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    [From the U.S. Government Publishing Office, www.gpo.gov]

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    ATOMIC  POWER  DEVELOPMENT
    AND  PRIVATE  ENTERPRISE

    HEARINGS

    BEFORE  THE

    JOINT  COMMITTEE  ON  ATOMIC  ENERGY

    CONGRESS  OF  THE  UNITED  STATES

    EIGHTY-THIRD  CONGRESS

    FIRST  SESSION

    ON

    ATOMIC  POWER  DEVELOPMENT  AND  PRIVATE  ENTERPRISE

    JUNE  24,  25,  AND  29 ;  JULY  1,  6,  9, 13, 15, 16,  20,  22,  23,  27,  AND  31, 1953

    Printed  for  the  use  of  the  Joint  Committee  on  Atomic  Energy

    ATOMIC  POWER  DEVELOPMENT
    AND  PRIVATE  ENTERPRISE

    HEARINGS

    BE^FORB  tHE  "

    JOINT  COMMITTEE  ON  ATOMIC  ENERGY
    CONGRESS  OF  ttfE  UNITED  STATES

    EIGHTY-THIRD  CONGRESS

    FIRST  SESSION

    ON

    ATOMIC  POWER  DEVELOPMENT  AND  PRIVATE  ENTERPRISE

    JUNE  24,  25,  AND  29;  JULY  1,  6,  9,  13,  15,  16,  20,  22,  23,  27,  AND  31,  1953

    Printed  for  the  use  of  the  Joint  Committee  on  Atomic  Energy

    UNITED  STATES
    GOVERNMENT  PRINTING  OFFICE
    30740  WASHINGTON  :  1953

    Boston  Public  Library-
    Superintendent  of  Documents

    SEP  1  - 1953

    JOINT  COMMITTEE  ON  ATOMIC  ENERGY

    (Created  pursuant  to  Public  Law  585,  79th  Cong.)'

    W.  STERLING  COLE,  New  York,  Chairman
    BOURKE  B.  HICKENLOOPER,  Iowa,  Vice  Chairman

    CARL  HINSHAW,  California
    JAMES  E.  VAN  ZANDT,  Pennsylvania
    JAMES  T.  PATTERSON,  Connecticut
    THOMAS  A.  JENKINS,  Ohio
    CARL  T.  DURHAM,  North  Carolina
    CHET  HOLIFIBLD,  California
    MELVIN  PRICE,  Illinois
    PAUL  J.  KILDAY,  Texas

    EUGENE  D.  MILLIKIN,  Colorado
    WILLIAM  F.  KNOWLAND,  California
    JOHN  W.  BRICKER,  Ohio
    GUY  CORDON,  Oregon
    RICHARD  B.  RUSSELL,  Georgia
    EDWIN  C.  JOHNSON,  Colorado
    CLINTON  P.  ANDERSON,  New  Mexico
    JOHN  O.  PASTORE,  Rhode  Island

    CoKBiN  C.  Allardice,  Executive  Director
    Walter  A.  Hamilton,  Staff  Member  on  Reactor  Development,  Editor

    LIST  OF  WITNESSES  AND  CORRESPONDENTS

    Page

    Atwoocl,  J.  L.,  president,  North  American  Aviation,  luc 324

    Aydelott,  J.  H.,  vice  president.  Association  of  American  Railroads   (sub-
    mitted)   582

    Baclier,  Robert  F.,  California  Institute  of  Technology 585

    Barbour,  William  E.,  Jr.,  president,  Tracerlab,  Inc.  (submitted) 635

    Bechtel,  S.  D.,  of  the  Bechtel  Corp 585

    Beckerley,  J.  G.,  Director  of  Classification,  Atomic  Energy  Commission —  36

    Benedict,  Manson,  Massachusetts  Institute  of  Technology  (submitted) 586

    Biemiller,  Andrew  J.,  member  of  the  national  legislative  committee  of  the

    American  Federation  of  Labor 479

    Blum,  Robert  (submitted) 587

    Bolster,  Calvin  M.,  Chief  of  Naval  Research,  accompanied  by  Maj.  Gen.
    Ernest  M.  Branuon,  Judge  Advocate  General  of  the  Army,  and  Comdr.

    1>.  H.  Dickey,  patent  counsel  for  the  Navy 555

    Boyer,  M.  \V.,  General  Man^igor,  Atomic  Energy  Commission 562

    Braun,  C.  R.,  manager,  atomic  power  section,  AUis-Chalmers  Manufac-
    turing Co 336

    Brown,  Arnold  K.,  executive  vice  president,  American  Machine  &  Foundry

    Co 313

    Brownell,  L.  E.,  University  of  Michigan  (submitted) 595

    Buckley,  Oliver  E.,  member,  General  Advisory  Committee  to  the  Atomic

    Energj^   Commission 596

    Bugher,  John    C,   Director,    Division   of  Biology   and   Medicine,   Atomic

    Energy  Commission 30

    Campbell,  Joseph,  Commissioner,  Atomic  Energy  Commission 562

    Center,  Clark  E..  Carbide  &  Carbon  Chemicals  Co 596

    Cisler,  Walker  L.,  president,  Detroit  Edison  Co 134

    Coats,  J.   E.,   president.   Patent  Law  Association   of  Los  Angeles    (sub-
    mitted)   619

    Cohen,  Karl,  vice  president.  Walter  Kidde  Nuclear  Laboratories,  Inc 259

    Collbohm,  F.  R.,  director,  the  Rand  Corp 625

    Costello,  J.  M.,  executive  vice  president.  South  Carolina  J^lectric  &  Gas

    Co.  (submitted) 628

    Davidson,    W.    L.,    Director,    Office    of    Industrial    Development,    Atomic

    Energy    Commission 26

    Davies,  C.  E.,  secretary,  the  American  Society  of  Mechanical  Engineers..  581

    Davis,  Chester  L.,  attorney  at  law  (submitted) 598

    Dean,    Gordon,    Chairman,    Atomic    Energy    Commission    (term    expired

    June  30,  1953) 5

    Dixon,  Edgar  H.,  chairman,  committee  on  atomic  power,  Edison  Electric
    Institute;  president.  Middle  South  Utilities.  Inc..  accompanied  by  Paul

    Hallingby.  Jr..  assistant  to  the  president.  Middle  South  Utilities,  Inc 434

    Doan,  R.  L.  (sulmiitted) 620

    Donnell,  Alton  P.,  coordinator,  Dow-Edison  project 134

    Doty,  Dale  E.,  member,  accompanied  by  Francis  L.  Adams.  Cluef.  Bureau
    of  Power,  and  Howard  E.  Wahrenbrock.  General  Counsel,  Bureau  of  Law,

    Federal  Power  Commission 114

    Ellis.   Blyde   T.,  executive  manager,   National   Rural   Electric   Co-opera-
    tive Association 357

    Fairman,  J.  F.,  vice  president,  Consolidated  Edison  of  New  York 134

    Ferguson,  Malcolm  P.,  president,  Bendix  Aviation  Corp 398

    Fermi,  Enrico,  University  of  Chicago  (submitted) 601

    Fleger,  Philip  A.,  Duquesne  Light  Co 600

    Ford.  John  Anson,  board  of  supervisors,  County  of  Los  Angeles    (sub-
    mitted)    611

    III

    rv  LIST    OF    WITNESSES    AND    CORRESPONDENTS

    Gale,  Willis,  chairman,  accompanied  by  Murray  Joslin,  vice  president,     rage

    Commonwealth  Edison  Co 205

    Gillespie,  Tyrone,  general  counsel,  Dow  Chemical  Co 134

    Grebe,  Dr.  John,  Dow  Chemical  Co 134

    Greeuewalt,  C.  H.,  president,  E.  I.,  du  Pont  de  Nemours  &  Co 599

    Grisw^old,  Arthur  S.,  assistant  to  the  president,  Detroit  Edison  Co 134

    Gwiun,  W.  P.,  general  manager,  Pratt  &  Whitney  Division,  United  Aircraft

    Corp.  (submitted) 635

    Hafstad,    Dr.    Lawrence  R.,   Director   of    the   Reactor   Division,    Atomic

    Energy   Commission 13

    Haskell,  Broderick,  Combustion  Engineering,  Inc 598

    Havilaud,   Fred   R.,  Jr.,  Director  of  Market  Development,   Minneapolis-
    Honeywell  Regulator  Co.   (submitted) 612

    Hayes,  Willard  C,  chairman,  committee  on  laws  and  rules,  American  Patent

    Law  Association  (submitted) 580

    Hayner,  J.  H.,  Henry  J.  Kaiser  Co • 602

    Hootman,  James  A.,  technical  assistant  to  the  director.  National  Advisory

    Committee  for  Aeronautics 548

    Hyland,  L.  A.,  vice  president  (engineering),  Bendix  Aviation  Corp 398

    Iddles,  Alfred,  president.  The  Babcock  &  Wilcox  Co 377

    Kellogg,  Fred  C,  president.  Pioneer  Service  &  Engineering  Co 192

    Kingston,  Walter  E.,  general  manager.  Atomic  Energy  Division,  Sylvania

    Electric  Products,  Inc : 527

    Lawrence,  Ernest  O.,  University  of  California 602

    LeBaron,  Robert,  Assistant  to  the  Secretary  of  Defens^e  (atomic  energy ) 71

    Lilienthal,  David  E.,  former  Chairman,  Atomic  Energy  Committee    (sub-
    mitted)    603

    Lindseth,  Elmer,  president,  Cleveland  Electric  Illuminating  Co 134

    Loughlin,   Eugene    S.,   president.   National  Association  of  Railroad   and
    Utilities    Commissioners   and   Chairman,   Connecticut  Public   Utilities

    Commission 582

    Malone,    Hon.    George   W.,    United    States    Senator   from    the    State   of

    Nevada 449,453

    McAfee,  J.  W.,  president.  Union  Electric  System,  the  North  American  Co.,

    the  Electric  Energy,  Inc.   (by  Edwin  Putzell) 188

    McCune,   F.   K.,   general  manager,   accompanied   by   Stuart  MacMacklin,

    counsel.  Atomic  Products  Division,  General  Electric  Co 301

    McKay,  Hon.  Douglas,  Secretary  of  the  Interior 98

    Menke,  John  R.,  president.  Nuclear  Development  Associates,  Inc 273

    Miles,   Clarence  R.,  Chamber  of  Commerce  of  the  United   States    (sub-
    mitted)   597

    Mills,  Vice  Admiral  Earle  W.,  president,  Foster  Wheeler  Corp 192

    Morris,    Samuel    B.,    chairman.    Atomic    Power    Policy    Committee,    ac-
    companied by  Alex  Radin,  manager,  American  Public  Power  Association.  420

    Morse,  R.  PI.,  Jr.,  president,  Fairbanks,  Morse  &  Co.  (submitted) 600

    Murphree,  E.  V.,  president.  Standard  Oil  Development  Co.   (submitted)^-  630

    Myres,   Homer   S.,   president.  Radioactive  Products,   Inc.    (submitted) __  624

    Neumann,  John  V.,  University  of  California 612

    Newman,  James  R.,  former  counsel  to  the  Senate  Special  Committee  on

    Atomic  Energy 613

    Olds,  Leland,  Public  Affairs  Institute    (submitted) 513

    Ooms,  Casper,  former  United  States  I'atent  Commissioner  and  Chairman

    of  the  AEC  I'atent  Compensation  Board 457

    Pierce.  Prof.  William  J.,  Law  School,  University  of  Michigan 134

    Pigott,  R.  J.  S.,  iiresident,  Engineers  Joint  Council 544

    Pike,  Sumner  T.,  chairman.  Public  Utilities  Commission,  State  of  Maine—  622
    Pitzer,  K.  S.,  dean.  College  of  Chemisti-y,  University  of  California  (sub-
    mitted ) 623

    Price,  Gwilym  A.,  president,  Atomic  Power  Division,  Westinghouse  Elec-
    tric Corp 278

    Proctor,  P..  E.,  Massachusetts  Institute  of  Technology 624

    Putzell,  Kdvpin  J.,  Jr.,  secretary,  Monsanto  Chemical  Co 171

    Rabi,  I.  I.,  chairman.  General  Advisory  Committee  to  the  Atomic  Energy

    C'nmmission °-

    Riileigli.  Walter,  executive  vice  president,  New  P^ngland  Council 415

    RinclilTe,   R.   G.,   president,    I'hiladelphia   p]lectric    Co 134

    Rowley,  Edward  R.,  production  manager.  National  Lead  Co 390

    LIST    OF    WITNESSES    AND    CORRESPONDENTS  V

    Ruebhausen,   Oscar  M.,   chairman,  special  committee  on  atomic  energy,  J^age

    the  Association  of  the  Bar  of  the  City  of  New  York 469

    Ruml,    Beardsley 642

    Searing,  Hudson  R.,  Consolidated  Edison  Co.  of  New  York 598

    Shugg,  Carleton,  Electric  Boat  Division,  General  Dynamics  Corp.    (sub-
    mitted)   626

    Sigal,  Benjamin  C,  Congress  of  Industrial  Organizations 488

    Smith,  Walter  Bedell,  Under  Secretary  of  State 63

    Smyth,  Dr.  Henry  D.,  Commissioner,  Atomic  Elnergj'  Commission 562

    Sporn.  I'hilip.  president,  American  Gas  &  Electric  Co.    (submitted) 628

    Starr,  Dr.  Chauncey,  director,  Atomic  Energy  Research  Department,  North

    American  Aviation,  Inc 248

    Steiger,  William  A.,  vice  chairman,  Committee  of  Patents,  National  Asso-
    ciation of  Manufacturers 507

    Stevenson,  R.  S.,  executive  president,  by  C.  R.  Braun,  manager,  atomic-
    power  section,  Allis-Chalmers  Manufacturing  Co 336

    Strauss,  Lewis  L.,  Chairman  (effective  date  July  2,  1953),  Atomic  Energy

    Commission 562

    Suits.  Dr.  C.  G.,  chairman,  subcommittee  on  atomic  energ:v  of  the  commit-
    tee on  research  of  the  National  Association  of  Manufacturers 504

    Swisher,  El  wood  D.,  international  president,  United  Gas,  Coke,  and  Chem-
    ical Workers  of  America,  CIO 499

    Teller,    Edward,    radiation    laboratory.    University    of    California    sub-
    mitted)   632

    Thomas,  R.  W.,  vice  president.  Phillips  Petroleum  Co.  (submitted) 620

    Towe,  K.  C,  president,  American  Cyanamid  Co 580

    Voorhis,  Jerry,  executive  director.  Cooperative  League  of  the  U.   S.  A.

    (submitted) 373

    Walker,  Dr.  Eric,  dean,  school  of  engineering,  the  Pennsylvania   State

    College 536

    Ward,  J.  Carleton,  Jr.,  Vitro  Corp.  of  America  (submitted) 638

    Watson,  Robert  C.  Commissioner,  United  States  Patent  Office,  Depart-
    ment of  Commerce  (submitted) 636

    Weaver,  Charles  H.,  manager,  atomic-power  division,  Westinghouse  Elec-
    tric Corp 278

    Weil,  Dr.  George  L.,  former  assistant  director.  Reactor  Development  Divi-
    sion, Atomic  Energy  Commission 346

    Weinberg,  Alvin  M.,  technical  director.  Oak  Ridge  National  Laboratory,

    Atomic  Energy  Commission 240

    Wigner,  Eugene  P.,  professor  of  physics,  Princeton  University 317

    Williams,  Hon.  Walter,  Under  Secretary  of  Commerce 104

    Wilson,  Charles  S.,  chairman,  patent  committee,  Aircraft  Industries  Asso-
    ciation of  America,  Inc.  (submitted) 578

    Zinn,  Walter  H.,  Director,  Argonne  National  Laboratory  Commission 220

    COMPANIES,  GOVERNMENT  AGENCIES.  AND  ORGANIZATIONS  REPRE-
    SENTED AT  THE  HEARINGS  OR  REPLYING  TO  INVITATION  TO  SUB-
    MIT VIEWS

    Page

    Aircraft  Industries  Association  of  America,  Inc 578

    Allis-Chalmers  Manufacturing  Co 336

    American  Bar  Association 636

    American  Cyanamid  Co 580

    American  Federation  of  Labor 479

    Am"i-ican  Gas  &  Electric  Co 628

    American  Machine  &  Foundry  Co 313

    American  Patent  Law  Association 580

    American  Public  Power  Association 420

    American  Society  of  Mechanical  Engineers 581

    Army,   Department  of  the 555

    Association   of  American   Railroads 581

    Association  of  the  Bar  of  the  city  of  New  York 469

    Atomic  Energy  Commission 1 5,  13.  26,  30,  36,  457,  562

    Argonne  National  Laboratoi-y 220

    Oak  Ridge  National  Laboratory 240

    Babcock  &  AVilcox  Co.,  The___l 377

    VI  LIST    OF    WITNESSES    AND    CORRESPONDENTS

    Page

    Bechtel  Corp 585

    Benclix  Aviation  Corp 398

    California  Institute  of  Technology 585

    California,  University  of 602,  612,  623,  632

    Carbide  &  Carbon  Chemicals  Co 240,  596

    Chamber  of  Commerce  of  the  United  States 597

    Chicago,  University  of 601

    Combustion  Engineering,  Inc 598

    Commerce,  Department  of 104,  636

    Commonwealth  Edison  Co 205

    Congress  of  Industrial  Organizations 488

    Connecticut  Public  Utilities  Commission 582

    Consolidated  Edison  Co.  of  New  York,  Inc 598

    Cooperative  League  of  the  U.  S.  A 37;'.

    Defense,  Department  of 71

    Detroit  Edison  Co 134

    Dow  Chemical  Co 134

    Duquesne  Light  Co 600

    Edison  Electric  Institute 434

    E.  I.  du  Pont  de  Nemours  &  Co 599

    Electric  Boat  Division,  General  Dynamics  Corp 626

    Electric  Energy,    Inc 188

    Engineers  Joint  Council 544

    Fairbanks,  Morse  &  Co 600

    Federal  Power  Commission 114

    Foster  Wheeler  Corp 192

    General  Advisory  Committee  to  the  Atomic  Energy  Commission 82,  596

    General  Electric  Co 301

    Interior,  Department  of  the 98

    Kaiser  Co.,  Henry  J 602

    Los  Angeles,  County  of.  Board  of  Supervisors 611

    Massachusetts  Institute  of  Technology 586,  624

    Michigan,   University   of 595

    Middle  South  Utilities,  Inc 434

    Minneapolis-Honeywell  Regulator  Co 612

    Monsanto  Chemical  Co 171

    National  Advisory  Committee  for  Aeronautics 548

    National  Association  of  Manufacturers 504,  507

    National  Association  of  Railroads  and  Utilities  Commissioners 582

    National  Lead  Co 390

    National  Rural  Electric  Cooperative  Association 357

    Navy,  Department  of  the 555

    New  England  Council 415

    North  American  Aviation,  Inc 248,  324

    North  American  Co.,  The 188

    Nuclear  Development  Associates,  Inc 273

    Patent  Law  Association  of  Los  Angeles 619

    Pennsylvania  State  College,  The 536

    Phillips  Petroleum  Co 620

    Pioneer  Service  and  Engineering  Co 192

    Princeton   University 317

    Public  Affairs  Institute 613

    Public  Utilities  Commission,  State  of  Maine 622

    Radioactive  Products,  Inc 624

    Rand  Corp.,  The 625

    South  Carolina  Electric  &  Gas  Co 628

    Standard  Oil  Development  Co 630

    State,  Department  of 63

    Sylvania  Electric  Products,  Inc 527

    Tracerlab,    Inc 635

    Union  Electric  System 188

    United  Aircraft  Coi-p.,  Pratt  &  Whitney  Aircraft  Division 635

    United  Gas,  Coke  &  Chemical  Workers  of  America,  CIO 499

    Vitro  Corp.  of  America 638

    Walter  Kidde  Nuclear  Laboratories,  Inc 259

    Westinghouse  Electric  Corp 278

    Index : 643

    ATOMIC  iPOWER  DEVELOPMENT  AND  PRIVATE
    ENTERPRISE

    WEDNESDAY,   JUNE  24,    1953

    Congress  of  the  United  States,
    Joint  Committee  on  Atomic  Energt,

    Washington^  D.  G.

    The  joint  committee  met  at  2  p.  m.,  pursuant  to  call,  in  room  P-63
    of  the  Capitol,  Hon.  W.  Sterling  Cole  (chairman  of  the  joint  com-
    mittee) presiding.

    Present:  Representative  Cole  (chairman)  presiding,  Senators
    Hickenlooper  (vice  chairman),  Bricker,  and  Pastore;  and  Repre-
    sentatives Van  Zandt,  Jenkins,  Durham,  Holifield,  and  Price.

    Professional  staff  members  present :  Corbin  C.  Allardice,  executive
    director;  and  Wayne  P.  Brobeck,  Francis  P.  Cotter,  Walter  A.
    Hamilton,  Edward  L.  Pleller,  J.  Kenneth  Mansfield,  and  George  Nor-
    ris,  Jr.,  of  the  professional  staff  of  the  joint  committee.

    Chairman  Cole.  The  committee  will  come  to  order.

    The  purpose  of  this  meeting  of  the  committee  today  is  to  have  the
    Atomic  Energy  Commission  present  formally  and  in  public  its  decla-
    ration of  policy  with  respect  to  the  use  of  atomic  energy  for  the  pro-
    duction of  industrial  electrical  energy.

    The  Chair  would  like  to  submit  for  the  record  a  joint  statement  by
    Senator  Hickenlooper,  the  vice  chairman,  and  the  chairman,  released
    last  week,  with  respect  to  the  calling  of  this  meeting.

    (The  statement  referred  to  follows :)

    The  Joint  Committee  on  Atomic  Energy  today  decided  that  it  could  now  proceed
    witli  public  hearings  on  the  problems  involved  in  determining  national  policy
    toward  the  development  of  atomic  energy  for  power  purposes  without  harming  in
    any  way  the  national  security  of  the  United  States.

    Public  hearings  on  the  subject,  and  continued  executive  hearings,  if  necessary,
    are  endorsed  and  encouraged  by  the  administration  as  well  as  by  the  joint
    committee.

    The  Atomic  Energy  Commission  submitted  on  May  26,  at  the  request  of  the
    joint  committee,  a  jwlicy  statement  on  atomic-power  development.  The  legisla-
    tive provisions  outlined  in  that  policy  statement  are  in  accord  with  the  views  of
    the  National  Security  Council.  Tlie  joint  committee  feels  that  it  is  necessary  to
    develop  a  public  understanding  of  the  subject  before  determining  whether  a  legis-
    lative expression  of  national  policy  should  be  made.

    The  series  of  public  hearings  that  we  are  about  to  begin  is  directed  toward
    public  understanding  of  the  problem.  In  the  next  session  of  Congress  we  will  be
    able  to  direct  our  attention  to  the  question  of  the  desirable  legislative  language.

    Over  the  past  2  months  the  Joint  Committee  on  Atomic  Energy  has  held  12
    executive  hearings  on  atomic-power  development.  It  has  become  amply  clear  to
    us  and,  we  believe,  to  our  colleagues  on  the  committee  that  the  great  promise  of
    utilizing  the  overwhelming  energy  locked  within  nuclei  of  atoms  for  the  produc-
    tion of  power  to  lessen  man's  burdens  places  upon  us  a  responsibility  to  our
    fellowmen  that  is  both  solemn  and  joyful.

    It  is  solemn  because  it  goes  to  the  very  root  of  poverty,  hunger,  strife,  and,  yes,
    even  of  war  in  the  world  today.  Solemn  indeed  is  the  increasing  discrepancy
    between  man's  requirement  for  energy  in  modern  civilization  and  his  ability  to
    provide  it  for  the  use  of  an  expanding  world  population.

    1

    2  ATOMIC    POWER    DEVELOPMENT

    It  is  joyful  because  upon  our  successful  fulfillment  of  that  responsibility  there
    will  open  to  this  Nation — and,  it  is  our  prayer,  to  the  whole  world — a  new  source
    of  energy.  Here  is  a  source  of  energy  truly  primordial  in  nature,  the  application
    of  which  promises  to  go  far  toward  counterbalancing  the  depressing  influences  of
    world  power  shortages,  of  food-population  relationships,  and  of  the  bitter  struggle
    for  existence  against  overwhelming  odds  in  certain  fireas  of  the  world.

    The  question  may  be  asked  if  this  is  the  time  to  consider  entering  into  what
    we  choose  to  term  the  atomic  power  race.  The  battle  for  the  minds  of  men  in
    which  we  of  the  Christian-Judaic-Moslem  ethic  on  the  one  hand  and  the  Soviet
    atheistic  materialists  on  the  other  are  engaged  makes  it  so.  It  is  urgent — and  we
    use  the  term  in  its  truest  sense — for  our  national  welfare  and  for  our  national
    defense  that  we  do  not  lose  the  momentum  that  has  been  gained  by  $12  billion
    expended  on  the  development  of  atomic  energy.  It  is  not  enough  that  this  ex-
    penditure has  bought  us  the  very  essential  of  military  defense  in  the  form  of  our
    atomic-weapon  stockpile.  We  must  do  more ;  we  must  show  ourselves  and  the
    world  that  the  industrial  vigor  of  America  continues  to  lead  the  way  to  a  decent
    standard  of  living  today,  tomorrow,  and  always  for  us  and  for  our  friends.  Not
    to  do  so  would  be  proof  of  suicidal  folly.

    Chairman  Cole.  In  addition,  the  Chair  has  an  opening  statement
    which  he  requests  the  indulgence  of  the  committee  in  order  to  present
    for  the  record.

    This  is  the  first  of  a  series  of  public  hearings  on  the  posisble  devel-
    opment of  atomic  energy  for  industrial  power.  The  Joint  Committee
    on  Atomic  Energy  plans  to  hold  meetings  on  this  subject  throughout
    the  month  of  July.  We  hope  that  when  these  hearings  are  concluded
    the  Congress  and  the  American  people  will  have  a  better  understand-
    ing of  the  prospects  for  atomic-power  development,  along  with  a
    fuller  appreciation  of  the  problems  which  must  be  solved  before  we
    can  generate  useful  quantities  of  electrical  energy  from  atomic
    reactors.

    Over  the  past  2  months  our  committee  has  devoted  more  than  a  dozen
    executive  meetings  to  this  problem.  We  have  taken  testimony  from
    ranking  officials  in  the  executive  branch;  we  have  had  before  us
    representatives  of  the  private  companies  which  have  participated  in
    atomic-power  studies  under  AEC  security  clearance.  These  execu-
    tive sessions  have  shed  light  on  many  important  issues.  They  have
    helped  us  define  the  key  policy  questions — the  questions  which  must
    be  answered  before  the  Congress  and  the  administration  can  formulate
    a  program  for  maximizing  the  contribution  which  industrial  atomic
    power  can  make  to  the  security  and  welfare  of  our  Nation.

    Last  week  the  joint  committee  decided  it  could  now  proceed  with
    public  hearings  without  jeopardizing  the  national  security.  We  are
    taking  great  pains  to  avoid  the  possibility  of  security  breaches.  We
    will,  for  instance,  ask  each  witness  to  give  us  his  affirmative  assurance
    in  writing  that  he  understands  no  classified  matters  are  to  be  dis-
    cussed in  these  open  hearings.

    The  purpose  of  these  public  hearings  is  simple.  They  aim  at  giving
    the  joint  committee,  the  Congress,  and  the  American  people  a  more
    comjjrehensive  and  accurate  understanding  of  the  problems  which
    our  Nation  faces  in  developing  atomic  energy  for  peacetime  power.
    All  the  committee  members  agree  that  such  an  understanding  must
    precede  any  examination  of  possible  changes  in  the  Atomic  Energy
    Act  of  194G.  In  this  connection  the  Director  of  the  Bureau  of  the
    Budget  has  informed  us  that  the  executive  branch  will  not  be  able  to
    transmit  fully  coordinated  legislative  recommendations  to  the  Con-
    gress in  the  immediate  future.

    ATOMIC    POWER    DEVELOPMENT  3

    Our  committee  hopes  that  these  forthcoming  hearings  will  lay  the
    groundwork  for  determining  what  changes  in  the  organic  law,  if  any,
    sliould  be  considered  during  the  next  session  of  the  Congress.

    Every  member  of  this  committee  trusts  that  partisan  considerations
    will  not  enter  into  the  framing  of  national  policy  toward  the  develop-
    ment of  atomic  power.  As  chairman,  I  can  assure  the  committee  and
    the  public  that  such  considerations  have  played  no  part  whatsoever
    in  the  joint  committee's  deliberations  on  this  problem.

    Our  Nation's  atomic  enterprise  represents  a  $12  billion  investment.
    In  developing  atomic  power,  we  must  not  risk  the  loss  of  the  mo-
    mentum which  has  been  so  dearly  bought  with  Federal  funds.  At
    the  same  time  we  must  guard  against  overly  hasty  formulation  of
    national  policy.  The  implications  of  atomic  power  for  the  future
    well-being  of  our  country  are  simply  too  far  reaching  to  permit  ill-
    considered  action.

    I  anticipate  that  these  hearings  will  reveal  wide  differences  of
    opinion  concerning  the  content  of  prudent  public  policy  in  this  field.
    It  would  be  surprising  if  it  were  otherwise.  We  are,  after  all,  scarcely
    10  years  into  the  atomic  age,  and  we  have  yet  to  build  the  first  reactor
    producing  useful  amounts  of  electricity.  No  man  can  pretend  to  a
    monopoly  of  wisdom  in  these  matters.

