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Mr. WOLF. The goal was for high purity--the initial goal. The one recently established, which, I think, is goal No. 229, was for liquid oxygen.
Senator DOUGLAS. Was that also high-purity oxygen?
Senator Douglas. Then the new goal for high-purity oxygen has not been reached ?
Mr. WOLF. The new goal has just been established.
Senator DOUGLAS. Since it has just been established it has not been reached.
Mr. WOLF. That is correct.
So if this plant could be used to produce high-purity oxygen, this would be the 1 out of the 69 that these clauses 1 and 2 might have some meaning about?
Mr. WOLF. Well, that is true.
Senator Douglas. Do you think this plant could produce highpurity oxygen, or is this just a leap into "never-never land” ?
Mr. WOLF. No; I want to further amplify on this high-purity oxygen. The high-purity oxygen was an all-inclusive goal which included oxygen in varying forms, both gaseous and liquid. The new goal which has just recently been established is for liquid oxygen only.
Senator DOUGLAS. I see. It is a subdivision of high purity?
Mr. WOLF. It is a subdivision, and it is used in the missiles program by the Department of Defense. Senator DOUGLAS. Senator Capehart.
Senator CAPEHART. If you eliminated 1 and 2, could you get substantially more money for this plant?
Mr. WOLF. I do not think it has a bearing on the amount of money you would get, Senator Capehart. I just think that they are meaningless in light of the third qualification in which an administrative determination could be made that almost any chemical could be produced in the plant.
Senator DOUGLAS. In other words, what you are saying is that as a test of defense essentiality these are beside the point as alternatives to butadiene from alcohol?
Senator CAPEHART. Mr. Chairman, really what you are saying is we no longer need this plant-period—for any purpose ?
Mr. WOLF. In fact, it is no longer an essential plant.
Senator CAPEHART. Why not sell it on that basis? Could we not get substantially more money for it?
Mr. WOLF. Well, the way this clause is written I would
Senator CAPEHART. Forget the clause. We are here to write a new clause.
Senator DOUGLAS. Yes; I would remind you that the Senate is an independent body and that it does not necessarily take the language handed to it from the executive departments or coming from the other House.
Senator CAPEHART. In other words, the testimony has been from Mr. Robbins and the Treasury that we do not need it to produce butadiene.
Now, you say you do not need it particularly for chemicals. Why do we not just take all the restrictions off and sell it to the highest bidder and let him do as he pleases with it?
Mr. WOLF. If I could qualify and perhaps clarify
Senator CAPEHART. I have no objections to that, you understand. Maybe that is what ought to be done.
Mr. WOLF. I would say that we think it would be desirable to add this plant to the chemical productive capacity of this country.
Senator CAPEHART. For 8 years!
Senator CAPEHART. Are we not really sort of kidding ourselves on these 10-year clauses anyway! What is going to happen at the end of 10 years that we can tell the fellows that own them to forget about it! Is something going to happen in the next 10 years that will not happen in the next 20?
Mr. WOLF. Well, I think it is just an attempt to assure ourselves that money that was spent, taxpayers' money that was spent, will still remain available for security.
Senator CAPEHART. For 10 years. But why not 25 years!
Mr. WOLF. Because these plans evidently have a definite life and their usefulness may be past at 10 or 15 years.
Senator DOCGLAS. Off the record. (Remarks off the record.)
Senator DoT GLAS. All right. Go ahead. Does that complete your testimony?
Mr. WOLF. That completes my testimony.
Senator DoTGLAS. I would like to ask a question about your second paragraph. You say, “C'nder present conditions the fulfillment of our full mobilization requirements is not dependent upon continued production of butadiene at the Louisville plant.” Well, now, I notice you are careful to say "under present conditions." But you have heard my colloquy this morning with Mr. Robbins or perhaps it was a solo on my part-in which I pointed out that if a war should come we might not have this plentiful supply of petroleum products which we now have.
With the Middle Eastern oil shut off, as it probably would be, then oil from the United States and Venezuela would have to supply the war needs of both the l’nited States and of Western Europe, and under those conditions we might well not have sufficient petroleum.
So your phrase "under present conditions" is not responsive to the problem which we may face.
Suppose Middle Eastern oil is shut off. Would you then think that the national requirements do not depend in any measure upon continued production of butadiene at the Louisville plant?
Mr. WOLF. Yes, I would still feel the same way, Senator Douglas. And the question that you asked has several ramifications, the first of which is if our petroleum imports are curtailed to the degree that we have to take steps, presumably there would be less petroleum available for gasoline, and if there is less gasoline we would curtail pleasure
driving, and if we would curtail pleasure driving we would have less need for the rubber to go on the cars using the gasoline. So you go in the same direction at the same time.
Senator Douglas. But remember this: In the first place we would have to supply Western Europe.
Senator CAPEHART. Your statement there is like the old story of the fellow who started a cat and rat farm. He fed the rats to the cats and the cats to the rats.
Senator DOUGLAS. And in the second place, I think we should also contemplate the fact that the natural supply of rubber is likely to be cut off because the political situation in Indonesia is extremely complicated, and, as I understand it, Indonesia produces approximately half of the world's natural supply of rubber. Is that not correct?
Mr. WOLF. That is correct.
Senator DOUGLAS. The political situation in Malaya—which produces almost the other half—is also complicated. And, just as in World War II we found the natural supply of rubber cut off from those areas, so we might find it in world war III if we should be unfortunate enough to get into it. Then, in spite of curtailing of pleasure driving, we would have trucks and transportation and aviation industry and military equipment which has to run on rubber in large part. Would we not need a synthetic rubber industry? If petroleum was the only source from which we could get our synthetic rubber and there was a heavy strain on petroleum, then where would we be? Are not you really gambling with the aces wild on this thing!
