Action of the Army and Navy, 1935,” as amended, be rescinded and the following substituted therefor:

"SECTION IV. ARMY AND NAVY MUNITIONS BOARD

"133. The authority for the Army and Navy Munitions Board is contained it the Joint Board's letter J. B. No. 346 (serial No. 181) of June 27, 1922, approved by the Secretary of War and the Secretary of the Navy June 29, 1922. The Board consists of the Under Secretary of War and the (Under or Assistant) Secretary of the Navy, and a civilian executive chairman appointed by them, The Executive Chairman shall be the chief executive of the Board and shall have two deputiesą one being a general officer of the Army and one being an officer of flag rank of the Navy, to be detailed by the War Department and the Navy Department, respe~ tively, for duty with the Board.

"An executive committee, consisting of the executive chairman and the twa deputy executive chairmen, shall be charged with carrying out the responsibilities of the Board and with general supervision of activities concerned therewith. Suc additional full-time personnel as are required to enable the executive committee properly to perform its duties shall be detailed by the War and Navy Departments for duty with the Board.

"A policy committee, consisting of the Commanding General, Army Air Forces the Commanding General, Army Service Forces, one general officer of the War Department General Staff designated by the Chief of Staff, a representative đị the Under Secretary of War, the Chief of the Office of Procurement and Material (Navy Department), the Deputy Chief of Naval Operations (Air), an officer d flag rank designated by the Chief of Naval Operations, and a representative of the (Under or Assistant) Secretary of the Navy, will consider and make recon=" mendations to the Board upon all matters of major policy and upon such other matters as may be referred to it by the executive chairman. The executive chairman shall act ex officio as chairman of the policy committee.

"134. The Army and Navy Munitions Board shall perform the duties which may be prescribed for it by statute, by the President, the Secretaries of the War and Navy Departments acting jointly, and in addition is designated as the agency responsible for the formulation of plans and policies for industrial mobilization in an emergency and for the coordination of such plans between the services; to coordinate between the War and Navy Departments with regard to industrial matters, including the procurement plans of the two services; and to supervise sncă joint bodies as are or may be created to consider the subjects falling within the scope of the Board's responsibilities. Maximum utilization will be made of experienced personnel and organizations within the War and Navy Departments by conducting the Board's activities through joint committees bringing together the views of appropriate personnel from the two Departments. Policies and direc tives issued by the board will be implemented through regular command channels."

2. The Army and Navy Munitions Board will report, when necessary, to the President through the Secretary of War and the Secretary of the Navy.

3. In view of the fact that military order, the White House, July 5, 1939, signed by the Commander in Chief, states that the Board shall hereafter exercise. its functions under his direction and supervision, it is recommended that approval of the Commander in Chief be obtained.

Approved:

Approved:

THE WHITE HOUSE, August 18, 1945.

ARTEMUS L. GATES.

Under Secretary of the Navy,
ROBERT P. PATTERSON,

Under Secretary of War.

JAMES FORRESTAL,

Secretary of the Navy. ROBERT P. PATTERSON, Acting Secretary of War.

HARRY TRUMAN, Commander in Chief.

The CHAIRMAN. Now, General, will that Board still be perpetuated, still in existence? What is the need for setting up a new board and putting stock piling under their jurisdiction?

General ROYALL. As I said a moment ago, there are other agencies of the Government that are legitimately interested in this stock piling.

The CHAIRMAN. But couldn't they cooperate with the Army and Navy Munitions Board just the same as they could with the other Board?

General ROYALL. Well, Mr. Chairman, the real difference is a question of authority. On the Army and Navy Munitions Board the Army and Navy being two of the group of three, they now have control. The other put control in a man designated by the President as Chairman.

The CHAIRMAN. Yes, I know.

Mr. DURHAM. General, at the present time you have no idea of the material to be transferred to this Authority in this item, do you?

General ROYALL. We cannot give you at this time-we have our goal set in certain things pretty definitely. We can give you in executive session, with a little preparation, a complete list of what is there now and what we hope to have. Those things should not be publicized.

The CHAIRMAN. The Chair will say this, that we will problably close these hearings in an hour, that is for today, and we can have an executive session at some future date before very long and hear the Navy and the Army on the question. I think it ought to be in executive session.

