(Discussion off the record.)

Mr. THOMAS. How much does industry have on hand?

Mr. ROLLE. That I do not know, sir; but I know they do not have anything you could call a stockpile.

Mr. THOMAS. How long would it take you to get these seven plants into operation to satisfy wartime needs?

Mr. WILLIAMS. Five of those plants are in full operation now. So, the only additional capacity we would have would be the Torrance plant, with a two-line production process. In addition, we are going to distribute the balance of the equipment at the Riverbank plant to such areas as we can find power to run them. It takes about 35,000 kilowatts of power to run one pot line. We have sold one rectifier and pot line capable of 36,000,000 pounds.

DISPOSAL OF PLANTS PRODUCING CRITICAL MATERIALS

Mr. THOMAS. Have you people given any though to halting any sales of surplus property and waiting and taking a look-see and checkup before disposing of it?

Mr. LARSON. Yes; all surplus-property disposals are being carefully screened for defense needs before disposals are made.

Mr. THOMAS. What do you have left to sell in the way of plants now? You are selling one of these aluminum plants now, are you not? Mr. LARSON. We have left for sale the equipment at the Riverbank plant, as Mr. Williams stated, for sale to private industry to be located at points where power is available. That is the only aluminum equipment we have for sale.

Mr. THOMAS. And the terms of the sale are such that they will have to put this into operation?

Mr. LARSON. They will have to put this into operation with 50 percent for the account of the Government.

Mr. THOMAS. Well, the total production of the plant will be for aluminum, regardless of whether it is for the account of the Government or for the civilian population?

Mr. LARSON. Yes, sir; that is correct.

Mr. THOMAS. It is one and the same as the matter stands now.

Mr. HOWARD. Yes, sir; that is correct, and in the sale of this plant the main factor in the sale will be how soon we can get this plant into production.

Mr. THOMAS. How many other plants do you have outside of the industrial reserve, what is the nature of the plants, and what were they built for? Can you bring us up to date on that?

Mr. LARSON. You mean generally?

Mr. THOMAS. In your surplus category.

Mr. LARSON. General production plants?

Mr. THOMAS. Yes.

Mr. LARSON. Outside of the industrial reserve we have left only about 12 production sites and plants.

Mr. THOMAS. What do they manufacture, and so forth?

Mr. LARSON. Well, they are mostly generally manufacturing plants. There are no wartime special purpose plants left, only inventories that are not in the national industrial reserve. They are mostly small operations. When I say plant I mean site of an operation. Mr. THOMAS. Detail those 12 that you have.

Mr. LARSON. I am sorry, I cannot give them off from memory. Mr. THOMAS. Mr. Williams over there ought to have that information at his fingertips.

Mr. LARSON. One is the Rockwood, Maine, plant. Another one just in process of being sold now is an alcohol plant which is partly cannibalized. It will require about $1,000,000 to rehabilitate it, at Kansas City.

Mr. THOMAS. Why sell it at this particular time?

Mr. LARSON. Well, if we sell it it will go into production for industrial alcohol, and the private operators will invest $1,000,000 in the plant to rehabilitate it.

Mr. THOMAS. It will not be cannibalized now?

Mr. LARSON. No; it will not be cannibalized any further than it is now. Of course, it is a very technical production, industrial alcohol from grain, which is a high cost operation, and it is only operable economically during periods of emergency.

We have a small manufacturing plant down at Louisville, Ky., the equipment of which has been put into industrial reserve.

We are negotiating for the disposal of those buildings. The market obviously is high right now for most of these 12 properties, and most of them are under negotiation, but there is not a single one of the 12 that you could classify as military production or a plant that would produce for military production.

Mr. THOMAS. Well, if that be true, why did the Government ever build them?

Mr. LARSON. The surplus-property program acquired properties that were not necessarily built for the war. Some of them have been in the hands of the Government for a long time.

Mr. THOMAS. Were these properties used in World War II?

Mr. LARSON. That I cannot say. Some of them might have been. Mr. WILLIAMS. I think most of them were. They have all been screened time and again by the Munitions Board as related to their present and future requirements.

Mr. THOMAS. Are you satisfied, Mr. Howard, that you are not turning loose anything that you should keep your hands on for another 6 months or so?

Mr. HOWARD. Yes, sir.

Mr. THOMAS. Now is no time to make any mistakes along that line. Mr. HOWARD. Yes, sir; I agree with you.

Mr. THOMAS. It is far better to keep your hands on them for another 6 months and take a chance of losing an opportunity to sell them rather than to get rid of them and then later find you need them.

Mr. HOWARD. Whatever action we take with reference to them will be with a view to producing of an essential material we need, with the control of that material by us.

Mr. LARSON. There is the closest coordination as to these plants in the industrial reserve, between us and the Munitions Board, and checks are made before any disposal is effected. I do not think anybody is going to be embarrassed by the disposal of any plant that we now have in inventory that is not already in the industrial reserve.

BREAKDOWN OF REQUEST OF MUNITIONS BOARD

Mr. THOMAS. Mr. Reporter, at this point will you put the bottom half of page 4 in the record, which shows materials to be purchased, $387,470,096; handling, security, storage, and maintenance, $7,698,413; reactivation of facilities, $6,000,000; and procurement and administrative expenses, $831,491.

(The matter referred to is as follows:)

The estimate referred to in the request of the Munitions Board is summed up as follows:

I. Purchases scheduled by Munitions Board:

A. Materials to be purchased__--

B. Handling, security, storage, and maintenance_

C. Reactivation of facilities____

D. Procurement and administrative expenses-

Subtotal__.

II. Provision for Reserve for changing conditions---.

$387,470, 096 7,698, 413 6, 000, 000 831, 491

402, 000, 000 198,000,000

Total estimate___.

