suggested that any rubber legislation contain a definite statement of policy favoring private purchase or lease, and provide that the acquisition and operation of any rubber-producing facilities purchased or leased from the Government would not be in violation of antitrust laws.

We suggested, also, that all sale or lease contracts should make adequate provision for the protection of rubber-producing capacity in case of national-emergency needs, and that recapture, default, and surrender clauses should be included in such contracts.

We have carefully studied S. 2187 in the light of this position of the B. F. Goodrich Co. We find that S. 2187 meets the objectives we believe in from the standpoints of its policy and purpose, of promoting competitive enterprise, of providing adequate definitions, of setting a reasonable termination date, of establishing adequate policy and administrative responsibility, of providing sufficient American rubber capacity for national security, of making mandatory use rubber available to rubber-products manufacturers on an equitable basis, of making provision for industry-advisory committees, and of providing a means for terminating patent-pool agreements.

It meets our objectives only partially on the problems of plant disposal, of the Government continuing to supply voluntary-use rubbers, of setting no maximum on Government production and distribution of American rubbers in peacetime even though Government participation may be in excess of national-security needs, and of not limiting Government research and development work in the American-rubber field.

We believe that the seriousness of these points of difference is considerably lessened by (1) the provision requiring a report within a definite time limit recommending to Congress a method of plant disposal; (2) the provisions permitting immediate sale or lease of plants outside the 665,000 tons of national-security capacity and the lease for the period of the act of plants within that limit that otherwise would have been placed in stand-by; and (3) a termination date that will probably have the effect of limiting direct Government ownership and operation to a period roughly coinciding with the period of cruderubber stock-pile accumulation.

Consequently, we wish to endorse S. 2187, with revisions suggested in the testimony of Mr. A. L. Viles, feeling that it offers a reasonable opportunity to develop national security as it has always been achieved in the United States-through a strong, free, and competitive private industry.

Senator BRICKER. Thank you, Mr. Keener.

There is one question I would like to have you discuss. You use the term "chemical rubber" and "American rubber" throughout your statement. We have adopted the term "synthetic rubber" because of its historical connotation, and because of the lack of accord on either of the two terms you mentioned. The term synthetic rubber would be satisfactory in your judgment?

Mr. KEENER. We believe, Senator Bricker, that the term synthetic carries with it a connotation of inferiority, which the material does not deserve. However, we will not raise any objection to the use of the word "synthetic" which seems to meet general acceptance on the part of the industry.

Senator BRICKER. It has been called that all along.

Mr. KEENER. That is right.

Senator BRICKER. And it has not hurt the use of it particularly. Mr. KEENER. That is right.

Senator BRICKER. And there are objections to the term "American rubber."

Mr. KEENER. So I have ben told.

Senator BRICKER. Have you any further suggestions?

Mr. KEENER. No, sir.

Senator BRICKER. If not, we thank you very much.

Mr. KEENER. Thank you.

Senator BRICKER. Is there anyone else present this morning who wishes to make a suggestion or testify in regard to this bill? (No response.)

Senator BRICKER. We will get further notice on the hearing on the bill. The Government withesses will be heard.

This is the first time that I have known of a hearing to be concluded on time. I want to express my appreciation to the witnesses for the clear and concise manner in which you addressed yourselves to the provisions of this bill.

It has been suggested by Mr. Eckler, who has been in constant touch with the Government authorities interested, that we will adjourn this hearing until such time as those witnesses are ready to appear. We do not have the exact date now. But if there are any others that care to be heard in the meantime, we would be glad to include them in the hearing at the time we hear the Government witnesses.

You will all be notified by press, and directly, insofar as we have the addresses and the names of those who are especially interested, of the time of that hearing.

I want to thank you all very much.

(Thereupon, at 12 noon, the committee adjourned, subject to the call of the chairman.)

NATIONAL RUBBER POLICY

TUESDAY, MARCH 2, 1948

UNITED STATES SENATE, SUBCOMMITTEE OF THE COMMITTEE ON BANKING AND CURRENCY, Washington, D. C. The subcommittee met, pursuant to call, at 10 a. m., in room 301, Senate Office Building, Senator John W. Bricker, chairman of the subcommittee, presiding.