General,

Mr. SPARK MAN. I would like to ask General Royall another question. why is it desirable, if it is, to have a chairman to exercise complete control over this, and the Board simply advisory?

General ROYALL. Well, if you are going to take it out of the authority of the Army and Navy, there is some advantage in having a single person to make the decisions, and to have that person designated by the President, because this stock pile touches a good many parts of the national life, and you have very divergent views-the Army views are rather divergent, and when you get into questions of commerce, questions of import and export, of course, they have different points of view in different departments, and the thought was in drawing this bill, which we all finally agreed to, that the best solution of that was to put the auth rity in a single man. If you put it in a majority of the board, it will probably be less desirable from the standpoint of the Army and Navy, because you would have the civilian agencies predominating, and the Army and Navy would be a definite minority. I think we would probably fare better with a single individual to look over the whole picture than we would to have one department voting for its particular objectives and the Army and Navy being in the minority. Mr. SHORT. Mr. Chairman, I have one question. scarce materials deteriorate, do they not, in time? General ROYALL. Yes, sir.

Some of these critical and

Mr. SHORT. I just wanted to know what the program or policy is as to disposal of such material before it becomes useless or worthless?

General ROYALL. We have what we call a rotation policy of rotating the materials that deteriorate and getting new ones, selling the old ones. Any item that would deteriorate we try to sell before it deteriorates too much and replace it with new.

Mr. SHORT. So you have a rotation policy?

General ROYALL. Yes, sir; that is now in effect.

Mr. JOHNSON. Mr. Secretary, you went over this bill once before, but I don't remember your testimony specifically. Do you set aside some natural resources that you permit to remain where they are? To give you an illustration, we have this tideland oil controversy out where I live, as to who has the right to drill for oil beyond a low tide line. Now, assuming that the Supreme Court decided that case in favor of the Federal Government, under this bill would you have the right to experiment and prospect to see if there was oil, and then after you learned that, just set that area aside, not use it now but hold it till the time when the emergency requires us to use it? Could that be done under

this bill?

General ROYALL. That is not exactly what we call stock piling. We call stock piling when we have taken the material out of its natural state to the extent that it can be stored, and peroleum products are not stock-piled. It is not thought feasible to stock-pile petroleum products. What you have in mind, though, is a supplement to the stock-piling program, which has the same effect, and the Army and Navy are vitally interested in having reserves in the ground of some items which would supplement the stock pile. I don't want to go into petroleum specifically, because that is a question that has a great many arguments one way and the other, and I am not saying what the policy is on that, because I don't think it has been determined.

Mr. JOHNSON. Would that problem come under the scrutiny of the Board you have here in determining your stock piling?

General ROYALL. That was not contemplated, and I don't believe-I don't have the word definite enough in mind to know, but I don't believe the bill would embrace that. That was not the intent anyhow. Of course, petroleum as I say. was excluded. I have already told you that, and it is expressly excluded from the stock-piling bill as far as that is concerned, but if it were not expressly excluded it would not be included.

Mr. THOMASON. A situation such as Mr. Johnson mentioned is not covered by this bill?

General ROYALL. NO.

Mr. THOMASON. Although it does say "conservation and development of sources of these materials within the United States."

General ROYALL. The Secretary of the Interior has that authority, which I think is probably still in existence, but it was thought wise to clarify it so that this bill would not have the effect of inferentially denying that right. Mr. KILDAY. Wouldn't the Board have to consider that in determining what items, critical and strategic items, were in adequate supply in the ground of the United States?

General ROYALL. Yes; that would supplement the stock pile, and therefore would have to be considered in determining what it was necessary to stock pile.

Mr. THOMASON. I don't believe the House is so much interested in the California oil situation. That is the interest of the Senate. [Laughter.]

Mr. JOHNSON. Yes; I know that.

Mr. DURHAM. Suppose somebody found a copper mine or a zinc mine or tungsten mine on Interior Department land, wouldn't this Board have to go out and get that material?

General ROYALL. The Secretary of the Interior now has authority to do that, and this bill continues that authority as to all that type of thing. This does not interfere with that in any way.

Mr. SPARKMAN. It just lodges the power in the Chairman of the Board? General ROYALL. Not as to that. It continues the authority of the Interior Department expressly, and that was put in so there would not be any inference that that was changed.