    No  man  can  now  advance  final  answers  to  such  fundamental  ques-
    tions as  these :

    How  will  the  development  of  atomic  power  bear  upon  the  military
    security  of  the  United  States  ?

    How  will  unfolding  progress  in  this  area  affect  America's  leader-
    ship of  the  free  worlds

    Whose  money  should  be  used  to  develop  atomic  power — the  tax-
    payers' or  private  investors' — and  in  what  proportion  ?

    What  type  of  policy  will  best  protect  the  public's  multi-billion-
    dollar  investment  in  the  national  atomic  energy  program  ?

    How  can  the  genius  and  skill  of  the  American  private  enterprise
    best  be  enlisted  in  developing  atomic  power  ?

    How  can  we  reconcile  wider  participation  of  free  enterprise  with
    the  requirements  of  atomic  security?

    Concerning  these  questions  reasonable  men  can  have,  and  no  doubt
    will  have,  reasonable  differences  of  opinion.

    There  is  virtually  unanimous  agreement  that  large  quantities  of
    electricity  can  be  derived  from  atomic  energy.  But  I  do  not  believe
    that  any  person  who  has  lived  with  this  problem  expects  atomic  power
    to  be  widely  competitive  in  the  United  States  with  electricity  gen-
    erated from  low-cost  conventional  fuels  by  the  day  after  tomorrow.
    Yet  costs  will  go  down  as  our  knowledge  and  experience  increase.
    Moreover,  present  cost  estimates  are  largely  speculative,  and  we  will
    not  actually  know  how  much  atomic  power  costs  until  we  produce  it.

    The  revolution  which  will  someday  be  wrought  in  our  lives  by  in-
    dustrial uses  of  atomic  power  will  not  be  heralded  by  the  blaring  of
    tnimpets.  We  will  not  go  to  sleep  one  night  in  the  preatomic  power
    age  and  wake  the  next  morning  in  a  world  transformed.

    Only  a  little  more  than  a  decade  has  passed  since  man  first  demon-
    strated the  atomic  chain  reaction.  The  very  fact  that  we  are  here  to-
    day, considering  how  Ave  will  proceed  to  utilize  energy  from  the
    atom's  core  for  power,  is  in  itself  a  remarkable  thing.    It  should  give

    4  ATOMIC    POWER    DEVELOPMENT

    heart  and  encouragement  to  our  people  and,  indeed,  to  all  peoples
    of  the  world.  It  is  a  mark  of  tribute  to  the  foresight  and  creative-
    ness  of  our  scientists,  and  it  is  a  measure  of  our  industrial  might.

    I  am  confident  that  the  second  decade  of  this  atomic  age  will  mean
    as  much  for  our  Nation's  welfare  as  the  first  decade  has  meant  for  our
    Nation's  security.

    I  foresee,  moreover,  the  day — through  perhaps  only  our  children  or
    their  children  will  live  to  see  it — when  atomic  power  will  change  man's
    material  lot  as  profoundly  as  it  was  altered  by  the  invention  of  the
    steam  engine.  I  foresee  the  day  when,  thanks  largely  to  the  help  of
    atomic  power,  the  age-old  poverty  of  Asia  and  Africa  may  at  least  be
    conquered.

    The  requirements  of  national  defense  have  so  far  forced  us  to  con-
    centrate on  military  applications  of  atomic  energy.  We  need  not
    apologize  for  this  necessary  emphasis.  We  produce  atomic  weapons
    with  deep  reluctance;  we  produce  them  because  the  defense  of  our
    country  and  the  free  world  so  requires;  we  produce  them  because
    our  earnest  strivings  for  international  control  over  all  armaments  have
    been  rebuffed,  time  and  again,  by  the  Soviet  government.

    Yet  the  elemental  force  of  the  split  atom — the  force  which  protects
    this  Nation  in  the  form  of  atomic  weapons — will  someday  be  harnessed
    to  make  this  world  nearer  our  hearts'  desires.  It  will  be  harnessed  to
    allay  human  wretchedness.  It  will  be  harnessed  to  elevate  the  dignity
    of  man.

    We,  of  this  Nation,  have  a  continuing  obligation  to  remind  all  men
    of  good  will  that  we  are  not  blind  to  the  peacetime  side  of  atomic
    energy.  I  will  go  further.  I  will  say  that  we  have  a  positive  obliga-
    tion to  show  decent  people  everywhere — by  deed  as  well  as  by  word —
    that  we  wish  to  share  the  benefits  of  peacetime  atomic  energy  with  all
    free  peoples.

    It  is  the  fervent  hope — it  is  the  prayer — of  all  of  us  on  this  committee
    that  these  hearings  will  help  make  this  fact  known  to  the  world.

    The  first  witness  of  the  meeting  this  afternoon  is  Mr.  Gordon  Dean,
    Chairman  of  the  Atomic  Energy  Commission.

    Mr.  Dean,  I  am  sure  you  share  with  me  the  feeling  of  some  bewilder-
    ment in  sitting  across  the  table  under  circumstances  such  as  we  have
    here  today.  Heretofore  you  and  your  associates  have  visited  with  the
    joint  committee  on  frequent  occasions  behind  locked  doors  guarded  by
    uniformed  personnel.

    It  is  quite  appropriate,  I  think,  that  this  last  visit  which  you  have
    with  the  joint  committee — at  least,  I  expect  it  will  be  the  last — should
    take  place  under  such  circumstances,  and  that  finally  you  can  come
    out  from  the  dungeon  of  security  and  seclusion  in  which  you  and  your
    colleagues  have  worked  heretofore,  into  the  broad,  glaring,  bright  light
    of  public  scrutiny.  A  light  that  is  broad  and  glaring  both  figuratively
    as  well  as  literally  today.

    Let  me  say  to  you,  Mr.  Dean,  speaking  for  myself,  and  as  a  result  of
    my  experience  through  the  years  on  this  committee,  that  as  you  leave
    your  post  as  Chairman,  you  carry  with  you  the  deep  respect,  admira-
    tion, and  appreciation,  I  am  sure,  of  every  member  of  the  committee.

    To  me,  it  is  a  remarkable  accomplishment  you  have  made.  It  has
    also  been  a  source  of  great  encouragement  personally.  When  I  con-
    sider that  a  farmer  can  come  from  the  State  of  California  and  take
    hold  of  this  gigantic  atomic  energy  program  and,  under  his  guidance,

    ATOMIC    POWER    DEVELOPMENT  5

    carry  it  to  the  degree  of  accomplishment  which  you  have  done,  with
    the  minimum  of  criticism  that  has  been  directed  to  the  operations
    since  you  have  taken  over,  I  am  heartened  as  a  farmer  from  New  York
    to  attempt  to  fulfill  my  own  responsibilities  in  the  program.

    I  pay  my  deepest  respects  to  you.  The  country  owes  you  a  great
    debt  of  gi^atitude  for  the  fine  job  you  have  done.

    With  that,  we  will  turn  it  over  to  you,  Mr.  Dean,  to  give  us  the
    statement  that  you  are  prepared  to  submit.

    STATEMENT  OF  GORDON  DEAN,  CHAIRMAN  OF  THE  UNITED  STATES
    ATOMIC  ENERGY  COMMISSION

    Mr.  Dean.  You  have  been  most  kind,  Mr.  Chairman,  particularly  in
    these  last  remarks,  and  most  generous.  I  wish  to  assure  you  on  my
    last  appearance  before  the  joint  committee  how  sincerely  I  have
    appreciated  the  association  between  the  members  of  the  Commission
    and  the  staff  on  the  one  hand,  and  the  members  of  the  joint  committee
    on  the  other.  It  has  been  an  altogether  pleasant  relationship,  and  I
    hope  it  has  been  productive  of  many  good  things  that  we  have
    worked  out  in  common.

    One  of  the  things  about  a  chairman  who  has  to  front  for  a  commis-
    sion of  this  kind  is  that  he  must  not  only  take  criticism  for  some
    things  he  does  not  do,  but  he  must  also  take  credit ;  and  I  assure  you
    that  taking  the  credit  is  a  lot  of  fun.

    I  would  also  like  to  say,  at  the  openinp;,  that  I  think  I  can  safely
    say  that  those  of  us  on  the  Commission  subscribe  to  every  single  word
    of  your  opening  statement  concerning  atomic  power.

    I  think  perhaps  the  document  with  which  we  should  commence
    is  the  Statement  of  Policy  on  Nuclear  Power  Development  which
    was  shaped  up  by  the  Commission  in  the  course  of  the  last  few
    months.  Before  reading  it  into  the  record,  I  should  like,  however,  to
    read  a  very  short  preface  to  that  Statement  of  Policy  on  Nuclear
    Power  Development.

    From  the  time  the  first  self-sustaining  nuclear  chain  reactor  was
    demonstrated  10  years  ago,  the  eventual  technical  fea,sibility  of  nu-
    clear power  has  been  accepted.  Developments  in  nuclear  reactors
    since  that  time,  including  submarine  powerplants  and  production  of
    token  quantities  of  electric  power  by  the  experimental  breeder  reactor
    at  Arco  and  the  homogeneous  reactor  experiment  at  Oak  Ridge,  have
    served  to  reinforce  confidence  in  the  ultimate  commercial  practi-
    cability of  nuclear  power.  Additional  evidence  of  this  confidence  is
    reflected  in  tlie  increasing  interest  on  the  part  of  industry  to  con-
    tribute more  fully  to  this  development.

    However,  the  general  availability  in  this  country  of  relatively  in-
    exi)ensive  sources  of  energA-  such  as  coal,  oil.  and  hydropower,  places
    a  severe  economic  requirement  on  competitive  nuclear  power.  A
    nuclear  plant  built  on  the  basis  of  today's  technology  could  not  com-
    pete with  conventional  power.  Yet  it  would  be  misleading  to  evalu-
    ate the  future  prospects  for  economic  nuclear  power  on  the  basis  of
    estimates  of  near-future  performance.  We  must  understand  that  the
    nuclear  reactor  research  of  the  past  years  served  specialized  military
    needs  and  was  not  aimed  specifically  at  the  production  of  economic
    power.     Although  a  difficult  development  period  lies  ahead,  there

    6  ATOMIC    POWER    DEVELOPMENT

    is  considerable  optimism  that  economic  nuclear  power  can  be  attai  'led
    within  a  few  years.

    It  is  the  judgment  of  the  Commission  that  now  is  the  time  to  announce
    a  positive  policy  designed  to  recognize  the  development  of  economic
    nuclear  power  as  a  national  objective.  An  important  element  of  this
    policy  is  to  promote  and  encourage  free  competition  and  private  in-
    vestment in  the  development  work,  while  at  the  same  time  accepting
    on  the  part  of  Government  certain  responsibilities  for  furthering  I  ech-
    nical  progress  in  this  field  to  provide  a  necessary  basis  for  such
    development.

    While  we  conclude  that  atomic  power  has  not  yet  been  developed  to
    the  point  of  economic  use,  and  that  the  time  is  not  yet  at  hand  for  the
    report  called  for  in  section  7  (b)  of  the  Atomic  Energy  Act,  we  do
    believe  it  is  imperative  that  we  create  a  favorable  atmosphere  which
    will  hasten  that  day.  We  believe  that  the  United  States  should  con-
    tinue in  its  present  position  of  leadership  among  those  nations  striving
    to  promote  the  peacetime  applications  of  atomic  energy.  As  a  n^i.tion
    we  should  not  delay  the  development  of  this  great  potential  source  of
    energy  for  constructive  purposes  until  circumstances  force  us  to  attempt
    its  practical  realization  on  a  short-time  scale.

    To  this  end,  the  Atomic  Energy  Commission  has  endorsed,  as  a
    basis  for  discussion  with  other  executive  agencies  and  the  Congress,
    the  attached  statement  of  policy  on  the  development  of  nuclear  power.

    I  should  like  to  read  the  policy  statement  itself.

    1.  We  believe  the  attainment  of  economically  competitive  nuclear
    power  to  be  a  goal  of  national  importance.  Reactor  technology  has
    progressed  to  the  point  where  realization  of  this  goal  seems  achievable
    in  the  foreseeable  future  if  the  Nation  continues  to  support  a  strong
    development  effort.  It  would  be  a  major  setback  to  the  position  of
    this  country  in  the  world  to  allow  its  present  leadership  in  nuclear
    power  development  to  pass  out  of  its  hands.

    2.  Accordingly,  we  recognize  it  as  a  responsibility  of  the  Commis-
    sion to  continue  research  and  development  in  this  field  and  to  promote
    the  construction  of  experimental  reactors  which  appear  to  contribute
    substantially  to  the  power  reactor  art  and  constitute  useful  contribu-
    tions to  the  design  of  economic  units.

    3.  In  addition,  it  is  the  conviction  of  the  Commission  that  progress
    toward  economic  nuclear  power  can  be  further  advanced  through  par-
    ticipation in  the  development  program  by  qualified  and  interested
    groups  outside  the  Commission.

    4.  We  recognize  the  need  for  reasonable  incentives  to  encourage
    wider  participation  in  power  reactor  development  and  propose  the
    following  moves  to  attain  this  end :

    (a)  Interim  legislation  to  permit  ownership  and  operation  of  nu-
    clear poAver  facilities  by  groups  other  than  the  Commission.

    ( b )  Interim  legislation  to  permit  lease  or  sale  of  fissionable  material
    under  safeguards  adequate  to  assure  national  security.

    (c)  Interim  legislation  which  would  permit  owners  of  reactors  to
    use  and  transfer  fissionable  and  byproduct  materials  not  purchased
    by  tlie  Commission,  subject  to  regulation  by  the  Commission  in  the
    interest  of  security  and  public  safety.

    (d)  The  performance  of  such  research  and  development  work  in
    Commission  laboratories,  relevant  to  specific  power  projects,  as  the
    Conunission  deems  warranted  in  the  national  interest-

    ATOMIC    POWER    DEVELOPMENT  7

    (e)  More  liberal  patent  rights  than  are  presently  granted  to  out-
    side groups  as  may  seem  appropriate  to  the  Commission  and  consistent
    with  existing  law.

    (/)  Consideration  of  a  progressively  adjusted  code  for  safety  and
    exclusion  area  requirements  as  may  appear  reasonable  in  the  light  of
    operational  experience  with  reactors.  Competent  State  authorities
    Avill  be  encouraged  to  assume  increasing  responsibility  for  safety
    aspects  of  reactor  operation.  Financial  responsibility  associated  with
    reactor  operation  will  be  assigned  to  the  owners,  in  keeping  with  nor-
    mal industrial  practice.

    (g)  Giving  full  recognition  to  the  importance  reactor  technology
    to  our  national  security,  a  progressively  liberalized  information  policy
    in  the  power  reactor  field  as  increasing  activity  justifies.

    5.  It  is  the  objective  of  this  policy  to  further  the  development  of
    nuclear  plants  which  are  economically  independent  of  Government
    commitments  to  purchase  weapons-grade  plutonium.

    6.  We  view  the  next  few  years  as  a  period  of  development  looking
    toward  the  realization  of  practical  nuclear  power.  On  this  basis  we
    concludo  that  the  time  is  not  yet  at  hand  for  the  report  called  for  in
    section  T  (b)  of  the  Atomic  Energy  Act  of  1946.

    1  should  now  like  to  make  a  brief  statement  concerning  why  the
    Commission  saw  fit  at  this  time  to  draft  such  a  statement,  and  I  think
    there  are  three  points  that  might  be  made  :

    1.  It  has  emerged  from  several  years  of  experience  with  reactors
    of  one  sort  or  another.

    We  have  had,  as  you  know,  production  reactors  in  operation  since
    the  early  days  of  World  War  II.  We  have  had,  in  addition,  experi-
    ence with  various  experimental  reactors  such  as  the  materials-testing
    reactor,  the  breeder  reactor  at  Arco,  experiments  at  Oak  Ridge,  and
    we  have  also  had  considerable  work  on  long-range  reactor  projects
    such  as  breeder  reactors  and  homogeneous  reactors.

    All  of  these  have  developed  to  the  place  where  we  think  the  time
    has  come  to  make  sucli  a  statement.

    I  should  also  like  to  point  out  that  what  we  do  here  is  quite  consist-
    ent with  the  directives  to  the  Atomic  Energy  Commission  as  they  are
    set  forth  in  the  Atomic  Energy  Act  of  1946,  and  I  should  like  to  refer
    to  several  sections  of  that  act.

    Section  1  (a)  of  the  act  states :

    Research  and  experimentation  in  the  field  of  nuclear  chain  reaction  laave  at-
    tained the  stage  at  wliich  the  release  of  atomic  energy  on  a  large  scale  is  prac-
    tical. The  significance  of  the  atomic  bomb  for  military  purposes  is  evident.
    The  effect  of  the  use  of  atomic  energy  for  civilian  purposes  upon  the  social,
    economic,  and  political  structures  of  today  cannot  now  be  determined.

    This  was  written  in  1946.

    It  is  a  field  in  which  unknown  factors  are  involved.  Therefore,  any  legisla-
    tion will  necessarily  be  siibject  to  revision  from  time  to  time.  It  is  reasonalble  to
    anticipate,  however,  that  tapping  this  new  source  of  energy  will  cause  pro-
    found changes  in  our  present  way  of  life.  Accordingly,  it  is  hereby  declared
    to  be  the  policy  of  the  people  of  the  United  States  that,  subject  at  all  times  to
    the  paramount  objective  of  assuring  the  common  defense  and  security,  the  de-
    velopment and  utilization  of  atomic  energy  shall,  so  far  as  practicable,  be
    directed  toward  improving  the  public  welfare,  increasing  the  standard  of  liv-
    ing, strengthening  free  competition  in  private  enterprise,  and  promoting  world
    peace.

    8  ATOMIC    POWER    DEVELOPMENT

    In  addition  to  this  provision  of  the  act,  section  3  (a)  provides  in  part
    as  follows:

    The  Commission  is  directed  to  exercise  its  powers  in  such  manner  as  to  in-
    sure the  continued  conduct  of  research  and  development  activities  in  the  fields
    specified  belovp  by  private  or  public  institutions  or  persons  and  to  assist  in  the
    acquisition  of  an  everexpanding  fund  of  theoretical  and  practical  knowledge  in
    such  fields.  The  Commission  is  authorized  to  conduct  research  and  develop-
    ment activities  relating  to

    It  then  lists  four  separate  fields,  and  the  fourth  one  listed  in  the  act
    reads  as  follows :

    Utilization  of  fissionable  and  radioactive  materials  and  processes  entailed  in
    the  production  of  such  materials  for  all  other  purposes,  including  industrial
    uses  *  *  *

    There  is  another  provision  of  the  act  which  anticipates  the  day
    when  economical  power  from  the  atom  would  be  available,  and  I  re-
    fer to  section  7  (b)  of  the  act.    It  reads :

    (b)  Repokt  to  Congress. — Whenever  in  its  opinion  any  industrial,  commer-
    cial, or  other  nonmilitary  use  of  fissionable  material  or  atomic  energy  has  been
    sufficiently  developed  to  be  of  practical  value,  the  Commission  shall  prepare  a
    report  to  the  President  stating  all  the  facts  with  respect  to  such  use,  the  Com-
    mission's estimate  of  the  social,  political,  economic,  and  international  effects
    of  such  use  and  the  Commission's  recommendations  for  necessary  or  desirable
    supplemental  legislation.  *  *  *  The  President  shall  then  transmit  this  report
    to  the  Congress  together  with  his  recommendations  *  *  *.

    The  Commission  has  re{)orted  the  current  state  of  development  to
    the  joint  committee.  It  has  done  this  in  several  executive  sessions,
    as  the  chairman  of  the  committee  has  pointed  out.  It  has  explained
    to  the  joint  committee  why  it  is  not  following  at  this  time  the  pro-
    cedure set  forth  in  section  7  (b),  and  I  think  it  is  important  that
    we  make  the  record  very  clear  at  this  point  precisely  why  this  pro-
    cedure is  not  followed.

    Section  7  (b)  obviously  envisaged  a  day  when  methods  of  securing
    power  had  been  sufficiently  developed — and  it  uses  that  phrase — that
    they  can  be  said  to  have  a  "practical  value."  We  understand  these
    words  to  mean  a  nonmilitary  value  and  a  value  which  is  practical
    in  the  sense  of  economics.  We  have  not  reached  this  point  in  reactor
    technology.  We  see  it  on  the  near  horizon,  but  the  time  is  not  here.
    As  we  have  stated  in  our  power  policy  statement,  we  see  the  next
    few  years  as  a  period  of  development  looking  toward  the  realization
    of  practical  nuclear  power.  On  this  basis  we  conclude  that  the  time
    described  in  section  7  (b)  is  not  yet  at  hand.

    It  is  the  obligation  of  the  Commission  under  the  act  to  keep  the
    joint  committee  fully  and  currently  advised.  It  is  also  the  obliga-
    tion of  the  Commission  under  section  17  of  the  act  to  "submit  to  the
    Congress  in  January  and  July  of  each  j^ear  a  report  concerning  the
    activities  of  the  Commission."     This  same  section  also  provides :

    The  Commission  shall  include  in  such  report  and  shall  at  such  other  times
    as  it  deems  desirable  submit  to  the  Congress  such  recommendations  for  addi-
    tional legislation  as  the  Commission  deems  necessary  or  desirable.

    It  was  pursuant  to  these  several  provisions  of  the  act  that  the  Com-
    mission has  reported  in  executive  session  to  the  joint  committee.  Your
    committee  felt  that  the  issues  raised  in  these  reports  were  of  sufficient
    interest  to  justify  a  public  hearing,  and  we  are  here  in  response  to
    an  invitation  from  your  committee.

    ATOMIC    POWER    DEVELOPMENT  9

    So  much,  then,  for  the  legislative  basis  for  coming  forward  with
    a  power  policy  statement  and  recommendations  to  the  committee.

    A  third  point  that  I  should  like  to  make,  which  has  to  do  generally
    with  the  question  of  why  a  power  policy  statement  at  this  time,  has
    to  do  with  the  recent  interest  on  the  part  of  a  group  of  industrial
    concerns.

    Approximately  a  year  and  a  half  ago,  the  Commission,  at  the  re-
    quest of  several  American  industrial  concerns,  cleared  the  appropri-
    ate officials  and  employees  of  these  companies  in  order  that  they  might
    dictermine  the  state  of  the  reactor  art  of  this  country  and  judge
    whether  the  time  is  emerging  for  the  entry  of  private  capital  into  the
    field  of  reactors  designed  t  >  produce  power.

    I  understand  that  these  groups  will  be  called  before  your  committee
    at  public  sessions,  and  you  will  hear  directly  from  them  their  experi-
    ence with  this  fi^-year  survey.

    In  general,  I  think  it  is  fair  to  say  that  each  of  the  groups  is  anxious
    to  continue  its  joint  studies  with  our  people,  and  that  not  one  of  the
    groups  was  pessimistic.

    One  of  the  reasons  why  the  Commission  is  emphasizing  the  develop-
    ment of  power  reactors  and  why,  during  a  period  of  development,  it  is
    anxious  to  bring  into  the  picture,  in  the  interest  of  speeding  develop-
    ment, the  brains  of  American  industry,  stems  from  the  challenge  of
    meeting  the  enormous  and  increasing  demands  for  energy  of  our  in-
    dustrial society.  The  potentialities  of  energy  through  uranium  are
    best  illustrated  by  comparison  with  coal.  One  pound  of  uranium —
    that  is,  a  cube  approximately  1  inch  by  1  inch  by  1  inch — has  within
    it  potentially  releasable  energy  equal  to  2,600,000  pounds  of  coal.

    Uranium  is  distributed  occasionally  in  the  earth's  surface  in  fairly
    rich  deposits,  but  even  where  this  is  not  the  case  it  is  widely  distributed
    in  low  concentrations  throughout  most  of  the  earth's  surface.  In  fact,
    if  the  cost  of  extraction  were  not  a  problem,  the  amount  of  uranium
    in  any  ton  of  granite  has  the  same  energy  potential  as  that  of  a  ton
    of  coal.

    I  think  it  might  be  well  at  this  point  to  give  some  indication  of  the
    energy  reserves  as  they  are  estimated  throughout  the  world.  Someone
    has  come  up  with  a  symbol  which  we  shall  call  IQ,  and  it  simply  is  a
    unit,  and  is  equal  to  lO^^  B.  t.  u.'s.  These  figures,  I  think,  will  be  of
    interest  to  the  committee.

    They  show  that  from  the  year  1  to  18G0  the  world  used  6Q.

    From  the  year  1860  to  1947,  a  much  more  contracted  period,  the
    world  used  4Q.

    In  the  year  1950,  the  world  used  1/5Q  in  the  1  single  year.

    In  the  year  2000,  by  best  estimates,  the  world  will  use'lQ.

    The  world  reserves  of  oil  and  gas  are  estimated  at  something  on  the
    order  of  8Q.

    The  world  reserves  of  coal,  something  on  the  order  of  72Q.

    The  world  reserves  of  uranium,  assuming  that  you  want  to  mine
    uranium  at  a  cost  of  something  on  the  order  of  $100  per  pound,  con-
    siderably more  than  we  now  pay,  would  be  on  the  order  of  1,700Q.
    ^  Senator  Bricker.  That  is  the  utilization  of  what  part  of  the  poten-
    tial power?

    JNIr.  Dean.  This  assumes  a  complete  utilization,  Senator,  of  all  of
    the  atoms  in  the  uranium.

    10

    ATOMIC    POWER    DEVELOPMENT

    Therefore,  if  we  can  accept  these  figures — and  we  must  admit,  I  am
    sure,  that  there  is  considerable  crystalballing  involved  in  any  such
    estimates — the  world  reserves  of  uranium  are  23  times  the  world's
    reserves  of  all  fossil  fuels — petroleum,  gas,  and  coal.

    Now,  I  should  like,  if  there  is  a  chart  available  here,  to  show  you
    the  estimated  demands  for  this  energy.

    We  have  referred  to  the  fuels  themselves

    Representative  Van  Zandt.  May  I  ask  a  question  there  ?

    Did  you  say  "graphite"  or  "granite"  ?

    Mr.  Dean.  "Granite";  yes,  sir.

    (The  chart  referred  to  follows:)

    US  CONSUMPTION  OF  PRIMARY  ENERGY
    in  the  20th  Century  may  look  like  this

    TRILLIONS  OF  BTUS  PER  YEAR
    200,000
    (OZQ)

    1900    10       20      30      40      50      60      70      80      90     2000
    CALENDAR  YEARS

    WITH  FLUID  FUELS  increasing  to

    75°o  OF  TOTAL  ENERGY  CONSUMP.

    PERCENT  OF  TOTAL

    I  no

    ndl     1 1 1  I

    20        40        60        80     2000

    AND  ELECTRICITY  CONSUMPTION

    INCREASING  8  TIMES  IN  NEXT  50  YRS.

    BILLIONS  OF  KWH

    4000

    ■.-16  TIMES-
    INCREASE

    8  TIMES -
    INCREASE

    .^sSi

    20        40       60         80        ^000

    Mr.  Dean.  This  little  chart  which  has  been  prepared  shows  the
    United  States  consumption  of  p)rimary  energy  in  the  20th  century,
    and  what  it  may  look  like — again  some  crystalballing  is  involved.
    You  will  notice  down  here  it  carries  it  from  the  year  1900  over  to  the
    year  2000.

    The  solid  portion  here  represents  what  is  behind  us,  and  in  other
    words,  we  are  over  here  into  the  year  1953  at  this  point  [indicating].

    You  can  see  from  this  chart  that  the  coal  is  represented  in  the  bottom
    in  black  and  gray,  and  your  estimated  reserves  of  oil  and  gas  in
    yellow,  and  the  fluids  from  coal  estimated  in  this  period  over  in  here
    [indicating] .

    Someone  has  figured  that  by  1960,  you  might  have  a  contribution
    of  a  percentage — let  us  say  it  is  very  small — from  uranium,  and  going
    on  up  to  the  year  2000,  where  it  might  be  something  on  the  order  of
    10  to  12  percent,  furnishing  10  to  12  percent  of  the  total  energy.

    ATOMIC    POWER    DEVELOPMENT  H

    This  gives  you  a  rough  picture  of  what  the  picture  will  look  like.
    There  will  always  be  some  kind  of  requirement,  of  course,  for  the
    fluid  fuels ;  and  as  your  petroleum  runs  out,  that  is  indicated  by  this,
    you  have  got  to  go  to  coal  in  order  to  get  fluids  from  coal.

    I  think  two  conclusions  might  be  drawn  from  the  chart.  One  is
    that  you  never  are  going  to  be  in  conflict  with  hydropower,  for  two
    reasons :  One  is,  you  need  all  of  the  increment  you  can  get  from  new
    energy  sources;  and,  furthermore,  the  obvious  fact  that  hydro  is
    cheaper.    Certainly  that  conclusion  could  be  drawn  from  it.

    Are  there  any  questions  on  it  that  I  can  answer  ?

    Chairman  Coue.  I  am  curious  to  know  why  it  is  necessary  to  bring
    in  a  dollar  cost  of  uranium  in  order  to  evaluate  its  energy  release.

    Mr.  Dean.  Simply  because,  if  you  doubled  the  prices  you  are  willing
    to  pay  and,  therefore,  mine  it  at  much  more  expense,  you  would  get
    more  uranium.  So,  you  have  to  make  a  cutoff  point  at  which  you  are
    willing  to  quit  mining.  So,  the  figure  that  I  have  used  here  is  not  the
    total  amount  of  uranium.

    Representative  Holifield.  Do  your  figures  take  into  consideration
    the  present  yield  of  B.  t.  u.  from  coal  and  oil  in  that  computation,  or
    u  possible  increase  in  the  efficiency  of  utilization  of  coal  and  oil  ?

