General RUGGLES. It isn't practical, I should say, to make a set of fixtures and jigs and dies

The CHAIRMAN. And the specifications have to be made, do they not?

General RUGGLES. Well, it is not practical to make a set of these accessory tools that will fit any establishment. We are different from the Air Service. There is now occurring a large commercial production of airplanes. There is practically no production of munitions outside of airplanes. There are no concerns that are anywhere near adapted to the manufacture of munitions except two or three on a very small scale, and we have to take automobile firms to make guns and shells. Mr. Osbourne, who was here the other day, is a multigraph manufacturer. We have to rely upon firms of that kind to make fuzes. We can't go to any concern whose plant is laid out for the manufacture of munitions and get munitions from them. We don't have that industry in this country. We have to take all sorts of different kinds of shops and adapt them in the best way we can to the manufacture of munitions, and we can not get up a standard set of tools that will fit any shop and then advertise for bids and expect a shop to take that set of tools and work them to advantage with their particular class of machinery. So I think that first part is not practical.

With respect to the second part, it calls for bids, and gives the order to the lowest bidder. The lowest bidder may not be in a position, he may not have the plant of the right character to make munitions in the quantity that they will be required in the event of war. If there were no general and continuing amount of munitions being ordered some small man would fit up a plant that would be especially adapted for the manufacture of these munitions and he would be constantly and always the lowest bidder.

Mr. MCSWAIN. General, that doesn't say the lowest bidder. It says

* * ** the lowest bidder who, in the judgment of the Secretary, can best perform the contract, considering quality, price, and performance of materials. That leaves it to his discretion. All he has to do is to report the reasons why he chooses that particular contractor, and that ends it. That is the same proposition that they have regarding the act right

now.

General RUGGLES. I am afraid the controller would enforce that as he does on others, the lowest, responsible bidder. That means really the lowest bidder with the controller. Very often he doesn't have to be responsible. At any rate, it would be any man that can do the work and turn out the goods in a satisfactory condition and at the low bid. Whether he has any relation to the national defense I do not think would be considered by the controller.

The CHAIRMAN. Then wouldn't there be this situation. The factories and concerns that are most desirable, that in the judgment of the Government would be the ones that would be able to expand rapidly and supply the Government in case of war, would not bid on this? They don't want these orders in peace times. General RUGGLES. That is absolutely the case. The CHAIRMAN. That is the point that I see.

Those we want to reach wouldn't bid on them in peace times, because they don't make any money on them.

General RUGGLES. That is the whole thing. The people upon whom we must rely will not bid. It is not to their interest to take these orders.

The CHAIRMAN. Certainly it would not pay them to do it. We wouldn't gain the advantage we are seeking to gain under this legislation.

General RUGGLES. We have given this a great deal of study, a great deal of thought. We have given a great deal of thought to picking out, with the help of industry, the manufacturers who would best make these munitions for the United States in the event of war, and they are not concerns that would take these little orders. They are successful concerns with big organizations of engineers and big establishments capable of swinging a big job but who have their hands full in times of peace with their commercial product, and any educational order or any order of that kind is a nuisance and an expense to them, and they wouldn't take it except on a purely patriotic basis.

The CHAIRMAN. A patriotic basis, and that in time of emergency it would be economical. They would save money because they would not be forced to go into it so quickly.

General RUGGLES. It would, of course, be economical, but I think there is a great deal more than that in it. A great many of these people think that it is their duty to do so-to put their tremendous organization at the call of the Government.

Mr. MCSWAIN. If we would enact this amendment of mine into law, that wouldn't kill their patriotism, would it? Let them come along and function under this, at a loss even, as they are going to function under this wide-open proposition under a loss.

General RUGGLES. The point is there would be some little fly-bynight concern that would bid.

Mr. WAINWRIGHT. It wouldn't be educating the people you want to educate?

General RUGGLES. Absolutely not.

Mr. RANSLEY. And they couldn't expand rapidly in time of war in order to produce the necessary amount of munitions, because they haven't the plant.