Mr. ELSTON. General, I want to ask why petroleum and petroleum only was excepted from this bill?

General ROYALL. I don't know, sir. I will say this, the Army and Navy did not suggest that it be excepted, but we did recognize that petroleum, with our present knowledge of the product, is not capable of economical and successful storage over long periods of time, and therefore there was really no objection to excluding it as a practical matter.

Mr. ELSTON. Isn't that true of a number of other things?

General ROYALL. It is, sir.

Mr. ELSTON. Why shouldn't they all be excluded instead of singling out one item, all of the things in the country?

General ROYALL. I cannot answer that. I don't know.

Mr. ELSTON. Who could answer it?

General ROYALL. I don't know how that happened, exactly who insisted on that being in the bill. I think the Interior Department was in favor of that provision, probably because they knew that petroleum was the subject of a lot of controversy, and we didn't want it anyhow, and that may have been the best way to do it. That is merely a guess. We had no particular objection to it being put in there, because it didn't hurt the practical results.

Mr. ELSTON. Just one other question, General. One thing I am a little concerned about is whether or not the setting up of this board might cause some confusion, some overlapping of authority. Most of the assistance that is provided for by this bill is already given by the Federal Government to other departments, such as the Department of the Interior. Isn't that correct?

General ROYALL. Well, most of the practical results can be accomplished under the laws that now exist.

Mr. ELSTON. If that can be accomplished under existing law, then just what is the reason for the legislation?

General ROYALL. Under the existing law, as I stated previously in my testimony, the Army and Navy have control of what goes into the strategic stock pile. There are other departments that are legitimately interested in that, and as the results of various conferences, this bill was worked out and finally agreed

to by all the departments, setting up a single board to determine the various matters involved in stock piling, and to give that authority to the chairman to be appointed by the President.

Mr. ELSTON. Of course, we are all against setting up new agencies. We don't want to set them up unless we have to. Has the Army and Navy experienced any difficulty before in stock piling?

General ROYALL. Yes; they have experienced difficulty before the last war because of the paucity of appropriations.

Mr. ELSTON. That is true, but you got the legislation that you wanted, the authorization that you wanted, from this committee.

General ROYALL. That is right, sir.

Mr. ELSTON. And that simple authorization bill, it seems to me, would have been sufficient if you would have gotten the appropriation and the Army and Navy would have gone ahead and stock-piled and retained what they needed. The only difficulty that I was ever able to see was the fact that you did not get the appropriations, and you did not get the appropriations because they were not insisted upon.

General ROYALL. Well, sir, I don't know that fact. I didn't know that they were not insisted upon. I was not here, so I cannot answer that.

Mr. ELSTON. What I am driving at is this: Wouldn't a simple authorization bill, such as we had before, plus whatever appropriations are needed, be sufficient without setting up a new agency?

General ROYALL. Well, I stated in the hearing, I think before you came in, that we thought the principal objectives could be attained under existing law, with sufficient appropriations.

The CHAIRMAN. Thank you, Mr. Secretary. Now, gentlemen, we have two witnesses from the Navy here, but we do not have time to hear them this morning. We will have another session, probably executive, at a later date, and we will have to let these gentlemen come back. I am sorry we do not have time to hear them now. The House meets at 11 this morning, and the committee will now go into executive session. We will notify you gentlemen when we can hear you later.

EXHIBIT 29

[H. Rept. No. 1869, 79th Cong., 2d sess.]

ACQUISITION OF STOCKS OF STRATEGIC AND CRITICAL MATERIALS FOR NATIONAL DEFENSE PURPOSES

APRIL 4, 1946.-Committed to the Committee of the Whole House on the State of the Union and ordered to be printed

Mr. MAY, from the Committee on Military Affairs, submitted the following

REPORT

[To accoompany S. 752]

The Committee on Military Affairs, to whom was referred the bill (S. 752) to amend the act of June 7, 1939 (53 Stat. 811), as amended, relating to the acquisition of stocks of strategic and critical materials for national defense purposes, having considered the same, submit the following report thereon, with the recommendation that it do pass, with the following amendment:

Beginning with line 3, page 1, of the bill, strike out the remainder of the bill and substitute in lieu thereof the following:

"That the Act of June 7, 1939 (53 Stat. 811), as amended, is hereby amended to read as follows:

""That the natural resources of the United States in certain strategic and critical materials being deficient or insufficiently developed to supply the industrial, military, and naval needs of the country for common defense, it is the policy of the Congress and the purpose and intent of this Act to provide for the acquisition and retention of stocks of these materials and to encourage the conservation and development of sources of these materials within the United States, and thereby decrease and prevent wherever possible a dangerous and costly dependence of the United States upon foreign nations for supplies of these materials in times of national emergency.