    Mr.  Dean.  It  makes  the  assumption,  Mr.  Holifield,  that  a  rea-
    sonable increase  in  efficiency  will  be  obtained.

    Representative  Holifield.  And  the  same  energy  release  from  a
    pound  of  uranium  as  exists  today?  Or  does  this  include  an  estimate
    of  an  increase  in  yield?

    Mr.  Dean.  It  includes,  as  Senator  Bricker  asked  the  question,  what
    assumptions  we  made  as  to  the  release  of  energy  from  uranium  in  your
    breeding  process,  assuming  you  are  utilizing  all  of  the  atoms  of
    uranium.

    Representative  Holifield.  Of  course,  that  assumption  is  not  yet
    realized,  is  it?

    Mr.  Dean.  No,  and  we  are  not  in  the  year  2000,  either.

    Representative  Holifield.  We  are  not  able  to  estimate  what  the
    B.  t.  u.  return  from  coal  and  oil  will  be  in  the  year  2000.

    Mr.  Dean.  And  we  could  double  that  if  you  wanted  to  make  an
    arbitrary  assumption.  I  do  not  know  what  the  engineers  would  say
    on  that.

    Dr.  Hafstad.  That  would  be  also  a  guess.

    Senator  Bricker.  I  was  interested  in  your  estimate  of  the  utiliza-
    tion of  fluids  from  coal.  The  process  is  already  perfected  and  avail-
    able, and  it  is  only  a  dollar  question  now  as  to  the  cost  of  making  these
    fluids.

    Mr.  Dean.  Well,  I  think,  since  you  referred  to  that  point,  one  other
    thing  is  illustrated.  Tliat  is  the  fact  that  you  are  not  in  competition
    with  coal.  Your  petroleum  reserves  will  run  out  and  you  are  going
    to  call  on  coal  to  fill  in  for  gasoline  or  whatever  the  other  require-
    ments are.

    Senator  Bricker.  These  processes  are  already  known,  and  there
    may  be  others  developed,  of  course.

    Mr.  Dean.  And  pilot-planted ;  yes.

    Senator  Bricker.  Even  now,  utilization  is  a  question  of  what  it
    costs  to  make  it.

    36740—53-

    12  ATOMIC    POWER    DEVELOPMENT"

    Mr.  Dean.  Frankly,  one  thing  that  is  not  on  this  chart  at  all,  there
    is  a  question  whether  it  should  be  on.  But  this  is  a  very  difficult  thing
    to  crystal-ball.  I  simply  bring  out  these  figures  because  they  show
    how  challenging  is  the  problem  of  getting  economical  power  from
    the  atom.  It  is  possible  in  terms  of  world  reserves  of  uranium,  and
    the  dividends  are  very  high  if  you  can  get  the  complete  burn-up  of  the
    uranium.  Some  people  would  say,  and  some  very  competent  people
    have  said,  that  by  the  time  you  reach  the  year  2000,  let  us  say,  you  are
    going  to  have  a  substantial  contribution  from  solar  energy.

    Now,  we  have  not  made  any  indication  or  allowance  for  solar
    energy  as  a  contributor  in  the  years  ahead ;  that  is,  except  in  the  form
    of  wood  as  a  fuel.  But  one  of  the  difficulties  here  is  an  engineering
    difficulty.  I  think  it  is  very  hard  to  make  assumptions  as  to  how  much
    of  the  world  energy  will  come  directly  from  solar  energy.  It  in-
    volves such  problems  as  great  tracking  devices  which  would  be  cen-
    tered on  the  sun,  with  complicated  thermocouplers,  with  some  kind
    of  engineering  devices  which  would  store  the  heat  through  the  night
    as  the  sun  went  down,  and  many,  many  other  problems.  We  have
    made  no  assumptions  as  to  solar  energy's  contribution  in  the  years
    ahead.

    There  is  one  other  point  that  I  should  like  to  make  before  I  turn
    this  over  to  Dr.  Hafstad.

    Chairman  Cole.  If  you  will  permit  the  Chair  to  interrupt  for
    the  purpose  of  identifying  Dr.  Beckerley,  who  is  sitting  alongside
    Chairman  Dean.

    Dr.  Beckerley  is  the  classification  expert  for  the  Commission,  and
    I  suggest  we  on  the  committee,  as  well  as  whoever  might  be  the  wit-
    ness, keep  Dr.  Beckerley  in  the  corner  of  his  eye;  and,  if  Dr.  Beckerley
    should  stand  up,  that  is  the  signal  for  everybody  to  shut  up.

    Mr.  Dean.  He  is  a  very  effective  policeman,  and  has  many  times
    pulled  my  coattails.

    The  next  point  I  should  like  to  raise  in  very  general  terms  has  to
    do  with  the  question  of  diverting,  in  a  time  of  national  stress,  certain
    amounts  of  uranium  in  order  to  pursue  an  industrial-power  program.
    Certainly  for  the  next  few  years,  no  intelligent  person  would  suggest
    tlie  diversion  from  our  weapons  strength  of  any  appreciable  amount
    of  uranium  simply  in  order  to  produce  power  from  reactors.  But  I
    think  you  must  also  realize  that  during  the  course  of  the  past  few
    years  the  Commission  has,  and  I  am  sure  wisely,  diverted  amounts  of
    uranium  for  research  in  its  own  laboratories,  for  development  and
    for  fueling  its  various  military  experimental  reactors.  The  amounts
    that  would  be  used  during  the  course  of  the  next  5  years  or  so  are
    comparable  to  what  it  has  been  spending,  let  us  say,  in  the  past  5  years.
    So,  we  are  not  changing  the  picture  in  that  respect.

    Before  the  large  industrial  groups,  or  whoever  may  come  in  to  take
    advantage  of  this  new  power,  are  able  to  raise  the  money,  perfect
    designs  of  reactors,  and  construct  these  reactors,  and  be  ready  to
    install  the  uranium  as  a  fuel,  several  more  years  will  undoubtedly
    elapse.  We  are  not,  therefore,  talking  about  a  movement  which  will
    hurt  our  stockpile;  and,  even  when  considerable  power  is  developed,
    the  amount  of  uranium  required  will  not  be  consequential.

    Those  are  all  of  the  statements  that  I  planned  to  make,  Mr.  Chair-
    man, at  tlie  outset.  We  have  3  other  witnesses  from  the  Commission,
    or  4, 1  should  say.     The  first  one  I  should  like  to  call  is  Dr.  Hafstad,

    ATOMIC    POWER    DEVELOPMENT  13

    who  is  Director  of  our  Division  of  Reactor  Development,  who  will  try
    and  explain  some  things  the  committee  is  already  familiar  with;
    namely,  how  you  get  power  from  uranium.

    Chairman  Cole.  We  are  happy  to  see  you  again,  and  happy  for
    the  opportunity  of  publicly  acknowledging  the  great  contributions
    which  you  have  rendered  in  this  entire  program.

    Dr.  Hafstad.  Thank  you,  Mr.  Chairman.

    STATEMENT  OF  DR.  LAWEENCE  R.  HAFSTAD,  DIRECTOR  OF  THE
    REACTOR  DIVISION  OF  THE  UNITED  STATES  ATOMIC  ENERGY
    COMMISSION

    Dr.  Hafstad.  The  subject  we  are  discussing  is  a  fairly  technical
    one,  and  over  the  next  several  days  during  these  hearings,  we  will
    be  using  quite  a  number  of  technical  terms.  I  think  in  order  that
    everybody  can  realize  what  we  are  talking  about  and  what  the  issues
    are,  I  would  like  to  take  a  few  minutes  to  drop  back  and  tell  a  little
    bit  about  the  fission  process,  and  about  reactors  and  how  they  work,
    and  what  their  limitations  are,  and  the  present  status  we  have  reached,
    in  order  that  the  rest  of  the  testimony  will  fall  into  place.

    We  have  to  know  a  few  elementary  physics  facts,  but  I  want  to
    hasten  to  say  that  we  do  not  have  to  know  a  lot  of  physics  to  under-
    stand reactors.  The  things  that  we  need  to  carry  in  mind,  however,
    are  that  there  is  such  a  thing  as  a  neutron,  and  this  is  one  of  the
    elementary  particles  of  matter ;  and  there  is  such  a  thing  as  the  fission
    process,  and  most  of  us  have  learned  from  newspaper  reading  and
    magazine  articles,  and  so  on

    Chairman  Cole.  Would  you  speak  up  a  little  bit  ?  I  am  afraid  the
    joeople  in  the  back  of  the  room  are  not  able  to  hear  you,  and  I  do  not
    think  that  you  should  be  misled  by  those  gadgets  in  front  of  you,
    because  I  do  not  believe  they  are  connected  with  any  amplifiers.

    Dr.  Hafstad.  I  will  try  to  speak  louder.

    The  thing  that  I  wanted  to  emphasize,  then,  is  that  in  the  fission
    process,  which  we  all  have  to  be  aware  of,  one  neutron  can  collide
    with  one  fissionable  atom,  produce  a  fission  process,  which  means  a
    splitting  of  this  atom  or  this  nucleus,  and  the  release  of  this  enormous
    amount  of  energy.

    Now,  this  is  where  the  energy  comes  from.  It  is  the  beginning
    of  the  release  of  energy  that  we  are  talking  about.  Actually,  in  this
    case,  part  of  the  mass  of  the  atom  itself,  of  the  nucleus,  is  converted
    into  energy,  and  this  is  where  the  famous  "E  equals  MC  squared''  equa-
    tion comes  into  the  picture,  and  we  are  actually  getting  energy  at  the
    expense  of  matter  in  the  nucleus  of  the  atom.

    In  the  fission  process,  one  neutron  collides  with  a  fissionable  nucleus,
    splits  the  nucleus  of  the  atom,  and  releases  this  energy.

    The  next  important  point  that  we  have  to  note  is  that  his  splitting
    process  releases,  in  addition,  two  or  more  neutrons  for  each  atom  split.
    It  is  this  fact  which  makes  the  chain  reaction  possible.  If  we  can
    so  arrange  our  material  that  each  of  these  new  neutrons  that  arc
    produced  collide  with  another  fissionable  atom,  we  will  have  two
    fission  processes  where  we  had  only  one  before.  And  each  of  these
    two  in  turn  releases  two  more  neutrons,  and  we  have  the  sequence  of
    events,  1,  2,  4,  8,  16,  and  so  on,  new  neutrons  produced,  and  along  with

    14  ATOMIC    POWER    DEVELOPMENT

    each  neutron  a  large  amount  of  energy  which  is  available  in  the
    form  of  heat.

    Now,  this  is  the  chain  reaction,  and  this  we  have  to  understand  if
    we  are  going  to  understand  the  implications  of  atomic  energy.

    From  the  chain  reaction  we  can  move  in  two  different  directions.
    We  can  adjust  or  control  this  chain  reaction  to  go  faster  and  faster  and
    release  the  energy  very  suddenly,  in  which  case  we  have  an  explosion.
    This  is  the  route  that  leads  toward  the  atom  bomb.  The  other  route
    is  to  take  exactly  the  same  chain  reaction,  again  depending  upon  our
    knowledge  of  control,  and  slow  down  this  reaction  in  order  that  exactly
    the  same  amount  of  energy  is  released,  but  over  a  longer  period  of  time,
    in  a  controllable  way.

    It  is  this  controllable  chain  reaction  which  we  are  discussing  here
    today.  The  controllable  chain  reaction  is  the  basis  of  the  reactor,  and
    the  reactor  is  the  machine  for  converting  nuclear  energy,  if  you  like,
    into  useful  work  of  any  kind.

    Now,  a  reactor  produces  several  different  things.  It  produces  these
    neutrons  which  I  have  mentioned,  and  they  can  be  used  in  a  number  of
    dilferent  ways  to  produce  new  fissionable  materials.  They  can  be  used
    to  produce  isotopes,  which  are  useful  in  research,  and  so  on.

    The  reactor  can  be  used  to  produce  heat,  because  these  neutrons  as
    they  fly  out  of  the  nucleus  are  traveling  with  high  velocity,  and  so  are
    the  fission  fragments  that  are  produced,  a.nd  these  also  represent  a  large
    amount  of  heat.  They  also  produce  many  new  elements.  The  fission
    fragments  are  themselves  new  elements,  and  the  process  represents
    an  actual  transmutation  in  the  sense  of  the  old  alchemists.  And  you
    remember,  those  of  us  who  went  to  school  some  time  ago  thought  of
    chemical  elements  as  being  unchangeable.

    Transmutation  of  chemical  elements  is  what  is  going  on  in  these
    nuclear  reactions.  We  change  uranium  into  elements  like  krypton
    and  beryllium,  and  elements  in  the  middle  of  the  periodic  table.  It  is
    an  actual  change  of  the  chemical  element.

    Chairman  Cole.  The  atomic  weapon  is  a  reactor  ?

    Dr.  Hafstad.  An  atomic  weapon  is  a  reactor  designed  to  react  very
    rapidly.    It  is  exactly  the  same  process.

    Chairman  Cole.  Without  any  degree  of  control,  once  it  starts  ?

    Dr.  Hafstad.  In  fact,  it  is  tailored  so  that  it  will  go  extremely
    rapidly,  whereas  the  kind  of  power  reactors  we  are  talking  about  is
    the  same  chain  reaction,  but  so  adjusted  and  tailored  that  it  can  be  held
    at  a  low  temperature  and  release  the  same  amount  of  energy  over
    a  long  period  of  time.

    The  yield,  then,  from  a  reactor — neutrons,  heat,  and  fission  prod-
    ucts, which  happens  to  be  the  name  we  give  to  these  new  elements
    that  are  formed — I  would  like  to  spend  a  few  moments  on  those,  be
    cause  as  I  have  indicated,  they  are  new  elements,  and  they  are  ele-
    ments which  are  radioactive.  They  are  elements  which  have  all  of  the
    ))roperties  of  radium,  and  most  of  us  know  of  radium  as  a  very  rare
    material  which  emits  some  sort  of  rays  which  are  useful  in  taking
    X-ray  pictures,  let  us  say,  in  industry,  or  treating  tumors,  or  taking
    X-ray  pictures  in  medical  work  to  get  pictures  of  bone  structure,  and
    so  on.  And  tliese  are  gamma  rays,  which  are  emitted  from  radium.
    p]xactly  the  same  kind  of  rays  are  emitted  from  these  fission  products..

    These  new  elements  that  are  formed  are  radioactive  in  exactly  the
    same  way  as  radium.    In  addition,  they  emit  other  forms  of  radiation

    ATOMIC    POWER    DEVELOPMENT  15

    which  are  not  so  well  known,  alpha  and  beta  rays.  Alpha  rays  are
    heavy,  positive  rays ;  and  beta  rays  are  light,  negatively  charged  rays
    and  other  neutrons.

    So  we  have  a  host  of  radiations  which  are  emitted  from  these  fission
    products.

    Now  we  come  to  the  question  of  building  a  reactor  to  utilize  this
    energy  and  this  heat.  We  would  like  to  arrange  this  reactor,  then,  to
    jneld  energy  continuously,  so  we  have  to  create  some  kind  of  a
    structure.

    One  of  the  first  things  that  we  run  into  in  building  this  reactor  is
    tliat  we  have  difficulty  with  the  materials  problems.  The  materials
    that  go  into  a  reactor  must  be  very  carefully  chosen.  They  must  stand
    high  temperature  if  you  want  to  extract  temperature,  and  they  must
    stand  radiation  bombardment,  this  neutron  bombardment  from  the
    <}hain  reaction  that  we  are  talking  about,  and  they  must  not  absorb
    neutrons.  If  they  do  absorb  neutrons,  then  the  number  of  neutrons
    available  to  keep  the  chain  reaction  going  is  correspondingly  reduced,
    and  the  chain  reaction  slows  down  and  might  even  stop.

    Here  is  where  the  fission  products  come  in,  because  even  though  you
    start  out  with  a  reactor  in  which  no  neutron-absorbing  properties  are
    present,  in  the  chain  reaction  itself  you  form  these  fission  products,
    and  many  of  these  new  elements  are  of  the  kind  that  absorb  neutrons,
    and  therefore  slow  down  or  poison  the  reaction.  So  we  have  to  watch
    out  for  the  problem  of  accumulation  of  fission  products  in  the  reactor,
    and  plan  our  design  accordingly.

    So  we  liave  a  very  difficult  materials  selection  problem,  as  far  as
    reactor  design  is  concerned.  If  we  overcome  that,  however,  then
    Ave  have  the  problem  of  heat  extraction,  because  before  we  can  utilize
    this  energy  Ave  have  to  drive  a  turbine  and  turn  a  screw  on  a  ship  or
    turn  an  electrical  generator  in  order  to  get  the  electric  poAver  out.
    So  within  the  reactor  we  have  to  introduce  heat-removing  equipment,
    and  the  second  major  problem,  then,  is  the  heat  exchange  or  heat
    transfer  problem,  as  we  call  it.

    We  have  to  circulate  material  through  the  reactor,  absorb  the  heat
    energy,  carry  it  out  of  tlie  reactor,  and  use  this  heat  in  turning  a
    turbine  to  drive  an  electrical  generator,  and  eventually  then  get  the
    energy  out  in  the  form  of  electrical  energy  on  our  transmission  lines.
    All  of  this  has  to  be  done  Avith  the  nuclear  reactor  in  order  to  get
    useful  power.

    It  is  important  to  realize  that  at  the  present  time,  science  knows  of
    no  Avay  to  sliort-circuit  this  complicated  procedure.  It  is  often  sug-
    gested that  it  Avould  be  very  helpful  if  Ave  coukl  go  directly  from
    the  fission  process  into  electrical  energy  in  some  way.

    Senator  Brickek.  There  is  constant  research  going  on  in  that  field  ?

    Dr.  Hafstad.  We  are  alert  to  this  possibility,  and  Ave  explore  all
    new  suggestions  Avhich  show  any  promise  of  meeting  this  particular
    solution  to  the  problem ;  but  as  yet,  nothing  has  been  uncovered,  and
    it  seems  that  Ave  haA^e  to  do  it  the  hard  way.

    I  have  brought  a  feAV  charts  along  Avhich  I  think  will  help  to  indi-
    cate AA'hat  Ave  can  do  and  apparently  can't  do  Avith  these  reactors  as
    a  source  of  energy.  I  want  to  stress  the  fact  that  they  are  heat
    sources;  that  the  uranium  is  a  fuel,  and  a  fuel  only,  as  far  as  com-
    peting Avith  coal  and  oil  and  other  fuels.  This  means  that  even
    though  uranium  Avere  extremely  cheap,  it  will  not  make  a  revolu-

    16

    ATOMIC    POWER    DEVELOPMENT

    tionary  impact  on  our  power  costs,  because  all  we  can  do  is  to  reduce
    the  fuel  cost  of  electric  power,  and  we  cannot  and  do  not  in  any  way
    reduce  the  distribution  costs.

    It  is  for  this  reason  we  say  with  considerable  confidence  that  we
    believe  nuclear  energy  will  be  a  supplementary  fuel  source  or  energy
    source,  rather  than  have  a  revolutionary  impact  on  our  industrial
    society.

    We  do  believe  that  we  can  compete  within  the  next  few  decades,
    at  least  begin  to  compete  with  the  conventional  fuels.

    I  would  like  now  to  show  one  of  the  charts  which  will  indicate  that.

    Representative  Durham.  I  would  like  to  ask  a  question.  There
    has  been  some  concern  expressed  on  the  part  of  some,  I  have  noticed
    in  the  press,  that  if  these  reactors  were  established  in  numerous  num-
    bers around  the  country,  there  would  be  some  danger.  In  your
    opinion,  is  there  any  dangerous  release  of  poisonous  things  detri-
    mental to  the  public  ?

    Dr.  Hafstad.  This  is  a  problem  we  are  fully  alert  to,  and  I  will
    turn  it  over  to  Dr.  Bugher.

    Mr.  Dean.  Dr.  Bugher  is  going  to  testify  on  that  very  point,  Mr.
    Durham.

    Dr.  Hafstad.  With  your  permission,  I  will  return  to  this  one  chart
    here,  which  I  think  might  be  helpful  to  you.

    (The  chart  referred  to  follows :)

    S.^IIEiilPC

    5f«T0ii

    Dr.  Hafstad.  The  first  of  these  is  to  emphasize  what  I  have  told
    you — that  the  reactor  is  a  heat  source,  and  that  the  problem  is  to  ex-
    tract the  heat  from  the  reactor,  which  must  be  shielded  because  of
    these  radiations  which  I  mentioned.     This  shield  is  made  necessary

    ATOMIC    POWER    DEVELOPMENT

    17

    by  these  damaging  radiations  which  I  mentioned,  and  here  is  the  re-
    actor itself  shielded  as  a  heat  source,  and  the  heat  is  pumped  out
    here  through  this  heat  exchanger  and  back  in  here  [indicating].
    This  is  what  we  call  our  primary  loop,  because  going  through  the
    atmosphere  of  neutrons  it  becomes  radioactive  itself,  and  again  must
    be  shielded,  as  indicated  here  [indicating].  The  heat  then  is  carried
    through

    Chairman  Cole.  Just  a  moment.  I  see  the  red  flag  is  flashing,  is
    it  not  '^     If  not,  we  will  ask  Dr.  Beckerley  not  to  stand  up.

    Dr.  Hafstad.  From  here  on,  the  system  is  conventional,  because
    we  have  a  boiler,  a  steam  plant,  and  everything  else  is  the  same  as
    with  conventional  plants.

    What  we  replace,  then,  is  what  I  call  the  fire  pot  and  boiler  of  a
    conventional  steam  plant.

    Senator  Bricker.  If  you  were  able  to  utilize  that  heat,  directly,
    it  would  change  the  whole  chart  and  the  whole  process.

    Dr.  Hafstad.  It  would  change  the  chart.

    Senator  Bricker.  And  costs,  and  everything  else.

    Dr.  HafsTxVD.  It  would  change  the  costs  enormously,  because  there
    is  about  20  to  25  percent  efficiency  in  this  process  of  transferring
    heat,  and  if  we  could  go  directly  we  would  save  that  particular  loss

    Now,  this  is  a  new  chart.

    (The  chart  referred  to  follows :)

    ^^''d'^
    «».>->

    S&~.  2,3 -.-i.*..^  «*»»;?  t  MIU/BW-KR «W»»Wk«a«  Of   |!430,000,OCMJ   »W

    Dr.  Hafstad.  Here  is  a  more  detailed  presentation  of  the  sort  of
    thing,  where  we  first  presented  the  conventional  powerplant  along
    the  top.  We  assume  the  coal  input  at  an  average  cost  of  3.4  mills
    per  kilowatt-hour.  We  are  talking  costs  to  the  producer,  and  not  to
    the  consumer.

    18  ATOMIC    POWER    DEVELOPMENT

    Then  you  have  the  boiler  apparatus  at  this  stage,  and  by  the  time
    you  get  out  of  there  your  costs  are  up  to  4.3  mills.

    Then  you  go  through  your  electrical  generating  equipment,  and
    add  1.9  mills,  and  you  are  up  in  the  neighborhood  of  6.2  mills  when
    you  go  out  to  the  transmission  line.

    Now,  these  are  average  figures  from  the  Federal  Power  Commis-
    sion, and  are  used  for  comparison  purposes.

    We  can  cut  in  at  this  point  here,  since  this  is  the  part  we  replace
    by  nuclear  energy,  and  back  down  here  and  say,  "In  order  to  compete,
    how  much  money  can  we  aiford  to  spend  for  the  boiler  equipment?"
    We  can  estimate  our  costs  as  to  fuel  from  the  cost  of  uranium,  and
    guess  that  this  is  about  one  mill,  let  us  say,  for  comparison  purposes.
    In  order  to  compete  with  this  plant,  then,  we  have  to  design  our
    leactor  and  heat  transfer  equipment  to  come  under  $200  per  kilowatt
    of  installed  capacity.

    If  we  do  that,  we  are  barely  competitive-  If  we  can  do  better  than
    that  and  this  is  the  problem  for  the  engineers,  to  beat  the  costs  down
    and  the  capital  cost  is  the  big  item  in  this  business — if  we  could  beat
    this  cost  down  to,  say,  $140  per  kilowatt-hour,  then  our  power  costs
    at  this  point  would  be  3.3  mills  instead  of  4.3.

    This  does  not  sound  like  much  until  you  convert  it  in  terms  of
    the  enormous  demand  of  this  Nation,  which  happens  to  be  430  mil-
    lion megawatt-hours,  and  you  come  out  with  $430  million  for  each
    mill  that  you  save.

    Senator  Hickenlooper.  A  megawatt  is  1  million  watts?

    Dr.  Hafstad.  Yes,  sir.

    Senator  Hickenlooper.  So  it  would  not  be  a  million  megawatts.

    Dr.  H,\rsTAD.  This  says  430  million  megawatt-hours,  and  this  is
    what  it  ought  to  be,  that  is,  in  that  field.  A  megawatt-hour  is  a
    million.

    Representative  Holifield.  Can  you  give  us  the  firm  cost  at  this
    time  of  a  conventional  capital  investment  installation  for  electrical
    production  ?

    Dr.  Hafstad.  The  comparative  cost — and  this  is  an  average  figure —
    would  be  $55  per  kilowatt,  for  this  part  of  the  plant.

    Representative  Holifield.  Now  can  you  give  me  the  firm  capital
    investment  for  corresponding  nuclear  kilowatts  ?

    Dr.  Hafstad.  No,  sir.  This  we  are  unable  to  do  at  the  present
    time,  and  I'  think  the  best  that  I  could  state  would  be  that  our  engi-
    neering estimates,  which  are  essentially  paper  studies,  have  now
    reached  the  stage  where,  according  to  those  paper  studies,  estimates
    of  construction  costs  begin  to  be  competitive.

    Now,  I  use  tliat  wording  because  these  are  estimates,  and  most  of
    us  have  learned  that  usually  your  actual  costs  run  over  your  estimates.
    That  is  why  we  say  we  are  not  yet  competitive.  We  will  not  really
    know  until  such  a  plant  has  been  built  and  operated.

    Representative  Holifield.  Does  your  cost  of  fuel  at  1  mill  per
    kilowatt-hour,  below  there,  include  the  cost  of  cleaning  the  fuel?

    Dr.  Hafstad.  That  would  come  in  over  here  as  part  of  your  fuel
    cost.    This  does  not,  as  presented  here,  include  that.

    Representative  Holifield.  That  is  an  unknown  factor?

    Dr.  Hafstad.  This  is  one  of  the  big  unknowns  in  the  picture;  yes.

    ATOMIC    POWER    DEVELOPMENT  19

    Chairman  Cole.  Will  you  explain  that  expression  which  has  been
    attributed  to  you,  a  megawatt  per  megadollar,  or  some  such  thing-
    as  that?

    Dr.  Hafstad.  This  is  a  figure  which  I  used  several  years  ago,  be-
    cause in  surveying  the  situation  as  it  was  in  1949,  one  of  the  first
    questions  would  be :  How  close  are  we  to  competing  with  the  conven-
    tional power  costs  ?

    The  index  which  we  use  is  this  figure  of  capital  costs  per  kilowatt-
    hour,  which  we  can  take  in  these  charts  as  about  $150  per  kilowatt.
    Looking  over  the  costs  of  reactors,  they  appeared  to  be  in  the  neigh-
    borhood of  $1,000  per  kilowatt  capacity.  That  is  $1,000  per  kilowatt,
    and  that  is  $1  million  per  megawatt.  So  the  expression  was,  "A  mega-
    buck  for  a  megawatt  was  the  cost  of  a  reactor."

    What  we  have  presented  here  indicates  essentially  what  our  goal  is,
    and  I  think  that  the  reason  we  have  some  confidence  at  the  present
    time  in  our  estimates  as  of  the  moment  arises  from  the  fact  that  we
    have  now  built  and  operated  a  number  of  reactors  over  the  last  several
    years.  Each  of  these  has  essentially  been  an  experiment  in  itself,  and
    an  experiment  in  several  ways.

    First,  it  is  to  see  whether  it  would  work  at  all,  because  we  could  not
    guarantee  in  a  field  like  this  that  things  would  work.  All  of  our
    reactors  have  worked.

    The  second  thing  is  to  see  whether  we  came  close  as  far  as  con-
    struction costs  were  concerned,  and  whether  large  new  unknowns
    appeared  in  the  picture,  unknowns  in  the  technical  sense,  which
    caused  us  unexpected  difficulties.

    I  think  we  can  say  that  we  have  not  run  into  any  major  unknowns.
    There  have  been  the  usual  troubles.  There  are  always  troubles  in
    a  large,  new  technical  development.  But  none  of  them  have  been  of
    the  kind  which  we  would  call  a  major  unknown.

    It  is  these  two  facts  which  give  us  considerable  confidence  that  the
    technologj'  has  now  arrived  at  the  stage  where  we  can,  with  some  con-
    fidence, begin  to  estimate  the  costs  of  powerplants.

    It  is  not  enough,  however,  to  come  close  in  estimating  the  cost  of
    electric  powerplants.  You  have  to  be  "on  the  nose,"  and  this  we  are
    not  yet  able  to  do.  This  is  w^hy  we  say  that  until  some  examples  of
    these  large  plants  have  been  built  and  operated,  we  do  not  know,
    [ind  we  have  no  illusions  that  we  know  the  actual  costs.

    I  think  that  is  really  all  that  I  have  to  say  at  the  present  time,
    unless  there  are  questions.

    Chairman  Cole.  Are  there  any  questions  of  Dr.  Hafstad?

    Representative  Durham.  I  think  that  you  have  given  us  a  very  fine
    exposition  of  the  subject.