Mr. WOLF. No. I want to say this, Senator Douglas: That the situation is substantially different from that of a year ago and even more radically different from that which faced us back in World War II. We have either in existence or coming into existence by the end of this year some 300,000 short tons of butadiene capacity which is not dependent upon petroleum but that is made from natural gasbutane.
Now, that is several times the capacity of this particular facility, and those facilities will be able to
Senator CAPEHART. Is there any butadiene being made out of natural gas at the moment?
Mr. WOLF. Oh, yes. We had butadiene made from butane by several companies during World War II.
Senator CAPEHART. I know, but is there any production at the moment?
Mr. WOLF. Yes, there is something approximating 100,000 tons of capacity already.
Senator CAPEHART. In production? Mr. WOLF. In production—and has been in production for the last 10 years.
Senator CAPEHART. Where?
Mr. WOLF. Where? Phillips Petroleum at Borger, Tex. The other plant is at Torrance, Calif., I think, the plant operated by
Senator CAPEHART. Shell?
Mr. WOLF. It used to be operated by Standard, now operated by the Shell. And another plant which has just recently come on stream in the last year or so was the Texas Butadiene and Chemical Corp. plant at Houston, Tex.
Senator CAPEHART. You are about to sell me on the idea—unless we need this from the standpoint of agricultural products, developing agricultural products for industrial use, as a pilot plant in researchthat we might as well throw off all thé restraints and just sell it to whoever will give us the highest price for it and let him do as he pleases with it. I do not know why we have got all that
Mr. WOLF. We do not consider it an essential plant for rubber or for chemical production, but we think it would be desirable if certain important chemicals to security could be
Senator CAPEHART. Let's keep it for the farmers then or let's sell it without restriction.
Mr. Wolf. Senator Capehart, I just wanted to say we do have a very large and a very nice butadiene plant at Kobuta which has been standing idle.
Senator CAPEHART. Where?
Mr. Wolf. Yes. But it is idle. I am sure they would be delighted to participate in a cooperative research program.
Senator CAPEHART. Maybe so. We have a lot of wording in this bill then, have we not?
Senator Douglas. The lawyers downtown are very skillful. Senator CAPEHART. That is all I have. Senator DOUGLAS. Dr. Flemming's letter states in the last sentence of the second paragraph:
We believe the interest of the United States would be better served if the operation of the plant were under private ownership.
Question: Does this refer to the security interests of the United States, or to the financial interests of the United States?
Mr. WOLF. I would think both, because an operating plant under private ownership we believe is more desirable than a standby plant under Government ownership, which is all that we can foresee
Senator DOUGLAS. What you are saying is the plant is not necessary for the security interests of the United States at all.
Mr. WOLF. I am trying to
Senator DOUGLAS. I never thought zero was greater than zero. I always thought one zero was no greater than the other.
Mr. WOLF. I am only trying to distinguish between a plant being necessary and being desirable. I only made the point that I think it desirable that the plant be maintained as an operating plant under private ownership.
Senator DOUGLAS. Senator Capehart?
STATEMENT OF FREDERICK D. BATES, OFFICE OF THE ASSISTANT
SECRETARY OF DEFENSE, SUPPLY AND LOGISTICS, DEPARTMENT OF DEFENSE
Mr. BATES. My name is Frederick D. Dates. I am in the office of the Assistant Secretary of Defense, Supply and Logistics, in charge of chemicals and rubber.
Senator DOUGLAS. Would you proceed?
Mr. BATES. I have an official statement to make which is so short that I had no copies made.
The Department of Defense has no objection to the passage of H. R. 2528. We concur in the finding of the ODM that fulfillment of our mobilization needs for rubber is not dependent on the continued availability of butadiene production from the Governmentowned alcohol-butadiene plant at Louisville, Ky.
Senator CAPEHART. Do you agree, Mr. Bates, with the statement that I made and that the chairman made a minute ago that this plant just is not needed for national security?
Senator Douglas. Well, wait a minute. I did not necessarilySenator CAPEHART. That I made then. I thought you did.
Senator DOUGLAS. I said that I thought the testimony of the witness was to that effect.
Senator CAPEHART. That is what I intended to say. That was my statement, too. I will put it this way: Do you agree with the testimony of the witnesses heretofore that this plant is not needed for national defense, national security ?
Mr. BATES. Essentially, yes. I would say that if the House had not written in this clause in the proposed bill that without the clause we would go along with that bill, too.
Senator CAPEHART. In other words, if we could get substantially more money for this plant without all these restrictions in there, it looks to me like this would be the wise thing to do.
Mr. BATES. The most informed opinion seems to be that this clause does not add or detract from the final return that would be available. And, of course, as has been stated, the security of the country would probably be in some measure better off.
Senator CAPEHART. Have you ever seen this plant?
Mr. BATES. Processing alcohol into butadiene.
Mr. BATES. It is similar to the petroleum refinery type, petroleum chemical type plant.
Senator CAPEHART. Without considerable changing it could not make alcohol ?
Mr. BATEs. It never could make alcohol, sir.
Senator CAPEHART. No, no, I understand. But I mean it would require entirely new machinery to make alcohol?
Mr. BATES. Yes.
Senator CAPEHART. If you wanted to make alcohol in this plant, you could do so by tearing out all the machinery, putting in new machinery, and making alcohol? Is that right?
Mr. BATEs. It would not be inconceivable that it might be modified without too much trouble to make alcohol from ethylene, but it would not very well be suited to make alcohol by fermentation.
Senator CAPEHART. I see; that is all I have.