more money selling that grade of beef for hot dogs' and hamburgers." He said that the hot-dog stands in the United States had created a new market with the advent of automobiles throughout the country, and that more people were eating hot dogs and hamburgers, and that that used up the kind of meat that used to be canned in small cans.

Senator THOMAS. To what extent does the Army furnish hamburgers to the boys?

Colonel LOGAN. We give them a great deal of ground meat, which we grind ourselves. We do not buy one pound of ground meat for the Army.

Senator THOMAS. But they get their hamburgers right along?
Colonel LOGAN. Oh, yes, indeed.

Senator MCKELLAR. They grind the meat themselves?

Colonel LOGAN. Yes, sir. Too many things can happen somewhere else in another man's grinder. We know what goes in ours.

Senator ADAMS. Are there any other questions of Mr. Welles? If not, we are very much obliged to you, Mr. Secretary.

PURCHASE OF FOOD AND CLOTHING NOT GROWN OR PRODUCED IN THE UNITED STATES

STATEMENT OF HON. ROBERT P. PATTERSON, UNDER SECRETARY OF WAR

Senator ADAMS. I think perhaps it would be well to put in the record before you make your statement a letter which has come to the committee from the Secretary of War.

Mr. PATTERSON. I am familiar with the letter.

(The letter is as follows:)

Hon. CARTER GLASS,

MARCH 25, 1941.

Chairman, Committee on Appropriations, United States Senate. DEAR SENATOR GLASS: The War Department is opposed to the enactment of the following proviso added by the House of Representatives to H. R. 4124, referred to in the bill as the "Fifth Supplemental National Defense Appropriation Act, 1941," Seventy-seventh Congress, first session. The proviso is found in lines 23, 24, and 25 on page 5, and lines 1 to 7, both inclusive, on page 6 of the bill as reported to the House of Representatives by the Committee on Appropriations, and as passed by the House March 21, 1941, viz:

"Provided, That no part of this or any other appropriation contained in this Act shall be available for the procurement of any article of food or clothing not grown or produced in the United States or its possessions, except articles of food or clothing not so grown or produced or which cannot be procured in sufficient quantities as and when needed, and except procurements by vessels in foreign waters and by establishments located outside the continental United States, except the Territories of Hawaii and Alaska, for the personnel attached thereto."

The Buy American Act (act of March 3, 1875 (18 Stat. 455), as amended, 41 U. S. C., secs. 10. 10a, 10b, and 10c) requires in substance that unless the head of the department or independent establishment concerned shall determine it to be inconsistent with the public interest, or the cost unreasonable, only such supplies as are mined, produced, or manufactured in the United States from domestic raw materials shall be acquired for public use.

Revised Statutes 3716 (10 U. S. C., sec. 1202), so far as here material, requires that the Quartermaster Corps of the Army, in obtaining supplies for the military service, shall state in all advertisements for bids that a preference shall be given to articles of domestic production and manufacture, conditions of price and quality being equal.

Army Regulations 5-340 requires observance of the Buy American Act and contains detailed instructions as to the manner of carrying out its provisions. Pursuant to provisions of the Buy American Act every War Department contract for supplies contains the following provisions :

"ART. 13. Unless the head of the department or independent establishment concerned shall determine it to be inconsistent with the public interest, or the cost to be unreasonable, only such unmanfuactured articles, materials, and supplies as have been mined or produced in the United States, and only such manufactured articles, materials, and supplies as have been manufactured in the United States substantially all from articles, materials, or supplies mined, produced, or manufactured, as the case may be, in the United States shall be delivered pursuant to this contract, except as noted in the specifications and/or other papers hereto attached. The provisions of this article shall not apply with respect to articles, materials, or supplies for use outside of the United States, or if articles, materials, or supplies of the class or kind to be used, or the articles, materials, or supplies from which they are manufactured are not mined, produced, or manufactured, as the case may be, in the United States in sufficient and reasonably available commercial quantities and of a satisfactory quality."

It is considered that the provisions of the Buy American Act and Revised Statutes 3716 give ample protection to American agriculture and industry in respect to food and clothing.

The War Department believes that the enactment of this proviso would result in materially increasing the price of food and clothing for the Army, as in fact it would reduce competition in such procurement.

For the reasons given, the War Department recommends that the proviso in question be not enacted into law.

Because of lack of time this report has not been submitted to the Bureau of the Budget,

Sincerely yours,

HENRY L. STIMSON, Secretary of War. Senator ADAMS. Mr. Secretary, are you interested in the same provision about which Undersecretary Welles spoke?