    There  is  one  thing  that  I  would  like  to  have  your  expression  on,  and
    that  is  this  fuel  problem.  Sticking  to  that  point  on  the  neutrons
    controlling  the  amount  of  electric  power  you  can  get  out  of  it,  would
    you  care  to  comment  on  what  increase  you  can  expect  or  hope  to  expect
    as  a  result  of  research,  on  your  present  development  ?

    Dr.  Hafstad.  You  come  immediately  to  the  breeder  problem  in  this
    case,  because  that  is  the  one  which  pays  the  big  dividends.

    Representative  Durham.  That  is  what  I  hoped  you  would  speak
    about.

    20

    ATOMIC    POWER    DEVELOPMENT

    Dr.  Hafstad.  It  is  such  an  important  development  that  it  might
    justify  taking  a  few  minutes  to  talk  about  it.

    The  important  thing  here  is  that,  as  I  mentioned,  in  the  fission
    process  two  or  more  neutrons  are  released  per  fission.  One  of  these
    neutrons  is  needed  to  replace  the  original  neutron  that  you  started
    with,  and  one  of  them  could  be  available  to  create  one  new  atom  of
    fissionable  material,  and  you  still  have  a  little  bit  over,  on  the  average,
    a  half  a  neutron  per  fission  to  take  care  of  absorption  in  your  struc-
    tural materials,  leakage  through  the  walls  of  the  reactor,  and  so  forth.

    Now,  if  our  engineers  are  sufficiently  ingenious  to  design  their
    reactors  to  hold  these  neutron  losses  down,  then  we  have  the  exciting
    possibility  of  creating  1  new  fissionable  atom  for  each  1  which  is
    destroyed  in  the  process.  This  can  go  on  as  long  as  there  is  fertile
    material  from  which  to  create  the  new  fissionable  material.

    Plere  I  have  to  get  technical  again  and  remind  everybody  that  there
    are  two  kinds  of  uranium  in  nature.  U-238  is  one,  vrhich  is  available
    in  large  quantities,  and  it  is  not  fissionable,  and  lJ-235,  seven-tenths
    •of  1  percent  in  natural  uranium,  which  is  fissionable.

    Now,  the  breeding  process  which  I  described  can  go  on  until  all
    of  the  U-238,  which  is  useless  at  the  present  time,  is  converted  into
    a  fissionable  material,  in  this  case  plutonium.

    This  is  the  thing  which  multiplies  by  a  large  factor,  theoretically
    as  high  as  140,  the  amount  of  fissionable  material  available  to  us,
    and  it  is  the  factor  which  makes  possible  these  enormous  reserves  of
    ■energy  in  the  uranium  ore.

    I  liave  a  chart  to  show  on  that,  too,  which  I  think  will  dramatize  it
    ii  little  bit.

    (The  chart  referred  to  follows:)

    BILLIONS  OF  KW  •  HRS

    800     —

    600

    400

    200

    Obtotnable  from
    200    to

    28,000

    fons  of

    Uranium
    depending  on
    the  extent  of

    REGENERATION

    Dr.  Hafstad.  This  chart  shows  the  world  consumption  of  electric
    power  in  tlie  year  1950.  From  here  up  to  here  [indicating]  is  the
    United  States,  which  takes  the  largest  part  of  it,  the  U.  S.  S.  R.  about
    this  amount  here,  and  all  of  the  rest  of  the  world  this  amount
    [indicating].

    I  will  turn  it  around  so  the  gentlemen  in  the  back  of  the  room  can
    see.

    ATOMIC    POWER    DEVELOPMENT  21

    Now,  tlie  important  thing  is  that  this  enormous  demand  for  energy
    for  the  whole  world  here  can  be  obtained  from  only  200  tons  of
    uranium  if  we  have  the  breeding  process  working.  And  this  is  possible
    because  of  this  enormous  multiplication  factor  that  the  chairman  men-
    tioned here;  from  each  pound  of  uranium  you  can  get  as  much
    energy  as  from  2,600,000  pounds  of  coal.

    Senator  Bricker.  If  you  do  not  have  the  loss  you  talk  about  in  your
    other  chart?

    Dr.  Hafstad.  If  you  do  not  have  the  breeding  process,  then  de-
    pending upon  the  extent  to  which  you  use  all  available  U-235,  or
    have  partial  breeding  and  use  a  little  bit  more,  you  could  get  the
    same  amount  of  energy  here  from  28,000  tons  of  uranium,  of  natural
    uranium,  without  depending  upon  the  breeding  process.

    Senator  Bricker.  Is  that  calculated  on  the  utilization  of  all  of  the
    energy?    It  does  not  take  into  consideration

    Dr.  Hafstad.  This  is  all  of  the  energy  in  the  natural  available
    U-235,  and  this  is  all  of  the  energy  available  in  all  of  the  uranium.

    Representative  Holifield.  I  think  it  should  be  made  clear  that
    complete  breeding  of  all  of  the  uranium  238  has  not  been  arrived
    at  yet.

    Dr.  Hafstad.  And  it  is  a  theoretical  upper  limit,  and  I  would  go
    on  and  say  it  never  will  be  arrived  at.  But  we  will  approach  it,  and
    we  are  confident  that  we  have  solved  the  main  problems,  and  we  are
    on  the  way  to  this.

    Representative  Holifield.  At  the  present  time  the  degree  of  breed-
    ing is  a  matter  of  secret  classification  ?

    Dr.  Hafstad.  The  exact  numbers  on  breeding  are  still  classified.

    Senator  Bricker.  This  figure  showing  the  electric  power  produc-
    tion from  the  amount  of  uranium  stated  here — does  this  take  into
    consideration  your  previous  chart  on  the  utilization  of  only  25  percent
    in  the  transition  of  the  heat  to  ultimate  electricity?

    Dr.  Hafstad.  Yes ;  it  does.    This  allows  for  efhcient  conversion.

    Senator  Bricker.  It  allows  for  that  ?

    Dr.  Hafstad.  Yes.

    Chairman  Cole.  I  find  there  is  a  bit  of  misunderstanding  on  this
    question  of  the  breeder  process,  and  I  read  in  the  press  about  the
    process  being  one  in  which  you  come  out  with  more  than  what  you
    put  in.

    Now,  is  that  correct,  or  does  it  mean  that  it  is  simply  a  more  efficient
    process  for  obtaining  the  greatest  amount  of  use  of  what  you  put  in?

    Dr.  Hafstad.  Well,  let  us  see  if  we  can  answer  it  this  way.  Let  us
    imagine  a  plutonium  reactor  in  which  you  put  plutonium  in  the  core.
    Then  you  surround  the  core,  which  is  the  central  part  of  this,  with
    what  we  call  a  blanket.  This  is  a  volume  in  which  we  put  U-238.
    Let  us  assume  we  get  some  U-238  from  Oak  Ridge  or  somewhere,
    where  we  have  essentially  pure  U-238,

    Now,  after  running  that  for  some  years — and  the  exact  figure  on
    this  would  be  classified  information  again — but  after  running  this  for
    a  number  of  years  we  shut  the  reactor  down  and  take  the  core  out  and
    measure  how  much  plutonium  was  burned  up  in  the  core,  and  we  say
    there  is  a  loss  of,  let  us  say,  1  pound  of  the  plutonium  burned  up  in
    the  core.

    Then  we  take  the  blanket  out  separately,  and  chemically  process  that
    and  see  how  much  new  plutonium  was  produced  in  the  blanket.

    22  ATOMIC    POWER    DEVELOPMENT

    Now,  depending  upon  the  ingenuity  of  the  design,  it  is  entirely
    possible  and  we  expect  that  you  will  pull  out  more  than  1  pound  of
    plutonium  from  the  blanket  which  you  can  use  to  replace  that  which
    was  burned  up  in  the  core.

    However,  there  is  still  a  hitch  in  this.  In  order  to  extract  this,  you
    do  have  a  chemical  processing  step  to  go  through,  and  this  is  a  com-
    plicated chemical  process.  So,  even  though  you  produce  this  ma-
    terial in  the  blanket,  what  you  are  really  interested  in  is  not  how  much
    was  in  the  blanket;  it  is  how  much  do  you  get  out  of  the  chemical
    processing  plant  to  put  back  into  the  new  reactor  when  you  get  around
    to  it.

    I  think  this  is  the  subtle  point  and  the  place  where  you  get  into  argu-
    ments as  to  whether  or  not  and  to  what  extent  this  is  feasible.  We  are
    quite  sure  from  the  numbers  already  at  hand  that  we  will  produce
    more  plutonium  in  the  blanket  than  we  burn  up  in  the  core.  We  can-
    not guarantee  that  we  will  be  able  to  carry  through  the  chemical  proc-
    essing and  have  it  available  to  put  back  into  the  core.  Tliis  remains
    to  be  proved.

    Representative  Durham.  But  the  breeding  process  has  worked  ?

    Dr.  Hafstad.  The  breeding  process  itself  has  worked,  and  we  are
    confident  of  it.

    Mr.  Dean.  I  think,  to  answer  Mr.  Cole's  question  very  simply,  you
    do  not  get  out  more  material  than  you  put  in.  You  get  out  more
    good  material,  because  you  put  in  some  otherwise  useless  material  or
    junk.

    Chairman  Cole.  Dr.  Hafstad,  I  understand  your  division  has  been
    in  the  course  of  making  a  study  of  the  whole  field  of  reactor  design
    and  problems  connected  with  it.  Can  you  tell  us  how  soon  that  study
    will  be  completed  and  available  ?

    Dr.  Hafstap.  We  have  continuous  studies  underway,  and  we  had
    lioped  to  submit  to  the  committee  today  a  report  which  was  essentially
    unclassified,  and  therefore  of  general  usefulness,  on  the  status  of  all
    of  the  different  reactors  that  we  have  been  working  on.  I  trust  this
    will  be  available  in  a  matter  of  days  or  weeks  at  the  most.

    Chairman  Cole.  Of  course,  such  a  report  as  that  will  be  very  helpful
    in  connection  with  these  hearings  for  public  discussion.

    Dr.  Hafstad.  I  believe  it  would  be,  personally,  and  contains  quite
    a  lot  of  information.

    Representative  Durham.  Doctor,  how  do  you  feel  and  what  contri-
    bution do  you  feel  will  be  made  by  private  industry  throughout  the
    country  in  this  development  of  these  reactors  ?

    Dr.  Hafstad.  Well,  I  think  I  would  approach  the  problem  by  saying
    that  we  have  reached  the  stage  in  the  technology  where  quite  a  number
    of  different  reactor  designs  look  good,  and  it  would  be  instructive  to
    carry  through  a  number  of  these  different  approaches.  We  are  unable
    at  the  present  time,  merely  by  making  paper  studies  and  analyses  and
    so  on,  to  pick  which  particular  reactor  design  is  going  to  be  the  winner.

    It  is  like  guessing  whether  the  1955  Chevrolet  or  the  Ford  is  going
    to  be  the  best  automobile.    It  is  pretty  hard  to  tell  in  advance.

    We  have  to  carry  through  a  number  of  different  designs  in  order  to
    see  which  one  proves  the  most  helpful.

    Now,  if  private  industiy  comes  in,  it  would  be  my  expectation  that
    different  companies  would  hit  upon  different  reactor  designs  to  exploit
    and  would  exploit  these  with  all  of  the  ingenuity  that  they  can  devise.

    ATOMIC    POWER    DEVELOPMENT  23

    In  tliis  way  the  best  of  these  reactor  designs  would  probably  turn  out
    to  be  competitive.

    It  does  not  make  any  difference  to  me,  as  a  teclinical  man,  whether
    these  different  reactor  designs  are  financed  by  private  industry  or  by
    govermnent,  but  it  is  important  that  we  do  not  try  at  the  present  time
    to  say  that  one  particular  reactor  design  is  it.  We  might  guess  wrong
    and  set  the  whole  program  back  if  we  do  not  exploit  several  different
    promising  approaches.

    Chairman  Cole.  Therefore,  it  is  desirable  to  encourage  a  variety  of
    types  ?

    Dr.  Hafstad.  I  say  that  without  hesitation.

    Chainnan  Cole.  Even  to  the  point  of  encouraging  private  capital
    to  be  made  available  ?

    Dr.  Hatstad.  In  my  judgment,  it  is  necessary  to  explore  several
    promising  types  of  reactor  designs.

    Representative  Durham.  Do  you  feel  that  these  study  groups  over
    tlie  past  jear  or  more,  which  we  have  heard  here  before  the  com-
    mittee, have  made  a  contribution  so  far  to  the  development  of  the
    reactor  ?

    Dr.  Hafstad.  Very  definitely,  and  I  think  largely  because  they  are
    professional  engineers,  used  to  analyzing  costs.  This  is  a  type  of
    thing  which  we  are  not  accustomed  to,  since  we  started  out  as  reactor
    builders.  So  that,  working  back  from  costs  of  powerplants,  and  so  on,
    these  studies  have  been  very  helpful  and  instructive  to  us.

    Representative  Durham.  You  are  primarily  concerned  with  the
    weapons  development?

    Dr.  Hafstad.  That  is  right.
    Representative  Durham.  And  not  the  costs  ?

    Dr.  Hafstad.  That  is  right.  And  so  they  have  supplemented  that
    side  of  our  technical  knowledge.

    Chairman  Cole,  Thank  you  very  much,  Doctor.
    Senator  Hickenlooper.  Dr.  Hafstad,  may  I  ask  just  one  additional
    question.  At  this  moment,  can  adequate  information  be  turned  over
    to  private  competitive  operations,  on  experimentation  and  research
    and  development  on  various  types  of  reactors,  can  adequate  informa-
    tion be  turned  over  to  private,  more  or  less  unsupervised  experimenta-
    tion without  seriously  invading  the  necessary  secrecy  essential  to  the
    national  security  in  our  weapons  program?

    Dr.  Hafstad.  This  is  a  question  which  goes  to  the  heart  of  the
    problem  that  we  face  at  the  present  time.  I  believe  that  what  is
    happening  is  that  this  reactor  information  is  moving  into  the  category
    ■of  less  sensitive  information,  and  we  have  to  take  a  look  at  what  is
    going  on  across  the  water,  so  to  speak.

    Certainly  all  the  reactor  information,  in  my  judgment,  could  not
    be  declassified  and  turned  over  to  industry,  because  part  of  it  comes
    into  the  category  which  we  must  retain.

    Senator  Hickenlooper.  The  next  question  is :  Can  private  industry,
    in  your  opinion,  or  will  private  industry  be  warranted  in  going  ahead
    with  experimentation  independently  on  reactors  when  they  cannot
    have  accessible  the  full  scope  of  reactor  information  which  will  be
    necessary  ?  Are  they  going  to  put  their  money  in  it  if  they  can  only
    have  part  of  the  information  ?

    Dr.  Hafstad.  I  think  the  answer  to  that  is  a  flat  "No,"  they  cannot
    afford  to  put  private  money  into  it  on  the  basis  of  what  is  presently

    24  ATOMIC    POWER    DEVELOPMENT

    unclassified  information  or  declassified  information.  A  mechanism
    would  have  to  be  devised  so  that  industry  were  given  access  to  at
    least  the  less  sensitive  categories  of  reactor  information.

    Representative  Holifield.  Dr.  Hafstad,  could  private  industry  go
    ahead  under  the  present  contract  arrangement  and  build  these  differ-
    ent types  of  reactors  without  violation  of  security  ?

    Dr.  Hafstad.  That  would  be  the  pattern  in  which  we  have  operated
    to  date,  and  the  answer  would  be  "Yes."

    Senator  Hickenl,ooper.  But,  by  the  same  token,  if  they  go  the  con-
    tract route — and  I  mean  if  they  are  merely  subcontractors  to  build
    certain  installations — they  operate  for  pay  and  they  do  not  put  their
    own  money  in  it,  and  any  patents  or  developments  which  may  result
    from  the  work  they  do  under  a  contract  arrangement  belongs  to  the
    Government  exclusively,  and  they  have  no  interest  in  it  or  they  have
    no  ownership  in  those  things.

    Dr.  Hafstad.  That  is  a  question  of  incentive.

    Senator  Hickenlooper.  Yes.  Well,  I  am  talking  about  private
    enterprise  getting  into  this  field,  because  if  private  enterprise  gets  into
    it  independently,  then  there  must  be  a  profit  motive  and  there  must  be
    the  fact  that  they  have  got  to  see  their  way  clear  eventually  to  get  their
    costs  returned  to  them  and  make  it  a  venture  which  will  pay  its  way.

    Dr.  Hafstad.  If  we  expect  them  to  work  hard  at  it  and  make  some
    contribution,  they  must  have  an  incentive.  That  is  about  what  it
    amounts  to.

    Senator  Pastgre.  For  the  information  of  the  public,  in  spite  of  all
    of  the  difficulties  that  you  have  pointed  out,  and  all  of  the  problems
    that  beset  us,  do  you  think  we  have  reached  a  time  when  we  should
    start  building  the  plants  ?

    Dr.  Hafstad.  When  we  should  start  building  a  plant  ?  In  my  judg-
    ment, yes,  because  we  have  reached  the  stage  where  interminable  engi-
    neering arguments  across  the  table  never  get  settled  and  will  not  until
    the  plant  is  built  and  operated.

    Senator  Pastgre.  Now,  my  next  question  is:  Who  do  you  think
    should  start  doing  that — the  Government,  private  industry  alone,  or
    a  joint  effort  on  the  part  of  both  ?

    Dr.  Hafstad.  I  believe  that  is  a  policy  question  which  I  would  pre-
    fer to  turn  over  to  the  Chairman.

    Senator  Pastgre.  I  think  he  has  answered  that  question.

    Mr.  Dean.  I  think  that  the  approach  the  Commission  has  made  to
    that  question  is  this :  that  it  looks  as  though  the  next  4  or  5  years  would
    be  a  period  largely  of  development.  This  means  the  building  of  reactor
    prototypes,  experimental  reactors.  It  does  not  mean  large  reactors
    wliieh  would  produce  large  quantities  of  power  and  therefore  eco-
    nomical power,  because  as  the  size  of  the  reactor  goes  up  the  price  of
    the  power  comes  down.  But  it  does  mean  prototypes  or  experimental
    reactors  which  would  test  out  design,  from  which  you  could  make
    extrapolations.

    It  is  our  conviction  that  these  prototypes  will  not  be  built  with  pri-
    vate money  dining  the  course  of  the  next  2  or  3  or  4  years,  to  set  an
    arbiti-iny  date.  Therefore,  there  is  still  on  the  Commission  the  burden
    of  going  ahead  Avith  an  intelligent  experimental  reactor  program  of
    one  ty])e  or  another.

    This,  however,  is  not  to  say  that  in  the  matter  of  3  or  4  years,  if
    industry  lias  been  brought  in  by  joint  studies,  has  worked  with  our

    ATOMIC    POWER    DEVELOPMENT  25

    people  and  so  forth,  they  will  not  be  prepared  to  go  with  large  sums
    of  private  capital  into  very  large  reactors  based  upon  the  designs
    which  have  been  tested  out  by  the  Commission.

    That  is,  in  brief,  the  approach  that  we  have  toward  this  thing.

    Senator  Pastore.  Well,  it  is  sort  of  a  delaying  action,  nonetheless.
    1  mean,  if  we  assume  now  that  this  is  the  time  for  us  to  connnence,
    but,  because  we  are  afraid  private  industry  will  not  invest  the  money,
    because  the  return  is  not  there,  we  are  to  keep  on  experimenting  for
    3  or  4  more  years,  are  we  not  actually  wasting  3  or  4  more  years  ?

    Mr.  Dean.  No;  I  think  the  two  can  go  along  simultaneously.  It
    does  not  mean  because  the  Government  is  going  to  and  should  build
    reactors,  prototypes,  experimental  reactors,  in  the  next  few  years,  that
    you  exclude  private  industry  in  the  meantime  from  making  studies
    upon  which  it  can  later  make  its  own  designs  and  determine  whether
    it  is  going  to  put  in  its  own  capital.  Unless  it  has  assurance,  in  our
    opinion,  that  some  day  it  can  get  into  this  business,  own  and  operate
    and  build  these  large  ones,  and  that  assurance  can  be  given  early,  they
    are  not  going  to  waste  their  time  with  development  money  and  lots  of
    other  things.

    Senator  Pastore.  Do  you  think  we  might  risk  preeminence  in  this
    field  if  we  followed  that  policy  ?

    Mr.  Dean.  I  think  we  would  risk  preeminence  if  we  do  not  take
    American  industry  into  this  field  very  soon.

    Senator  Pastore.  No,  no.  1  realize  that.  I  am  for  private  enter-
    prise, and  I  think,  myself,  that  they  should  be  involved  in  a  joint
    effort.  There  should  be  a  partnership.  And  I  think  there  are  lots  of
    brains  and  know^-how  in  private  industry  that  ought  to  be  utilized.
    I  am  speaking  now  of  this  waiting  period  of  3  years.  Do  you  think
    we  chance  losing  preeminence  in  these  3  years  if  we  wait  the  3  years
    for  the  reasons  that  have  been  stated  ?

    Mr.  Dean.  Perhaps  I  do  not  understand  your  question.  Wait  to  do
    what  ?

    Senator  Pastore.  You  say  that  because  private  industry  feels  at
    the  moment  that  there  would  not  be  sufficient  return,  because  we  have
    not  perfected  this  experimentation  that  you  are  talking  about,  and
    Government  is  in  a  better  position  to  risk  this  capital,  that  industry
    cannot  be  expected  to  invest,  naturally  we  have  to  wait  and  go  on  for
    3  or  4  more  years  before  we  get  into  this  thing  with  the  cooperation
    of  industry.

    Mr.  Dean.  I  don't  regard  it  as  a  wait,  Senator,  for  this  reason :
    Wliether  private  industry  builds  these  experimental  prototypes  or
    whether  tlie  Government  builds  them,  they  are  going  to  have  to  be
    built.  So,  when  I  speak  of  the  period  of  development  of  prototypes
    and  experimental  reactors,  it  is  not  a  wait.  It  is  just  a  necessity.  One
    or  the  other  or  both  has  got  to  do  it.  You  don't  lose  anything,  in
    other  words.

    Perha]:)s  it  is  applicable  to  the  last  two  questions  that  have  been  put
    both  by  the  chairman  and  by  Senator  Pastore  that  I  now  call  on  Mr.
    W.  L.  Davidson,  who  heads  our  Division  of  Industrial  Participation,
    and  who  can  describe  to  you  briefly  the  various  groups  that  have  come
    into  the  Commission  during  the  year  and  a  half  since  his  office  has  been
    created.

    Senator  Pastore.  Before  you  get  to  that,  may  I  ask  you  a  further
    question,  please?

    26  ATOMIC    POWER    DEVELOPMENT

    The  reason  for  my  asking  you  the  question  is  this :  I  am  of  the  belief
    that  the  public  generally  feels — and  tliat  brings  us  down  to  the  efficacy
    of  these  public  hearings  that  we  are  holding — the  public  generally  feels
    that  we  are  going  to  have  this  generation  of  this  current  through
    atomic  energy  tomorrow.     You  see  what  I  mean  ?

    Mr.  Dean.  Yes,  sir.

    Senator  Pastore.  Now,  I  think  we  have  to  make  the  public  under-
    stand what  our  difficulties  are  and  just  what  a  waiting  period  we
    are  going  to  have.

    Now,  up  in  the  part  of  the  country  that  I  come  from,  New  England,
    we  talk  a  lot  about  electric  power  and  hydroelectric  power,  and  there
    are  a  lot  of  people  who  feel  that  we  are  going  to  have  atomic  energy
    to  do  this,  and  that  we  are  going  to  have  it  pretty  quick.  That  is  not
    the  case,  is  it  ?

    Mr.  Dean.  That  is  quite  true.  You  are  quite  right.  I  think  if
    you  will  examine  the  statement  that  we  have  tried  to  make  on  this
    thing,  you  will  realize  that  nowhere  in  the  Comjnission  have  we  ever
    suggested  that  economical  power  is  right  around  the  corner.     It  it  not.

    Senator  Pastore.  I  realize  that.

    Mr.  Dean.  What  we  have  tried  to  emphasize  is  that  it  is  a  terrifically
    challenging  goal  to  achieve,  and  that  there  are  going  to  be  some  very
    difficult  technological  problems  on  the  road  to  achieving  it.  But  the
    time  to  lick  these  problems  is  today.  That  is  about  what  we  have  said
    in  substance.

    Senator  Pastore.  But  you  will  agree  with  me  that  there  are  a  lot  of
    people  who  do  not  know  the  intricacies  that  are  involved,  that  think
    just  the  opposite.

    Mr.  Dean.  That  impression  certainly  prevails  in  many  quarters.

    Senator  Bricker.  That  comes  from  the  failure  on  the  part  of  the
    published  articles  to  give  the  technical  difficulties  that  are  apparent
    to  those  who  are  studying  in  the  field  today.

    Mr.  Dean.  It  is  hard  to  do.  Senator,  as  you  can  appreciate,  because
    for  one  who  has  not  had  to  lick  the  very  difficult  technological  prob-
    lems— and  they  only  lick  them  inside  the  Commission  under  our
    present  setup — it  is  difficult  for  him  to  conceive  what  those  problems
    are  and  how  much  time  would  be  consumed  in  licking  them.

    Representative  Holifield.  Mr.  Chairman,  while  I  have  some  other
    questions  along  the  line  of  Senator  Pastore's  questions,  I  will  with-
    hold them  until  the  balance  of  the  presentation.

    Chairman  Cole.  Will  you  sit  down,  Dr.  Davidson,  and  will  you
    give  us  the  benefit  of  your  experience  in  this  problem?

    STATEMENT  OF  W.  L.  DAVIDSON,  DIRECTOR,  OFFICE  OF  INDUSTRIAL
    DEVELOPMENT,  ATOMIC  ENERGY  COMMISSION

    Mr.  Davidson.  With  your  permission,  Mr.  Chairman,  I  would  like
    to  oft'er  the  following  statement  expressing  our  evaluation,  that  is,  the
    evaluation  of  the  Office  of  Industrial  Development,  of  the  interest
    exhibited  by  American  industry  and  industry's  desire  to  participate
    in  the  development  of  commercial  applications  of  nuclear  energy,
    particiilai'ly  in  fields  related  to  the  generation  of  electric  energy  utiliz-
    ing luiclear  fuel.

    For  tlie  benefit  of  the  committee,  I  might  just  give  a  small  amount
    of  background  information  here,  which  will  set  in  proper  perspective

    ATOMIC    POWER    DEVELOPMENT  27

    the  function  that  this  Office  is  supposed  to  play  in  the  activities  of
    theAEC.

    Our  Office,  a  subdivision  of  the  General  Manager's  Office,  commenced
    operations  May  1, 1952,  about  14  months  ago.

    The  reasons  underlying  the  creation  of  this  Office  are  aptly  expressed
    in  the  following  extract  from  the  AEC  press  release  of  that  date,
    and  I  quote :

    The  Commission's  establishment  of  an  Industrial  Development  OflBce  has  im-
    portant long-range  implications  looking  to  the  day  when  industry  will  carry  on
    its  own  a  substantial  part  of  the  national  atomic-energy  program,  with  oppor-
    tunity for  real  initiative.  This  OflBce  will  provide  a  single  point  of  contact  with
    positive  responsibility  to  foster  wider  industrial  participation  in  the  Commission's
    program,  and  the  development,  as  may  be  possible,  of  a  more  normal  competitive
    approach  to  the  problems  and  potentials  of  the  atomic-energy  business.

    In  fulfilling  our  role  as  a  contact  point  within  AEC  for  industry,
    particularly  those  firms  not  previously  in  touch  with  the  Commission,
    we  were  approached  by  over  350  industrial  groups  during  our  first
    year  of  operation.  The  exact  number  is  easy  to  remember.  It  is  the
    exact  number  of  days  in  the  year,  365.  These  contacts  ranged  all  the
    way  from  individuals  with  limited  financial  reserves  to  large  corpora-
    tions boasting  annual  sales  running  into  hundreds  of  millions  of
    dollars.

    The  nature  of  the  problems  posed  and  the  interest  shown  have  been
    quite  varied.  However,  it  is  possible  to  classify  these  contacts  into
    five  broad  categories.

    Out  of  this  group  of  365,  some  35  were  firms  who  desired  to  vend
    standards  products  to  AEC.  These  concerns  manufactured  a  par-
    ticular article  of  chemical  and  wondered  if  within  the  broad  AEC
    program  there  might  not  be  a  market  for  such  product  or  service.
    By  and  large,  this  group  had  negligible  interest  in  nuclear  power
    per  se.

    A  second  group  comprising  89  concerns  approached  us  on  the  basis
    of  offering  research  and  development  assistance  to  the  Commission.
    A  majority  of  these  firms  were  interested  in  nuclear  power,  at  least
    indirectly.

    A  third  group  of  87  requests  were  for  technical  information  most  of
    which  related  to  some  phase  of  nuclear  power.

    There  were  30  visitors  to  our  office  who  hoped  to  start  a  business  in
    some  phase  of  atomic  energy.  The  intended  areas  ranged  all  the  way
    from  power  reactors  through  research  reactors  and  isotope-producing
    reactors  to  the  chemical  processing  of  spent-fuel  elements,  acting  as
    a  wholesaler  for  fission  products,  manufacturing  radiation  instru-
    ments, and  many  other  facets  of  atomic  science  not  yet  explored.

    Sixty-nine  visitors  were  looking  for  general  information  on  AEC
    policies  and  plan,  as  these  policies  might  affect  their  business.  An  ad-
    ditional 53  requests  solicited  speeches  and  articles  on  atomic-energy
    matters  for  presentation  to  technical  and  business  groups.

