and major purpose of the investment—and that is the obtaining of this field artillery at the earliest possible moment in connection with the prosecution of the war-still they are factors of sufficient importance to warrant consideration being given to them and not for the department to simply ignore them in its enthusiasm to get the plants under way.
Gen. CROZIER. Well, I have no doubt that there is room for judicious bargaining in carrying out these kinds of projects; the projects themselves, however, have so bristled with difficulties, and have occasioned such delay, that we have been inclined, when we got them to the point where we could secure the main object of starting the work of manufacturing the artillery, to crystallize at that point and go on to something else; we have not by any means gotten by those difficulties which are in the way of inaugurating the projects at all, but many of these difficulties are still in front of us. I think that the suggestion is a good one to see whether or not we can get some arrangement which will leave the Government in a less disadvantageous position at the end of the war.
Mr. SHERLEY. By the way, General, have you ever stated at any point the value of the output that it is contemplated will come from this investment? In other words, the Government is proposing to invest something like $30,000,000 or $40,000,000 in the creation of additional plant capacity. Now, it is contemplated, of course, as a result of that investment, that there will be an output running into millions or hundreds of millions of dollars, and it might be of interest if you could supply with your notes a statement showing the value of the output. .
Gen. CROZIER. I can supply that to some extent now. In each one of these cases where we have made an estimate of the cost of certain plant extension we have also made an estimate of the output we expect to get out of that plant, so that those figures could be given. We hope to go on afterwards, if the war continues, and secure an additional output from this same plant investment without any great increase of it or, perhaps, without any increase of it at all, but we have not gone into the figures with reference to that anticipated output; but we have gone into the figures as far as the output is concerned which we expect to get from appropriations which are either made or now under consideration.
Mr. SHERLEY. I gathered from your previous testimony the other day, General, that the program which you outlined under the estimates for field artillery made not only a demand upon all the existing capacity of the country, both Government capacity and private capacity, but that it would call for the creation of considerable additional capacity in order that it might be carried out in anything like the time necessary from a military standpoint?
Gen. CROZIER. That is the state of the case.
Mr. SHERLEY. This whole scheme of bulding these plants on land owned or controlled by private corporations is with the idea of availing yourself of their existing organizations as going concerns, either in this work or such work as readily permits them to adapt themselves to this kind of work, in order to obtain quickly the increased capacity!
Gen. CROZIER. That is the scheme.
Mr. SHERLEY. I thought I understood you to say that it was not practical for the Government with any organization that it now possesses or with any organization that it could create to, within a reasonable time, build and equip these factories itself?
Gen. CROZIER. That is true. The Government has a certain organization which is skilled in doing this kind of work. That organization is capable of certain expansion. I can use the funds appropriated for securing the artillery, which is what we are talking about, in extensions at Government establishments as well as in extensions at Government expense on the territory of private concerns; but, of course, as I stated, the amount of that expansion which can be handled by the Government organization is limited, and beyond that limitation we have to avail ourselves of the organizations of other going concerns. Another point with reference to that, and right on the same subject, according to the legal interpretation on which we are acting, buildings for this plant extension secured out of the appropriation for artillery itself must be temporary buildings. For the plant extension which can be had at the Government establishments, being small in amount compared with the whole, I think it is desirable to have permanent buildings so that it will be a permanent capacity for the future, and for the building in which to house that plant I have come to you for authority to erect as a permanent structure.
Mr. SHERLEY. I am not dealing with the estimate immediately before us or with your intimation of an increase in that amount, but I am simply reviewing somewhat the testimony heretofore had in connection with the proposal to utilize the organization of private going concerns to create plants where an additional output of field artillery can quickly be had. The reason for that you have just restated. The idea of these extensions is not that of creating plants permanent in the sense of being built for an indefinite time, but, I gather, is simply to build structures sufficient to take care of the immediate need, and the probable need that may follow that should the war last some years. That is true?
Gen. CROZIER. Yes, sir.
Mr. SHERLEY. Therefore, the buildings will be built with a view to two things, getting your building equipped as quickly as possible ?
Gen. CROZIER. Yes, sir.
Mr. SHERLEY. And of sufficient permanency only to enable you within the next six months, and, perhaps, a year or two beyond that, to turn out the output for which you estimate the need of those concerns?
Gen. CROZIER. Yes, sir; that is the case.
Mr. SHERLEY. That would probably result in a less investment of Government capital in buildings than if they were permanent structrues ?
Gen. CROZIER. Yes, sir.
Mr. SHERLEY. You have already stated that the buildings and machinery are to be the property of the Government?
Gen. CROZIER. Yes, sir. Mr. SHERLEY. Considering the disadvantage that might arise, which I indicated some little time ago, in the disposition of this property subsequently, is, in your judgment, the demand for this material so great, from a military standpoint, and its value both from a military standpoint and in money, compared with the investment that the Government will have to make in these buildings, as to warrant you in doing this instead of undertaking to do it through the creation of Government plants of more permanent character at a slower rate of creation and perhaps at a slower rate of output.
Gen. CROZIER. It is, most decidedly. The need for the artillery is imperative, and the need for celerity in its manufacture is also imperative. There is no way to get the artillery in the time it must be had except by the creation of new plants. Of course, that leaves the question to be answered as to whether the plants are to be created by private organizations at Government expense or are to be created by and for the Government
Mr. SHERLEY (interposing). Or by themselves at their own ex
Gen. CROZIER. Or by themselves at their own expense. Taking the last one first, the private manufacturers decline to create the plants at their own expense, because they say they see no use for them after the war. As to the creation of the plants by the Government, the Government has no organization to do it. It can only do a limited amount of it. That limited amount of expansion we expect to make. In other words, we will create Government plants by Government agencies to the extent that we are able, but that leaves us still far from meeting the necessities of the case. The only thing that can be done beyond that is to utilize existing organizations and have them both create the plant and operate it afterwards. The Government has not the organization to either create or operate them to a greater extent than it intends to do, and there is no way by which the Government can create this organization in a short time. That leaves as the inevitable and unavoidable method the method of having the plants created at Government expense by existing organizations and having them thereafter operated by the same organizations.
Mr. SHERLEY. You, of course, have in mind, and, I believe, have heretofore testified, as to the plans that you expected to make with the corporations through whom you are to erect these new buildings?
Gen. CROZIER. I have only mentioned some of them.
Mr. SHERLEY. You also testified as to the difficulty of arriving at a working basis in advance of complete assurance by an appropriation of the money for the building of them and also the amount of work sufficient to induce these companies to use their organizations in building these plants?
Gen. CROZIER. Yes, sir.
Mr. SHERLEY. Has your knowledge of the situation developed to the extent of knowing what land will be required and whether that land is owned by these companies, and, if not, whether it could be