Stockpiling is a thing in which we are all intensely interested. I have a feeling out of what I have heard and out of what you have just said, Mr. Chairman, that you have the feeling that we are trying to keep secret or confidential matters which should not be kept secret and confidential.

Personally, I do not believe that that is the case. We are in a very delicate position in the world today. We are opposed to a philosophy which very few of us have understood. We do not know exactly how to deal with it. We do not know what the future is going to bring, even in a very short time. It would seem to me rather ridiculous or silly to deliberately place this information in the hands of a potential enemy of the United States.

I may say that due to a number of reasons-and I would like to elaborate on that just a little later-we are in a bad condition as far as our stockpiling operations are concerned. To deliberately place in the hands of a potential enemy country the actual figures in regard to our shortcomings, the potential bottlenecks of the forthcoming emergency, would certainly be wrong. I believe you gentlemen, if you think that through along that particular line, would fully agree with me.

Mr. LEMKE. I may say I am sure the committee agrees with you fully on that. The only question is how to remedy the situation if there is one that ought to be remedied, and from your remarks I understand there is one. We have that information and the public has it. It has been published in newspapers, and so forth, for several years. That is the thing we want to get down to brass tacks on to see how to remedy a situation that ought to be corrected.

Admiral PAINE. Mr. Chairman, I would like to say I am here this morning prepared to give you any bit of information that I can possibly give you in connection with out operations. It is my belief here and it is the belief of the Board that you should have it, but if the information is given I would suggest that it be given in executive session where we can talk man to man and understand thoroughly and exactly what we are trying to do, rather than have any possible chance that the information be published or publicized so it might be of value to a foreign power.

Mr. LEMKE. That would be perfectly agreeable.

Admiral PAINE. Under those circumstances, I will answer the questions absolutely freely and I have all of the data here with which I

can answer them.

Mr. LEMKE. I may state further that the reference about top secrets applies to no particular organization, but we have been denied information that could not possibly have any bearing on any foreign complications and that the American people were entitled to know and do not have. I am not referring to any particular department. I will say most of the departments have been very cooperative with us.

Admiral PAINE. We desire to be just as cooperative. We have nothing to hide in this matter at all.

Our difficulty is that we have 67 of these strategic and critical materials on our group A list, the ones which we are desperately in

need of having in the stock pile. It is certainly possible, as Mr. Engle demonstrated in some hearings that you held a month or so ago, to take an item like manganese and make a pretty good stab at what we might possibly have in the stock pile.

The argument from that point was that we should release all of the figures, but while it was demonstrated to be possible in the case of manganese, it is definitely not possible in most of the other items. Manganese happens to be something of which the matter of the receipt of a single ton in this country is a matter of log and record. It is possible to develop figures that pretty closely represent what might have gone into the stock pile by deduction. We feel very definitely that where we are short in any of these strategic and critical materials that that information should not deliberately be placed in the hands of any other nation because we know that they can use methods of economic warfare to make it difficult for us to get those materials in the future, if they know what to shoot at.

STOCK-PILE OPERATIONS CONDUCTED FROM MILITARY POINT OF VIEW; MUNITIONS BOARD TO COMPETE WITH CIVILIAN NEEDS FOR SCARCE MINERALS AND METALS

Mr. LEMKE. I may also state that as I understand it, Public Law 520, provides you should not buy stock-pile materials so as to interfere with industry.

Admiral PAINE. May I say that we have had two obstacles which have hazarded our development of the stock pile. The first is that while as military men we take a military point of view in regard to stockpiling, we felt it was to the military interest just as much as it was to the country-wide interest to see that civilian conversion was facilitated in every way possible. We have deliberately stayed out of the market where we could have bought in order for industry to get what it needed to reconvert. We believe, however, that the timeliness of the wording which warned us to use restraint in Public 520, bearing in mind that Public 520 was passed just after World War II, has now passed and that wording should no longer govern our operations.

In other words, industry has had 212 years to convert. Now, somewhere along in there comes a time when the need of the National Government, the needs of the maintenance of our national security, must transcend the needs of the conversion of industry. We believe that possibly at this time we are at that particular point. We live with a very considerable number of industry advisory committees. We ask gentlemen to come into our Board and sit with us continually from all parts of the country and representing all segments of industry, and we asked them what their feeling is in regard to this. Generally speaking, they will go along with the idea that we should now be in the market picking up increments of such of the strategic and critical materials as we need for the stock pile. We are up here in the Congress this year for a fairly considerable amount of money and I hope that there will be no feeling in this committee which will keep us from getting that money because we need it desperately.

