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The CHAIRMAN. Then "5" should be struck out and "2" should be substituted.

Mr. Casto. That is correct.
The CHAIRMAN. Without objection, that is agreed to.
Now I think we have all the information we need.
Mr. ARENDS. Vote-

Mr. HARDY. Mr. Chairman, we have not got quite all the information we need.

The CHAIRMAN. All right, what is it, Mr. Hardy?

Mr. Hardy. In the first place, I would like to know why we are making the exemption of the 6 months, or the 6 months' waiting period

you have

(Chorus of “Mr. Chairman.")
Mr. HARDY. Wait 1 minute.
(Continuing) With respect to only the 4,000 tons.

Mr. Casto. 4,000 tons is that quantity which we estimate will relieve the shortage during that 6-month period. Mr. HARDY. All right.

Then even if you might need the rest of it-I mean why single out the 4,000 tons !

Why don't you waive it on all of it?
Mr. BATEs. Well, Porter, you do not want to glut the market.
Mr. Hardy. No, we don't want to glut the market.

And I suppose the GSA is going to have sense enough, in the disposal of it, to avoid doing that.

But if you operate on the basis that you have been operating on some other commodities, I don't know whether we will ever get rid of it.

Mr. Casto. We would have no objection to the waiver of the entire—of the 6 months on the entire quantity, sir.


Mr. Casto. We would be in favor of the waiver of 6 months on the entire quantity.

Mr. Rivers. Well, that is good.

Mr. Bates. No-Mr. Chairman, I understand that will glut the market.

The CHAIRMAN. Of course it will.

Mr. BATEs. Now, what they tell me is that the 4,000 tons they need, they need now.

And the Government will get a good price for it now. And the rest of it can be done according to the normal process that they do on everything else.

The CHAIRMAN. It is Government material that you are selling.

Mr. HARDY, Mr. Chairman, have you got to sell it all now just because you are not required to wait 6 months?

The Chairman. Well, the mere fact it is handing it over to the market will fix the price. There are no two ways about that.

Now here it is. If you got 12,000 tons-
And you say you can sell it all now.

The question is what effect does it have on the market, if there is only demand for 4,000 tons?

Down goes your price.

And who loses?
The Government loses.
Mr. CASTO. Mr. Chairman-

The CHAIRMAN. Is this good trading on the part of the Government, to restrict it and not keep it from being dumped on the market ?

Mr. HARDY. It has not a thing in the world to do with dumping, Mr. Chairman.

We have been through this with rubber. They got a rubber situation over there, where you cannot even move the limited amounts that they have available.

There is some more information to be developed on this proposal. I went through this before, on a previous one of these things, and I had to go to the floor to get the thing changed, and where it ought to have been changed in the committee.

If you want to do it this way, it is all right with me.

The CHAIRMAN. We do not want to do it as you say. We would be lost without your valuable suggestions, and we appreciate it.

Mr. Bates. I understand this 4,000 tons is good for about a year's supply?

Mr. Casto. We would recognize the fact quite clearly that it at least would last for 6 months.

We estimate it to be a year's supply also.
Mr. BATEs. The information that I received from the trade said

about a year.

Now do I understand that the rest of it will be sold over a 3-year period or so?

Mr. Casto. Three or more years.
Mr. Bates. Three or more years?
Mr. Casto. There is no magic quality to the 3 years.

Mr. BATES. It depends upon what the best price the Government can get at a certain time.

Mr. Casto. That is correct.

Mr. BATEs. Now if Mr. Hardy's objection is the fact that we have separate bills, I do not have any Mr. HARDY. I have not raised any objection at all. I was merely trying to understand why we had two different figures Mr. BATEs. Oh, I will tell you why. Mr. HARDY. I frankly don't see any purpose of it. I have not voiced any objection to either one of them. Mr. BATES. Let me explain it to Porter.

The GSA had a bill for the 12,000-plus tons, and on which the 6-month period would be in effect

Mr. Casto. That is correct.
Mr. Bates. So they would not be getting it until next January.
So it was a question of trying to get something now.

So we estimated, or the industry did, what would they need in the next year,

and it was about 4,000 tons. Mr. Casto. That is correct.

Mr. BATES. So we asked for a waiver on that now, and to be sold during that following period.

And that is how it got into effect.

The CHAIRMAN. There is only one issue before the committee, and that is as to whether we authorize 4,000 tons or 12,000 tons.

That is all the issue.
Mr. Hardy. Mr. Chairman, as far as the resolution is concerned,

if you


Mr. HARDY. Well, just 1 minute, if you please. Your resolution ought to contain 12,000 tons.

Now I do not know whether there is any point in putting 12,000 tons in Mr. Bates' bill or not.

But I wanted to try to understand why there was a distinction.

And frankly I think—as I get the picture now, it is probably due to the fact that he introduced the bill before this determination with respect to 12,000 tons was made.

Mr. BATES. No, it was after it was made. Then I tried to get-it was combined into one bill. And there were certain problems. They had already worked out and cleared the 12,000 tons. And it had already been cleared downtown and the papers were in process.

Mr. HARDY. If there is any objection to amending Mr. Bates' bill I have no objection to his bill.

But I did want to try to understand why there was a distinction.
Mr. BATES. Well, that was the reason.
The CHAIRMAN. I think this:

From an economic standpoint, if you are authorizing 12,000 tons and you put it all on the market at one time, when there is a market for only 4,000 tons, you depress the price.