General RUGGLES. This proposition has two sides to it. First, the acquiring by these manufacturers who are going to use them of a set of these jigs, dies, and fixtures; second, the training of the actual people who are going to do the work. We train our soldiers that are hoped to do the work, even though they may go in three years. The officers keep their training. These are the people who are the soldiers of industry, a part of our national defense, the best people for the purpose in the country. They are big people, busily engaged in commercial work. They can't bid against some little fellow who would do the thing for profit in peace times. If we want to have protection on the industrial side, as we have on the main-power side, it is just as important to train our industrial soldiers, if you will call them that, as it is to train our military soldiers.

Mr. MCSWAIN. Well, you will keep the world busy making munitions to dump into the Atlantic Ocean, or resell for 10 per cent of its value, as we talked about this morning, if we keep them all

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equipped and trained to make munitions. If we keep after them constantly to keep the machinery and the help all trained.

Mr. RANSLEY. And you would need it, too, in time of war.

The CHAIRMAN. You would charge that up to insurance in the case of war.

Mrs. KAHN. That would be the cheapest in the long run.

Mr. WAINWRIGHT. I wonder if the general wouldn't take one or two practical appliances or articles of ordnance we would have to have, and tell us just how we would proceed under this bill, and what the effect would be if we had to proceed under the amendment as suggested by the gentleman from South Carolina? I mean as an illustration.

Mr. MCSWAIN. I think that the recuperator was a very extreme illustration.

Mr. WAINWRIGHT. I had that in mind. I thought he might take something else.

General RUGGLES. I was thinking of the new Infantry weapons, the 75-millimeter mortar, Infantry mortar, and the 37-millimeter Infantry gun. We had in the appropriation authorizing the purchase of a certain number of these weapons an item covering these jigs, dies, and fixtures. We had certain concerns we had selected to make these in the event of war. We did not have the educational order bill, although it had been submitted before we got the appropriation for these carriages. Of course, we were handicapped somewhat by the law, the national defense act requiring us to do this work in the arsenals if they could do it there economically. We were very anxious to start this educational program, and we went to the concerns that were interested and we said, "Now, we would like you to bid on these carriages and the facilities, because we want you to have the experience, and we want you to have the sort of facilities that are adapted to your shops." And they said, "Well, all right; but who is going to bid against us? Are the arsenals?" Are the arsenals?" And we said. "Yes. Under the national defense act we must ask the arsenals to bid." Their reply was, "There is no use for us to go to the expense, which is a considerable expense, of figuring out all the facilities we would need for this manufacture and the cost of making them and then submit a bid, when we know that that bid is bound to be higher than the bid submitted by your arsenals. It is just asking us to throw away our money, and it will not accomplish what you ask for. So we must decline to bid. We will take an educational order on the cost basis, but it is not right to ask us to spend a considerable amount of money on engineering in figuring out this cost when we know it will do no good."

That was the experience we had with the Infantry weapons, the 75-millimeter mortar, when the law included the facilities in the price. We were granted authority to buy the carriages and buy the facilities necessary.

Now, if we had advertised for these carriages, with their facilities, some little irresponsible concern would have bid, and would have gotten the order if they had underbid the arsenal. I rather doubt, with their experience, that they could underbid the arsenal. There was no object for us to go to a concern that was not on our program, that was not the kind of a concern that was capable of manufacturing these carriages in the event of war.

Mr. WAINWRIGHT. In great quantities.

General RUGGLES. In great quantities. And maybe in the event of war they would not then be in existence-some temporary concern. So it was not feasible for us to advertise for those things. We are going to make them in the arsenal. Then the question came up, how can we be sure that the facilities which we will make that will suit our arsenals will suit the concerns that would manufacture these materials in the event of war? We are going to get around that by sending our engineers to the plants that are going to make these materials in the event of war, and ask them to give up considerable of their money-that is, their time, which is money--and they, with our engineers, will design a set of facilities, dies, jigs, and fixtures, that will fit their plants, and then we will make these facilities in the arsenal. It requires us, in the first place, to make the fixtures, which we do not object to on that account, but it doesn't give those firms the experience that they would have if they made the material. Now, frequently, when you design a set of fixtures, after a good deal of engineering study, you find, in a study of the actual work, that they must be materially changed, so that any set of fixtures that we design from simply a study of the plant would likely have to be changed considerably before they could be best adapted to that plant. Does that answer the question?

