BUSINESS AND DEFENSE SERVICES ADMINISTRATION

STATEMENTS OF LOTHAIR TEETOR, ASSISTANT SECRETARY FOR DOMESTIC AFFAIRS; JAMES C. WORTHY, ASSISTANT SECRETARY OF COMMERCE (ADMINISTRATION); OSCAR H. NIELSON, DEPARTMENTAL BUDGET OFFICER; CHARLES F. HONEYWELL, ADMINISTRATOR; H. B. McCOY, DEPUTY ADMINISTRATOR; PHILIP G. ASHER, BUDGET OFFICER; AND CARL OECHSLE, DEPUTY ASSISTANT SECRETARY FOR DOMESTIC AFFAIRS

BUDGET ESTIMATE

Now we will take up Business and Defense Services and Administration. Mr. Teetor, this is also your department. The estimates were $7,300,000. The House allowed you $6,070,000, or a cut of $1,230,000, and you request the whole of it to be put back.

Last year you had $6,380,500. In 1953, you actually expended $26,900,000. This substantial cut from $26 million to $6 million was that due to the close of the Korean war?

(The amendment and justification data follow:)

The Department requests the following amendment:

$7, 300, 000

16, 070, 500

6, 070, 000

Page 31, line 18, strike out "6,070,000" and insert "$7,300,000", the estimate, or an increase of $1,230,000.

EXTRACT FROM HOUSE REPORT

"There is included in the bill $6,070,000 for this item, a reduction of $1,230,000 in the budget estimate. The committee was advised that the Business and Defense Services Administration was established on October 1, 1953, pursuant to the authority vested in the Secretary of Commerce by Reorganization Plan No. 5 of 1950 and authority delegated to the Secretary of Commerce under the Defense Production Act. For the present fiscal year $4,174,000 was derived from 'Salaries and expenses, defense production activities, Commerce'; $200,000 from ‘Technical and scientific services, Office of the Secretary'; $291,500 from 'Department al salaries and expenses, Bureau of Foreign and Domestic Commerce'; and $1,715,000 from 'Field office services, Bureau of Foreign and Domestic Commerce'; making a total of $6,380,500. From this amount there is to be deducted $310,000 for costs incidental to reduction in force, leaving a total of $6,070,500 available during the current fiscal year for this agency. Therefore, the amount allowed for 1955 is only $500 less than that provided for the present fiscal year and will allow this agency to proceed at the present level."

JUSTIFICATION

The restoration of $1,230,000 is requested in order that the industry divisions may be staffed so that they will be in a position to have the necessary information and knowledge to take emergency action immediately in the case of all-out mobilization and carry out all of the current responsibilities delegated to the

Department by the Office of Defense Mobilization. The present funds do not provide for an adequate staff to discharge in full the responsibilities which are presently being required of the Administration. In 1950 there were approximately 840 full-time employees assigned to the servicing of business and fostering industry and commerce, whereas now we have approximately 700 persons carrying this same responsibility plus the increased workload of the defense materials system and the defense preparedness programs. The restoration of the House reduction will provide a level comparable to 1950, and will permit the Administration to perform on a minimum selective basis the workload of the defense program.

It is the opinion of the Office of Defense Mobilization and the military that in case of another war, we must be ready as there will not be time to prepare after hostilities break out. Experience shows it took 2 years to develop a satisfactory system for the marshaling of industrial production of the Nation in World War II, and 1 year for the Korean war. This was true because the Government had neither the facts, knowledge, nor trained personnel for the necessary change from civilian production to military production.

The Business and Defense Services Administration is an organization set up to deal with business and industry, and in carrying out the responsibilities of the Department of Commerce to foster and promote industry and trade will have at all times an accumulation of basic data of the nature and structure of our industry, production, supply, and consumption of basic materials. The preparedness functions delegated to the Commerce Department by the Office of Defense Mobilization, such as, recommending expansion goals, tax amortization, and stockpile, determining critical facilities, and supervising such programs as continuity of production, plant protection, identifying mobilization deficiencies, etc., will require the full use of this information and avoid duplication of effort and staffing. The action of the House in allowing for the fiscal year 1955 only our presen level, which is inadequate for carrying out all of the programs of the Business and Defense Services Administration, will mean that either some of the programs will not be adequately performed or some will be eliminated entirely. We believe that the programs as planned, on which the estimate of $7,300,000 is based, are a minimum below which we dare not go if we are to be properly prepared for possible future emergencies.