Mr. İLARDY. Mr. Chairman, that would undoubtedly be true.

But if GSA does not have any better sense than to set up a plan of sale which would involve putting the entire amount on the market immediately, then they have not got the competence over there that I thought they had.

Mr. PRICE. Well, the normal

Mr. HARDY. Where they would—no, you do not dump it all at one time.

Mr. PRICE. No, the normal procedure of GSA would be to consider the effect on the market.

Mr. Casto. Yes.
Mr. Hardy. Of course it is.

Of course, they would spread it over a period of time. The fact you are making 12,000 tons available over a period of time does not mean it will be offered at one time.

We authorized 470,000 tons of rubber to be disposed of over this period of time

Mr. ARENDS. Mr. Chairman

Mr. HARDY. Mr. Chairman, you have to have a definite amount over a period of time in here.

Mr. ARENDS. Why don't you give them permission to sell 12,000, no more than 4,000 of which can be sold in 12 months?

Mr. BATES. This is what this is.

Mr. Hardy. I don't think there is any particular problem with this aspect of it.

But there is another question I would like to ask.
Why was there no reference to price in the resolution?

Now we have passed some resolutions that contained a requirement that the materials be sold at the market price.

Now is there any specific reason that that was left out of this resolution?

Mr. Casto. No, sir.

We would propose to offer this material for sale on a competitive basis at existing market prices at the time of sale.

Mr. HARDY. And you would propose to do it on a basis which would not depress the market so that there would be a reduction in the return to the United States?

Mr. Casto. That is exactly right.
Mr. HARDY. All right.
The CHAIRMAN. Well, why not incorporate that in the language of
the bill?

Mr. Hardy. You do not need it, Mr. Chairman.
You don't need it.
I merely wanted to get a record on it.

The CHAIRMAN. Then without objection, the resolution will be favorably reported.

And without objection, H.R. 12416 will be favorably reported.
Mr. SLATINSHEK. As amended.
The CHAIRMAN. As amended.

And, Mr. Bates on behalf of the committee, will you report the bill?

And on behalf of the committee, I will report the resolution.

Now, members of the committee, that disposes of the work of the subcommittee.

Now before we are recessed, I first want to ask Mr. Rivers and Mr. Bates, and the subcommittee, what progress you are making with reference to the ship inquiry as to the modernization of the Navy?

I read with interest in the paper that some 480-some-odd ships were to be built, over a period of years. And I was glad to see that state

Now I think we must push that matter forward and try to get enough money out of the budget this fall to authorize a very healthy shipbuilding and conversion and repair bill.

Now what is the situation, Mr. Rivers?
Mr. Rivers. Mr. Chairman, we have had one meeting.
We developed some very worthwhile information.

There will have to be an increase in the budgeting for both new construtcion and conversion, and the FRAM program.

Now we plan to have a meeting tomorrow to further pursue this inquiry.

And I think we will be ready in a very short time, not over one more meeting, maybe two, to give the committee some very pertinent information on the modernization and the block obsolescence of the entire fleet.


Mr. RIVERS. And I think we will be able to help them get increased consideration in this entire area.

The CHAIRMAN. I am hoping that the subcommittee can expedite its consideration of the subject matter, and so that we can lay down


a healthy program of ship modernization and get a larger appropriation in the budget this year.

Mr. BATES. Mr. Chairman.
The CHAIRMAN. Mr. Bates.

Mr. BATES. Mr. Chairman, I understand there was a story in one of the local papers

The CHAIRMAN. Yes. Mr. Bates (continuing). In the last couple of daysThe CHAIRMAN. Last Sunday. Mr. Bates (continuing). Which I have not seen, because I was out of town.

Mr. RIVERS. I had not seen it either.

Mr. Bates. But I understand there were certain figures in that article

The CHAIRMAN. They quoted you as saying some 481 ships.
Mr. BATES. I understand it did do that.

It did quote me as saying the need for it was the fact that our ships now, or three-quarters of our ships, are of world war vintage.

And that was my quote.

I understand that down below it indicated figures, that did not necessarily refer to my statement, but anybody reading it would indicate that it had.

Mr. Rivers. Phil, you got that statement?
I haven't it.

Mr. Bates. I would just like to say, Mr. Chairman, that I have given out no figures at all on this.

I did see another release this morning using the same figures.

But I consider that all of this information the committee has received the other day-except for the fact we are dealing with the general problem of obsolescence—that all the information pertained to was classified.

Mr. Rivers. I haven't given out any information.
The CHAIRMAN. Thank you very much, Mr. Bates.

Now Mr. Hardy and Mr. Bates are on a very important subcommittee, and I understand that they have finished their hearings and they are now in the act of writing the report with reference to that.

Nr. Hardy. Mr. Chairman, we are in the process of writing a report.

I would not want to make the firm statement that our hearings are concluded.

The CHAIRMAN. All right.

Mr. Hardy. It may be we will have to have some additional testimony.

But we are in the process of writing a report now, and if we do not find gaps in the testimony we may not have further hearings.

The CHAIRMAN. Then I offer this suggestion.
Mr. Arends. Will the gentleman yield right there?
Are any of the hearings available yet?

Mr. HARDY. The transcripts are available to members of the committee, if we would like to see them, but no hearings have been printed yet.

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