The CHAIRMAN. Now, General, if this bill would become a law, does the department, expect these concerns that you would select to take up these educational orders to train their men and do it at cost?

General RUGGLES. Most of the firms have said that they will do it at actual cost.

Mr. MCSWAIN. Who is to be the judge of what is cost? Who will decide that question?

The CHAIRMAN. I think there are ways of checking up pretty close on that.

General RUGGLES. We could analyze their estimates. If they do it at cost, they will have to make a report of their costs.

The CHAIRMAN. Every big factory keeps a cost account of their production that will be accessible.

General RUGGLES. Absolutely. Or we can send accountants in there. We can have an inspector there. I would like to say that there is no intention, under this bill, speaking for the Secretary, to buy anything that we can get competition for. There would be no necessity of buying clothing or shoes, or putting up a building, or building a road or a railroad under this. The intention is to use this to educate the manufacturers in the kind of articles that they do not make, so as to give them experience and save time in the event of war. Furthermore, under the bill, these orders could only be placed by the special authority of the Secretary of War, and he has to report to Congress what orders he has placed, under this authority, so there is a continuing check on the Secretary, and should it develop that he was abusing the privilege, which is not likely, Congress could check it, because a report is made to Congress.

Mr. WAINWRIGHT. Even before the report is made to Congress, when he came with his appropriation for a particular year, it would pass through the Budget and would have to pass through the Appropriations Committee, too.

General RUGGLES. Of course, the Budget might not show to what particular manufacturer he would decide to give a contract. He would simply get the authority for the material and for the facilities. Mr. MCSWAIN. You would let these contracts without any advertisement and without any competitive bidding, would you, these educational orders?

General RUGGLES. Where there were several manufacturers who would make the same article in the event of war, at first we would get competitive bids and undoubtedly give the order to the lowest bidder. So long as it served the purpose we have in mind, to give it to a man who is in the program, who has agreed to make a definite amount of this material in the event of war. But, frankly, the object is, as time goes on, to give an order to each of these manufacturers, so far as possible, that are in this program to train them for quick manufacture in the event of war.

Mr. MCSWAIN. Now, General, what is the purpose of these words in the bill on lines 7 and 8:

And in placing these educational orders the competitive bids which, in his opinion, best secure these results may be accepted.

If no competition is to be invited by public advertisement and no competition entered into here, why was that language inserted there? What is the purpose of that language in the bill?

General RUGGLES. I think it was the intention to ask bids from those concerns who were in what we might call the war program. Mrs. KAHN. Hoping that the opportunity would arise to give each one an order in its turn, so that their personnel would be trained in that way?

General RUGGLES. Absolutely. Maybe they would see the point and get down lower, so that each one, it being a patriotic proposition, would submit bids low enought to get it.

Mrs. KAHN. The probabilities are that no one would really seek an order. They would have to be urged to take it.

General RUGGLES. There isn't any of them that want this thing, except from a patriotic point of view.

The CHAIRMAN. .General, I was going to suggest this: Will you take Mr. McSwain's amendment as he gave it to you there, and study it over, and can you have a reply before the committee in writing on Thursday morning at 10 o'clock, the next meeting of the committee? General RUGGLES. Shall I bring it down here on Thursday morning?

The CHAIRMAN. Yes.

General RUGGLES. You would like me to be with it?

The CHAIRMAN. I think that would be best. You study it over, and give us a statement in writing.

General RUGGLES. Yes, sir.

Mr. MCSWAIN. I respectfully invite constructive criticism as well as destructive criticism of this amendment. No doubt the General can help us prepare an amendment to his own bill and to my amendment that will be satisfactory to all. Try to see it in our light as well as a destructive light.

(Whereupon, at 11.45 o'clock a. meet on the call of the chairman.)

m., the committee adjourned to