The CHAIRMAN. If, as the civil defense establishment is telling us over the television almost nightly and daily that New York City might be bombed, I think they point out 43 other cities of the United States might be bombed, and they will bomb next October, wouldn't you immediately need such legislation?

Mr. FLEMMING. It seems to me that it would be necessary for the President to ask for it.

The CHAIRMAN. Wouldn't it be better for them to have it ready now rather than have to call Congress into session and get a delay?

Mr. FLEMMING. It is our feeling that as far as an extraordinary power of this kind is concerned, if there is no necessity for it at the present time, it is better to let it lapse, and it is better then for the President and the Congress to work in a cooperative manner in determining when it is to be brought back into existence.

Senator MAYBANK. That can't be done in a hurry.

The CHAIRMAN. It has been indicated that since September 4, 1950, it has been used in one instance, which proves it hasn't been needed up to the present time. I don't think it is needed at the present time. The thing we have to consider is, should we put it into the law in case of a quick emergency in which it might be badly needed. Even though Congress could act fairly quickly, great damage might be done in that period of time in which Congress was not acting.

You say you don't need it. Of course, we in the Congress then will have to make up our minds whether we think you do or not.

Mr. FLEMMING. I think your comments, Mr. Chairman, very definitely run to a judgment as to how quick the Congress can act in dealing with matters of this kind. As far as I am concerned, I have the feeling that Members of Congress are in a much better position to answer that question than someone who is not.

The CHAIRMAN. You feel it is our responsibility, and our responsibility rather than yours?

Mr. FLEMMING. That is correct.

Senator DOUGLAS. Would I be interfering with your development if I put in the record at this point the history of the similar bills in World War II and in the Korean war? I think my facts are correct. This authority to requisition and condemn, as I remember it, was introduced in 1940 at the time of the first draft and renewed in 1941 at the time of the second draft, to get a parallelism between the drafting of property and the drafting of men.

But the general price control bills, as I get the history, was as of the 1st of August 1941, which was over 4 months before Pearl Harbor. A general bill was introduced but was not passed until the 30th of January 1942, or almost 2 months after Pearl Harbor. There was not an effective law put into effect until the 28th of May 1942, or 521⁄2 months after Pearl Harbor. And during that time a great deal of damage was done.

Now the question comes, would it not have been wiser if a standby bill had been passed so that immediately upon Pearl Harbor these powers could have been exercised? Congress certainly moved very slowly at that time in spite of the great emergency. If I may also put into the record some of the history in dealing with the attack of the Communists on Korea. I believe it occurred on the 25th of June. It was not until the 1st of September 1950, that the Senate passed a bill, which 1 week later, on the 8th of September, was signed by the

President; 68 days between the time of the attack and the time of the passage of the act by Congress; 75 days between the attack and the signing. There was a further delay, of course, in setting up an administrative agency. They had to start from scratch.

I am informed that 34 men turned down the job of Administrator of the Economic Stabilization Agency. It was not until the 26th of January that a freeze was established, or 72 months after Pearl Harbor. Along with many members of this committee I sat on the Banking and Currency Committee when we were considering the bill. I can say we worked very hard, but we found that nearly every interest asked to be heard, and in a democracy you have to hear them. We had inevitable delays in getting a bill out on the floor. There was debate on the floor. The House was going through similar difficulties. Then we had the problem of conference. Although we were doing our best, we had these delays.

During that time, this is what happened: Up until the 1st of September the prices of commodities traded in daily, the so-called spot market prices, went up 31 percent on imports, 19 percent on domestic prices. Wholesale prices rose 7 percent, and the consumers' index rose by 2% percent. But, since a lot of time was required to set up the agency, by the time OPS was in a position to put on a freeze, spot market prices were up 59 percent on imports, 35 percent domestically, and wholesale prices were up 15 percent, the consumers' index had risen by 11 points, or 6% percent, and the horse had been stolen.