CONGRESS BLAMED FOR GRANTING ONLY $275,000,000 OF $650,000,000 REQUESTED FOR STOCKPILING DURING FIRST 2 YEARS OPERATION

2

I may say that in the 2 years that Public 520 has been in operation that the Congress has only been willing to give us $275,000,000 against our request of something of the order of 650 or 660 million dollars. I can understand perfectly why that was done. It was done in the effort to hold down the national budget and generally speaking we went along with the principle, but now we are in a position where we have got to take a different point of view if we are to carry out the mandate of Public Law 520. You gentlemen in Congress and we in the Board have to take that different point of view and attempt to spend a considerable amount of money and build up the stock pile so we can have within our borders all of these strategic and critical materials which we so seriously lack.

$660,000,000 REQUESTED FOR STOCK-PILE PROCUREMENT DURING FISCAL YEAR 1949 2

I would like to have you feel that we have been rather poor in conducting our operations. $275,000,000 is a lot of money, but for the purposes that we have in mind it has been far from sufficient and we have got to have more if we are going to do the thing that the bill was designed to accomplish and we are therefore in at the present time for $285,000,000 and just recently a supplemental estimate of $375,000,000 for long-term contracts.

FUNDS REQUESTED FOR LONG-TERM CONTRACTS SAID TO BE INTENDED PRIMARILY FOR DOMESTIC AND WESTERN HEMISPHERE PROCUREMENT 3

The long-term contracts are a device by which I think a great number of the things that you gentlemen have in mind can be accomplished. Up to this time we have been so poor that we have been attempting to cross the board on the 67 critical and strategic items in the effort to build all of them up at a slow and steady rate, so that one would not violently pass another one, and we would have a reasonably balanced. stock pile even if it was small. We have not been able to achieve that

[SUBCOMMITTEE NOTE.-The record (exhibit 4, pp. 996 and 997, and exhibit 5. pp. 1005 and 1006) shows that the Munitions Board, through the Bureau of Federal Supply, presented requests to the Bureau of the Budget for $855,000,000 to cover operations during the first 2 years, including a supplemental appropriation request of $225.000.000 submitted in August 1947. The President reduced this amount by $405.000.000 and submitted requests to Congress for only $450,000,000. Congress reduced the requests by $175,000,000 and appropriated and granted contract authorization for $275.000,000. It is significant that whereas Congress reduced the first year's request by $150,000,000 and appropriated $100,000,000, exhibit 4 shows that $33,395.888.86 of this amount remained unexpended and Unobligated at the end of the first year of operations. Also significant is the statement by Admiral Paine (see exhibit 71, p. 1521) before the House Appropriations Committee on May 15, 1948, only 12 days after his testimony before this subcommittee, that "Until recently it could not be said that we had yet run short of funds to buy what was available, or what We chose to take." Evidence in the records cited (as well as in hearings of the subcommittee and other exhibits in the appendix) indicates that the blame for lack of greater progress in acquiring stock-pile materials and additional funds rests squarely on the shoulders of both the Munitions Board, as a result of its procurement policies, and the Administration.]

SUBCOMMITTEE NOTE.-In his testimony (exhibit 71, pp. 1518 to 1525) before the House Appropriations Committee on May 15, 1948, Admiral Paine does not appear to have stated or implied that the $375,000,000 requested for long-term contract authorization would be used primarily for purchases from either domestic or Western Hemisphere sources. It is found that Admiral Paine testified (see p. 1522) that "It is intended to utilize this contract authorization for relatively long-term contracts; that is, 3 to 5 years or more, which will result in increasing world production of those materials most urgently needed in the stock pile but currently in tight supply."

objective, but we have been able to buy in areas outside of those which I believe are most particularly of interest to you this morning. And so far we have been able to spend the entire $275,000,000 without in any way hazarding industry at all up to this time.

Now, we are talking about going into the market and buying increments against all of the 67 items and doing it on a different basis than we have ever employed before because our basis up to this time has been to take spot purchases where material was available and not immediately absorbed by industry. Now, we are talking about going into the market and establishing the means by which a person knows that he is guaranteed a certain output if he will create additional sources of production.