Present: Senators Bricker (chairman of the subcommittee), Cain, and Robertson of Virginia.

Senator BRICKER. The committee will come to order.

On behalf of the subcommittee, I wrote a letter to Mr. Steelman asking that the Government give attention to S. 2187 and the recommendations of industry, and requested that someone be designated who might appear before our committee with any suggestions as to amendments on behalf of the Government.

Mr. Steelman has designated Mr. David Bruce of the Department of Commerce to represent his office and the Department this morning. Admiral Braine is here from the Munitions Board; Mr. Hadlock from the Office of Rubber Reserve in the RFC; Mr. Kennedy from the State Department; and Mr. Wolfe from the National Security Resources Board.

Mr. Bruce, do you have a prepared statement?

STATEMENT OF DAVID BRUCE, ASSISTANT SECRETARY OF COMMERCE, DEPARTMENT OF COMMERCE, WASHINGTON, D. C.

Mr. BRUCE. Yes, sir.

Senator BRICKER. Now, these, Mr. Bruce, are the suggestions that you have in regard to Senate bill 2187?

Mr. BRUCE. That is correct, sir.

Senator BRICKER. If you will proceed in your own way, then, we will appreciate it. I understand you want to leave as soon as you have presented your part of the testimony.

Mr. BRUCE. If I may, sir. I have another hearing.

Senator BRICKER. Just go right ahead.

Mr. BRUCE. Mr. Chairman, and members of the committee; my name is David Bruce. I am Assistant Secretary of Commerce.

The administration of controls over rubber as authorized in Public Law 24 is carried on under my direction in the Department of Commerce. Upon receipt of Senator Bricker's letter of February 20, 1948, requesting comments on S. 2187, Mr. Steelman called together representatives of the various departments and agencies concerned with rubber to study this bill. A consolidated statement, accompanied

51

by detailed comments on the bill, and suggestions for certain changes, has been prepared. This statement, representing the general views of these agencies, is embodied in the letter dated March 1, from Mr. John R. Steelman to Senator Bricker. I have been asked by Mr. Steelman to present this letter to the committee.

With your permission, I shall proceed to read it and submit it for the record.

Senator BRICKER. Very well.

Mr. BRUCE (reading):

DEAR SENATOR BRICKER: This is in reply to your letter of February 20 in which you request the comments of the interested departments and agencies of the Government on S. 2187, cited as the Rubber Act of 1948. This is also in reply to your verbal communication requesting the views of the departments and agencies regarding the statement submitted to your committee by the Rubber Manufacturers Association on February 24, 1948.

I am attaching a memorandum containing suggested changes in S. 2187. This memorandum, and this letter have been developed jointly by all of the departments and agencies concerned, and represent the general view of those departments and agencies.

The memorandum is divided into two parts, which differ in the matter of disposal authority and procedure and its implications to certain other aspects of the bill, and the duration of the legislation.

In part I, the attempt has been made to conform closely to the intent and method, as we understand it, of section 9 of S. 2187, dealing with disposal, and of section 20, terminating the act on June 30, 1950. The changes suggested are therefore limited to those considered necessary for purposes of national security, administrative workability and internal consistency of the bill.

In part II, however, a new section 9 is suggested which deviates considerably from the apparent intent and method of the present section 9. The suggested new section 9 is meant to provide immediate and continuing authority and procedure for disposal of the Government-owned facilities, and is therefore believed to be consistent with the disposal policy stated in section 2 of S. 2187.

Part II assumes no termination date to the legislation. This is the logical corollary to the inclusion of provisions for a continuing disposal authority. However the inclusion of a termination date would be not inconsistent with section 9 as outlined in part II.

Most of the suggestions in the attached memorandum are self-explanatory or are explained by brief notes in the memorandum. The matter of automatic termination of the legislation, however, requires general comment.

