(b) The Director and the several Administrators are hereby directed to decentralize operations on an area basis to the maximum extent consistent with efficient operation.

(c) The Director is authorized and directed to employ State and other area representatives, who shall coordinate and integrate the operations of the constituent offices in these States and other areas.

(d) The Director and the several Administrators are authorized and directed to establish boards similar in structure and function to the board established under section 5 of this Act on a national, area, and industrial basis.

SEC. 11 (a) All laws or parts of laws conflicting with the provisions of this Act are to the extent of such conflict suspended while this Act is in force.

(b) Upon the termination of this Act all executive or administrative agencies, governmental corporations, departments, commissions, bureaus, offices, or officers shall exercise the same functions, duties, and powers as exercised prior to the date of enactment of this Act.

(c) This Act shall take effect immediately upon its enactment and shall remain in force during the continuance of the present war and for six months after the termination thereof, or until such ealier date as the Congress by concurrent resolution or the President may designate.

SEC. 12. (a) All orders, rules, regulations, permits, or other privileges made, issued, or granted by or in respect of any agency or function transferred to any other agency or function under the provisions of this Act, and in effect on the date this Act takes effect, shall continue in effect to the same extent as if such transfer had not occurred, until modified, superseded, or repealed.

Senator MURRAY. There is also certain other material which Senator Kilgore wished to have made part of the record which I will introduce at this time.

(The material referred to was marked "Exhibits Nos. 2-12" and appears on p. 111 et seq.)

Senator MURRAY. As you know, this is a bill to create a war agency structure which includes within a single office the four major functions of procurement and production, manpower mobilization, technological mobilization and economic stabilization. The bill will not set up a new agency, but will realine the personnel, powers and duties of existing agencies so as to establish clear-cut lines of authority and responsibility, much the same way as industrial management has learned to do over the past 50 years.

We understand that the National Association of Manufacturers as well as yourself have studied both the general principles of this legislation and some of its details. Are you prepared to summarize the views of the association and yourself, as the case may be, on this entire problem of mobilization?

STATEMENT OF MALCOLM MUIR, CHAIRMAN OF THE WAR COMMITTEE, NATIONAL ASSOCIATION OF MANUFACTURERS

Mr. MUIR. Mr. Chairman, I am very glad to come here. I have prepared a statement, which, if you agree, I will read.

Then after that I will be very glad to answer any questions.
The CHAIRMAN. You may proceed.

Mr. MUIR. Mr. Chairman and gentlemen, my name is Malcolm Muir. I appear today as chairman of the War Committee of the National Association of Manufacturers.

My appearance is at the request of your committee through an invitation extended by members of your staff.

It is a pleasure to be with you for we are all here today motivated by but one common desire-how to win the war speedily and with as little loss of life as it is possible.

6

Therefore, I think that we can agree at the outset that the yardstick by which we must measure what should be done and what should not be done is: Will it help win the war?

At this point I think it appropriate to state that our association has taken no specific position on S. 607. I want to say here that this is under consideration of a subcommittee of our war committee. Last week they reported to our war committee that they were still considering it and that at the next meeting they would be prepared to present their report, so I am not in a position, you see, to speak officially. This was explained to your staff members who nevertheless felt it would be desirable for a representative of the association to appear and discuss generally the over-all policy for the conduct of the war.

On January 19, 1942, the President established the War Production Board which action was highly gratifying to industry as a centralized authority over the country's production facilities.

All Americans have a right to be proud of the production record which has been established since that time.

Only last week the President, as recorded in the Washington Post, had this to report:

President Roosevelt revealed yesterday that this country plans to exceed this year's enormous aircraft production schedule by more than 55 percent next year. Using a new method to estimate airplane production, measuring volume in millions of pounds, the President gave the following simplified tabulation of production progress to his press conference:

1941, only 87,000,000 pounds were turned out; 1942, 291,000,000 pounds of aircraft were produced; 1943, 911,000,000 pounds are expected to be produced; 1944, 1,417,000,000 pounds have been estimated.