    The  discussions  with  these  various  representatives  of  American  busi-
    ness, in  Washington  and  in  the  field,  leads  to  the  followinji  assessmpnf.
    of  industrial  interest  and  intent  in  nuclear  science  and  technology.

    I  want  to  emphasize  here  that  this  is  an  assessment,  because  in  trying
    to  evaluate  what  365  companies  have  in  mind  you  have  trouble  doing
    that  with  mathematical  precision.  So,  in  that  sense  it  is  an  estimate.
    It  is  our  conviction  of  their  interests  and  intents.  But  I  don't  claim
    necessary  Drecise  value  to  it.

    36740—53 3

    28  ATOMIC    POWER    DEVELOPMENT

    There  are  10  such  conchisions  that  I  wish  to  read.

    1.  American  industry  is  keenly  and  actively  interested  in  exploring
    possible  commercial  applications  of  nuclear  science.  Dollarwise,  most
    of  this  interest  centers  on  the  generation  of  electrical  energy  utilizing
    nuclear  fuel.

    2.  Only  the  largest  firms  aspire  to  construct,  own,  and  operate
    nuclear  powerplants.  The  majority  of  industrial  groups,  at  least
    those  contacting  our  office,  desire  to  become  components  manufacturers
    or  specialize  in  services  of  various  kinds  to  a  nuclear-power  industry,
    and  these  include  such  things  as  architect-engineering  work,  fuel
    fabrication,  chemical  processing,  and  control-systems  design.  Other
    groups  hope  to  find  worthwhile  uses  for  the  byproducts  of  reactor
    operation.  A  study  made  by  our  staff  estimated  that  well  over  two-
    thirds  of  the  companies  in  this  country,  employing  more  than  50  re-
    search engineers  and  scientists,  have  experience  or  capabilities  which
    could  be  directly  useful  in  nuclear-power  development.

    This  simply  epitomizes  in  my  mind  the  wide  variety  of  problems
    that  must  be  contended  with  here  in  this  broad  field  of  nuclear  power.

    3.  The  motives  underlying  industrial  interest  in  the  atomic-energy
    area  are  manifold.     They  include —

    (a)  A  desire  to  diversify  into  a  new  and  potentially  profitable  field.

    (b)  The  fear  that  atomic  development  may  one  day  make  their
    present  operations  obsolete.

    (c)  A  hope  that  atomic-energy  advances  and  techniques  can  be
    used  to  improve  or  cut  costs  of  present  products.

    (d)  The  possibility  of  finding  outlets  for  their  products  or  services
    in  a  future  atomic-power  business.

    4.  American  industry  feels  that  atomic  science  and  technology
    constitute  a  field  it  simply  cannot  affoi'd  to  ignore.  Tliis  interest  will
    remain  whether  the  Atomic  Energy  Act  is  revised  or  left  unchanged.
    Prudent  industrial  management,  however,  cannot  be  expected  to  invest
    large  sums  in  nuclear-power  development  under  the  present  restrictive
    ground  rules.  Hence,  in  the  event  the  Atomic  Energy  Act  remains
    unchanged,  industry  will  attempt  to  accumulate  nuclear  know-how
    much  as  it  does  today ;  that  is,  through  Government-sponsored  research
    and  development  contracts  and  operation  of  Government  facilities,
    rather  than  through  self -financed  projects.  A  great  deal  of  the  pres-
    ent activity  by  the  study  teams  is  premised  on  the  anticipation  of  a
    revision  in  the  Atomic  Energy  Act.  If  there  is  no  enabling  legisla-
    tion, interest  by  these  groups  will  surely  decrease,  though  it  will  not
    disappear.

    5.  If  the  Atomic  Energy  Act  is  changed  to  meet  the  object] ^•e  of
    greater  industrial  participation,  industry  can  be  expected  to  devote
    considerable  talent  and  resources  to  nuclear  projects.

    6.  The  extent  of  self-financed  private  participation  under  revised
    lefjislation  will  not  be  tremendous  at  the  outset,  owing  to  the  over-
    riding poor  economic  outlook  for  most  nuclear  ventures  at  the  present
    time.  As  the  technology  advances  through  industry-sponsored  re-
    search and  the  Commission's  own  program,  private  investment  will  in-
    crease pi'oportionately.

    7.  In  the  light  of  the  preceding  statement,  it  is  exceedingly  doubt-
    ful that  any  industrial  group  would  be  willing  to  underwrite  the  early
    construction  of  a  nuclear-power  reactor,  even  assuming  a  revision  of
    tlie  act.     With  new  legislation  and  a  Government-sponsored  proto-

    ATOMIC    POWER    DEVELOPMENT  29

    type  reactor  demonstrating  power  costs  even  marginally  economic,  it
    is  felt  several  private  groups  would  then  strongly  consider  financing
    full-scale  projects.

    8.  The  basis  of  our  proposed  policy  is  that  industry  will  participate
    freely  in  nuclear-power  development  under  patent  provisions  which
    recognize  and  fully  protect  the  public  interest  in  technology  developed
    at  taxpayer's  expense.  Industry  will  argue  strenuously  for  patent
    rights  to  those  inventions  which  are  clearly  the  product  of  privately
    financed  activities.

    9.  Secrecy  and  compartmentalization  of  classified  information  are
    undoubtedly  responsible,  to  a  large  degree,  for  the  nebulous  state  of
    knowledge  possessed  by  a  majority  of  industry  as  to  the  status  and
    promise  of  nuclear  power.  Most  industrialists  accept  this  as  a  nec-
    essary consequence  of  giving  prime  consideration  to  the  common  de-
    fense and  security.  Some  feel,  however,  that  a  realistic  appraisal
    of  the  situation  would  permit  more  information  to  be  made  public.

    Finally,  a  significant  number  of  American  companies  deemed  capa-
    ble of  making  substantial  contributions  to  nuclear-power  develo])-
    ment  are  currently  serving  as  contractors  to  the  Commission's  reactor
    program.  The  Commission's  ]5olicy  would  permit  an  expansion  of  this
    number  to  the  end  that  we  would  have  an  even  stronger  national
    atomic-energy  program.

    Chairman  Cole.  Thank  you  very  much,  Mr.  Davidson.

    Do  the  committee  members  have  any  questions  they  want  to  submit
    to  Mr.  Davidson?

    Representative  Holifieij).  I  assume  your  statement,  Mr.  Davidson,
    has  the  approval  of  the  Commission  ?

    Mr.  Davidson.  Yes,  sir.  It  has  been  reviewed  by  the  proper
    authorities.

    I  should  reiterate :  This  is  an  estimate  of  the  Office  of  Industrial  De-
    velopment. I  am  not  positive  that  every  single  Commissioner  or
    every  staff  member  would  subscribe  to  all  these  conclusions.  However,
    this  is  an  attempt  to  be  as  objective  as  possible  in  assessing  the  in-
    terest and  convictions  of  these  industrial  groups  which  have  been  in
    contact  with  our  Office.

    Eepresentative  Holifield.  In  section  7  you  say  that,  even  though  the
    new  legislation  were  enacted,  and  without  going  into  the  question  of
    what  kind  of  legislation,  and  "a  Government-sponsored  prototype
    reactor  demonstrating  power  costs  even  marginally  economic,"
    even  then  there  would  be  a  very  light  participation  by  the  industrial
    group  ?

    Mr.  Davidson.  No;  I  said  it  was  felt  that  under  those  conditions
    several  groups  would  then  strongly  consider  financing  full-scale
    projects.

    Representative  Holifield.  But  you  say:

    It  is  exceedingly  doubtful  that  any  industrial  group  would  be  willing  to  under
    write  the  early  construction  of  a  nuclear  power  reactor,  even  assuming  a  re-
    vision of  the  act.

    Mr.  Davidson.  That  is  on  account  of  the  very  poor  economics  of
    the  situation  today.

    Representative  Holifield.  Then,  if  that  be  the  case,  the  only  way  we
    can  get  a  power  reactor  built  would  be  with  Government  funds  or  a
    great  percentage  of  Government  funds.

    30  ATOMIC    POWER    DEVELOPMENT

    Mr.  Davidson.  Speaking  of  prototypes,  I  think  this  is  the  case.

    Eepresentative  Holifield.  Let  us  speak  of  a  practical  2,000-kilo-
    watt-hour  producing  reactor.

    Mr.  Davidson.  You  mean  200,000  kilowatt?

    Representative  Holifield.  200,000.    Excuse  me.

    Mr.  Davidson.  My  conclusion  as  of  today  is  that  no  group  would
    do  that.

    Representative  Holtfield.  That  was  my  understanding.  I  wanted
    to  verify  that.

    Chairman  Cole,  Thank  you  very  much,  Mr.  Davidson.

    Mr,  Dean.  Are  you  ready  for  the  next  witness,  Mr.  Chairman  ?  It
    is  Dr.  Bugher,  who  heads  our  Division  of  Biology  and  Medicine  and
    will  discuss  some  of  the  health  and  safety  aspects  of  the  business
    which  were  raised  by  earlier  questions.

    Chairman  Cole.  Dr.  Bugher,  we  will  be  happy  to  hear  you.  You
    may  proceed.

    STATEMENT  OF  JOHN  C.  BUGHER,  DIEECTOE,  DIVISION  OF  BIOLOGY

    AND  MEDICINE,  ATOMIC  ENERGY  COMMISSION

    Dr.  Bugher.  It  is  obvious  that  the  successful  development  of  com-
    mercial power  from  nuclear  fuels  must  be  consistent  with  the  standards
    of  public  health  and  safety.  Since  reactors  for  the  production  of
    fissionable  material  have  been  satisfactorily  operated  for  more  than  a
    decade,  it  followed  that  power  reactors,  which,  as  Dr.  Hafstad  ex-
    j)lained,  depend  upon  the  same  fundamental  principle,  using  the  same
    nuclear  reactions,  may  also  be  constructed  and  operated  without  sig-
    nificant, radiation  hazard.

    Dr.  Hafstad  has  also  explained  something  of  the  magnitude  of  the
    radiation  values  involved  and  has  developed  the  fact  that  we  must
    deal  not  only  with  high  intensities  of  gamma  and  neutron  radiation
    within  the  reactor  during  the  process  of  uranium  fission  but  also  with
    the  complex  of  elements  called  fission  products,  the  fragments  of  the
    uranium  nucleus  which  result  from  the  fission  resulting  from  this
    reaction  and  which  continue  their  radioactive  course  at  different  rates.
    Some  of  them  have  a  very  slow  rate  of  decomposition  and  persist  in
    their  radioactivity  over  a  long  period  of  time.

    Senator  Bricker.  Are  all  of  these  products  radioactive?  Those  in
    the  middle  of  the  periodic  table  ?     Are  they  also  radioactive  ?

    Dr.  Bugher.  They  are  practically  all  radioactive  in  the  very  begin-
    ning, and  most  of  them  go  through  a  succession  of  radioactive  disinte-
    grations to  reach  a  stable  state  and  later  appear  as  ordinary  elements.

    Senator  Bricker.  I  was  thinking  of  krypton  and  barium  particu-
    larly. In  the  first  radioactive  state,  then,  are  those  in  the  isotope
    form  ?

    Dr,  Bugher.  They  are  in  the  isotope  form,  but  many  of  the  isotopes
    are  not  those  that  ordinarily  occur  in  nature,  so  they  are  not  stable.
    And  ultimately  they  degrade  to  isotopic  forms  that  are  stable,  that  are
    normally  found.

    Senator  Bricker.  That  is  the  normal  krypton,  barium,  and  other
    products  ?

    Dr.  Bugher.  Yes,  sir.

    Approximately  11  percent  of  the  total  energy  of  the  reaction  is
    ultimately  released  in  radioactivity  from  the  derived  fission  products.

    ATOMIC    POWER    DEVELOPMENT  31

    These  materials  constitute  the  waste  products  of  the  reactors  and  must
    be  removed  from  time  to  time  in  order  that  the  fission  process  may-
    proceed  economically.

    Wliat,  then,  is  the  present  status  of  our  knowledge  of  the  health
    hazards  involved  in  this  complex  business,  and  how  do  we  stand  in
    our  technology  of  protecting  the  operators  and  the  public  generally
    from  the  dangers  inherent  in  large  concentrations  of  radioactive
    materials?

    To  give  a  bit  of  the  background  of  this  problem,  I  would  like  to  in
    a  very  brief  manner  go  into  a  bit  of  history.  Since  the  isolation  of  ra-
    dium, for  the  first  time  in  1899,  only  a  very  few  pounds  of  this  highly
    radioactive  element  have  been  accumulated.  The  public  is  generally
    aware  of  the  fact  that  this  small  amount  of  the  element  radium  has
    not  only  been  of  immeasurable  value  in  medicine,  but  in  careless  hands
    it  has  been  a  source  of  injury  to  many  people.  We  now  are  dealing,
    when  we  speak  of  the  production  of  large  amounts  of  power  from
    nuclear  fission,  with  the  creation  in  a  single  reactor  of  huge  amounts
    of  radioactivity,  comparable  to  that  of  many  tons  of  radium,  instead
    of  pounds.

    ^AHien  tlie  first  reactors  were  planned  by  the  Manhattan  Engineer
    District,  the  scientists  and  engineers  were  faced  by  problems  of  un-
    precedented magnitude  concerning  which  there  was  very  meager  infor-
    mation. The  nature  of  the  issues  faced  in  1942  was  expressed  by  the
    Commission's  semiannual  report  to  the  Congress  of  July  1950 — that  is,
    the  Eighth  Semiannual  Report,  as  follows — and  I  wish  to  quote  two
    })aragTaphs  from  that  report.  This  was  expressing  the  situation  and
    the  problem  as  faced  by  the  ]Manhattan  Engineer  District  scientists  in
    1942  and  thereabouts.

    In  place  of  a  few  radium  dial  painters  doing  standardized  work  and  an  occa-
    sional operator  of  a  testing  machine,  thousands  of  workers  soon  were  to  perform
    hundreds  of  tasks  in  the  vicinity  of  materials  releasing  much  more  radiation  than
    men  had  known  before.  In  place  of  a  few  doctors  and  hospital  and  laboratory
    Technicians  handling  minute  quantities  of  radium  and  1.5,000-  to  50,000-volt  X-ray
    machines,  hundreds  of  scientists  and  technicians  were  to  do  laboratory  work  with
    material  thousands  of  times  more  radioactive  than  radium  and  with  particle
    accelerators  with  voltages  running  to  tens  of  millions.

    Instead  of  about  3  pounds  of  radium  under  human  control  in  the  entire  world,
    there  would  be  radioactive  materials  equivalent  to  millions  of  pounds  of  radium.
    There  would  be  not  one  kind  of  radio  material  but  literally  hundreds  comprising
    nearly  every  known  element  and  others  previously  unknown,  such  as  plutonium.
    Instead  of  X-rays,  the  chief  danger  of  which  had  been  a  skin  burn,  there  would
    be  gamma  rays  and  neutrons  able  to  deliver  heavily  damaging  radiation  deep
    within  the  body.

    I  must  interject  here,  with  regard  to  the  forecast,  at  that  time,  only
    a  little  more  than  10  years  ago,  that  particle  accelerators  would  be  in
    use  running  to  tens  of  millions  of  electron  volts,  and  we  actually  now
    are  in  the  neighborhood  of  4  billion  electron  volts,  with  particle  accel-
    erators, in  that  short  span  of  time.

    Under  these  circumstances,  referring  to  the  circumstances  of  1942,
    and  pending  the  inauguration  of  a  vigorous  research  program,  it  was
    necessary  to  establish  criteria  of  radiological  safety  of  a  very  con-
    servative character.  These  considerations,  plus  those  of  security  and
    the  necessity  for  dispersal  of  huge  installations,  required  the  isolation
    of  the  operations  within  large  tracts  of  land.  With  the  experience
    gained  by  actual  operation,  and  with  the  accumulation  of  knowledge
    as  research  has  progressed,  it  has  been  possible  to  achieve  a  certain

    32  ATOMIC    POWER    DEVELOPMENT

    degree  of  relaxation  of  some  of  the  original  criteria.  The  perform-
    ance record  of  the  plants  is  such  that  there  have  been  very  few  radia-
    tion accidents,  and  the  general  health  of  the  people  fully  engaged  in
    the  atomic-energy  program  is  certainly  as  good  as  that  in  any  other
    section  of  our  national  economy.

    Senator  Hickexlooper.  May  I  ask  you,  Dr.  Bugher,  if  it  is  not  a
    fact  that  there  have  been  no  radiation  injuries  in  the  Government  op-
    eration except  injuries  resulting  from  nonconformance  to  anticipated
    conditions,  on  which  rules  had  been  made ;  in  other  words,  violations
    of  rules,  or  carelessness  in  areas  where  the  safeguards  had  already  been
    set  up  ?

    Dr.  Bugher.  Generally  speaking,  that  has  been  the  case,  with  a  very
    few  exceptions,  which  go  back  to  the  very  early  days,  when  people
    were  conducting  experiments,  for  example,  of  a  critical  nature,  con-
    cerning which  there  were  no  rules  at  that  time.  And  a  few  accidents
    did  occur  then.  Those  no  longer  occur,  because  the  procedures  are
    more  clearly  established.

    Chairman  Cole.  Doctor,  is  it  not  also  a  fact  that  the  accident  rate
    in  the  overall  AEC  program,  both  for  radiation  hazard  as  well  as
    occupation  hazard,  has  been  immeasurably  better  than  the  same  record
    of  accidents  in  industry  ?

    Dr.  Bugher.  Yes.  The  general  frequency  of  accidents,  nonradia-
    tion  accidents,  in  the  plants,  is  only  about  half  the  frequency  of  the
    same  accidents  generally  in  industry,  which  is  a  reflection  of  the  fact
    that  constant  emphasis  on  safety  has  its  fruits  in  many  other  fields
    than  just  radiation.

    Chairman  Cole.  I  think  the  safety  work  of  the  Commission's  pro-
    gram has  been  remarkably  fine.

    Dr.  Bugher.  The  great  amount  of  high-energy^  radiation  emitted
    during  the  fission  process  makes  the  immediate  vicinity  of  a  reactor  of
    great  hazard  to  the  operators  unless  the  device  is  adequately  shielded.
    Such  shielding,  therefore,  as  Dr.  Hafstad  has  explained,  is  included
    by  the  engineers  as  an  integral  part  of  the  reactor  installation.  The
    problem  in  practice  is  essentially  one  of  determining  the  amount  of
    shielding  wdiich  is  adequate  to  protect  the  health  of  the  operators.

    As  the  fission  process  proceeds,  there  is  always  a  continued  accumu-
    lation of  the  fission  products,  and  ultimately  the  fuel  must  be  proc-
    essed in  some  manner  so  that  these  atomic  waste  products  may  be  re-
    moved and  the  purified  fissionable  material  returned  to  the  power
    cycle.  The  separation  of  fission  products  involves  a  highly  compli-
    cated chemical  technology  and  extremely  high  levels  of  radiation.
    Here  again  these  problems  have  been  met  satisfactorily  in  the  several
    different  schemes  of  chemical  separation  now  in  operation,  and  the
    operating  personnel  of  such  plants  enjoy  excellent  protection  from  the
    health  and  safety  standpoint.

    From  the  point  of  view  of  the  public  safety  of  populations  within
    close  proximity  to  reactors,  it  is  to  be  remembered  that  at  any  one  time
    a  reactor,  whether  for  production  or  power  purposes — and  by  produc-
    tion, I  mean  production  of  fissionable  material  here — will  contain
    large  amounts  of  radioactive  materials  which  would  be  definitely  dan-
    gerous to  the  public  if  they  were  scattered  about  in  a  haphazard  fash-
    ion. The  planning  of  reactors  and  their  design  must,  therefore,  always
    stress  the  fact  that  human  failure  may  sooner  or  later  occur  in  any
    situation,  and  the  system  must  be  designed  to  be  self-limiting  in  case

    ATOMIC    POWER    DEVELOPMENT  33

    of  operational  accidents  or  mis  judgment.  That  this  may  be  success-
    fully achieved  has  been  demonstrated  by  the  reactor  accidents  at  the
    Argonne  National  Laboratory  and  at  Chalk  River,  Canada,  where  de-
    spite the  occurrence  of  an  excessive  power  burst,  in  the  latter  instance
    resulting  in  serious  damage  to  the  reactor,  there  was  no  significant
    radiation  injury  to  any  of  the  personnel,  and  the  contamination  re-
    sulting was  confined  to  the  reactor  buildings  themselves  and  no  health
    problems  occurred  outside  these  buildings.

    Thus  it  would  appear  that  throughout  the  history  of  the  Manhattan
    Engineer  District  and  the  Atomic  Energy  Commission  an  increasing
    number  of  reactors  for  production  purposes  have  been  operated
    successfully  witliout  endangering  either  the  operating  personnel  or
    any  portion  of  the  general  public.  We  have  at  hand  both  the  knowl-
    edge and  experience  to  assure  us  that  reactors  for  primary  power  may
    be  safely  operated  at  the  present  time.  As  such  a  program  continues
    to  develop  and  undergo  the  gradual  evolution  which  may  be  antici-
    pated, the  research  program  likewise  must  be  steadily  prosecuted  in
    order  that  criteria  of  safety  may  be  continually  examined  and  new
    knowledge  accumulated  relative  to  the  requirements  for  radiation
    protection.  We  would  not  anticipate  any  abrupt  or  revolutionary
    change  in  the  criteria  of  reactor  operation  generally,  but  a  steady
    development  as  knowledge  of  the  art  increases.

    In  other  words,  medically  the  situation  is  somewhat  comparable  to
    the  engineering  problem,  of  a  steady  development  and  evolution
    rather  than  revolutionary  change  at  some  particular  date.

    The  standards  of  radiological  safety  in  this  field  are  primarily  the
    responsibility  of  the  Atomic  Energy  Commission.  The  decisions  as
    to  permissible  levels  of  exposure  are  never  capricious ;  in  these  matters
    we  are  assisted  and  advised  by  the  outstanding  radiologists  of  the
    country,  some  of  whom  are  conducting  research  as  a  part  of  the
    general  research  program  of  the  Commission,  and  others  who  bring
    to  us  the  benefits  of  experience  gained  in  other  fields.

    In  summary,  we  find  that  while  we  have  yet  much  to  learn  concern-
    ing the  mechanism  of  radiation  injury,  the  manner  in  which  radiation
    injures  living  things,  particularly  people,  we  have  sufficient  practical
    knowldege  to  insure  safe  operation  of  power  reactors  of  the  types
    now  contemplated.  For  the  longer  view,  we  are  confident  that  our
    research  programs,  vigorously  prosecuted,  will  enable  us  to  maintain
    sound  safety  criteria  for  future  developments.

    Chairman  Cole,  Thank  you.  Doctor.  I  think  now  it  is  appropriate
    for  Senator  Hickenlooper  to  raise  the  questions  which  he  had.

    Are  there  any  questions?  Somebody  raised  the  question  of  Mr.
    Dean  which  he  deferred  to  you  with  respect  to  the  health  hazard.
    Mr.  Durham,  I  believe.

    Dr.  BuGHER.  Yes.  I  believe  the  question  was :  To  what  extent  are
    the  reactors  likely  to  endanger  the  public  within  the  immediate
    neighborhood  ?

    The  problem  is  almost  the  same  as  we  have  in  the  power  reactors
    at  the  various  installations  now  operating.  I  mean  the  production
    reactors.  In  the  event  of  a  serious  disaster,  the  locality  could  be  very
    seriouslv  contaminated  and  would  not  be  suitable  for  occupation  by
    people  for  quite  a  period  of  time.  The  problem,  therefore,  of  design
    is  one  in  which  such  a  complete  disaster  could  not  occur,  but  where
    operational  accidents  might  result  only  in  very  localized  contanuna-

    34  ATOMIC    POWER    DEVELOPMENT

    tion.  Our  best  and  only  example  of  course,  so  far,  is  in  the  case  of  the
    reactor  at  Chalk  Kiver,  which  the  Canadians  have  informed  the  press
    and  the  public  generally  about.

    Representative  Durham.  What  effect  would  weather  conditions
    have  on  that  ?

    Dr.  BuGHER.  The  local  distribution  of  contaminating  material  in
    such  an  event  would  be  more  or  less  dependent  upon  the  immediate
    weather.  That  is  to  say,  rain  would  certainly  change  the  distribution.
    But  we  would  anticipate  that  in  case  of  a  reactor  accident  of  any  major
    character,  the  deposition  would  be  within  a  few  miles  of  the  reactor
    itself.  It  would  not  have  a  very  remotely  borne  mass  of  contamina-
    tion.

    Representative  Holifield.  Will  the  gentleman  yield  on  that  point?

    Is  it  not  true  that  at  the  time  of  the  Chalk  River  explosion  the  wea-
    ther conditions  were  ideal,  so  that  the  contamination  went  up  into
    the  air  and  was  dispersed,  whereas  if  there  had  been  a  dense  fog  or  a
    heavy  rainfall,  a  blowing  type  of  rainfall,  it  would  have  been  more
    concentrated  on  the  ground  areas  and  more  dangerous  ?

    Dr.  BuGHER.  They  felt  that  at  the  very  beginning,  but  we  are  in-
    formed that  as  they  studied  the  situation  later  and  became  more  aware
    of  what  had  happened,  they  said  they  would  not  have  been  particu-
    larly worried  even  though  a  heavy  rain  had  occurred  at  the  time.

    Representative  Holifield.  There  must  not  have  been  very  much
    contamination  by  radiated  dust  in  the  air  at  the  time.

    Dr.  Bugher.  That  is  right.  There  was  very  little  that  came  from
    the  reactor  itself.

    Chairman  Cole.  In  the  normal  operation  of  a  power  reactor.  Doc-
    tor, is  there  any  hazard  to  the  health  of  either  the  nearby  community
    or  distant  communities,  irrespective  of  the  number  of  reactors  that
    there  might  be?

    Dr.  Bugher.  With  the  normal  operation  of  any  of  the  designs  now
    in  sight,  the  problem  of  safety  of  the  operators  or  the  nearby  people
    is  entirely  one  of  shielding,  which  is  a  straightforward  engineering
    problem.  The  system  is  a  closed  system,  and  the  problem  of  fission
    product  activity  does  not  really  come  into  the  picture  until  at  such
    time  as  the  fuel  may  be  processed  for  removal  of  these  products.

    Chairman  Cole.  Then  there  are  no  products  discharged  into  the
    air  which  are  contaminated  and  which  might  jeopardize  the  health?

    Dr.  Bugher.  No.    These  are  all  closed  systems.

    Chairman  Cole.  The  only  hazard  is  in  connection  with  the  person
    engaged  in  the  plant,  the  employees,  or,  in  the  event  of  a  catastrophe,
    some  unforeseen  miscalculation  in  the  immediate  neighborhood?

    Dr.  Bugher.  Yes.    That  is  a  good  statement  of  it.

    Chairman  Cole.  Can  you  tell  us  any  of  the  developments  which
    you  anticipate  might  be  made  available  to  medicine  and  thereby  to
    the  health  and  improvement  of  our  people  through  an  encouragement
    and  an  enlargement  of  this  reactor  field  ?

    Dr.  Bugher.  It  is  one  of  the  most  attractive  areas  in  medicine  to-
    day, that  the  small  reactors  may  have  a  direct  application  to  medical
    problems,  particularly  in  the  field  of  cancer  treatment,  where  the  neu-
    tron radiation  itself,  which  ordinarily  is  confined  within  the  reactor,
    may  be  drawn  out  for  specific  purposes  with  extremely  promising  re-
    sults.

    ATOMIC    POWER    DEVELOPMENT  35

    The  second  big  area  of  utilization  of  the  reactor  is  in  the  production
    of  radioactive  isotopes,  particularly  those  whose  half-life  is  short,
    which  can  be  utilized  in  a  number  of  diseases  w^ith  considerable  ad-
    vantage. So  that  even  small  reactors  which  are  not  primarily  de-
    signed for  power  production  of  any  magnitude  offer  considerable  value
    in  this  field,  and  it  may  be  said  that  the  medical  profession  then
    profits  as  a  byproduct,  you  might  say,  from  the  very  great  amount
    of  engineering  research  which  goes  into  the  power  reactor  design.

    Chairman  Cole.  I  have  noticed  that  you  emphasize  that  the  bene-
    fits might  be  made  available  by  the  use  of  small  reactors.  Could  that
    be  interpreted  to  mean  that  the  larger  the  reactors,  the  more  numerous
    they  are,  the  more  opportunities  you  have  for  greater  benefits  ?  Does
    the  volume  of  the  benefits  increase  with  the  size  of  the  reactors,  or  can
    medicine  get  all  the  help  it  wants  out  of  nuclear  power  from  the  small
    reactors  ?

    Dr.  BuGHER.  I  think  medically  the  needs  are  not  for  large  reactors.
    As  I  understand  the  engineering  problem,  it  is  the  economics  of  power
    that  make  the  large  reactors  attractive  in  that  field.  But  by  the  same
    token,  the  smaller  ones  are  more  useful  medically,  more  flexible,  and
    have  in  many  ways  more  attraction  from  the  standpoint  of  the  usual
    medical  center.  The  power  levels  are  not  high  in  such  case,  but  the
    radiation  uses  are  very  adequate.

    Chairman  Cole.  You  seem  to  establish  two  categories  of  benefits
    from  the  reactor  program,  one  through  the  use  of  manufactured  iso-
    topes for  use  in  treatment  and  analysis  of  ailments,  and  so  forth,  and
    then  your  first  category,  as  I  understood  it,  meant  that  the  patient
    would  have  to  go  to  the  reactor  itself  and  be  exposed  to  the  radiation.