Mr. PATTERSON. I am, Senator; and I wish to express the views of the War Department on the paragraph on page 5 of the bill, H. R. 4124, under the heading "Quartermaster Corps." The item is entitled "Clothing and equipage, Army."

REASONS WHY WAR DEPARTMENT WISHES RESTRICTION REMOVED

The War Department is opposed to the proviso for two reasons. I say nothing about the foreign relations, of which Undersecretary Welles spoke. We are opposed to it, first, on the ground that it would interfere with the speedy performance of our national-defense program.

The second reason is that it would unreasonably increase the cost of the national-defense program to the War Department. Under existing law, the Buy American Act, we are required to buy goods of domestic manufacture and production except when the head of the department-in this case the Secretary of War-determines that it would be inconsistent with the public interest or would result in an unreasonable cost.

TWENTY-FIVE PERCENT DIFFERENTIAL IN FAVOR OF AMERICAN PRODUCERS UNDER BUY AMERICAN ACT

It has been administratively determined that under normal conditions 25 percent is the general measuring rod of an unreasonable differential in the cost.

Senator ADAMS. That would mean a 25-percent differential delivered in the United States, after the tariffs had been paid.

Mr. PATTERSON. Yes, sir; the price here. As I understand, that percentage is not adhered to uniformly. It is left to the Secretary to determine. There may be an unreasonable differential in cost even though the differential be less than 25 percent.

General CORBIN. That is correct. When the price goes up, and becomes high, we make the differential smaller.

Senator MCKELLAR. Does the Secretary have absolute control over the amount of the differential up to 25 percent?

Senator ADAMS. The 25 percent is his own determination. That is not statutory.

Mr. PATTERSON. Under existing law, as determined by the declared legislative policy of the country, we buy domestically unless it is determined that there is an inconsistency with public interest or an unrea sonable differential in cost. Our standard forms of contract provide for that, and we make no purchases of cloth made from foreign wool and no purchases of foreign beef-those are the two principal items— unless the Secretary authorizes the Quartermaster General to do so.

This proviso in H. R. 4124 would go much further. It would provide, in effect, that we may not make foreign purchases, no matter what the difference in cost may be, if there are sufficient goods of that kind grown, produced, or manufactured in the United States.

DELAYS WOULD BE OCCASIONED BY INQUIRY AS TO DOMESTIC SUPPLY OF

ARTICLE

Before the Quartermaster Corps could buy beef, woolen cloth, blankets, or anything made of wool, he would have to conduct an inquiry into the domestic supply of that article. We believe that would cause an unreasonable delay in the procurement of the Quartermaster Corps items, and also we believe it would cause a very substantial increase in the cost.

RESTRICTION WOULD RESULT IN INCREASED COSTS

Senator ADAMS. Let me ask you two questions, if I may, Mr. Secretary. What would be your estimate of the increased cost-and, of course, I realize that necessarily such an estimate must be a guess at best-if this were to stay in the bill?

The other question is what would be the extent of your acquiescence if the provision in the bill were modified so as to contain the 25-percent proviso?

Mr. PATTERSON. I have no figures on the estimated increase. Do you, General Corbin?

General CORBIN. No; it is impossible to tell what that increase would be, because it depends on the price of wool. For example, the price of domestic wool might go up 20 percent; and then to add another 25 percent to that would raise the price all the higher. It would depend upon the price all along the line.

PRESENT DIFFERENTIAL IN FAVOR OF DOMESTIC WOOL NOW 5 PERCENT

Senator MCKELLAR. Can you give us a comparison of the products of the two countries today?

General CORBIN. We are giving a differential of 5 percent in favor of domestic wool over foreign wool.

Senator ADAMS. That is to say, over tax-paid foreign wool?
General CORBIN. Yes; over tax-paid foreign wool. We pay 5 per-

cent more.

Senator ADAMS. There was a meeting here in the building some few days ago, at which some of the wool people were meeting-and very naturally; and they were saying that there ought to be a 10-percent variation.

To what extent do you regard that as unreasonable?

General CORBIN. We think that with the present situation of wool, 5 percent is enough. If wool were lower in price, we would be willing to give 25 percent; but it is above parity now, and we would like to see it stabilized, on account of consumers and on account of the purchases for all the departments. So we figure that 5 percent will allow us to buy domestic wool.