Obviously proud of the production record made by this country's aircraft manufacturers, the President pointed out that the current production rate was greater than the production rate of all the other nations of the world combined.

American planes have a greater number of pounds per ship than any other nation, he said.

And just yesterday, Chairman Nelson of the W. P. B. predicted that the President's program for 1943 munitions goals will be fully achieved and in some instances exceeded by a comfortable margin.

It is unfortunate at this time that we cannot be even more specific for the figures constitute a wonderful record. You gentlemen, as members of the Senate Military Affairs Committee, have access to them and know the record as well as we.

I only wish the public could know more now of this production record. Could know more:

Of how many extra bullets we have on hand-it is enough to fire many rounds at each German and Jap in the world—

Of how many bombs we have stored to drop on German, Italian, and Japanese soil

Of how many extra shells we have stored for our heavy gunsOf how many new and heavier aircraft are rolling from assembly lines

Of how many extra trucks, jeeps, and other motor vehicles are stored awaiting shipment

Of how, as disclosed by Under Secretary of the Navy, Mr. Forrestal, 40,000,000 20-mm.-anti-aircraft shells, or more than 1,000 for every minute of the day, were loaded for the Navy during February.

And a lot of other things which will surprise the enemy are on hand.

These figures cannot be revealed but an indication-and one that must not comfort the enemy-is found in the cut-backs which are being made in many ordnance items.

Now much of the credit for this wonderful production record can be accorded to you gentlemen in Congress. Both individually and through committees you have kept a constant watchful eye on every phase of the war program.

The hearing here today is exactly what I have in mind. You gentlemen have drafted a new bill in the hope and belief that you can give even greater impetus to the war program. I am sorry that I am not qualified to discuss the specific provisions and language of this bill, but I do want you to know that I am in accord with your over-all objective, which is to strengthen the war effort in every way possible.

In the early stages of the defense effort it was necessary to make many realinements. Before Pearl Harbor we passed through, as you gentlemen know, the stage of the National Defense Advisory Committe. That was a loosely jointed agency which did not work.

Then we tried the Office of Production Management with two managers. That did not work either.

Next we had the Supply, Priorities, and Allocations Board. That had more concentration of power but it still was not the answer.

Throughout all this period there was confusion. No one had the final authority to make things go. Industry was perplexed and puzzled. Defense production was being obtained but this was but a trickle to the flood of production which developed after the creation of the War Production Board.

It seems extremly significant to note that in England it took 4 years to reduce the civilian consumption of the total national income from 81 percent, which it occupied before the war, to 46 percent. In this country a similar reduction was necessary and we accomplished the same proportionate reduction in 2 years, the greater part of this reduction being effected only after the War Production Board was created.

Thus, to repeat for a moment, many adjustments were needed in early phases of the war effort. It is largely through the efforts of Congress that we had agencies created to look specifically after rubber, oil, shipping, food, and other activities.

But let me throw out this word of caution, let me caution strongly against anything being done at this time which would weaken or disrupt the splendid work now being performed by the War Production Board.

In my opinion, gentlemen, the historian, in reviewing the course of the war to date, will cite the production achievements of American factories as ranking with the defense of Britain and the Russian resistance as one of the three outstanding events of the conflict.

It is true that all of our war effort has not been entirely harmonious. The front pages of the newspapers and the radio broadcasts are filled with conflict and controversy daily. It is either the coal strike, or the 100-percent octane gasoline, black markets, meat prices, potato scarcity, or the civilian rubber needs.

But such turmoil is simply the consequence of converting the greatest peace loving Nation into the greatest fighting machine in history. It has been done so rapidly, however, that it has both surprised and startled the Axis.

It seems here important to stress that the tremendous production. has been accomplished only by use of practically all the manufacturing facilities of the Nation.

To determine the extent to which the war work has been spread the National Association of Manufacturers is making a survey of the distribution of business resulting from the placement of war contracts.

Brig. Gen. Robert W. Johnson, Chairman of the Smaller War Plants Corporation, recently stated that 252 corporations held practically all the war contracts.