"'SEC. 2. (a) To effectuate the policy set forth in section 1 hereof the Secretary of War, the Secretary of the Navy, and the Secretary of the Interior, acting jointly through the agency of the Army and Navy Munitions Board, are hereby authorized and directed to determine, from time to time, which materials are strategic and critical under the provisions of this Act and to determine, from time to time, the quality and quantities of such materials which shall be stockpiled under the provisions of this Act. In determining the materials which are strategic and critical and the qualiity and quantities of same to be acquired the Secretaries of State, Treasury, and Commerce shall each designate representatives to cooperate with the Secretary of War, the Secretary of the Navy, and the Secretary of the Interior in carrying out the provisions of this Act.

"(b) To the fullest extent practicable the Secretary of War, the Secretary of the Navy, and the Secretary of the Interior, acting jointly, shall appoint industry advisory committees selected from the industries concerned with the materials. to be stock piled. It shall be the general function of the industry advisory com mittees to advise with the Secretary of War, the Secretary of the Navy, and the Secretary of the Interior and with any agencies through which they may exercise any of their functions under this Act with respect to the purchase, sale, care, and handling of such materials. Members of the industry advisory committees shall receive a per diem allowance of not to exceed $10 for each day spent at conferences held upon the call of the Secretary of War, the Secretary of the Navy, and the Secretary of the Interior, plus necessary traveling and other expenses while so engaged.

'SEC. 3. The Secretary of War and the Secretary of the Navy shall direct the Secretary of the Treasury, through the medium of the Procurement Division of: his Department, to

“(a) make purchases of strategic and critical materials pursuant to the determinations as provided in section 2 hereof which purchases (1) shall. be made, so far as is practicable, from supplies of materials in excess of the current industrial demand and (2) shall be made in accordance with title III. of the Act of March 3, 1933 (47 Stat. 1520), but a reasonable time (not to exceed one year) shall be allowed for production and delivery from domestic sources and in the case of any such material available in the United States but which has not been developed commercially, the Secretary of War and the Secretary of the Navy may, if they find that the production of such material is economically feasible, direct the purchase of such material without requiring the vendor to give bond;

"(b) provide for the storage, security, and maintenance of strategic and critical materials for stock-piling purposes on military and naval reservations or other locations, approved by the Secretary of War and the Secretary of the Navy;

"(c) provide through normal commercial channels for the refining or proeessing of any materials acquired or transferred under this Act when the Secretary of War and the Secretary of the Navy deem such action necessary to convert such materials into a form best suitable for stock piling, and such materials may be refined, processed, or otherwise beneficiated either before or after their transfer from the owning agency;

"(d) provide for the rotation of any strategic and critical materials constituting a part of the stock pile where necessary to prevent deterioration by replacement of acquired stocks with equivalent quantities of substantially the same material with the approval of the Secretary of War and the Secretary of the Navy;

"(e) dispose of any materials held pursuant to this Act which are no longer needed because of any revised determination made pursuant to section 2 of this Act, as hereinafter provided;

"No such disposition shall be made until six months after publication in the Federal Register and transmission of a notice of the proposed disposition to the Congress and to the Military Affairs Committee of each House thereof. Such notice shall state the reasons for such revised determination, the amounts of the materials proposed to be released, the plan of disposition proposed to be followed, and the date upon which the material is to become available for sale or transfer. The plan and date of disposition shall be fixed with due regard to the protection of the United States against avoidable loss on the sale or transfer of the material to be released and the protection of producers, processors, and consumers against avoidable disruption of their usual mar kets: Provided, That no material constituting a part of the stock piles may be disposed of without the express approval of the Congress except where the