have borne the impact of increased exports almost solely. Moreover, secondary aluminum prices have been the effect of export policy, rather than the cause of reported aluminum shortages. The combined action of diverting material from stockpile delivery and licensing scrap for export, he maintained, amounts to an export of prime pig. Smelters are further penalized by United States export policy in that they cannot use prime pig to replace scrap both for economic reasons and because the alloying elements contained in scrap are in shorter supply than aluminum itself.

Although aluminum scrap exports in 1954 accounted for only 10 percent of available domestic scrap, this relatively small percentage can jeopardize the adequacy of scrap supply in 1955, Committee members believed.

BDSA made its recommendation in connection with the decision to divert deliveries from stockpile accumulations after a thorough analysis of the overall aluminum supply-demand outlook, Mr. Erskine stated. According to BDSA estimates, he said, sufficient scrap will be generated in 1955 to permit exports at the same levels previously established. Including metal diverted from stockpile delivery, total aluminum supply should be sufficient to meet domestic demand.

Shortages of metal in certain segments of the aluminum industry were found to exist, Mr. Erskine added, and the decision which was made was founded on evidence to that effect rather than on price or other factors over which the Government can exercise no control. While the recommendation of the Aluminum and Magnesium Division was to restrict exports of aluminum scrap to a considerably lower quota than 9,000 short tons in the 1955 second quarter, the ultimate decision was made by an Interdepartmental Advisory Committee on Export Policy, after careful evaluation of all factors from the standpoint of a practicable governmentwide policy.

IMPACT OF ALUMINUM SCRAP EXPORT POLICY

The effects of the present aluminum scrap export policy on the aluminum smelting industry were reviewed by a Committee member who protested the creation by Government action of artificial economic situations which, he said, interfere with the free operation of the private competitive enterprise system. He recalled that the present problem arose about 18 months ago when business conditions in Europe developed to a point where additional aluminum raw materials were required abroad to fill the needs of an expanding European economy. Since there was a substantial duty in most countries on the import of aluminum pig and ingot, and no duty on scrap aluminum, European consumers naturally sought scrap from the United States.

At that time, the domestic smelting industry was obliged to compete with European output of aluminum pig selling at 26 to 27 cents a pound, and, at the same time, keep its price on finished ingot in line with an established primary domestic pig price of 21 cents a pound. Because of the differential between domestic and world ingot prices, smelters were also economically unable to compete for scrap. As a result, smelters sought relief from the Government by requesting that restrictions be placed on the export of increasing quantities of scrap from the United States.

Reviewing recent developments, the Committee member stated that about 5 months ago, when the domestic demand for aluminum increased and primary producers would no longer fill growing requirements of the ingot-consuming industries, smelters were again able to compete with foreign buyers of scrap aluminum, thereby obtaining substantial additional quantities of raw materials. The price of secondary ingot moved from about 23 cents to a 30-cent level which accurately reflected world market conditions, namely, a 22-24-cent world market price for scrap and a 27-cent world market price for pig.

Creation of a more readily available supply of primary ingot by Government action has been one of the reasons for a reduction in the price of secondary ingot; however, the cost of scrap to smelters, and aluminum scrap exports, have risen. An artificial economic situation has thus developed, resulting in a squeeze on the smelting industry.

As a member of the industry, the Committee member said, he was opposed to Government action bringing about artificial economic situations, especially at a time when such action is uncalled for and there is no national emergency. In creasing the available supply of metal and permitting a high level of scrap aluminum export are prejudicial to the interests of a long-established industry and tend to subsidize domestic ingot-consuming industries and foreign economies at the expense of the aluminum smelting segment. He particularly protested action taken without prior official consultation with members of the industry.

Mr. Erskine objected to this last statement, pointing out that the aluminumsmelting industry had been consulted and that the Division had made every effort to reduce quantitative export quotas on aluminum scrap. As for stockpile diversions, the decision was based on the total shortage of aluminum rather than on shipments of primary and secondary pig and ingot, he said.

DOMESTIC AND FOREIGN COMPETITION

The effect of deferring deliveries from stockpile placed the secondary metal industry in competition with the primes in supplying pig and ingot, a Committee member stated; whereas primary producers' inventories had formerly been depleted in the latter part of 1954 when extensive stockpile accumulations were being made, in the first quarter of 1955 the heavy demand for castings was met almost entirely by smelters because the primes had reverted to supplying their customers on a historical consumption pattern basis.

Smelters' backlogs of inventory are now depleted, another Committee member added, asking whether relief can be expected from foreign competition for scrap, as well as from domestic competition from primary producers. In the past, a number of smelters have been forced out of business, he pointed out, emphasizing that the industry is essential in times of emergency. Furthermore, it is considered small business and as such is entitled to Government assistance for survival, he said. Foreign governments impose high duties and grant subsidies to protect their smelters against competition from United States producers, while United States smelters are forced to compete both domestically and in world markets not only for sales but also for their supply of raw materials. Unless action is taken to either restrict scrap exports, or increase the supply of scrap, he said, the present situation can well lead to unemployment and more business failures in the smelting industry.