It is such considerations as these that make some of us feel it would be to the benefit of the country if we had something on the books that the President and his administration, if they believed a grave emergency had occurred, could put into effect.

I again want to point out that we don't want to continue these controls during the present situation. That is a speech, perhaps, rather than a question. I hope you will forgive me.

Mr. FLEMMING. Could I comment in this way: The discussion has moved as I suspected it might from this requisition authority over into the price and wage control area.

The CHAIRMAN. Would you rather wait until you get to that title? Mr. FLEMMING. I am going to deal with that and try to set forth the position of the administration on it.

The CHAIRMAN. We will try to take this up in an orderly fashion. Senator BENNETT. I have been trying for 15 minutes to ask 1 simple question. I have to leave myself in a minute. I am taking you back to title I in order that there can be no misunderstanding before we get too far away from it.

Do I understand that your approval of title I, as you propose it should be amended, carries approval of section 104 for continued import controls on dairy products?

Senator DOUGLAS. I thought you were a friend of his, Senator Bennett?

Senator BENNETT. I am a friend of the record, Senator.

Mr. FLEMMING. Mr. Chairman and members of the committee, may I say on that particular section, as one who has just been getting into the details of the Defense Production Act, I find it a little bit difficult to understand why that section is a part of a defense production act.

On the merits of it, as far as this administration is concerned, it seems the appropriate person to testify on that is the Secretary of Agriculture.

The CHAIRMAN. We will have him before us.

Mr. FLEMMING. That is right. I am not an expert in that area. I would prefer if the committee would wait until it had the opportunity of hearing from the Secretary of Agriculture.

Senator BENNETT. Mr. Flemming, my reason for asking the question was not to put you on the spot, but to clear up any possible misunderstanding that your movement from title I to title II, with your statement that you would-I think you made such a statementapprove title I with the amendments you suggested, carried by inference the approval of section 104. I wanted to get that perfectly clear.

The CHAIRMAN. In my mind, that was not the intent. It stands out by itself.

Mr. FLEMMING. I appreciate it being cleared up. It is my understanding the Secretary of Agriculture will testify on it.

Senator BENNETT. I wanted to make sure you were not approving it automatically by your statement.

The CHAIRMAN. I think if everyone who wants to talk addresses the Chair, it will make for a more orderly procedure. Senator Lehman.

Senator LEHMAN. Here again, Mr. Chairman, I think there is great confusion. We are discussing this bill as if it were a bill that we wanted to have become effective immediately. It is by no means that kind of a bill.

The proposed bill definitely states that before the President can invoke any authority granted by the title, he must find and declare that the exercise of the power is in the interest of national security or economic stability. As I understand it, you want to take out certain things from this standby bill, and it is only a standby bill, not a continuing bill. You want to take out certain thing on the theory that Congress, if necessary, can give the President the powers that are necessary.

Under any circumstances, as we know them, action by the Congress is likely to be slow. We have had so many experiences going back many, many years where we know that action is slow.

In the present circumstances, or in the circumstances that may occur in the case of an all-out war, the complication of the situation would be greatly increased. If we can believe the stories of the force of the atomic weapon that may be used against us, certainly the greatest unbelievable and undescribable dislocation would result both to the political, social, and economic life of the country.

We haven't any idea in the event of an atomic attack on Washington or New York how many Members of Congress will be able to respond to a prompt call. We don't know.

Senator DOUGLAS. I have been told they are going to offer a bounty on every Member of Congress who disappears.

Senator LEHMAN. We don't know that. The Congress might be completely paralyzed. In the case of Senators, if a Senator dies or is killed or is wiped out, the governor of the State can appoint his successor. That can't be done in the case of Members of the House of Representatives where a special election is required.

So I would think it is the height of unwisdom if we don't have standby legislation which can be invoked in case of necessity but cannot be invoked unless the President certifies to the emergency.