    Dr.  BuGHEE.  Yes.  That  is  the  problem  there,  which  implies  that
    with  time,  and  as  the  reactor  technology  advances,  we  should  antici-
    pate for  that  purpose  small,  extremely  safe,  and  relatively  simple
    reactors  for  these  specific  medical  purposes.

    Representative  Durham.  Doctor,  this  is  a  little  bit  beside  the  point,
    but  since  you  have  discussed  this,  let  me  ask.  Has  the  study  that  has
    been  made  through  the  Commission  as  a  result  of  the  explosions  at
    Hiroshima  and  Nagasaki  been  of  great  value  in  arriving  at  some  con-
    clusions today  as  to  what  miglit  happen  if  we  should  develop  hundreds
    of  these  reactors  throughout  the  country?

    Dr.  BuGHER.  The  subsequent  medical  histories  of  the  survivors  in
    Japan  of  the  two  cities  is  of  great  value  to  these  peacetime  applica-
    tions. We  prosecuted  it  in  fact  fundamentally  with  that  reference.
    And  it  is  a  combined  scientific  effort  in  the  medical  field  of  both  the
    Japanese  and  the  American  Governments.  It  will  give  us  extremely
    valuable  information  as  to  the  problems  and  long-term  effects  of
    radiation  on  people.

    Chairman  Cole.  Are  there  any  further  questions?

    If  not,  thank  you  veiy,  very  much.

    Representative  Durham.  In  line  with  the  statement  the  Chairman
    made  witli  regard  to  the  services  that  have  been  performed  by  those
    who  have  taken  part  in  this  program,  I  am  sure  he  joins  with  me  in
    expressing  commendation  for  the  services  rendered  to  the  country  and
    the  world  at  large  by  the  present  Chairman.

    Chairman  Cole.  You  are  speaking,  when  vou  refer  to  the  "present
    Chairman,"  of  the  Chairman  of  the  Atomic  JEnergy  Commission.

    36  ATOMIC    PO'VER    DEVELOPMENT

    Representative  Durham.  I  am  speaking  of  the  Chairman  of  the
    Atomic  Energy  Commission.

    Representative  Price.  I  concur  in  the  statement.  I  know  the  com-
    mittee is  unanimous  in  its  regard  for  Mr.  Dean.

    Mr.  Dean.  We  have  one  more  witness,  and  he  is  going  to  briefly
    allude  to  some  of  the  problems  encountered  in  connection  with  the
    control  of  power  reactor  information.  He  is  Dr.  J.  G.  Beckerley,
    Director  of  Classification.

    STATEMENT  OF  J.  G.  BECKERLEY,  DIRECTOH  OF  CLASSIFICATION,
    ATOMIC  ENEEGY  COMMISSION

    Dr.  Beckerley.  Mr.  Chairman,  there  is  no  doubt  in  my  mind  that
    any'  expansion  of  industrial  and  public  participation  in  the  develop-
    ment of  nuclear  power  can  be  accomplished  without  adversely  affect-
    ing the  national  security.

    As  the  Commission's  policy  statement  indicates,  the  distribution  of
    classified  information  as  well  as  the  declassification  of  technical  data
    on  nuclear  power  must  necessarily  be  geared  to  the  increase  in  activity
    and  interest  in  the  field  on  the  part  of  American  industry  and  public.
    This  process  of  liberalizing  reactor  information  distribution  in  pro-
    portion to  increasing  activity  is  based  upon  a  policy  of  weighing
    value  to  the  United  States  versus  value  to  unfriendly  nations  in  de-
    termining the  dissemination  of  technical  data.

    I  should  like  to  review  briefly  the  current  declassification  program
    as  it  pertains  to  nuclear  reactor  information.  Additionally,  I  should
    like  to  indicate  a  probable  course  which  Commission  declassification
    policy  may  take.

    The  basis  for  secrecy  in  atomic  energy  matters  stems  from  the
    Atomic  Energy  Act  itself.  Under  section  10  of  the  act  power  reactor
    information  is  "born"  classified  and  remains  in  this  state  until  the
    Commission  determines  that  the  information,  in  the  words  of  the
    statute,  "may  be  published  without  adversely  affecting  the  common
    defense  and  security."'  The  reason  reactor  data  has  security  implica-
    tions lies  in  the  fact  that  nuclear  reactors  are  capable  of  producing
    fissionable  material  for  atomic  weapons.  A  second  reason  that  reactor
    data  may  be  security  information  is  the  fact  that  nuclear  fuels  may  be
    used  for  military  propulsion  purposes.  Reactor  information  also
    may  have  security  significance  because  of  its  relationship  to  fissionable
    materials  production  capacity.  This  latter  is  clearly  an  intelligence
    factor  whereas  the  first  2  concerns  technical  use  of  the  data  by  un-
    friendly nations  in  their  own  programs.

    It  is  clear  that  the  Commission  must  release  at  least  as  much
    reactor  data  as  other  nations  have  developed  and  published.  This
    means  that  as  other  nations  develop  nuclear  reactors  and  publish
    data  thereon,  it  is  pointless  to  withhold  from  publication  similar  data
    developed  in  this  country.  This  is,  of  course,  a  minimum  declassifica-
    tion requirement.

    Actually,  in  order  to  assure  a  strong  United  States  atomic  energy
    program  it  is  necessary  to  release  more  data  than  that  which  is  known
    to  other  nations.  A  \arg-?  body  of  engineers,  scientists,  and  tech-
    nicians in  this  country  mu5t  be  prepared  to  participate  in  the  devel-
    oping atomic  energy  progTam.     The  declassification  of  information

    ATOMIC    POWER    DEVELOPMENT  37

    necessary  to  the  basic  training  in  a  new  technology  is  essential  to  the
    national  security.  This  amounts  to  an  investment  of  technical  in-
    formation in  the  coming  generation  of  nuclear  scientists  and  engineers.

    In  1945  the  Manhattan  District  set  up  a  committee  under  the  late
    Dr.  R.  C.  Tolman  to  recommend  a  basic  declassification  policy.  One
    of  the  recommendations  made  by  this  committee,  which  has  been  a
    part  of  declassification  policy  during  the  past  7  years,  is  that  basic
    science  should  be  declassified  first  and  technology  later.  Under  this
    policy  the  Commission  has  withheld  from  publication  essentially  all
    important  and  unique  reactor  technology,  while  it  has  permitted  pub-
    lication of  the  underlying  basic  science  and  engineering.

    Let  me  indicate  a  few  examples  of  what  has  been  released  under
    this  policy.  All  biological  and  medical  data  of  any  possible  signifi-
    cance in  the  health  problems  associated  with  nuclear  reactor  and
    chemical  processing  operations  has  been  released.  In  fact,  practi-
    cally all  of  this  work  is  done  on  a  completely  open  basis  following
    the  usual  tradition  of  unhindered  scientific  publication.  In  1950  the
    United  States,  as  well  as  Canada  and  the  United  Kingdom  with  whom
    we  share  common  basic  declassification  rules,  agreed  to  release  all  in-
    formation concerning  the  design  and  operation  of  a  number  of  low
    power  nuclear  reactors.  One  consequence  of  this  action  is  that  cer-
    tain research  reactors  for  basic  scientific  endeavors  can  be  operated
    as  unclassified  facilities.  In  1951  further  numerical  data  were  re-
    leased supporting  this  policy  so  that  theoretical  studies  and  training
    could  be  carried  out  on  a  completely  open  basis.

    The  declassification  of  low  power  reactors  is  slowly  but  surely
    resulting  in  benefits  to  the  project  in  terms  of  a  better  trained  new
    generation  of  scientists,  engineers  and  technicians.  "Classified"
    training  cannot  do  the  complete  job.  When  you  consider  that  no
    "home  work"  can  be  done  under  such  conditions  nor  can  the  trainees
    discuss  their  course  with  nonproject  experts  and  when  you  consider
    that  the  trainees  discipline  themselves  not  even  to  think  about  the  clas-
    sified technology  except  when  on  the  job,  then  it  is  easy  to  appreciate
    that  such  training  has  its  limitations.  It  is  clear  that  we  will  al-
    ways have  classified  on-the-job  training.  It  is  quite  wasteful,  how-
    ever, to  extend  such  training  to  relatively  elementary  and  basic
    engineering.

    Under  the  present  declassification  policy  in  the  reactor  field  we  have
    released  certain  technological  data  of  substantial  off-project  useful-
    ness. An  example  of  this  is  liquid  metal  technolog}\  Almost  all
    basic  work  on  the  problems  of  handling  liquid  metal  for  reactor
    coolant  applications  has  been  declassified.  Equipment  developed  for
    such  purpose  is,  for  the  jnost  part,  publicly  available.  While  this
    technology  is  of  use  in  the  reactor  business  it  is  clear  that  the  applica-
    tion of  liquid  metal  techniques  to  other  industrial  problems  is  of
    such  importance  that  the  n.'tional  security  would  be  adversely  affected
    under  a  restrictive  publication  policy  or  in  other  words,  our  national
    security  would  be  weakened  by  failure  to  publish.

    Another  technology  which  is,  for  the  most  part,  declassifiable  is  that
    concerned  with  remote  handling  equipment  and  systems.  This  is  a
    field  of  engineering  which  is  a  challenge  to  mechanical  and  electrical
    ingenuity  and  one  for  which  we  are  drawing  on  the  immense  body  of
    know-how  in  servoraechanisms  and  similar  developments  through-

    38  ATOMIC    POWER    DEVELOPMENT

    out  American  industry.  Eemote  handling  technology  is  an  essential
    part  in  the  health  and  safety  program.  When  fully  developed  the
    technology  will  be  applicable  to  many  nonatomic  activities,  such  as,
    for  example,  the  handling  of  dangerous  chemicals  or  biological
    materials.  ";  ]

    Although  the  above-mentioned  information  is  released,  it  has  been
    our  policy  to  withhold  from  publication  the  really  unique  reactor
    information.  Relatively  little  has  been  released  about  those  nuclear
    constants  which  are  very  difficult  to  measure  and  which  are  essential
    to  the  design  of  advanced  reactors.  The  distortion  and  corrosion  of
    fuel  elements  in  nuclear  reactors  is  an  extremely  important  problem
    in  the  reactor  business  and  one  about  which  we  have  said  almost  noth-
    ing. The  fabrication  of  fuel  elements  and  their  performance  under
    intense  thermal  and  nuclear  irradiation  involve  rather  extensive  know-
    how.  We  have  released  very  few  technical  details  on  these,  in  the  belief
    that  the  data  are  critical  to  our  business  and  cannot  be  understood
    without  time-consuming  activities  involving  unique  facilities.

    In  essence,  many  of  our  reactors  are  considered  as  "black  box"  heat
    sources.  By  this  I  mean  that  we  say  as  little  as  possible  about  the  con-
    tents of  the  box  and  are  relatively  open  about  the  equipment  exterior
    to  the  box.  This  concept  has  been  developed  over  the  past  several
    years  and  has  proved  to  be  extremely  useful.  Of  course,  it  is  apparent
    that  we  will  have  to,  as  the  scope  of  the  nuclear-power  program  in-
    creases, release  data  on  the  "black  box"  design  and  performance,  since
    this  is  at  the  heart  of  the  new  technology.  In  fact,  it  is  in  this  "black
    box"  that  the  greatest  opportunities  for  ingenuity  exist.  To  date,  we
    have  never  given  all  the  details  on  any  of  these  "black  box"  reactor
    cores  except  for  the  low  power  units  where  the  effect  of  temperatures,
    radiation  fields,  and  corrosion  are  less  important.

    Although  we  shall  continue  to  withhold  the  critical  details  of  reac-
    tor core  technology,  it  is  essential  that  we  declassify  more  and  more  in-
    formation on  what  can  be  done  in  a  reactor  core  without  divulging
    precisely  how  it  can  be  done.  This  means,  for  example,  that  we  should
    find  it  possible  to  discuss  engineering  evaluation  of  core  performance;
    that  is,  degree  of  burn  up,  lifetime  of  fuel  elements,  corrosion  resist-
    ance, et  cetera.

    In  looking  ahead  I  believe  that  we  should  continue  the  development
    of  reactor  core  technology  on  a  classified  basis  until  it  becomes  appar-
    ent that  classification  is  handicapping  the  full  development  of  nuclear
    power  to  an  extent  which  outweighs  its  possible  value  to  unfriendly
    nations.  In  the  development  of  this  technology  on  a  classified  basis,
    it  is  essential  that  we  distribute  the  data  broadly,  so  that  a  maximum
    fraction  of  the  United  States  technical  community  may  contribute  the
    ideas  and  ingenuity  essential  to  rapid  progress.  This  will  increase  only
    very  slightly  the  possibility  of  compromise  of  the  information.

    With  respect  to  the  contributing  technology  to  the  reactor  business —
    for  example,  the  development  of  reactor  materials  such  as  zirconium
    and  its  alloys  and  heavy  water — undoubtedly  the  Commission  will
    find  it  more  and  more  desirable  to  release  data  on  this  technology  so
    that  the  contributing  industries  will  be  relatively  free  to  undertake
    their  own  research  and  development  and  to  advance  under  the  usual
    incentives  of  free  enterprise.  We  have  already  moved  in  this  direction
    rather  substantially.  The  manufacturers  of  radiation  detection  in-
    struments, special  components  such  as  liquid  metal  pumps,  etcetera,

    ATOMIC    POWER    DEVELOPMENT  39

    are  developing  and  improving  their  products.  Since  the  end  of  the
    war  there  have  developed  a  number  of  new  industries  based  on  declassi-
    fied data.

    In  releasing  technical  information  or  distributing  classified  infor-
    mation more  broadly,  there  are  bound  to  be  real  and  basic  difficulties.
    One  consequence  of  withholding  release  of  reactor  core  technology
    will  be  the  continuance  under  secrecy  order  of  a  large  body  of  patent
    applications.  This,  of  course,  results  in  some  very  basic  problems
    which  it  is  not  proposed  to  discuss  here  at  this  time.

    Additionally,  there  will  always  be  the  feeling  that  an  important
    new  technology  such  as  this  should  be  as  unfettered  by  security  and
    secrecy  paraphernalia  as  possible.  It  is  certainly  true  that  we  slow
    down  our  rate  of  progress  in  withholding  significant  technical  infor-
    mation from  publication.  However,  the  basic  question  is  one  of  rela-
    tive values ;  that  is,  as  long  as  we  feel  that  we  are  retarding  unfriendly
    nations  in  their  efforts  in  this  field — by  making  them  perform  the
    work  themselves — we  can  afford  to  take  a  measure  of  slowdown  in  our
    own  progress.

    Naturally,  it  is  a  delicate  balance  and  one  which  must  be  continual-
    ly worked  on.  It  is  a  balance  which  is  very  hard  to  strike,  since  it  is
    never  clear  to  any  of  us  just  how  useful  our  reactor  information  is  to
    an  unfriendly  nation.  But  as  long  as  the  present  unfriendly  inter-
    national competition  exists  we  must  withhold  from  our  competitors
    many  of  those  "trade  secrets"  which  we  have  worked  so  hard  to
    develop.

    Chairman  Cole.  Thank  you  very  much,  Dr.  Beckerley.
    I  was  especially  impressed  by  your  opening  statement,  which  I  feel
    is  important  enough  to  reemphasize,  in  which  you  say  there  is  no
    doubt  in  your  mind  that  any  expansion  of  industrial  and  public  par-
    ticipation in  the  development  of  nuclear  power  can  be  accomplished
    without  adversely  affecting  the  national  security.  That  is  a  phase  of
    this  problem  which  has  given  us  a  good  bit  of  concern.  That  reassur-
    ance from  you,  in  view  of  your  connection  with  the  program,  and  your
    knowledge  of  the  problem,  is  heartening.

    Representative  Dltjham.  You  are  speaking  as  a  physicist.  Doctor  ?
    Dr.  Beckerley.  Yes,  I  trained  as  a  physicist  and  worked  in  an
    industrial  research  laboratory  for  a  number  of  years.

    Representative  Durham.  Do  you  have  a  doctor's  degree  ?
    Dr.  Beckerley.  Yes,  sir.

    Representative  Dttrham.  There  was  one  other  point  that  you  made
    there.  It  was  pointed  out  in  your  statement  here  that  the  publish-
    ing of  these  improvements  in  the  process  of  manufacturing  or  what-
    ever it  should  happen  to  be  would,  of  course,  immediately  be  made
    null  and  void  if  we  had  to  clamp  secrecy  on  in  this  country.  At  the
    present  time,  in  your  opinion,  is  there  anything  being  published  in
    England  that  declassifies  any  matter  that  we  have  classified  ?  I  mean,
    is  there  anything  being  published  in  England  on  reactors  that  we  have
    classified  in  this  country,  that  unclassifies  what  we  have  classified  ?

    Dr.  Beckerley.  With  respect  to  Great  Britain  and  Canada,  we
    share  common  rules  of  declassification.

    Representative  Dlt?ham.  We  have  no  control  over  what  they  pub-
    lish, do  we  ?

    Dr.  Beckerley.  In  the  normal  course  of  events,  for  example,  if  the
    rules  are  not  clear

    40  ATOMIC    POWER    DEVELOPMENT

    Representative  Durham.  Well,  I  will  reframe  my  question.  Is
    there  anything  being  published  throughout  the  world  now  of  that
    kind  to  your  knowledge  ?

    Dr.  Beckerley.  My  answer  to  that  is  "No,"  taking  into  account  the
    French  program,  the  Belgian  program,  the  Norwegian  program.
    They  have  not  published  anything  which  we  have  held  classified,  not
    to  my  knowledge.

    Representative  Holifield.  Dr.  Beckerley,  referring  to  the  first  par-
    agraph of  your  statement,  will  you  please  state  that  in  an  affirmative
    way  ?     "Will  you  please  state  exactly  what  you  mean  by  that  ?

    Dr.  Beckerley.  It  has  just  been  called  to  my  attention  that  there
    is  a  typographical  error  here.  It  should  be  "an  expansion."  Because
    obviously  an  expansion  which  was  so  large  that  it  interfered  with  other
    defense  activities  would  clearly  negate  this  sentence  here.  "What  I
    mean  here  is  any  reasonable  expansion  which  is  possible  with  the  funds
    and  people  available.  I  do  not  feel  that  expansion  itself  will  involve
    any  disclosure  of  data,  any  loss  of  security  whatsoever.

    Representative  Holifield.  Of  course,  that  statement  is  worthless,
    because  it  does  not  rest  upon  any  foundation  of  a  known  element.
    Now,  what  do  you  mean  by  it?  Tell  us  how  much  of  an  expansion
    of  industrial  and  public  participation  can  be  accomplished  without
    adversely  affecting  the  national  security.  That  is  a  very  vague  state-
    ment, if  I  understand  it  right.

    Dr.  Beckerley.  I  think  you  have  a  point  there,  sir.  That  is  why
    the  following  sentences  are  intended  to  clarify  that.  What  I  mean
    is  that  in  any  expansion  of  any  effort  in  this  field  you  have  two  courses
    which  must  be  followed.  One  is  to  disseminate  the  information  more
    broadly  on  a  classified  basis.  The  other  is  to  declassify  certain  in-
    formation. And  with  these  two  courses  available,  I  feel  that  one  can
    develop  a  program  in  such  a  way  as  to  enhance  the  national  security
    rather  than  to  lose  any  security.

    Representative  Holifield.  Now,  I  want  to  understand  this,  because
    I  think  it  is  very  important,  in  view  of  your  last  sentence  of  your  state-
    ment, in  which  you  say :

    But  as  long  as  the  present  unfriendly  international  competition  exists  we
    must  withhold  from  our  competitor  many  of  those  "trade  secrets"  which  we
    have  worked  so  hard  to  develop.

    Dr.  Beckerley.  Yes,  sir.

    Representative  Holifteij).  Do  you  believe  that  a  widespread  par-
    ticipation by  private  industry  in  owning  and  operating  civilian  power
    reactors  at  this  time  could  be  accomplished  without  widening  the  base
    of  security  risk?

    Dr.  Beckerley.  I  say  that  the  security  risk  is  relatively  speaking
    rather  small.  In  other  words,  the  participation  is  on  a  classified  basis.
    You  are  dealing  with  cleared  people.  They  observe  the  normal  secu-
    rity procedures  to  assure  the  safeguarding  of  information.  And  if
    this  is  done,  then  I  can  see  no  reason  why  we  should  lose  any  security
    thereby.

    I  am  thinking  in  terms,  for  example,  of  the  present  industrial  group
    participation.  I  do  not  think  we  have  lost  any  security  whatsoever
    by  having  had  these  groups  come  in,  study  all  of  our  classified  data,
    develop  reports,  and  then  come  to  conclusions  which  have  been  bene-
    ficial to  the  Commission  and  to  the  public  as  a  whole.

    ATOMIC    POWER    DEVELOPMENT  41

    Representative  Holifield.  Of  course,  you  withheld  a  gi-eat  deal  of
    information  from  these  groups  in  certain  fields.

    Dr.  Beckerley.  So  far  as  I  know,  in  the  reactor  field  there  has  been
    relatively  little  w^ithheld  from  them.  In  the  weapons  field,  of  course,
    this  is  another  matter.  In  this  statement,  of  course,  I  am  referring
    strictly  to  reactor  information.

    Representative  Durham.  The  materials  there  are  common,  are  they
    not?

    Dr.  Beckerley.  The  materials  are  common ;  yes,  sir.  But  when  I
    speak  of  weapons,  I  am  speaking  of  what  to  do  with  the  fissionable
    material  to  make  it  into  a  weapon.

    Representative  Durham.  Your  statement  there  covered  up  to  the
    complete  manufacturing  of  fissionable  material?

    Dr.  Beckerley.  Yes,  sir.  I  am  thinking  in  terms  of  right  up  from
    the  uranium  to  fissionable  material,  that  entire  process.

    Representative  Durham.  You  would  have  to  have  that  to  develop
    power  ?

    Dr.  Beckerley.  Not  necessarily.  I  mean,  you  can  have  reactors
    which  are  so  designed  that  they  burn  the  fissionable  material  as  they
    produce  it.

    Representative  Durham.  But  they  would  be  producing  material,  of
    course  ?

    Dr.  Beckerley.  A  breeder  reactor  would  be  excluded  from  that
    category ;  yes,  sir.

    Chairman  Cole.  Thank  you  very  much.  Dr.  Beckerley.

    Now,  if  you  will  take  your  previous  post  over  there  as  the  flag  man :

    Are  there  any  questions  the  members  wish  to  present  to  Mr.  Dean?

    You  have  completed  your  presentation  ?

    Mr.  Dean.  We  have  completed  our  presentation,  Mr.  Chairman.

    Representative  HoLH^mLD.  Mr.  Chairman?

    Mr,  Dean,  I  certainly  want  to  add  my  commendation  to  the  com-
    mendations which  you  and  the  rest  of  the  Commission  have  received
    today  for  the  long  and  arduous  job  which  you  have  undertaken  over
    the  past  few  years.  I  can  say  with  a  great  deal  of  satisfaction  that
    never  in  those  years  have  I  had  any  serious  difference  with  the  Com-
    mission.

    However,  I  find  myself  in  the  position  of  differing  somewhat,  not
    on  a  personal  basis,  certainly,  but  on  a  basis  of  the  principles  involved,
    with  the  policy  statement  in  the  recent  draft  of  the  legislation  which
    you  have  presented.  I  wish  to  explore  some  of  the  reasons  for  that
    difference.

    First  I  would  like  to  ask  you  approximately  what  the  cost  of  a
    civilian  power  reactor  of  200,000  kilowatt-hour  capacity  would  be.

    Mr.  Dean.  Well,  it  is  a  little  hard  to  say.

    Representative  Holifield,  The  approximate  cost,

    Mr,  Dean,  It  is  in  the  order,  say,  of  somewhere  between  a  hundred
    million  dollars,  $125  million,  something  on  this  order.

    Representative  Holifield.  Now,  your  Commission  has  interviewed
    the  representative  groups,  you  might  say,  in  American  industry,  num-
    bering well  over  a  hundred,  I  understand,  and  they  are  now  consoli-
    dated into  five  different  study  groups.  I  would  like  to  ask  you  this
    question :  Has  private  industry  offered  to  build  such  a  reactor  with  all
    private  funds?

    42  ATOMIC    POWER    DEVELOPMENT

    Mr.  Dean.  We  have  had  expressions  of  interest  by  certain  of  the
    industrial  groups  in  building  a  reactor  entirely  with  their  own  funds.
    However,  this  is  not  to  be  built  in  195'3.  And  there  are  qualifications
    put  upon  their  offer.  I  cannot  recall  them.  But  some  of  the  qualifi-
    cations are,  for  example,  that  the  Atomic  Energy  Commission  will
    continue  to  assist  these  groups  in  licking  certain  problems  in  the  course
    of  the  next  few  years  before  they  would  be  willing  to  go  ahead  and
    build.  And  other  qualifications  have  been  written  in.  I  can  get  these
    into  the  record  so  that  we  will  have  them  exactly.  There  are  groups,
    therefore,  that  have  come  in  and  expressed  an  interest.  Eventually,
    not  saying  what  year  and  what  day,  they  will  be  building  a  reactor
    entirely  from  their  own  funds,  with  no  support  from  Government,  and
    with  no  subsidy  in  the  form  of  plutonium  purchases.

    Representative  Holifield.  Of  course,  you  have  put  that  on  the  basis
    of  an  indeterminate  date.

    Mr.  Dean.  I  have  to.

    Representative  Holifield.  You  have  to.  It  makes  the  offer  con-
    tingent upon  unknown  factors.  So  I  take  it  a  proper  answer  to  the
    question  would  be  that  at  the  present  time  no  private  industry  has
    come  forward  and  offered  to  build  a  reactor  with  their  own  private
    funds  without  certain  concessions.

    Mr.  Dean.  Without  certain  problems  having  been  licked  with  the
    assistance  of  the  Commission,  is  what  I  would  say.

    Representative  Holifield.  Not  only  certain  problems  being  licked,
    but  they  have  also  inferred,  if  not  asked  for,  certain  rights  of  amorti-
    zation, certain  rights  in  the  sale  of  plutonium  back  to  the  Govern-
    ment, and  certain  patent  rights.  Some  of  the  groups  have  not  asked
    for  all  of  those,  but  all  of  the  groups  have  asked  for  some  of  those,
    I  believe.

    Mr.  Dean.  Oh,  I  suppose  you  will  find  those  requests  in  1  group
    or  another.  However,  to  get  the  record  straight,  one  group  to  which  I
    have  referred — I  prefer  not  to  name  it,  because  we  have  not  blessed
    one  group  over  the  other — has  never  asked  for  any  concessions  as  far  as
    plutonium  purchases  are  concerned ;  therefore,  no  subsidy.

    Representative  Holifield.  But  they  have  asked  for  amortization
    privileges?

    Mr.  Dean.  I  don't  believe  any  amortization  privileges  have  been
    requested  by  this  particular  group.

    Representative  Holifield.  They  have  not  offered,  however,  to  put
    that  money  up,  without  the  Government  participating  with  them  on  it.

    Mr.  Dean.  In  some  cases  there  is  no  participation  by  the  Govern-
    ment at  all.  In  one  group  they  asked  for  Government  participation.
    We  put  up  the  reactor.  They  put  up  the  rest  of  the  plant.  In  certain
    other  cases  they  don't  want  us  to  put  up  any  of  it.  But  they  want  a
    little  more  time  to  make  sure  they  are  in  a  position  to  put  up  $100  mil-
    lion or  $125  million.

    Representative  Holifield.  And,  of  course,  they  want  guaranties  as
    to  the  supply  of  uranium  over  a  period  of,  let  us  say,  20  or  30  years?

    Mr.  Dean.  They  would  have  to  have  this.  Because  you  don't  put
    up  a  $125  million  plant  without  knowing  that  you  are  going  to  get
    fuel  for  the  period  that  that  plant  exists.

    Representative  Holifield.  That  is  right.

    ATOMIC    POWER    DEVELOPMENT  43

    Now,  you  recommended  certain  legislation  to  the  President  to  make
    possible  private  industry  participation  which  is  not  now  allowable
    under  the  Atomic  Energy  Act,  have  you  not  ?

    Mr.  Dean.  That  is  correct.

    Representative  Holifield.  That  legislation  is  not  under  considera-
    tion before  this  committee  at  this  time,  for  certain  reasons.  However,
    in  commenting  upon  some  of  your  policy  statements,  some  of  the
    points  in  your  policy  statements,  it  indicates  that  changes  in  the  act
    are  necessary  so  that  private  industry  can  own,  produce,  and  utilize
    fissionable  material.

    Mr.  Dean.  That  is  correct.

    Representative  Holifield.  Do  you  consider  that  a  basic  change  in
    the  Atomic  Energy  Act?

    Mr.  Dean.  Oh,  it  is  obviously  a  basic  change ;  but  under  the  present
    terms  of  the  act  no  industrial  concern  or  anyone  else  other  than  the
    Commission  can  own  a  reactor.  No  one  else  other  than  the  Commis-
    sion can  own  fissionable  material.

    Representative  Holifield.  Now,  that  change  is  being  advocated  in
    order  to  allow  private  industry  to  make  industrial  application  of  the
    benefits  of  it?

    Mr.  Dean.  In  the  power  field.

    Representative  Holifield.  In  the  power  field.  In  view  of  that  fact,
    why  is  it  that  the  Commission  has  not  made  a  determination,  as
    required  by  the  act,  that  we  are  approaching  the  time  of  practical
    value?