Recognition of the smelting industry.—The relative importance of the aluminum smelting industry to the overall economy and national defense should be borne in mind by BDSA and Government officials in formulating plans and making decisions with respect to the aluminum industry as a whole, committee members emphasized. They called attention to the volume of business represented by this segment of the industry, citing the fact that 1954 shipments by smelters exceeded other shipments of pig, ingot, and billets by more than 65 million pounds. Facts such as this, it was believed, have been overlooked in the past by the Government, and action taken without adequate representation for smelters in matters dealing with the aluminum industry and industry problems has resulted in unsubstantiated rumors and incomplete or premature news accounts which have disrupted markets and caused erroneous assumptions to be made by and about the aluminum smelting industry.

EXPORT QUOTAS

Pointing out the downward trend of scrap aluminum exports in the past few months, Mr. John H. Kilby (Director, Materials Division, Bureau of Foreign Commerce) informed the Committee members that the scrap aluminum export policy recommended by the Bureau of Foreign Commerce to the interdepartmental export policy committee had been even more restrictive than that of BDSA. However, numerous other Government agencies are also concerned in the decisions reached on export quotas, he reiterated.

Actual exports of aluminum scrap are not reaching licensing levels, Mr. Kilby also reported, and exports for the first half of April show a decline.

Which domestic scrap is being exported at 22 cents a pound, it is returning in the form of secondary ingot at 25 cents a pound, Committee members reported. This secondary ingot, or remelt scrap, is a few cents below that of domestic remelt scrap. Mr. Kilby asked for substantiating information on the possible source and volume of this foreign remelt ingot, which Committee members offered to furnish, although the source may be questionable in view of unknown transshipments.

Price is admittedly a major factor in the available supply and disposal of scrap, and it presents a perpetual unsolved problem, a Committee member observed, but other factors should also be taken into account, such as profit incentives, convertibility of currencies, etc. He suggested that a possible solution to the present problem might be to limit scrap aluminum exports on a more equitable basis such as a consumption ratio of scrap to pig. Thus, the drain on domestic scrap supply, as represented by the export quota of 3,000 short tons a month, would not be borne solely by the smelting industry.

Committee members also suggested that representatives of the aluminum smelting industry be consulted in the future prior to official determinations affecting the industry such as an open-ending of aluminum scrap export licensing or the establishment of future quotas.

Mr. Erskine assured the Committee members of continued impartial treatment of all segments of the aluminum industry by BDSA and other Government agencies. He added that the composite views and recommendations of all industry advisory committees concerned will be given full consideration by the Aluminum and Magnesium Division in arriving at a Division recommendation when the aluminum scrap quota is revived for the 1955 third quarter and each subsequent quarter for which it is in effect.

SUMMARY OF COMMITTEE RECOMMENDATIONS

Committee members unanimously recommended:

1. That the Government curtail exports of aluminum scrap to not more than 1 million pounds per month, as recommended at the Committee's last meeting, April 29, 1954.

2. That, since scrap represents about 20 percent of the total aluminum raw material supply, and, since 6 million pounds per month represents the amount needed for export, the amount of scrap exported should not exceed 20 percent of the authorized total, or approximately 1,200,000 pounds per month.

3. That the conditions under which export quotas are established now exist, and they constitute grounds for positive action in curtailing exports.

4. That in all future aluminum industry conferences or meetings dealing with the aluminum industry and industry problems, the aluminum smelting industry be adequately represented, on the grounds that smelters comprise a proportionately large segment of the entire industry and their views should be accorded equal votes and consideration in matters affecting them.

The CHAIRMAN. You may put in the record any of these advisory committees minutes because we will have to adjourn now.2

We are to hear Mr. Young of the Civil Service Commission this afternoon and the meeting will now adjourn after I make this statement.

Up to this point we have received no data from Mr. Ray, Counsel for the Department of Commerce, concerning the Business Advisory Council.

I had indicated to Mr. Ray that I wanted that information by yesterday. I am now informed that Mr. Ray has asked for a conference with me for this afternoon, late this afternoon. I have consented to that conference. I want it distinctly understood that if Mr. Ray acting for Mr. Weeks persists in refusing to give us the data that we seek, which data goes back into Democratic administrations as well as Republican administrations, if we don't get that data by today, I will have a statement to issue tomorrow morning and we may have to indicate in that statement that extreme measures will be taken to force either Mr. Ray or Mr. Weeks or the Director, Mr. White of the Business Advisory Council, to submit that data for our scrutiny. I say "extreme measures" and I want that emphasized. The meeting will now adjourn until 2:30 this afternoon when we will hear Philip Young, Chairman of the Civil Service Commission. I take this opportunity Judge Barnes, again to thank you for your most earnest cooperation.

Mr. BARNES. I take it I am excused Mr. Chairman, until you notify me you want me again.

The CHAIRMAN. You are excused.

(Whereupon the committee adjourned at 1:10 p. m. to reconvene at 2:30 p.m. of the same day.)