Mr. FLEMMING. Mr. Chairman, I feel that I should point out, as you have noted, my comments are based, as I develop my testimony, on the provisions of the existing Defense Production Act, on each title of that act, rather than on any of the bills that are now pending before the committee. So when I suggest an amendment, it is an amendment to the Defense Production Act as it stands at the present time.

The CHAIRMAN. You understand that S. 753 for all practical purposes is simply an extension of the present act on a standby basis, never to be used unless there is a grave emergency. Proceed, Dr. Flemming.

Mr. FLEMMING. Next, we recommend the authority to assist private enterprise in the expansion of productive capacity should be extended to June 50, 1954. Title III of the Defense Production Act authorizes the Government to assist private enterprise in the construction and expansion of productive facilities which are important to the national defense.

Included are authorities to make loans and to guarantee loans in connection with the performance of Government contracts and the exploration, development, mining, and production of defense materials. Authority is also given to make long-term purchase contracts and other arrangements which will permit increases in the supply of defense materials.

These authorities have been extensively used and must be credited with a substantial part in the expansion of our productive capacity which has occurred during the last 2 years.

It is partly through this expansion of capacity that we have achieved the substantial balance in supply and demand that allows us to throw off most of the economic controls on the economy at the present time. Here again, however, much remains to be done.

Roughly, two-thirds of our industrial expansion goals have been 80 percent or more subscribed. That is to say, private industry has agreed to undertake that much of the proposed expansion.

At the same time, more than 10 percent of our goals are less than one-half subscribed.

We have reached the area of selective expansion in materials peculiarly important to defense but not normally in great demand for the production of peacetime goods and services.

Current programs of great importance in the area of raw materials supplies are intended to increase the production of nickel, cobalt, mica, and titanium. Progress in these areas has been slow and difficult but they are of such great importance that we must leave no stones unturned in our efforts to increase the available supply.

We believe that the authority presently provided in this title will, in cooperation with programs of the Defense Department and other agencies of the Government involving research, development, construction, specialized production, and stockpiling, make possible the completion of our industrial base for war mobilization. There is no more important responsibility on the Federal Government today than the completion of this mobilization base.

Most of the powers granted by title III are financed by the authority to borrow $2.1 billion from the Treasury.

Provision is made in the act for computing the Government's obligations on the basis of probable ultimate net cost after completion of the expansion program.

Senator MAYBANK. How much of that money has been borrowed? We had quite an issue when we put that amount in.

The CHAIRMAN. If the Senator will hold his question until he has read about another half a page, I have a lot of records I want to talk about in respect to that.

Senator MAYBANK. If you will put that in the record, it will be all right.

The CHAIRMAN. Why don't you finish your recommendations on this particular title, and then we will have some questions?

Mr. FLEMMING. Present estimates indicate a substantial balance in this fund after payment of all costs and, as a result, we are not asking for an increase in the gross authority for the next fiscal year.

Only one change is recommended in the provisions of title III, and that is that the authority to make long-term contracts for periods up to June 30, 1962, be amended to authorize contracts extending 1 additional year, until June 30, 1936.

In connection with this title, I desire to stress the fact that as a part of our reorganization plans we intend to center responsibility for following through on the entire program in one person immediately under the Director of the Office of Defense Mobilization. We intend to provide this person with a very high-grade review committee.

This review process will apply not only to new proposals but also to any proposals that are now in the process of being executed but where the Government has not yet made a final commitment.

The CHAIRMAN. Now, Mr. Flemming, I would like to get your opinion on one other feature of this particular title. I would like to place in the record at this time the contracts that the Government have entered into this title under three categories: What might be called metals, minerals; another is machine tools; and the third is the aluminum program. These three reports that I hold in my hand, which I shall place in the record, if there is no objection, give the name of the contractor with whom these contracts were made, the dollar value of the contracts, the amount that has been delivered up to date, the undelibered portions, and the full and complete story of this whole program.

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