BUSINESS AND DEFENSE SERVICES ADMINISTRATION

Salaries and expenses-Summary of requirements

Appropriation, 1954..
Comparative transfer from:

"Salaries and expenses, defense-production activities, Commerce".
"Technical and scientific services, Office of the Secretary of Commerce".
"Departmental salaries and expenses, Bureau of Foreign and Domestic Commerce".
"Field office services, Bureau of Foreign and Domestic Commerce".

Total...

Deduct: Reappropraition for 1954 costs incidental to reduction in force.

Base for 1955..

Net difference, 1955 over 1954:

0

$4, 174,000 200,000 291, 500 1,715, 000

6,380, 500 -310,000

6, 070, 500

GENERAL STATEMENT

The appropriation request for Business and Defense Services of the Department of Commerce for fiscal year 1955 in the amount of $7,300,000, provides $7,228,000 to finance the Business and Defense Services Administration and $72,000 to finance the Defense Air Transportation Administration. These amounts represent minimum requirements for the discharge of the responsibilities relating to industry and trade of the United States vested in the Secretary of Commerce by the act of February 14, 1903, as amended; to exercise the authority delegated to him under the Defense Production Act of 1950 as amended and extended; to participate in the mobilization readiness programs as authorized and directed by the Office of Defense Mobilization; and to perform the functions and exercise the authorities vested in the Secretary under the Rubber Act of 1948, as amended by Executive Order 9942.

ORGANIZATION AND OBJECTIVES

The Business and Defense Services Administration was established pursuant to the authority vested in the Secretary of Commerce by Reorganization Plan No. 5 of 1950, by Department Order 152. The Administration (a) continues the residual defense and mobilization functions of the former National Production Authority; (b) establishes 25 industry divisions, staffed by business experts from Government and private industry; (c) consolidates five current departmental offices, the Office of Technical Services, the Office of Distribution, the Field Service, staff functions of the Industry Evaluation Board, and the Office of Industry and Commerce; and (d) provides a focal point for effective cooperation between Government and business in promoting economic stability and growth.

The BDSA is under the authority and supervision of the Assistant Secretary of Commerce for Domestic Affairs and is directed by an Administrator, appointed by the Secretary of Commerce, who reports and is responsible to the Assistant Secretary for Domestic Affairs.

There are 3 staff offices, the Office of Technical Services, Office of Small Business, and Office of Distr.bution, 25 industry divisions, and the Office of Field Services. The Office of Technical Services, which is a clearinghouse for Government technological data of interest to business, also assists industry in voluntary product standardization and in regional and local area development problems.

The Office of Small Business, a staff office, is the focal point in the Commerce Department for liaison with the Small Business Administration.

The Office of Distribution, which is also a staff office, is the focal point in the Department for the retail, wholesale services, and distributive trades on marketing and distribution programs and policies.

The industry divisions are as follows: (1) Agricultural, Construction, and Mining Equipment; (2) Aluminum and Magnesium; (3) Automotive; (4) Building Materials and Construction; (5) Business Machines and Office Equipment; (6) Chemical and Rubber; (7) Communications Equipment; (8) Consumer Durable Goods; (9) Containers and Packaging; (10) Copper; (11) Electrical Equipment; (12) Electronics; (13) Food Industries; (14) Forest Products; (15) General Components; (16) General Industrial Equipment; (17) Iron and Steel; (18) Leather, Shoes, and Allied Products; (19) Metalworking Equipment; (20) Miscellaneous Metals and Minerals; (21) Power Equipment; (22) Scientific, Motion Picture, and Photographic Products; (23) Shipbuilding, Railroad, Ordnance, and Aircraft; (24) Textiles and Clothing; and (25) Water and Sewerage Industry and Utilities.

Through departmental, field, and cooperative offices, the Office of Field Services makes the Department's services and facilities readily available to the business community and serves to establish and maintain on a local level the Department's relationship to the business community.

The general functions and objectives of BDSA are to:

(1) Assure the achievement of military and atomic energy programs by channeling, where necessary, the materials and products required therefor in accordance with the provisions of the Defense Production Act of 1950, as amended;

(2) Insure the development of practical mobilization programs by ascertaining the production potential of the industrial economy as related to materials, products, and facilities for defense supporting and essential civilian needs, for which the Department of Commerce is the cognizant agency;

(3) Provide the framework for the integration of defense production and mobilization programs with industry's long-range plans for maintaining civilian production and employment on a sound basis;