DEFENSE PRODUCTION ACT-1962 TUESDAY, JUNE 5, 1962 U.S. SENATE, COMMITTEE ON BANKING AND CURRENCY, Washington, D.C. The committee met, pursuant to call, at 10:13 a.m., Senator John Sparkman presiding. Present: Senators Sparkman, Proxmire, Muskie, Neuberger, Capehart, Bennett, and Javits. Senator SPARKMAN. Let the committee come to order, please. The committee is meeting this morning to hear witnesses testify on S. 3203, a bill to extend and amend the Defense Production Act of 1950. A draft of this bill was transmitted to the Senate by Mr. Edward A. McDermott, Director, Office of Emergency Planning. Favorable comments have been received from the Federal Reserve Board, Department of Defense, General Services Administration, Civil Service Commission, and Treasury. A copy of the bill and these comments will be inserted in the record. 1 (The bill and reports referred to follow :) 87TH CONGRESS 2D SESSION S. 3203 IN THE SENATE OF THE UNITED STATES APRIL 19, 1962 Mr. ROBERTSON (by request) introduced the following bill; which was read twice and referred to the Committee on Banking and Currency A BILL To extend the Defense Production Act of 1950, as amended, and for other purposes. 1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 3 That the Defense Production Act of 1950, as amended, is 4 hereby further amended as follows: Section 303 (a) is 5 amended by deleting from the parenthetical clause the word 6 "domestic”. 7 SEC. 2. Section 303 (b) is amended by inserting a 8 comma and the words "except for sales or contracts for proc9 essing or refining," after the phrase "but not extending". 10 SEC. 3. Section 303 (f) is amended by adding the fol11 lowing paragraph at the end of the section: I 2 1 "In lieu of such transfers, metals, minerals, and ma2 terials so acquired may be used to make payment in kind 3 for the refining or processing into a form better suitable for 4 stockpiling of any materials held in, or to be transferred pur5 suant to this subsection, to the national stockpile established pursuant to the Act of June 7, 1939, as amended (50 U.S.C. 7 98-98h). Such use shall otherwise be treated as a transfer 8 under this subsection." 6 9 SEC. 4. Section 304 (b) is amended by inserting the fol10 lowing after the first two words of the penultimate sentence: 11 "incurred for the purpose of carrying out transactions under 12 section 302". Section 304 (b) is further amended by insert13 ing after the penultimate sentence the following: "Notes or 14 obligations issued on amounts borrowed or which may be bor15 rowed from the Secretary of the Treasury to carry out ac16 tivities under section 303 shall not bear interest after June 17 30, 1961, and interest accrued or owing to the Treasury on 18 such notes or obligations is hereby canceled." 19 SEC. 5. Section 304 of the Defense Production Act of 20 1950, as amended, is amended by adding at the end thereof 21 the following new subsection: 222 22 "(c) The net unrecovered loss, including nonrecoverable 23 expenses and the unrecovered balance of exploration grants, 24 incurred prior to and including June 30, 1961, by depart25 ments, agencies, officials, and corporations of the Govern 3 1 ment through the use of funds borrowed from the Treasury 2 of the United States pursuant to this section shall, with the 3 approval of the Director of the Bureau of the Budget, be 4 written off by such departments, agencies, officials, and cor5 porations, and the notes, debentures, bonds, or other obliga6 tions issued to the Secretary of the Treasury in connection therewith shall be reduced or canceled accordingly. Upon 8 the cancellation of any such notes or other obligations issued 7 9 10 to the Secretary of the Treasury, the aggregate amount of borrowing which may be outstanding at any one time under 11 Section 304 (b) of this Act, as amended, shall be reduced 12 13 14 in an amount equal to the amount of such notes or to the obligations so canceled: Provided, That nothing herein shall be construed to reduce or write off the liability of any person, 15 association, or corporation to the United States." 16 SEC. 6. The first sentence of section 717 (a) is amended 17 by striking out "June 30, 1962" and inserting in lieu thereof 18 "June 30, 1964". 19 SEC. 7. This Act may be cited as the "Defense Produc20 tion Act Amendments of 1962". BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM, Hon. A. WILLIS ROBERTSON, Chairman, Committee on Banking and Currency, Washington, April 26, 1962. DEAR MR. CHAIRMAN: This is in response to your letter of April 23, 1962, requesting the Board's views with respect to the bill S. 3203 to extend the Defense Production Act of 1950, as amended, and for other purposes. Section 6 of the bill would extend until June 30, 1964, the authorities contained in the act. The only provisions of the act which directly concern the responsibilities of the Board are contained in title III relating to Government-guaranteed loans for defense production under the Board's regulation V, and since the Office of Emergency Planning considers that this authority is useful, particularly to the procuring agencies as means of assisting their contractors in securing working capital and additional equipment needed for the performance of defense contracts, the Board would have no objection to the extension of this program for an additional 2 years as provided by the bill. The Board has no comments with respect to other provisions of the bill which are concerned with matters not directly related to the Board's primary responsibilities. Sincerely yours, WM. MCC. MARTIN, JR. GENERAL COUNSEL OF THE DEPARTMENT OF DEFENSE, Hon. A. WILLIS ROBERTSON, DEAR MR. CHAIRMAN: Reference is made to your request for the views of the Department of Defense on S. 3203, 87th Congress, a bill to extend the Defense Production Act of 1950, as amended, and for other purposes. S. 3203 would extend the Defense Production Act of 1950, as amended (50 U.S.C. App. 2061-2166), beyond its current expiration date of June 30, 1962, to June 30, 1964. It would also make certain amendments to sections 303 and 304 of the act regarding the purchase and sales of metals, minerals, and other materials. The Department of Defense recommends the enactment of S. 3203. The provisions of the act continue to be of importance to this Department in carrying out its programs for the national defense. Title I of the act contains the statutory basis for the assignment of priorities to defense contracts. This authority is considered essential as an aid in the placement of contracts and in assuring a timely flow of materials and components to defense suppliers. Such authority is of particular importance in the area of advanced weapon systems which require the delivery of a wide variety of special materials and components more expeditiously than can be obtained from industry without priorities. Title I also provides the basis for the continuation of the defense materials system under which there is maintained the basic elements of a materials control system for mobilization use. Section 301 of title III of the act, which authorizes the military departments to guarantee working capital loans made by financing institutions to defense contractors and subcontractors is also of considerable importance. Other sections of that title fall primarily within the administration of other agencies. Accordingly, the Department defers to the views of those agencies on the proposed amendments to section 303 and 304 of title III. The general provisions of the act as found in title VII are necessary in that they contain provisions for the effective administration of title I and title III. The Bureau of the Budget advises that there is no objection to the presentation of this report for the consideration of the committee and that the enactment of S. 3203 would be in accord with the program of the President. Sincerely, CYRUS R. VANCE. |