Additional minutes will be published in an appendix.

AFTERNOON SESSION

The CHAIRMAN. The committee will reassemble.

We will hear this afternoon Mr. Philip Young, Chairman of the United States Civil Service Commission.

Mr. Young, will you step forward. You may have your colleages with you. Will you give your name and affiliation to the stenographer. STATEMENT OF PHILIP YOUNG, CHAIRMAN, UNITED STATES CIVIL SERVICE COMMISSION, ACCOMPANIED BY JOHN MACY, EXECUTIVE DIRECTOR, AND LAWRENCE MELOY, ACTING GENERAL COUNSEL

Mr. YOUNG. Mr. Chairman, I am Philip Young, Chairman of the United States Civil Service Commisssion. I have with me Mr. John Macy, the Executive Director of the Commission, and Mr. Lawrence Meloy, the Acting General Counsel of the Commission.

The CHAIRMAN. You may proceed.

Mr. YOUNG. Mr. Chairman, I am happy to be here today to assist your subcommmittee in its consideration of the employment of WOC personnel and to discuss the specific matters which you requested that I cover in my statement.

It is the responsibility of the Chairman of the Civil Service Commission under section 304 of Executive Order 10182 to survey at least once every 3 months appointments made under that order and to report the results to the President. As background, I would like to define for you the area covered in these surveys.

Executive Order 10182, as amended, delegates to the heads of departments and agencies carrying on functions under the Defense Production Act the authority provided in that act for: (1) the employment of persons of outstanding experience and ability without compensation; (2) the employment of experts and consultants of organizations thereof with compensation; and (3) the use of the services of Federal, State, and local, and other agencies, and of such voluntary and uncompensated services as may be needed."

The periodic surveys my predecessors and I have conducted under Executive Order 10182 cover the following points:

1. We determine whether appointments without compensation to operating positions under section 101 (a) have been certified in writing by the head of the agency as required by section 301 of Executive Order 10182, as amended by Executive Order 10205.

These certificates must state that (a) the appointment is necessary and appropriate to carry out the provisions of the Defense Production Act, (6) that the duties of the position to which the appointment is being made requires outstanding experience and ability, (c) that the appointee has the outstanding experience and ability required by the position and (d) that the department or agency has been unable to obtain a person with the qualifications necessary for the position on a full-time salaried basis.

2. We determine whether the positions occupied by persons appointed as experts or consultants under section 101 (a) and 101 (b) of the order are actually expert or consultant positions.

The CHAIRMAN. How do you tell in your inquiry whether the individual appointed as a WOC has outstanding experience and ability?

Mr. YOUNG. What we do first of all, is to review the position to determine whether or not it is a consultant position or an operating position.

In reviewing these WOC positions under section 101 (a), in all cases where the WOC man is filling an operating position, we accept this four-point certificate which is submitted by the head of the

agency.

The CHAIRMAN. Do you accept that certificate on its face value? Mr. YOUNG. We accept that certificate on face value, which is submitted by the head of the agency.

The CHAIRMAN. So that you do not really make any independent investigation of "outstanding experience and ability" of the prospective WOC?

Mr. YOUNG. Not of these persons who are filling these operating positions on a WOC basis.

The CHAIRMAN. What kind of a check, if any, do you make to determine whether the person has the necessary qualifications?

Mr. YOUNG. Well, that is 1 of the 4 points of certification included in this certificate.

The CHAIRMAN. You accept the certification from the head of the agency at face value?

Mr. YOUNG. That is correct, Mr. Chairman.

The CHAIRMAN. So you simply accept what is handed to you? Mr. YOUNG. Well, this authority is given to the head of the agency to meet this four-point requirement in a written certification, and the traditional policy evidently of the Civil Service Commission has been to accept that certificate on its face value.

The CHAIRMAN. Do you not feel that it is the duty of the Civil Service Commission to do more than merely accept on face value the certificate, which is a self-serving declaration, so far as you are concerned?

Mr. YOUNG. Yes; it is a written certificate filed by the head of the agency, and we do not go behind that.

As a result of the changes, and the general concept and policy which has now been established by Congress in the new Defense Production Act, I am asking our staff in the Civil Service Commission to review very carefully our whole policy with respect to inspection under this Executive order.

The CHAIRMAN. The instructions contained in Executive Order 10182, I must say, do not appear to have been followed. You are to determine whether or not these WOC's are actually men of outstanding experience and ability, and that an individual cannot be found among the 2 million Federal employees to fill the position. I think that there has been dereliction on the part of the Civil Service Commission. I say that in all kindness. It may have been the practice, but undoubtedly when the Executive order was issued it was issued on the basis that there be some supervising agency, like the Civil Service Commission, to oversee what the head of the agency is doing. The mere certification to you as to these factors should not be deemed sufficient.

Mr. YOUNG. Well, I think that there is room there, Mr. Chairman, for some difference of opinion and interpretation, and I do not regard the Commission as being derelict in its duty in this interpretation of accepting the certificate of the head of the agency.

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