The N. A. M. wrote all of these 252 corporations asking two questions:

1. What is the approximate dollar volume of your total war contracts for the calendar year 1942?

2. What is the approximate dollar volume of that portion of these contracts which has been distributed to other companies for the calendar year 1942?

To date, 190 companies have been tabulated. This compilation shows that these companies held contracts amounting to twenty-sixbillion-one-hundred-and-ninety-two-million-odd dollars for the calen

dar year 1942.

Of this amount they reported $13,459,000 distributed to other companies.

This is a distribution of 51.4 percent.

These companies reported they did business with 140,424 other companies located in all of the 48 States. They are, of course, numerous duplications in the total of 140,000 companies, but it does give a good indication of the wide spread of the war work.

If the Committee is interested, the Association will be glad at a later date, when the survey is complete, to furnish the Committee with its final report.

The survey tracing the flow of war business emphasizes that the prime contractor's principal role is that of a channel through which orders for war material move out through the Nation's industrial and economic structure. In fact, the prime contractors, having already received the bulk of war orders from the procurement agencies, are collectively the biggest procurement agency in the country today.

These are the companies that possess the know-how which within 15 months turned American peacetime industry into a wartime producer in excess of immediate requirements.

It was only natural that the armed services turned to these companies for the emergency speed-up production required after Pearl Harbor.

But what has been going on since that all-out shift-over has been the steady conversion of qualified small shops throughout the country into the scheme of war production.

Naturally, at first, this process-the adaptation of the small shops to making war material entirely unknown and strange to them—was slow. The fruits of that tedious effort are now becoming apparent. I have taken considerable of your time, gentlemen, to describe the complexities and vastness of the American industrial machine. America, and that means management and labor, has wrought a miracle in

production. Each month finds this production reaching an even higher tempo. This, in itself, testifies to the efficiency of operation.

We have done what none of the Axis nations thought could be done. That must be borne in mind.

The sun no longet sets on the American flag. It flies on all of the continents and all of the seas. The lifelines of supply moving to these many battle fronts must be kept open.

I can assure you that American industry is geared to this tremendous job. The present production set-up brings into play the brains, the intelligence, the all-important know-how of American industry.

This effective arrangement must be continued. It has taken more than a year of precious time to evolve this relationship. Every proposal to change it will, I know, be examined carefully by the yardstick: Will it help win the war?

It may be that outside of the production field covered by the War Production Board there is some need for greater coordination of effort and a need for a clearer delineation of authority. However, as Chairman of the N. A. M. War Committee, I naturally am more familiar with the W. P. B. and the tremendous strides it has made during the last year than I am with other agencies in the war program.

I know from my conversations with many industrialists that they regard the W. P. B. as an agency with which they can work satisfactorily. I have had them tell me that the men now in W. P. B. understand the problems of industry.

While our committee has taken no position on S. 607, we urge that you weigh very carefully at this time any proposal either to abandon the W. P. B. or to require its merger into some other governmental set-up. We believe that so long as we are turning out war production for the use of our military forces in the marvelous manner in which they are being turned out it might be a serious mistake at this critical time to require readjustment, new set-up, and new organization of the war-production machine that might seriously interfere with the increasing flow of war production.

The CHAIRMAN. Thank you, Mr. Muir. I think you have made a very able and constructive statement and one that I certainly cannot find any criticism of. We all have a very high regard for the accomplishments of the War Production Board, and in all my contacts with them I have found them anxious to accomplish their job. We are very grateful to you for coming here today and giving us your views and the views of your great organization.

Last week this subcommittee submitted a report to the Military Affairs Committee pointing out the interdependence of manpower, production, and economic stabilization policies.

Now does it seem desirable to you that these agencies should make separate decisions when a decision by any one of them has a material effect on the other agencies?

Mr. MUIR. Well, Senator, I feel this way about it. I think that there has to be a close coordination between those agencies on any step that affects all three. I feel those agencies should not be merged into one, but I do agree that they ought to be very closely coordinated on problems that affect-now we are speaking about production-that affect production.