    Mr.  Dean.  I  tried  to  cover  that  in  my  opening  statement.  The  act
    does  not  say  "when  you  are  approaching  the  time  of  practical  value.'^
    Section  7  (b)  of  the  act  says:

    Whenever  in  its  opinion  any  industrial,  commercial,  or  other  nonmilitary  use  of
    fissionable  material  or  atomic  energy  has —

    and  these  are  the  important  words —

    been  sufficiently  developed  to  be  of  practical  value,  the  Commission  shall  *  *  *.

    The  whole  purpose  of  our  presentation,  the  theory  on  which  we
    make  it  at  this  time,  is  that  it  has  not  been  suiRciently  developed  to
    be  of  practical  value,  and  before  it  has  been  developed  to  the  point
    where  it  is  of  practical  value — and  by  that  I  mean  economic  value,
    not  military  value — you  have  to  go  through  the  period  of  development
    that  is  referred  to  in  7  (b).  It  seems  to  us  quite  clear  that  the  7  (b)
    day  as  contemplated  in  the  act  has  not  arrived.

    Representative  Holifield.  I  agree  with  you,  of  course,  that  the
    7  (b)  day  has  not  arrived.  But,  nevertheless,  notwithstanding  the
    fact  that  you  have  not  made  that  finding  of  value  and  that  the  day
    has  not  arrived,  you  have  presented  to  the  President  a  draft  of  legis-
    lation which  is  a  basic  change  in  the  act  and  which  is  to  enable  that
    participation  in  the  act  which  was  envisaged  to  occur  only  when  the
    7  (b)  day  arrived.  So  you  are,  in  effect,  evading  that  provision  by
    going  ahead  and  acting  as  thougli  it  does  exist  in  your  recommenda-
    tion for  basic  legislative  changes.

    Mr.  Dean.  I  would  like  to  make  two  comments.  There  is  no  evasion
    of  7  (b)  if  you  take  it  literally.  It  says,  "sufficiently  developed  to  be
    of  practical  value."      You  have  agreed  just  now,  and  we  certainly

    36740—53 4

    44  ATOMIC    POWER    DEVELOPMENT

    agree,  that  it  has  not  been  sufficiently  developed  to  be  of  practical
    value.     If  this  be  the  case,  7  (b)  does  not  come  into  play.

    Now,  so  far  as  the  spirit  of  the  act  is  concerned,  as  distinguished
    from  the  language  of  the  act,  what  is  contemplated?  What  do  you
    want  ?  What  you  want  is  a  Commission  that,  when  it  sees  a  significant
    development  in  this  field,  will  come  up  and  make  this  known.  To
    whoni^  The  act  says,  "to  the  joint  committee."  This  we  have  done.
    And  you  think  it  apparently  of  sufficient  importance  to  have  public
    hearings  on  it.

    Now,  there  is  certainly  no  intent  to  evade  7  (b) .  We  are  not  afraid
    of  7  (b)  or  anything  about  it,  because  we  have  taken  practically  the
    same  course  -of  action.  However,  I  don't  think  it  is  quite  correct
    to  say  that  we  are  evading  7  (b),  when  you  admit  it  doesn't  apply.

    Kepresentative  Hollfield.  Well,  it  does  not  apply,  but  you  are  going
    ahead  as  though  the  time  envisaged  has  arrived,  and  yet  you  refuse
    to  accept  the  responsibilities  of  the  rest  of  7  (b),  which  has  to  do
    with  presenting  to  the  President  and  to  the  Congi-ess  an  estimate  of
    the  social,  political,  economic,  and  international  effects  of  such  use.
    You  are  making  an  industrial  application  law  possible  without  taking
    the  responsibility  of  making  the  analysis,  it  seems  to  me.

    Mr.  Dean.  Well,  may  I  suggest  respectfully  that  we  are  not  going
    ahead  as  though  7  (b)  applied.

    Representative  Holifield.  You  are  not  in  accepting  your  responsi-
    bilities, but  3'ou  are  in  recommending  legislation  to  make  a  basic  change
    in  the  act.

    jNIr.  Dean.  The  statute  itself  in  several  places — and  this  I  tried  to
    stress  in  my  opening  statement — said,  "If  ever  you  think  it  is  a  good
    idea  to  amend  this  act,  get  up  here  to  the  Congress  and  suggest  it.''
    And  that  is  what  we  are  doing.

    Representative  Holifield.  That  is  true.  And  you  have  done  that
    many  times.  But  not  in  the  field  of  industrial  application  or  in  the
    field  of  civilian  power  for  practical  use.

    Mr.  Dean.  But  do  we  not  have  to  answer  the  question,  Mr.  Holifield,
    whether  7  (b)  applies  or  does  not  apply?  If  you  admit  it  does  not
    apply,  I  do  not  know  why  you  suggest  that  the  Commission  somehow
    evaded  7  (b) .

    Representative  Hollfield.  I  admit  that  the  time  has  not  arrived
    when  practical  application  of  civilian  power  is  economically  feasible  or
    practical.

    ^Ir.  Dean.  And  I  think  that  is  what  7  (b)  meant.  Is  that  not  what
    it  meant  ?

    Representative  Holifield.  I  think  so.  And  it  said  for  you  to  do
    certain  things.  Now,  you  have  gone  ahead  and  proposed  legislation
    which  will  achieve  the  same  purpose  as  though  you  had  arrived  at  that
    finding  of  practical  value.

    Mr.  Dean.  I  do  not  think  that  is  quite  a  correct  statement.  We  are
    really  suggesting  here  not  legislation  for  all  times  to  settle  all  prob-
    lems, and  no  one  could  agree  more  with  the  chairman  of  your  com-
    mittee than  myself  when  he  said,  in  his  opening  statement,  tliat  we  will
    not  get  all  of  these  problems  licked  in  the  course  of  a  week  or  a  month
    or  even  a  year.  And  no  one  is  smart  enough  to  know  all  the  answers.
    We  have  approached  this  as  interim  legislation,  not  permanent  legisla-
    tion that  would  be  forever  applicable.

    ATOMIC    POWER    DEVELOPMENT  45

    Kepresentative  Holifield.  All  right.  Now,  you  have  spoken  of  in-
    centives. We  will  leave  that  point.  You  have  spoken  of  incentives.
    In  this  interim  legislation  do  you  anticipate  giving  to  industry  the
    right  to  stake  out  areas  of  private  interest  such  as  that  evidenced  by
    patent  rights  or  discriminatory  opportunity  to  cooperate  in  further
    experimental  work?

    Mr.  Dean.  Well,  there  are  two  questions.  One  is.  Do  we  propose
    a  change  in  the  patent  procedure  of  the  act?  The  answer  is  "No."
    We  do  not.  We  specifically  state  that  it  should  be  left  in  the  same
    way  for  a  period  of  time.  So  far  as  proposing  anything  discrimina-
    tory, I  fail  to  detect  it,

    Kepresentative  Holifield.  All  right.  Let  us  consider  the  Patent
    Act.  There  are  certain  groups  of  industry  that  have  appeared  before
    this  committee  that  have  put  in  as  one  of  their  stipulations  that  they
    be  allowed  to  obtain  patents  during  this  interim  period  beginning
    with  the  status  that  now  exists  and  the  status  that  would  exist  at  the
    time  when  a  civilian  power  reactor  becomes  economically  practicable.
    They  have  asked  for  those  patent  rights.  And  your  thought  is,  then,
    that  they  should  not  have  those  patent  rights  ?

    Mr.  Dean.  We  have,  as  you  will  notice  from  our  policy  statement,
    specifically  stayed  away  from  any  suggestions  as  to  how  you  answer
    the  patent  question.  We  have  not  suggested  that  the  law  be  changed.
    We  have  suggested  simply  that  probably  during  this  interim  period
    the  Commission  should,  as  a  matter  of  Commission  policy,  but  known
    to  the  Congress,  liberalize  what  it  can  already  do  in  the  way  of  clauses
    with  these  industrial  concerns  and  their  contracts — liberalize  it  within
    the  limits  of  the  act.     We  have  not  suggested  anything  more.

    Representative  Holifield.  You  do  not  intend  to  suggest  any  fur-
    ther granting  of  patent  rights  in  this  interim  period  ?

    Mr,  Dean,  I  don't  personally.  Let  me  suggest  that  the  question
    of  patent  rights  is  a  very  difficult  one,  and  I  think  you  and  I  would
    probably  be  after  the  same  kind  of  answer.  We  don't  want  patent
    privileges  given  to  somebody  where  he  hasn't  really  made  a  contri-
    bution. We  don't  want  slight  extrapolations  made  by  people  walking
    through  a  lab  after  our  people  have  collected  information  but  not
    recorcled  the  discoveries  for  7  years.  Neither,  on  the  other  hand,  do
    we  feel  it  is  fair  to  say  to  a  private  industrial  concern  that  comes  in
    with  its  own  money,  "You  cannot  have  the  patents  you  develop  while
    you  are  using  your  own  money."  Now,  somewhere  in  any  patent
    policy  you  try  to  achieve  those  two  things.  We  have  not  suggested
    the  answer.

    Representative  Price,  But  would  you  exclude  others  from  the  bene-
    fit of  this  patent  that  the  private  company  discovered  ?

    Mr.  Dean.  The  Government,  in  the  first  place,  is  never  excluded,
    Mr.  Price,

    Representative  Holifield.  You  spoke  of  some  agreement  you  had
    with  these  companies  that  came  into  the  program,  that  they  would
    make  available  to  all  industry  any  patent  that  they  came  upon.

    Mr.  Dean,  This  is  certainly  one  method.  And  I  am  not  suggest-
    ing it  is  the  correct  answer,  or  an  incorrect  answer.  I  think  the  ques-
    tion of  cross-licensing

    Representative  Holifield.  It  is  not  a  new  idea,

    Mr.  Dean.  No  ;  it  is  a  very  common  arrangement.

    46  ATOMIC    POWER    DEVELOPMENT

    Eepresentative  Holifield.  Industry  has  worked  together  on  such
    a  basis  before.

    Mr.  Dean.  I  would  like  to  correct  one  impression  that  some  people
    may  have,  and  that  is  that  somehow  it  is  proposed  by  the  Commis-
    sion or  by  someone  else  that  an  industrial  concern  could  come  in,  walk
    off  with  a  patent,  and  somehow  the  public,  the  Commission,  or  the
    other  branches  of  the  Government,  would  lose  rights  under  that  patent.
    No  one  anywhere  has  ever  proposed  this,  even  in  industry.

    Representative  Holifield.  No,  but  you  have  been  silent  on  the
    subject  in  your  legislative  draft.  You  have  not  taken  that  subject
    under  consideration  in  your  legislative  draft,  and  you  have  left  that
    responsibility  upon  this  committee.  And  it  is  a  responsibility  that
    this  committee  cannot  meet  if  it  follows  the  other  points  of  your
    legislative  proposals.

    Mr.  Dean.  Mr.  Holifield,  I  know  of  no  suggestion  by  the  Commis-
    sion or  anyone  else  that  the  Government  ever  be  denied  the  rights
    under  a  patent.

    Representative  Holifield.  Now,  let  us  clarify  that  point.  That
    is  true,  that  the  Government  retains  its  right  to  use  any  patent  that
    is  obtained.

    Mr.  Dean.  Right.    That  is  my  point.

    Representative  Holifield.  But  if  a  private  industry  comes  in,  there
    must  of  necessity  be  a  very  few  industries  which  come  in  during  this
    interim  period  of  development,  and  if  those  companies  obtain  patent
    rights,  they  are  available  to  the  Government,  but  they  are  not  availa-
    ble to  the  rest  of  American  industry,  and  therefore,  they  are  restric-
    tive, and  in  the  nature  of  promoting  monopoly  and  restrictive  trade
    practices,  and  not  in  the  nature  of  strengthening  free  competition
    as  the  act  calls  for.

    Mr.  Dean.  I  could  not  argue  with  you.  Because  certainly  nothing
    we  have  suggested  is  designed  to  create  a  monopoly.  Nothing  that
    we  have  suggested.

    Representative  Holifield.  But  this  is  one  of  the  incentives  that  we
    talked  about,  getting  private  industry  into  the  program.  And  that
    is  one  of  the  incentives  that  they  demand.

    Mr.  Dean.  They  demand  not  any  change  in  the  law;  they  do  de-
    mand some  liberalization  of  the  patent  rights.  We  have  not  spelled
    those  out.

    Representative  Holifield.  Well,  I  will  say  we  have  not.  And  that
    is  the  thing  that  I  want  spelled  out  before  you  start  changing  the
    law  and  putting  a  limited  number  of  people  into  this  program.  I
    want  it  spelled  out  as  to  what  incentive  it  is  going  to  be  necessary  to
    give  them,  and  what  field  of  private  interest  they  are  going  to  stake
    out  in  this  project  which  has  cost  the  taxpayers  $12  billion.

    Mr.  Dean.  Well,  you  have  many  alternatives.  And  furthermore,
    I  don't  write  laws.    This  is  the  responsibility  of  the  Congress.

    Representative  Holifield.  That  is  right.

    Mr.  Dean.  You  can  have  cross-licensing  arrangements.  You  could
    have  them  with  or  without  royalties.  There  are  innumerable  ar-
    rangements that  could  be  made.

    Representative  Holifield.  What  good  would  a  patent  be  without
    royalties  ?

    Mr.  Dean.  What  would  it  be?

    ATOMIC    POWER    DEVELOPMENT  47

    Representative  Holifield.  What  good  would  it  be  without
    royalties  ?

    Mr.  Dean.  It  would  be  wonderful  if  you  had  no  cross-licensing.

    Representative  Holieield.  Then  it  would  be  a  restrictive  patent,
    of  course.  You  certainly  are  not  advocating  that  we  give  any  of
    these  companies  restrictive  patents  during  the  interim  period?

    Mr.  Dean.  Let  me  say  again  I  am  not  advocating  anything  so  far
    as  the  patent  provisions  are  concerned.

    Representative  Holieield.  All  right.  Then  you  are  leaving  a  cor-
    related field  which  is  completely  dependent  upon  the  other  legisla-
    tive proposals  you  have  made;  you  are  leaving  it  now  on  the  shoul-
    ders of  the  committee,  without  taking  any  responsibility  in  that  field.

    Mr.  Dean.  Well,  if  I  knew  the  answer,  Mr.  Holifield,  to  this  par-
    ticular problem,  I  would  be  (|uite  happy  to  spell  it  out  now.  I  think
    this  is  something  that  is  going  to  have  to  take  an  awful  lot  of  thought
    and  not  too  much  fast  guessing  as  to  the  answer.

    Representative  Holifield.  This  committee  is  very  aware  of  its
    responsibility  along  that  line,  from  the  fact  that  $12  billion  of  the
    people's  money  has  been  expended  bringing  this  technology  up  to
    date,  and  that  is  no  reason  for  allowing  it  to  be  the  base  for  a  few
    private  industries  to  get  in  and  obtain  restrictive  patents  while  the
    rest  of  the  American  industry  pay  through  the  nose  for  the  advan-
    tageous privileges  which  could  be  obtained  during  this  interim  period.
    That  is  one  of  the  problems.

    Mr.  Dean.  That  is  one  of  the  problems.  And  I  am  not  suggesting
    that  such  a  condition  prevail.

    Representative  Holifield.  All  right.  Let  me  ask  you  another
    question.

    In  a  recent  issue  of  Fortune  magazine  it  estimated  that  about  3.5
    percent  of  the  total  electrical  energy  consumption  in  the  United
    States  is  consumed  in  the  atomic-energy  program.

    Mr.  Dean.  That  is  true.

    Representative  Holifield.  Under  that  situation,  why  would  it  not
    be  wise  for  the  Government  to  explore  and  develop  the  possibilities
    of  power  production  in  its  present  atomic  facilities  in  order  to  relieve
    the  huge  drain  on  private  industry  at  the  present  time  and  to  lessen
    the  cost  of  atomic  armaments  ?

    Mr.  Dean.  Well,  in  the  first  place,  you  are  not  going  to  develop  any-
    where near  the  total  amount,  in  reactors,  of  electric  power  that  we
    now  consume.

    Representative  Holifield.  That  is  right.

    Mr.  Dean.  We  could  only  make  at  most,  in  the  years  immediately
    ahead,  a  small  contribution  to  that.  We  have  discussed  it  inside  the
    Commission.  It  presents  a  lot  of  problems.  We  have  discussed  the
    possibility  of  putting  a  reactor  down,  all-power  reactor,  at  some  site
    where  we  now  use  inordinate  amounts  of  electric  energy  produced  by
    coal.  This  is  something  the  Commission  is  not  ready  to  make  a  rec-
    ommendation on.  I  think  it  is  quite  feasible  for  perhaps  the  CVR
    reactor  to  go  down  at  the  site  w^iere  we  now  use  up  a  lot  of  juice.

    Representative  Holifield.  And  the  Atomic  Energy  Act  provides
    that  if  there  is  a  byproduct  of  electrical  energy  from  any  of  these
    facilities,  the  Government  can  use  it  or  can  sell  it.

    48  ATOMIC    POWER    DEVELOPMENT

    Mr.  Dean.  Oh,  we  would  be  permitted  to  sell  any  power  that  we
    generated.

    Representative  Holifield.  Or  to  use  any  power?

    Mr.  Dean.  Or  to  use  it.     Oh,  quite.

    Representative  Houfield.  So,  therefore,  it  would  be  quite  practical
    and  feasible  for  the  Government,  if  there  is  a  byproduct  of  power
    which  is  not  economical  considered  by  itself,  if  there  is  a  byproduct
    of  power  from  either  any  reactor  now  in  existence  or  any  new  and
    improved  type  of  reactor  which  could  be  built,  and  it  would  be  entirely
    within  the  act  and  the  purport  and  intent  of  the  act,  for  atomic-energy
    facilities  themselves  to  use  that  power  to  the  extent  that  it  is  available.

    Mr.  Dean.  That  is  right.  I  think  you  would  have  two  consider-
    ations there.  One  is :  Is  this  a  sensible  thing  to  do,  to  build  a  reactor
    of  tliis  design  looking  toward  economical  power?  You  answer  that
    question  first.  Then  you  find  that  the  answer  to  that  question,  if  you
    built  it  today,  is  that  it  is  going  to  cost  us  a  little  bit  more  in  power
    than  what  we  could  get  from  coal  in  that  area.  In  the  case  of  the
    Portsmouth  plant — you  might  still  wish  to  do  it  and  feed  that  juice
    in,  because  you  would  justify  it  as  a  developmental  project.

    Representative  Holtfieed.  And  you  could  also  justify  it  if  it  was
    a  dual  purpose,  in  that  you  were  producing  plutonium.

    ]Mr.  Dean.  I  couldn't  personally.

    Representative  Holifield.  No,  the  Government  could  justify  it.

    jNIr.  Dean.  I  think  it  would  have  a  hard  time.

    Representative  Holifield.  It  would  have  a  hard  time  justifying  a
    ilual-purpose  reactor?  How  about  these  people  in  private  industry
    that  have  come  to  us  and  said  that  they  had  predicated  their  plans  on
    a  dual-purpose  type  of  reactor,  planning  to  sell  to  the  Government
    plutonium  and  to  have  electricity  as  a  byproduct  ?

    Mr.  Dean.  This  is  not  entirely  their  fault.  I  think  I  ought  to
    straighten  the  record  out  on  that.  ^-Vlien  we  first  talked  to  these  in-
    dustrial concerns,  almost  2  years  ago,  I  think  there  was  some  feeling  in
    the  Commission,  and  I  perhaps  shared  it,  that  the  only  way  that  you
    could  get  quickly  to  economical  power  was  to  build  a  dual-purpose
    reactor,  one  that  would  produce  both  power  and  plutonium.  The  only
    way  you  could  ever  hope  to  finance  this  was  to  give  a  subsidy  in  the
    form  of  the  price  for  plutonium.

    I  think  the  thinking  has  changed  considerably  in  the  course  of  the
    2-year  period.  I  think,  therefore,  that  you  cannot  say  that  these  are
    the  only  things  these  companies  are  interested  in,  because  when  the
    proposals  were  originally  discussed  we  encouraged  them  to  think  along
    these  lines.  So  when  they  came  back  with  their  answers,  it  was  some-
    what in  response  to  a  little  encouragement  from  the  Commission  to
    work  out  plans  along  that  line.

    Representative  Holifield.  TN^'ell,  they  are  still  thinking  along  that
    line.

    Mr.  Dean.  Some  are ;  some  aren't.

    Representative  Holifield.  I  know  that  there  was  a  big  article  in  the
    Parade  magazine  section  of  the  Washington  Post  on  April  19,  1953,
    in  which  Dr.  Charles  Allen  Thomas,  of  ISIonsanto,  ended  up  his  inter-
    view on  this  subject  after  describing  imaginary  atomic  kitchen  stoves,
    with  a  paragraph  in  which  he  indicated  that  he  would  like  to  sell
    j)lutonium  to  the  Government  at  a  profitable  rate.

    ATOMIC    POWER    DEVELOPMENT  49

    Under  the  passage  of  the  recent  authorization  bill  in  the  House —
    and  I  realize  I  may  be  out  of  order  in  askin^j  this  question,  as  it  has  not
    passed  in  the  Senate  yet^ — what  would  the  Commission's  intent  be  as  to
    developing  the  land-based  power  reactor?  Would  it  be  in  the  nature
    of  a  prototype,  with  the  $7-million  fund  allowance  ?

    Mr.  Dean.  This  would  be  in  the  nature  of  a  rather  large  prototype,
    one  that  was  originally  thought  of  as  being  a  propulsion  unit  for  an
    aircraft-carrier  reactor,  or  a  large  ship.  It  is  an  ecjually  interesting
    approach  to  economical  power.    It  would  be  land  based  when  first  built.

    Representative  Holifield.  If  the  Government  goes  ahead  with  that
    project,  and  if  it  does  develop  an  economically  feasible  reactor  or  a
    near  economically  feasible  reactor,  then  the  product  of  that  develop-
    ment would  be  owned  by  the  American  people  ?

    Mr.  Dean.  That  is  correct.

    Representative  Holifield.  If,  on  the  other  hand,  the  Government
    went  ahead  with  several  of  these  different  reactor  types,  prototypes,
    of  the  size  such  as  this,  at  a  cost  of,  let  us  sa}^,  $10  or  $15  million  apiece,
    out  of  that  research  and  development  they  would  undoubtedly  bring
    forward  the  science  of  reactor  technology  ?

    Mr.  Dean.  That  is  correct.

    Representative  Holifieli).  And  if  they  did  that,  with  this  small  ad-
    ditional expenditure,  in  addition  to  the  $12  billion  that  has  already
    been  spent,  some  of  which  I  realize  has  military  value  which  has
    not  been  spent  on  civilian  reactor  development,  we  would  be  in  a  posi-
    tion then  to  turn  over  to  all  of  private  industry  at  the  same  time  and
    on  an  equal  basis  an  economically  practical  civilian-type  reactor,  would
    we  not  ?

    Mr.  Dean.  Yes ;  but,  of  course,  you  have  lost  something  in  the  mean-
    time.

    Representative  Holifield.  AYliat  have  we  lost  ?

    Mr.  Dean.  You  have  lost  the  inventive  genius — I  am  not  talking
    about  patents;  I  am  talking  about  know-how  and  brains  and  technical
    skills — you  have  lost  the  inventive  genius  of  American  labs,  American
    industrial  concerns.  You  have  lost  the  competition  in  ideas  which
    would  come  about  if  they  were  in  the  progi'am.  You  will  lose  it  if
    they  are  excluded.  And  you  will  have  to  fall  back  on  the  Atomic
    Energy  Commission,  which  today  has  virtually  a  monopoly — but  not
    entirely  on  the  brains,  simply  on  some  of  the  information — for  the
    development  during  the  3-  or  4-year  period.  Then  you  start  from
    scratch  to  get  American  industry  in.  and  you  have  lost  3  or  4  years
    of  their  participation.

    Representative  Holifield.  All  right.  Xow  let  us  analyze  that.
    During  the  past  7  years  we  have  utilized  American  industry  on  a
    contract  basis.  And  I  believe  that  we  have  made  wonderful  strides
    forward  toward  the  goal  that  we  set,  which  was  a  more  economical
    production  of  plutonium,  U-235,  the  development  of  military  weapons,
    and  I  believe  that  there  has  been  no  lack  of  incentive  on  the  part  of
    industry,  because  they  realize  that  they  are  trying  for  the  same  ob-
    jectives we  are  all  trying  for,  which  is  the  safety  and  security  of  our
    Nation  in  a  very  troubled  world.

    Now,  do  you  not  believe  that  under  the  contractual  arrangement  we
    have  made  great  progi^ess  in  the  last  7  years  ?

    Mr.  Dean.  Oh,  of  course,  we  have.

    50  ATOMIC    POWER    DEVELOPMENT

    Representative  Holifield.  Now,  if  we  turn  those  same  types  of
    contractual  relations  toward  another  goal ;  that  is,  the  production  of
    civilian  power,  do  you  have  any  reason  to  believe  that  American  in-
    dustry will  not  be  just  as  patriotic  and  just  as  willing  to  go  ahead  and
    to  acquire  the  know-how  and  to  exert  their  engineering  talent  and
    brains  along  that  line  as  they  have  in  the  past  ?

    Mr.  Dean.  There  can  be  no  question  about  their  remaining  just  as
    patriotic  and  devoting  their  know-how  so  far  as  it  applies  to  that
    contract.  But  to  say  that  a  contract  system  of  operation  is  adequate
    in  which  the  only  people  v\^ho  get  the  know-how  are  people  who  get
    a  contract  to  do  a  specific  job — and  it  won't  be  all  to  build  power
    reactors;  we  have  many  other  contractors  who  are  not  engaged  in
    this  business — to  say  that  satisfies  the  entry  on  a  free  competitive  basis
    which  is  one  of  the  objectives  of  the  act,  seems  to  me  to  fail  completely.
    What  you  do  every  time  you  pick  a  contractor  in  this  business  is  to
    exclude  about  15  others  from  getting  into  that  business  at  that  partic-
    ular point.

    Representative  Holifield.  You  are  going  to  do  the  same  thing  under
    any  kind  of  new  arrangement.

    Mr.  Dean.  I  don't  visualize  this  at  all.  It  seems  to  me  that  your
    problem  here  is  to  let  in  anybody  that  looks  qualified  in  this  business,
    that  comes  up  with  good  intentions,  has  a  desire  to  build,  has  a  reason-
    ably decent  staff  of  engineers  and  physicists,  and  let  them  in  on  the
    same  basis  we  have  let  them  in  on  in  the  last  year  or  two.  That  is
    the  first  step.

    Representative  Price.  Mr.  Dean,  how  many  companies  that  have
    come  in  have  wanted  to  build  a  reactor  ?

    Mr.  Dean.  With  their  own  money  ?

    Representative  Price.  Yes.

    Mr.  Dean.  No  one.

    Representative  Price.  That  is  what  Mr.  Holifield  was  driving  at.

    Mr.  Dean.  Oh,  I  misunderstood  Mr.  Holifield,  then.  I  thought  he
    was  suggesting  that  the  answer  to  that  problem  is  to  continue  the
    contract  relationship.

    Representative  Holifield.  Well,  it  is  unless  they  will  put  up  the
    money.  If  they  want  to  put  up  all  the  money  without  any  patenfi
    strings  or  any  plutonium-sales  strings  or  any  other  strings  on  the
    part  of  the  Government,  then  that  is  a  different  proposition.

    Mr.  Dean.  I  misunderstood  you.  During  the  period  of  develop-
    ment, particularly  if  the  Commission  is  the  one  to  build  these  prototype
    reactors,  and  I  think  it  is  almost  inevitable  for  the  next  3  or  4  years,
    we  would  let  them  out  on  contracts,  so  that  one  man  would  be  a  con-
    tractor to  build,  to  operate,  one  type  of  reactor,  another  man  to  build
    and  operate  another.

    Representative  Holifield.  Well,  I  am  in  favor  of  that  type  of  pro-
    gram, and  you  admit  yourself  that  is  the  only  program  that  is
    practicable  in  the  next  3  or  4  years,  and  then  I  asked  you  why  you
    want  the  law  changed  now.  Why  do  you  not  wait  until  the  end  of
    that  period  and  then  have  the  law  changed  at  that  time?

    Mr.  Dean,  I  don't  see  why  you  are  afraid  to  change  the  law  at  this
    point  if  you  are  willing  to  change  it  3  years  from  now.

    Representative  Holifield.  Because  of  the  concessions  which  private
    industry  will  require  at  this  time  in  the  change  of  the  law.    And  I

    ATOMIC    POWER    DEVELOPMENT  51

    do  not  think  it  is  time  to  give  them  those  concessions.  I  do  not  think
    they  have  earned  them  as  a  matter  of  right.

    Mr.  Dean.  I  do  not  think  it  is  time  here  today  to  assume  that
    they  are  going  to  insist  on  certain  concessions  or  that  they  should  get
    all  the  concessions  they  might  ask  for.  It  seems  to  me  this  is  the
    sort  of  thing  that  should  be  spelled  out  in  the  public  hearings.  I
    cannot  testify  for  those  people.  All  I  can  do  is  give  you  a  consensus
    of  their  opinions  as  I  meet  with  them.  Because  I  think  only  when
    they  appear  here  on  the  witness  stand  and  explain  it  will  you  know
    what  the  concessions  are  which  they  ask  and  those  which  should  be
    granted.

    Representative  Holifield.  This  point  will  be  explored.

    Representative  Price.  Let  us  look  at  this.  If  you  went  the  new
    route,  and  you  just  broke  off  now  and  you  made  a  contract  tomorrow
    for  your  military  reactor  and  for  your  power  reactor,  would  it  increase
    progress  immediately,  or  would  it  slow  down  the  program?