600, 000, 000

PROCUREMENT AND ADMINISTRATIVE EXPENSE

Mr. THOMAS. We will turn over to the last page where you have a breakdown of that item of $831,491. Mr. Reporter, will you put the bottom half of page 7 in the record at this point?

(The matter referred to is as follows:)

PROCUREMENT AND ADMINISTRATIVE EXPENSE

This program is viewed as an expansion of the program which will be financed from funds which will be provided in the Independent Offices Appropriation Act of 1951. As provision is already made in that item for all of the top staff of this program, provision is made in this estimate only for the lowergrade employees needed to perform the additional workload of this supplemental program at average rates which include "other objects," as follows:

You want 182 positions for procurement and direct operations at a cost of $650,871. Then you want on staff operations 45 positions at a cost of $180,620. Where are these staff operations, in the Munitions Board or in your organization?

Mr. LARSON. No, they are in General Services, and they are broken down as indicated in the justification.

Mr. THOMAS. Where are these 182 positions which are requested, are they in your organization?

Mr. LARSON. Yes, in General Services. One hundred of those positions, you will note are reserve labor to take over warehouse operations in case we cannot contract for such an operation.

Mr. THOMAS. What are these 45 staff positions?

Mr. LARSON. Well, to handle the accounting which is necessary. Thirty of them are for management functions which are necessary, such as statistical work.

Mr. THOMAS. Now is no time for statistics. Now is no time for statistics; we want merchandise.

Mr. LARSON. Well, you have to keep operating statistics to keep control of your operation and to know where you are, and in order to inform ourselves and the Congress as to the status of the program at any time and the progress of this program.

That represents a little les sthan 20 percent increase over our present administrative staff. We are increasing this program by 100 percent, and increasing the administrative cost by 20 percent, or slightly less.

Mr. THOMAS. We have one observation to make to you, Mr. Howard: we certainly want to commend you and your organization on attempting to breathe a little life into this program. We understand that not only your organization, but Mr. Larson's organization, is up against a pretty hard problem, but we certainly hope that you give further consideration to courting the State Department. They might be able to help you in this program. Failing that, it might be well to just give consideration to putting some money into the productive facilities of some of these foreign countries, because these materials are essential to our own economic lifeblood if we are going to support a fighting force.

So, in the final analysis, dollars do not count for too much. What I am trying to say is, Get the material. How you get it is up to you. Mr. HOWARD. Thank you, sir.

ATTITUDE OF STATE DEPARTMENT TOWARD PROCUREMENT OF STRATEGIC AND CRITICAL MATERIALS

Mr. ANDREWS. Does this so-called point 4 program fit into this program?

Mr. HOWARD. It should, in our judgment, and we have presented that argument to the State Department, but they have not gone along with our views as to what should be done. They have practically rejected the inclusion of any reference to getting materials from the countries in the point 4 program.

Mr. ANDREWS. What is the objection? Do they not realize that the Government needs this critical material?

Mr. HOWARD. It is a little hard to understand, and, frankly, in my conferences with them I said I just did not understand it, but their position is that they are going out to do something for these people, and if they say we want something in return for it that destroys the atmosphere.

Mr. PHILLIPS. Whose attitude is that?

Mr. ANDREWS. The State Department's.

Do I understand, from what I have heard here this morning, that the State Department has hindered your efforts to stockpile strategic materials?

Mr. HOWARD. I do not say that they have hindered them.

Mr. ANDREWS. But they have not helped you?

Mr. HOWARD. That is correct.

Mr. ANDREWS. They have had ideas about the stockpiling of strategic and critical material that did not coincide with yours?

Mr. HOWARD. I do not think they had any ideas about stockpiling at all.

Mr. THOMAS. Period.

Mr. HOWARD. They have gone ahead to accomplish what they felt was their mission and their objective. They have not modified their views to comply with our views as to the need for assistance on stockpiling.

Mr. ANDREWS. I did not know that they reached over into the field of stockpiling or had anything to do with it.

Mr. HOWARD. They have not had anything to do with it, but they do have a great deal to do with the industries of each of these foreign countries, and they have a knowledge of the commercial transactions that take place in these countries.

Mr. CASE. Mr. Larson, I notice that the table is headed "Statement of purchases to be made from supplemental appropriation for strategic and critical materials, fiscal year 1951." Do you have any program of acquisition from other funds that are not covered by this table?

Mr. LARSON. Yes; you will recall that at the time we were before this committee on our regular appropriation we submitted a similar table to this which covered the program for 1951, as it was contemplated in that request.

Mr. CASE. That included some items that do not appear on this table? Mr. LARSON. Yes; that is right.

Mr. CASE. What is your acquisition position with respect to items not appearing on this table?

Mr. LARSON. I would have to refer that to Mr. Walsh.

Mr. WALSH. There are some items in here which would come into the stockpile through ECA with counterpart money, but anything that we would buy either from regular 1951 appropriations or the supplemental is included in this list.

Mr. CASE. That is, what we have here is directed to the critical materials?

Mr. LARSON. That is correct as of this time.

Mr. CASE. Since this referred to the supplemental money I was wondering if you had some money that you were procuring under about which this table does not give us any information.

Mr. LARSON. You mean, so far as items are concerned, or so far as the program for expenditure is concerned?

Mr. CASE. So far as items are concerned.

Mr. LARSON. I think this table, plus the table for the 1951 program would give the complete picture.

Mr. CASE. Perhaps I do not make myself clear. Let me illustrate it. Let us say that iron ore was a critical item, and I am not suggesting that it is, but supposing it were. If you had some money in your other program, some money to buy that, I would like to know