The declaration of policy of S. 2187 contains the words, "It is the policy of the United States that there shall be maintained at all times in the interest of the national security and common defense * * * a technologically advanced and rapidly expandible rubber-producing industry in the United States of sufficient productive capacity to assure the availability in times of national emergency of adequate supplies of synthetic rubber to meet the essential civilian, military, and naval needs of the country."

We strongly subscribe to this statement of policy. So long as world economic and political conditions remain unstable, we believe that there is only one development which could remove the necessity for legislation giving positive Government support to the chemical-rubber industry of substantially the character embodied in S. 2187, and that is the technological development of synthetic rubber to the point where it is clearly established that it can compete commercially with natural rubber. When that time arrives, rubber legislation embodying mandatory controls and other measures of positive support to the chemical-rubber industry can and properly should be immediately repealed. In the meantime, however, in the interest of national security, there should be legislation definitely insuring such positive support to the chemical-rubber industry on a continuous basis.

It is recognized that the provisions of S. 2187 are generally of an interim or temporary character. If legislation along the general lines of S. 2187 is to be enacted, we consider it appropriate that it contain a termination date. would prefer, however, legislation of a continuous character.

We

I am glad to have had the opportunity to submit the views of the several agencies of Government concerned.

Sincerely,

ROBERT C. TURNER,

(By direction of John R. Steelman).

If I may continue for just a moment, sir:

I regret that I will be unable to continue in the subsequent discussion of the bill before your subcommittee. I am committed to appear before another congressional committee in the continuation of a hearing carried over from yesterday.

I am turning over my responsibilities before this subcommittee to Mr. H. B. McCoy, who has immediate charge under me of the administration of Public Law 24.

Also present from the Department of Commerce are Mr. E. W. Glen, Chief of the Rubber Division, Mr. John Caswell, assistant to Mr. Glen. and Mr. Everett G. Holt.

In addition to representatives from the Department of Commerce, other interested agencies have representatives present who are prepared to answer any specific questions which the committee may wish to ask. They are Admiral Braine, representing the Munitions Board. Mr. Hadlock of the RFC, and Mr. Kennedy of the State Department.

Mr. Chairman, if for any reason you desire that I again appear before your committee, I shall be most happy to do so. May I be excused, sir?

Senator BRICKER. You may be excused now. The others will be able to take up the technical aspects of the recommendations. Mr. BRUCE. That is correct, sir.

Thank you very much.

(The memorandum of suggested changes, referred to by Mr. Bruce, is as follows:)

MEMORANDUM AND SULGESTED CHANGES IN S. 2187

PART I

(1) Throughout the bill: It is suggested that the term "synthetic rubber" be replaced by the term "chemical rubber." Wherever the term "domestically produced rubber" is used, it should be retained.

(It is believed that, in the interest of national security, every effort should be made to encourage the acceptance of this domestically produced rubber. There is, unfortunately, a rather widely held belief that anything "synthetic" is "ersatz." a substitute for the real thing. The term "chemical" will avoid this connotation and, it is hoped, give the new rubber a better chance of establishing itself in its own right.)

(2) Page 2. lines 10-11: Strike "to be served by private research and develop

ment.”

(The only way to attain chemical rubber of improved qualities is to encourage research and development. Section 11 of this bill undertakes to widen the field of private research. However, there should be no thought of closing the door on continued Goverment research. Government research wade possible many improvements and advances in rubber production since 1942. Today there exist several areas in which it appears that outstanding improvements are either with us or just around the corner. The Government and private industry both should continue and expand their efforts in research,)

(3) Page 2, line 11: Strike "accomplish" and insert "strengthen national". (4) Page 2, line 12: Strike “all”. (5) Page 2, line 13: Strike "all".

(6) Page 2, line 14: Strike "all".

(7) Page 2, line 15: Strike "all”.

(The deletion of the word "all" in these four lies will not change the intent, but will remove the suggestion of all-inclusive immediacy.)

(8) Page 2, line 15: Strike “should”.

(Unnecessary to construction of sentence.)

(9) Page 2, line 18: Strike "SYNTHETIC RUBBER" and insert "NATURAL AND CHEMICAL RUBBER AND RUEBER PRODUCTS".