Senator ADAMS. But you are not in favor of the general policy of making it 25 percent?

General CORBIN. No. If it were 80 cents a pound, we would be very glad to pay the 25 percent; but when wool is a dollar, we think 5 percent is ample.

Senator ADAMS. You are in favor of a sliding scale, then, are you? General CORBIN. Yes.

Mr. PATTERSON. I might point out that this is the fifth supplemental appropriation act. The other supplemental appropriation acts do not carry a similar proviso. If this were passed, it would embarrass the Quartermaster Corps to be required to segregate the purchases under this from the others.

Senator ADAMS. I suppose we could take care of that by making it retroactive to the others.

Mr. PATERSON. But, in general, it is an impediment to the War Department to have peculiar provisos in one appropriation bill and not in the others, because we have to sort it out and see just where the funds come from-which, of course, can be done, although it is difficult and time-consuming.

Senator BYRNES. Of course it would; if it applied only to these particular funds, you would have to segregate them.

Senator ADAMS. Let me ask a question, just as a matter of bookkeeping: We have appropriated various items under the head of equipage, and under other heads. If we appropriate $50,000,000 under each of two items, do you keep the two funds separate on your books, or do you simply consider the total of $100,000,000?

General CORBIN. No, sir; we keep them separate. However, let me say that one of our first bills gave us a contract authorization for $50,000,000, and we have already contracted for that.

Senator ADAMS. But this is a money appropriation to make good the contract authorization which you carried out.

Senator HAYDEN. The Chief of Staff asked us yesterday to remedy the situation by putting these several appropriations into one.

Col. A. E. BROWN. The Chief of Staff discussed only the appropriation title "Construction of Buildings, Utilities, and Appurtenances at Military Posts."

Senator HAYDEN. Only?

Col. A. E. BROWN. Yes, sir; only the "Military Post” appropriation title.

Senator HAYDEN. The same principle might be applied here?

Col. F. W. BROWNE. The first paragraph of the bill contains the provision that each of these appropriations shall be supplemental to and merged with the appropriations under the same heads in the regular annual military appropriation act. It will be most helpful to us in simplifying the administration of the funds if that provision can be retained.

Senator ADAMS. It might be an advantage to you if you did something with respect to that situation.

Senator MCKELLAR. Do you have any other suggestions?

DOMESTIC PRODUCERS PROTECTED BY BUY-AMERICAN ACT AND CUSTOMS

DUTIES

Mr. PATTERSON. We believe, Senator McKellar, that the domestic producers are sufficiently protected under the existing Buy-American Act. It gives them good and full protection, in addition to the customs duties on foreign importations. Of course, it affects us mainly in regard to beef and wool.

Senator BYRNES. Has not the increase in freight rates and in insurance rates upon imported beef and other imported articles also served to give the domestic producers protection?

Mr. PATTERSON. Considerable advantage, I think; yes, sir.

Senator BYRNES. Because in addition to the duty there is increased expense in transporting the product?

Mr. PATTERSON. Yes, sir; undoubtedly.

Senator HAYDEN. Will this 20,000,000 pounds of beef that you will buy be a consolidated purchase for the Army and the Navy, or will part be for the Navy and part of the Army?

Mr. PATTERSON. Part will be for the Navy, and part for the Army. Senator HAYDEN. The reason I asked the question is that in connection with the demand for copper it appeared that there was one law for the Navy and for the Army.

Mr. PATTERSON. That is right.

Senator HAYDEN. And that there is an excise import duty of 4 cents a pound on copper; and that if copper is brought in for the use of the Army the excise tax must be paid, but that under some statute passed back in 1914 any material essential to the Navy may be brought in without paying the duty.

Mr. PATTERSON. We run into those little differences between the Army and the Navy, and between the statutes controlling them, 20 times a day.

Senator HAYDEN. Then it would not be true that it would be dutypaid wool or duty-paid canned beef if the purchases were made for the Navy and if the Navy wanted to exercise the advantage that it has over the Army under the law, because if the Navy can import without paying the tariff the Army cannot. Of course, undoubtedly the major portion of the purchases would be for the Army, because there are more men in the Army than in the Navy-more men to eat beef or to be clothed with wool.

Mr. PATTERSON. Oh, yes; four times as many.

I would just sum up our position by saying that the War Department would regret to see that proviso carried into the final act. Our regret would be based upon two grounds: We believe such a proviso would interfere with the national-defense program, first, as to speed and, second, as to cost.