Mr. MURDOCK. Mr. Chairman, may I ask the admiral a question there?

Mr. LEMKE. Certainly.

Mr. MURDOCK. In regard to the plan for the long-term contracts, Admiral, are you free to state whether those will be with foreign or domestic producers?

Admiral PAINE. The wording that was employed in sending the request for that money to Congress was that it would be very largely either domestic or in this hemisphere. We are not bound rigidly not to go abroad, but our intention is to stay within the borders of this coun try, or in this hemisphere where we feel we would have a control in a future emergency.

COMMITTEE MEMBERS POINT TO MUNITIONS BOARD POLICY OF BUYING ABROAD WITHOUT REGARD FOR ENCOURAGING PRODUCTION FROM DOMESTIC RESOURCES

Mr. MURDOCK. I realize I am getting a little aside from the main question here, but if I may, Mr. Chairman, I would like to ask a ques tion or two at this point. Far be it from me to ask for information that ought to be withheld. I shall not do that. However, I am a bit dubious about how secret some of this information really is. We here in Congress have talked very loosely about scraping the bottom of the barrel. We say that without having definite information and I have said it myself, "We do not have what we ought to have in the stock pile." We hear those statements made here in the committee and on the floor of the House frequently.

Of course, it is understood that when I make such a statement I do not know actually how much there is in the stock pile. I am just expressing fear that we are awfully short, and the admiral without being definite has specified that we are pretty short on most of these things. I am not asking for specific information, but, Admiral, I would like to ask a few questions as to general policy. For the 12 years I have been here, I have been advocating suitable reserves in the name of national defense.

The thing I have been harping on is this, that we ought to get what we need from abroad if we cannot produce it at home, taking tin as an example, but we ought to produce what we can produce at home and produce it concurrently while we are getting the remainder quickly for the stock pile from abroad.

I have had the feeling that the policy of stockpiling during the last 2 or 3 years, or since the Stock Piling Act has been in effect, has been to procure without much regard to available domestic production. Could you say anything along that line? What have we done?

Mr. D'EWART. Would you yield to me before the admiral comments? Mr. MURDOCK. Yes. The thing I wanted to find out was what are we doing to increase production at home?

Mr. D'EWART. I would like to say it is more than a feeling. It is the knowledge of this committee. In the case of manganese it has all been I purchased abroad except a little from Butte and Phillipsburg, Mont. In the case of chrome there is absolutely none produced in this country. In fact, the producing mines were closed down. In the case of mercury we are out of operation altogether. It is the knowledge of this committee by testimony presented to it that you have gone abroad, thereby sacrificing our domestic mining industry, and this committee is thinking very strongly of asking for an amendment to that bill, provided that you get these funds, that it be mandatory that a certain percentage of the appropriations for stockpiling be spent in the United States for the development of our minerals resources. I think we should go stronger than Mr. Murdock's statement and say it is the knowledge of this committee that a policy of buying abroad and not developing our domestic resources has been followed. We do not like that as western members of Congress.

Mr. MURDOCK. I will accept the amendment. I think I was a little light.

Admiral PAINE. I am sure I understand exactly what you two gentlemen are talking about. Again I go back to the fact that we have had to work with up to this time only $275,000,000 over a period of something like 2 years.

Mr. RUSSELL. May I interrupt you there, Admiral? That $275,000,000 was for the 67 strategic and critical materials, is that right? Admiral PAINE. That is correct.

Mr. RUSSELL. That encompasses more than just the minerals and metals? There are other materials purchased in addition to minerals and metals?

Admiral PAINE. Everything-all the materials we can see which might be bottlenecks to industry in time of another emergency.

WITNESS ASSERTS MUNITIONS BOARD WOULD WELCOME BUT NOT SUPPORT MINE INCENTIVE PRODUCTION PROGRAM

Mr. LEMKE. I might say that I am satisfied that this committee is willing to recommend a greater appropriation than the amount you have asked now, provided we can be assured we will get a sufficient stock pile and also develop our own industry as the same time to supplement the foreign purchases.

Admiral PAINE. Mr. Chairman, I would like to say that the feeling of the Munitions Board is founded very largely on the idea that it is the duty and responsibility of you gentlemen and not the Board to determine whether a subsidy should be paid to any particular segment of American industry.

Mr. LEMKE. May I suggest, we say an incentive be given so the domestic mining industries can compete with slave labor and low standards of living abroad.