    Mr.  Dean.  My  first  answer  is  that  you  will  not  get  that  right  away,
    so  you  have  no  alternative.  But  to  continue  in  the  case  of  military
    reactors,  for  example  no  concern  today  is  going  to  come  up  with  their
    own  money  to  build  a  submarine  force.  This  is  going  to  be  military
    by  GE  or  Westinghouse  or  some  other  group.

    Representative  Price.  The  reason  I  asked  you  that  question  is  be-
    cause the  prevailing  opinion  seemingly  in  many  quarters  is  that  pri-
    vate industry  is  ready  now  to  take  over  these  projects.

    Mr.  Dean.  Well,  I  have  heard  someone  say — I  do  not  know  who

    Representative  Price.  Well,  I  saAv  a  newspaper  story  which  quoted
    a  spokesman  for  the  Defense  Establishment  saying  that.

    Mr.  Dean.  That  private  industry  was  ready  to  take  over  the  CVR?
    This  is  nonsense.

    Representative  Price.  I  wanted  you  to  put  that  in  the  record.

    Mr.  Dean.  Well,  I  have  said  it.

    Representative  Price.  This  statement  comes  to  the  public  with  the
    cloak  of  official  sanction  as  an  official  statement  from  Washington  from
    the  Department  of  Defense.  It  is  made  as  a  statement  from  a  spokes-
    man for  the  Department  of  Defense.

    Mr.  Dean.  Maybe  my  answer  was  too  positive.  I  believe  it  so
    strongly  that  I  think  I  should  have  been  positive.  I  think  the  answer
    is  to  go  to  the  outfit  that  is  now  the  contract  operator  for  the  CVR  and
    ask  them,  "Will  you  come  up  with  the  number  of  dollars  required  to
    build  this,  your  own  dollars?"    And  the  answer  will  be  "No."

    Representative  Price.  We  all  realize  that  private  industry  and  the
    AEC  together  have  done  a  wonderful  job.

    Mr.  Dean.  No  question  about  it.

    Representative  Price.  And  to  say  now  you  want  to  turn  it  over  in
    this  way  would  indicate  that  perhaps  AEC  has  been  a  hindrance.

    I  think  the  industry  has  cooperated  fully  with  AEC,  and  AEC  has
    cooperated  fully  with  private  industry.  And  I  think  it  has  been  a  very
    good  program  up  to  this  point.

    Mr.  Dean.  I  think  it  has  been  a  very  good  program,  and  let  me
    assure  this  committee  that  this  could  never  have  been  accomplished
    without  the  contract  system  of  operations  and  without  calling  on
    American  industry  and  their  brains  to  get  in  and  operate  on  this  type
    of  a  basis.

    52  ATOMIC    POWER    DEVELOPMENT

    Representative  Holifield.  And  without  financing  it  witli  the  tax
    moneys.

    Mr.  Dean.  Up  to  this  time  tliat  is  true.

    Representative  Price.  As  you  say,  the  statement  which  was  sup-
    posed to  have  emanated  from  the  Department  of  Defense  to  the  effect
    that  private  industry  can  produce  reactors  now,  was  sheer  nonsense.

    Mr.  Deajst.  I  was  referring  to  this  specific  one.

    Representative  Price.  I  think  we  are  referring  to  the  same  state-
    ment.

    Mr.  Dean.  It  was  a  large  reactor.  It  would  have  called  for  an  outlay
    of  a  large  amount  of  money.  But  the  stakes  are  too  big  to  ask  for  the
    jDutting  up  of  a  hundred  million  dollars  or  whatever  the  amount  is,
    a  large  figure,  to  produce  what  is  necessary  to  produce  that  amount  of
    power.

    Representative  H^olifield.  Let  us  just  for  a  moment,  before  we
    terminate  this  enjoyable  interchange,  consider  the  basis  of  information
    which  all  these  study  gToups  are  resting  their  report  on,  the  report
    which  they  have  recently  put  out.

    Is  it  not  true  that  their  people,  their  scientists,  their  engineers,  have
    obtained  practically  all  of  their  information  from  physicists  and
    engineers  that  are  in  the  employ  of  the  United  States  Government,
    either  bj^  contract  or  directly  ?

    Mr.  Dean.  Yes.  They  had  to  be  let  into  the  program  to  see  what
    the  monopolists  had  acquired  in  the  way  of  available  reactor  designs.

    Representative  Holifield.  That  is  true.

    Mr.  Dean.  But  I  would  like  to  qualify  that  somewhat  by  saying
    this  also.  The  men  who  came  in  to  meet  with  out  people  at  Argonne
    or  Oak  Ridge  or  Knolls  Lab  or  Bettis  or  the  other  reactor  labs  were
    competent  scientists  in  their  own  right,  some  of  whom  may  have  been
    in  the  program  earlier  and  left,  some  of  whom  were  never  in,  and  they
    are  men  who  bring  some  amazingly  ingenious  ideas  into  the  study.  So
    I  think  these  have  to  be  put  in  balance  when  you  are  talking  about  a
    study  group.  It  is  true  they  come  in  and  see  what  we  have,  but  they
    come  in  as  competent  men  equipped  to  come  up  with  some  good  ideas
    themselves.

    Representative  Holifield.  That  is  true.  And  if  they  came  in  on  a
    contractual  basis,  they  would  come  in  as  they  have  in  the  past  on
    their  contractual  relations  with  the  AEC.  And  I  want  to  say  that
    I  think  the  AEC  has  handled  this  program  in  the  right  way,  by  giving
    j  obs  to  private  industry  to  do.  I  want  to  see  that.  But  as  to  the  timing
    of  when  you  start  changing  the  way  of  doing  the  job,  and  the  con-
    cessions that  you  have  to  make  in  this  interim  period,  that  is  the
    point — and  also  the  security  problem,  the  patent  problem — those  are
    problems  which  this  committee  is  quite  concerned  with.

    Mr.  Dean.  It  should  be.  Those  are  troublesome  problems.  I  hope
    nothing  I  have  said  indicates  that  I  have  glossed  over  these  as  not
    being  problems  at  all.  These  have  taken  up  months  of  discussion
    within  the  Commission,  and  we  are  only  a  few  people  who  have
    thought  it  out.  Many  others  would  have  to  go  into  it.  They  are  not
    easy  problems.

    Representative  Holifield.  I  would  make  the  complaint,  that  in
    your  legislative  draft  you  did  not  tackle  this  patent  problem,  but
    left  it  out,  and  I  consider  it  a  key  to  the  whole  problem ;  and  the  other

    ATOMIC    POWER    DEVELOPMENT  53

    legislative  recommendations  you  make  are  completely  contingent  on
    that  field,  and  you  left  that  field  to  this  committee.

    Mr,  Dean.  I  don't  think  they  are  completely  contingent  upon  it.
    But  I  think  it  is  a  very  important  problem.  As  we  explained  to  your
    committee  I  think  in  joint  session,  the  Commission  is  now  tackling  and
    asking  to  be  considered  as  a  separate  document  its  recommendations
    on  the  patent  policy.  But  you  do  not  reach  up  in  the  air  and  come
    out  with  the  right  answer.  You  just  have  to  kick  it  around  for  many
    a  month.  And  it  has  many  an  angle.  And  we  were  not  ready  at  the
    time  we  made  this  to  say  precisely  what  would  be  the  answers  to  the
    patent  question.

    Representative  Holifield.  Of  course,  my  idea  is  that  if  you  make  a
    basic  change  in  the  legislation  without  considering  this  point,  you
    are  leaving  out  the  key  to  the  whole  problem  of  private  industry
    participation  for  the  future.  If  you  can  leave  out  the  latent  problem
    and  make  all  this  information  available  to  all  of  industry  so  that  we
    will  have  real  competition,  then  I  am  ready  to  change  some  of  the
    legislation.

    Mr.  Dean.  Well,  there  is  no  intention  on  our  part  to  duck  it.  There
    is  no  intention  on  our  part  to  throw  it  on  to  your  shoulders  as  dis-
    tinguished from  our  shoulders.  We  just  did  not  feel,  at  the  time  we
    brought  this  in,  that  we  had  the  complete  answer  on  the  patent  thing.
    And  I  do  not  think  it  is  too  important  that  the  Commission  have  the
    complete  answer.  I  think,  by  the  time  your  hearings  are  over,  the
    difficulties  and  perhaps  the  solutions  are  going  to  be  suggested  by  the
    many  witnesses  that  will  come.

    Representative  Holifield.  That  is  all,  Mr.  Chairman.

    Representative  Price.  Mr.  Dean,  we  have  had  a  long  and  interest-
    ing afternoon  of  discussion,  without  having  gone  into  what  is  prob-
    abl}^  the  one  thing  the  American  people  want  most  to  know.  How  far
    does  the  Commission  think  we  are  from  economic  electric  power?

    Mr.  Dean.  We  have  25  members  of  the  staff  here,  and  you  might
    have  25  guesses.

    Representative  Price.  The  reason  I  ask  that  question  is  because  of
    the  many  articles,  newspaper  stories,  and  so  on ;  so  many  people  think
    it  is  a  year  away  or  2  years  away.  Wliat  is  the  guess  on  how  far  away
    we  are  from  industrial  use  of  this  power?

    Mr.  Dean.  You  are  talking  about  economical  power  from  a  reactor.
    It  depends  somewhat  on  what  the  competitive  fuel  is  at  the  place
    where  you  build  the  reactor.  Consequently,  if  you  are  putting  it  up
    in  Brazil,  it  is  one  thing.  Consequently,  if  you  are  putting  it  up  in
    Belgium  or  the  United  Kingdom,  which  have  heavy  coal  costs,  it  is
    another.  If  you  are  putting  it  up  in  the  Arctic  Circle,  you  are  willing
    perhaps  to  pay  4  cents  for  it.  If  you  are  putting  it  down  in  the  mid-
    dle of  Chicago  or  in  the  coalfields  of  the  Ohio  Valley,  that  is  the
    toughest  test.  It  is  always  a  question  of  what  we  mean  when  we  talk
    about  economically  competitive  electrical  power  from  the  atom.

    I  think  our  people,  from  what  they  see  now,  from  what  design
    engineering  they  have  done,  think  that  within  a  matter  of  a  very  few
    years — and  I  don't  like  to  be  too  specific,  and  if  you  are  willing  to
    put  up  a  large  reactor — because  if  you  put  up  a  small  one,  you  are
    going  to  get  more  costly  power — you  will  have  economical  power.
    You  have  got  to  build  your  experimental  reactors  first.  But  it  is  not
    very  far  off.

    54  ATOMIC    POWER    DEVELOPMENT

    Dr.  Hafstad  perhaps  knows  more  than  anybody  else  in  the  busi-
    ness on  this.

    What  did  I  say  that  was  wrong,  Doctor?

    Dr.  Hafstad.  I  would  say  the  same  thing.

    Representative  Pkice.  I  think  that  is  the  thing  that  the  general
    public  wants  to  know.

    Mr.  Dean.  I  appreciate  that.

    Representative  Price.  They  would  like  to  get  some  idea  from  this
    hearing  as  to  how  far  away  we  are  from  it.

    Mr.  Dean.  You  are  certainly  less  than  10  years.  But  that  doesn't
    answer  your  question.

    Representative  Holifield.  Thank  you,  Mr.  Dean,  for  your  re-
    sponses.

    Mr.  Dean.  Thank  you.

    Chairman  Cole.  Mr.  Dean,  I  have  2  or  3  questions  I  would  like
    to  ask  you.

    First,  has  the  Commission's  power  policy  been  presented  to  the
    President  ?

    Mr.  Dean.  The  power-policy  statement  was  presented  to  the  Na-
    tional Security  Council,  and  the  legislative  proposals,  not  the  lan-
    guage, because  this  came  later,  but  the  objectives  of  the  legislation,
    such  as  owning,  operating,  and  so  forth,  were  blessed  by  the  National
    Security  Council.

    Chairman  Cole.  And  at  that  meeting,  when  the  policy  was  pre-
    sented, I  assume  the  President  was  in  attendance  ?

    Mr.  Dean.  That  is  correct.

    Chairman  Cole.  So  that  we  have  the  affirmative  response  that  the
    Commission's  power  policy  has  been  presented  to  the  President  and  he
    has  indicated  no  disagreement  ?

    Mr.  Dean.  So  far  as  it  represents  legislative  goals.  Now,  I  would
    not  want  to  hold  the  President  to  all  the  language  of  our  preface  in
    the  early  part  of  the  statement.  That  is  purely  a  Commission  state-
    ment. But  so  far  as  the  "so  what"  of  it,  what  you  do  with  it,  this  has
    been  blessed  by  the  National  Security  Council.

    Chairman  Cole.  That  is,  the  legislative  proposals  have  been  en-
    dorsed ?

    Mr.  Dean.  The  goals.  The  portions  of  the  statement — I  could
    mark  them  very  readily — it  is  paragraph  4,  really,  that  touches  the
    goals,  and  it  is  divided  into  several  parts.

    Chairman  Cole.  Can  you  indicate  whether  the  attitude  of  the  Na-
    tional Security  Council  represents  an  affirmative  endorsement  of  the
    Commission's  policy,  or  simply  a  negative  acquiescence?

    Dr.  Dean.  I  would  say  so  far  as  the  legislative  goals  are  concerned,
    and  the  desire  to  get  a  leglislation  change  to  accommodate  industry,
    it  is  blessed  by  the  National  Security  Council.

    Chairman  Cole.  Have  the  policy  statement  or  the  legislative  pro-
    posals separately  or  both  been  considered  by  the  Joint  Chiefs  of  Staff?

    Mr.  Dean.  The  Chiefs  have  had  the  policy  statement.  We  do  not
    usually  deal  directly  with  the  Chiefs.  That  is  done  by  clearance
    through  the  Secretary  of  Defense,  who  sits  on  the  NSC,  and  the  Chair-
    man of  the  Joint  Chiefs  also  sits  on  the  NSC.  So,  in  that  sense  it  is
    blessed.  I  don't  know  whether  there  is  any  separate  blessing  by  the
    Chiefs,  as  such.

    ATOMIC    POWER    DEVELOPMENT  55

    Chairman  Cole.  I  liad  a  number  of  questions  to  submit  to  you.  The
    hour  now  is  very  late,  and  it  involves  so  much  detail  that  I  do  not  think
    I  will  present  them  to  you  at  this  time.  I  prefer  to  submit  them  to
    you  in  writing  so,  when  you  go  off  on  this  lon^  and  extended  and  happy
    vacation,  which  I  hope  you  get  and  to  which  you  certainly  are  en-
    titled, you  can  take  that  document  along  and  mull  it  over  so  that  we
    can  get  the  benefit  of  your  reactions  and  answers  to  these  questions.
    I  am  soliciting  your  judgment  and  not  the  judgment  of  whoever  might
    be  your  successor  as  Chairman  of  the  Commission,  because  he  will
    have  an  opportunity  at  a  later  time.

    (Chairman  Cole's  questions  and  Mr.  Dean's  replies  follow :)

    congkess  of  the  united  states,
    Joint  Committee  on  Atomic  Energy,

    June  25,  1953.
    Mr.  Gordon  Dean,

    Chahinan,  United  States  Atomic  Energy  Commission,

    Washington,  D.  C.
    Dear  Mr.  Dean:  On  behalf  of  the  entire  joint  committee  I  wish  to  thank  you
    and  your  associates  tor  your  valuable  presentation  at  yesterday's  public  hearing
    on  the  possible  development  of  atomic  power.

    As  I  indicated  at  the  close  of  the  meeting,  we  would  indeed  be  grateful  for  your
    detailed  written  comments  on  several  issues  which  strike  us  as  going  to  the  heart
    of  this  problem.  My  thought  was  that  we  could  incorporate  this  letter  and  your
    reply  thereto  into  the  public  record  of  the  atomic-power  meetings.  We  would
    accordingly  be  most  appreciative  if  we  could  hear  from  you  before  the  end  of
    this  present  series  of  open  hearings.

    I  hope  you  will  feel  free  to  include  in  your  letter  any  collateral  observations
    which  you  think  may  serve  to  put  this  entire  matter  into  proper  perspective.

    I.  The  committee  members  are  of  course  keenly  aware  that  our  national  atomic
    enterprise  represents  a  $12  billion  investment  of  the  taxpaj'ers'  money,  and  they
    would  naturally  viev/  with  disfavor  any  program  which  resulted  in  private  gain
    at  the  public's  expense.  In  other  words,  they  seek  emphatic  assurance  that  the
    Commission's  proposals  for  interim  legislation  would  in  no  sense  open  the  door
    to  the  possibility  of  an  "atomic  giveaway."

    1.  Could  you  therefore  outline  precisely  what  private  enterprise  would  secure —
    in  information,  patent  rights,  materials,  and  otherwise — under  the  Commission's
    proposals  which  it  cannot  now  receive  under  existing  legislation?

    2.  What  would  be  the  quid  pro  quo  for  these  additional  benefits?  That  is,  what
    returns  might  the  American  people  secure  from  a  program  for  encouraging  pri-
    vate participation  in  atomic-power  development?

    3.  If  the  proposals  were  written  into  national  policy,  do  you  believe  they  would
    result  in  a  net  gain  to  the  public?

    II.  The  Atomic  Energy  Act  of  1946  declares  that  "subject  at  all  times  to  the
    paramount  objective  of  assuring  the  common  defense  and  security,  the  develop-
    ment and  utilization  of  atomic  energy  shall,  so  far  as  practicable,  be  directed
    toward  improving  the  public  welfare,  increasing  the  standard  of  living,  strength-
    ening free  competition  in  private  enterprise,  and  promoting  world  peace."  I  am
    sure  the  members  of  our  committee  would  be  deeply  concerned  if  steps  were  taken
    which  permitted  a  few  large  companies  to  secure  a  monopolistic  foothold  in  the
    atomic-power  field,  with  the  result  that  small  firms  would  find  few,  if  any,  oppor-
    tunities for  entry.

    1.  Is  the  state  of  the  reactor  art  such  that  you  anticipate  only  large  companies,
    with  large  sums  of  money  available  for  investment,  will  be  able  to  enter  the
    atomic-power  field  over  the  next  several  years?

    2.  If  this  is  the  case,  might  such  companies  secure  a  position  of  such  dominance
    as  to  discourage  free  competition  in  the  atomic-power  industry?

    3.  Can  you  suggest  any  particular  approach  to  the  vexing  question  of  patent
    rights  which  might  best  help  avert  the  danger  of  monopolistic  control,  while  at
    the  same  time  providing  adequate  incentive  for  private  investment?

    4.  If  private  investment  in  this  field  reached  the  point  where  further  diversion
    of  material  could  not  be  made  from  our  weapons  stockpile,  how  could  the  Com-
    mission decide  between  applicants  for  such  materials  without  being  open  to
    charges  of  favoritism?

    III.  The  joint  committee  has  heard  widely  varying  estimates  concerning  what
    privately  financed  development  of  atomic  power  will  mean  in  the  way  of  profits.

    56  ATOMIC    POWER    DEVELOPMENT

    Some  maintain  that,  over  tlie  next  several  years  at  least,  the  benefits  to  private
    enterprise  would  consist  largely  in  the  know-how  acquired  by  pioneering  in  this
    new  technological  field  ;  others  see  in  atomic  power  a  possible  bonanza.
    How  do  you  personally  estimate  the  prospects  in  this  respect?

    IV.  The  committee  has  heard  it  suggested  that  a  different  legislative  atmos-
    phere would  result  in  a  flourishing  atomic-power  industry  in  the  relatively  near
    tuture.  It  has  also  heard  it  suggested  that  widespread  private  participation  in
    this  field  will  not  come  about  for  many  years.

    1.  Assuming  no  Federal  purchase  of  products  and  no  changes  in  the  existing:
    law,  when  do  you  estimate  that  useful  atomic  power  will  become  a  reality?

    2.  By  how  much  might  this  date  be  advanced  if  the  Commission's  policy  pro-
    posals were  written  into  law  ?

    3.  How  large  a  program  do  you  envisage  in  speaking  about  atomic-power
    development  over  the  next  several  years?  Are  you  thinking,  for  instance,  in
    terms  of  1  prototype  reactor  in  5  years — or  can  you  imagine  10  full-scale  plants
    being  constructed  in  10  years?

    4.  Has  any  private  ?xroup  come  to  the  Commission  with  a  firm  proposal  for
    building  an  atomic  pov.erplant  at  private  expense  without  some  type  of  Federal
    assistance?

    V.  Our  committee  has  detected  in  some  quarters  the  fear  that  Federal  regu-
    lations and  controls  of  atomic-pov.-er  development  may  be  so  extensive  and
    rigorous  as  to  discourage  the  investment  of  private  capital.

    1.  Have  you  encountered  such  fears,  and  do  you  believe  they  have  basis  in
    fact?

    2.  If  so,  is  it  possible  to  allay  such  apprehensions  and  at  the  same  time  pro-
    vide appropriate  Governmental  safeguards  over  the  development  of  atomic
    povv'er  ?

    VI.  So  long  as  \ve  live  in  a  troubled  world,  the  requirements  of  military
    defense  must  naturally  continue  to  have  first  claim  upon  our  fissionable  materials
    and  uranium  raw  materials.  I  take  it  for  granted  that  the  joint  committee  will
    wish  to  be  unequivocally  assured  that  any  possible  stepup  in  the  tempo  of
    atomic  development  would  not  jeopardize  the  continued  expansion  of  our  weapon*
    stockpile.

    1.  The  Iresident  and  his  constituted  advisers  in  the  Defense  Establishment
    must  of  course  evaluate  the  military  significance  of  diversion  of  materials  from
    our  weapons  stockpile.  Is  it  your  personal  belief,  however,  that  the  materials
    required  to  support  a  power-development  program  of  the  size  envisaged  by
    the  Commission  would  repesent  a  minor  diversion  from  our  weapons  require-
    ments— or  would  you  regard  this  diversion  as  significant?

    2.  Do  you  regard  it  as  likely  that  the  rate  and  tempo  of  atomic-power  develop-
    ment during — say — the  next  decade  might  be  such  that  it  could  be  su-stained
    only  by  major  diversions  from  our  atomic  stockpile?

    VII.  We  understand  the  Commission  proposals  to  contemplate  private  owner-
    ship of  both  atomic  plants  and  fissionable  materials.

    1.  Has  the  Commission  considered  what  constitutional  authority  it  would
    invoke  to  regulate  atomic  powerplants  containing  privately  owned  fuel?

    2.  What  advantages  do  you  see  in  outright  private  ownership  of  fissionable
    material,  as  contrasted  with  leasing  arrangements?

    3.  Would  leasing  arrangements  be  equally  satisfactory  to  private  industry
    and  at  the  same  time  provide  a  better  basis  for  governmental  regulation?

    Thank  you  very  much  indeed  for  giving  your  attention  to  these  questions.
    I  feel  sure  that  your  answers  will  greatly  aid  the  committee  in  its  deliberations
    on  this  most  important  problem.
    Sincerely  yours,

    (Signed)     Sterling  Cole,  Chairman.

    Lehman  Bros.,
    Neiv  York  4,  August  3,  1953.
    Hon.  Sterling  Cole,

    ClKiiriiiari,  Joint  Congressional  Committee  on  Atomic  Energy,
    Capitol  Building,  Washington,  D.  C.
    My  Dear  (Jhairman  Cole:  I  shall  attempt  to  address  myself  to  the  inquiries
    set  forth  in  your  letter  of  June  25.  Before  doing  so,  I  should  like  to  express  my
    sincere  appreciation  for  the  cordial  treatment  accordelicy,  or  simply  a
    negative  acquiescence?

    Mr.  Dean.  I  would  say  so  far  as  the  legislative  goals  are  concerned  and
    the  desire  to  get  a  letiislation  change  to  accommodate  industry,  it  is  bless'ed
    by  the  National  Security  Council.

    36740^53 6

    76  ATOMIC    POWER    DEVELOPMENT

    That  would  indicate  that  the  Defense  Department,  if  we  can  rely
    on  what  Mr.  Dean  said,  when  the  Defense  Department  sat  as  a  mem-
    ber of  the  Securitj'^  Council,  did  have  before  it  the  legislative  pro-
    posals of  a  general  nature  made  by  the  Commission,  and  indicated
    its  approval.

    Mr.  LeB  \Koisr.  Well,  I  would  like  to  clarify  the  record  by  saying
    that  "legislative  proposal"  I  interpreted  to  mean  a  draft  of  legisla-
    tion. The  legislative  summary  proposals  to  which  you  refer  here,
    we  have  endorsed,  as  evidenced  by  a  letter  from  the  Secretary  of  De-
    fense to  the  committee  at  an  earlier  date.  I  was  under  the  misappre-
    hension that  you  were  talking  about  an  actual  legislative  draft.

    Chairman  Cole.  I  think  the  record  is  pretty  well  clarified.

    Do  any  members  have  any  questions  of  Mr.  LeBaron?

    Representative  Holtfield.  Mr.  LeBaron,  I  did  not  get  to  hear  you
    testify,  but  I  have  read  the  statement  since  I  returned,  and  on  this
    latter  question,  being  in  favor  of  the  goal  or  the  objectives  is  one
    thing,  and  being  in  favor  of  a  legislative  draft  which  seeks  to  obtain
    those  objectives  is  a  completely  different  thing.  I  think  every  mem-
    ber of  this  committee  is  in  favor  of  the  objective,  if  that  objective
    be  as  wide  as  possible  private  industry  participation  under  our  se-
    curity requirements  and  military  requirements.  We  are  all  in  favor
    of  those  objectives.  So  as  far  as  I  know,  there  is  no  disagreement
    on  objectives.  But  the  legislative  draft  which  was  presented  by  the
    AEC  to  the  Security  Council  and  to  the  President  is  a  thing  that
    is  altogether  different.  And  so  my  question  is:  Do  you  favor  the
    legislative  draft  which  was  presented?

    Mr.  LeBaron.  I  think  my  testimony  before  you  came  in  said  that
    we  had  objected  to  parts  of  the  legislative  draft  in  our  reply  to  the
    Bureau  of  the  Budget.

    Representative  Holtfield.  Are  those  objections  of  a  nature  that
    they  can  be  spread  upon  the  public  record  at  this  time?

    Mr.  LeBaron.  I  think  it  would  be  better  to  do  it  in  executive
    session.

    Representative  Holifield.  You  would  reserve  an  answer  to  that
    for  executive  session.  Well,  in  view  of  that  reservation,  it  puts  the
    committee  in  a  position  where  they  cannot  go  much  further  into  the
    matter  of  how  to  obtain  these  objectives  without  discussing  the  inade-
    quacies of  and  the  objections  to  that  draft  of  legislation.

    Under  the  circumstances,  I  feel  foreclosed  from  asking  any  further
    questions  of  Mr.  LeBaron.

    Representative  Price.  Mr.  LeBaron,  there  have  been  some  news-
    paper articles  in  recent  weeks  that,  in  my  opinion,  since  they  were
    credited  to  ofHcial  spokesmen  in  the  Department  of  Defense,  throw
    some  confusion  on  this  whole  reactor  program,  in  relation  to  the
    military  reactor  and  also  to  the  CVR  program,  the  industrial  project.
    I  would  just  like  to  tie  down  that  statement  as  to  whether  it  actually
    reflects  the  official  position  of  the  Defense  Establishment.  There  was
    an  article  that  appeared  in  the  Washington  Post,  and  one  that  ap-
    peared in  the  Chicago  Tribune,  which  raised  some  doubt  in  my  mind
    as  to  the  exact  status  of  the  program  as  far  as  the  Defense  Establish-
    ment was  concerned.

    Now,  could  you  tell  me  what  was  the  action  of  the  National  Secu-
    rity Council  concerning  the  military  usefulness  of  the  CVR  program?

    ATOMIC    POWER    DEVELOPMENT  77

    Mr.  LeBaron.  Yes,  sir.  I  would  be  glad  to  review  the  actions  of
    the  Department  of  Defense  and  the  philosophy  behind  those  actions.

    In  the  first  place,  we  still  have  military  requirements  for  both  the
    so-called  CVR  reactor  and  for  the  ANP  reactor.  Those  requirements
    were  not  canceled  in  the  Security  Council.  What  happened  in  that
    meeting  was  a  judgment  by  the  Secretary  that  the  way  of  achieving
    the  objectives,  the  method,  the  managerial  way  of  carrying  out  those
    objectives,  was  not  as  sound  and  as  consistent  with  other  parts  of  the
    program  as  it  might  be.

    Consequently,  we  proposed  at  that  time  an  alternative  course,  for
    the  sole  purpose  of  arriving  at  these  desired  military  end  products  in
    a  shorter  period  of  time,  and  with  less  expenditure  of  Government
    funds.  At  no  time  have  we  ever  said  that  we  do  not  want  these  reac-
    tors.    We  do  want  them.    We  want  them  as  promptly  as  we  can.

    Representative  Price.  Now,  Mr.  LeBaron,  when  you  say  you  want
    them  as  promptly  as  you  can :  How  can  you  get  them  as  promptly  as
    you  can  when  you,  in  effect,  give  up  the  program  ?

    Mr.  LeBarcn.  Well,  I  do  not  think  that  is  really  what  happened.
    We  didn't  really  give  up  any  program.  We  reorganized  the  program
    so  that  the  ultimate  end,  we  felt,  would  be  a  better  end,  without  as
    many  diversionary  exercises.  In  other  words,  what  we  were  con-
    cerned with  was  the  fact  that  we  were  diluting  our  energies.  We  were
    freezing  our  designs  prematurely.  And  we  vrere  doing  a  great  many
    things  which  sound  business  practice  in  the  new  development  at  this
    stage  of  the  game  did  not  contemplate.  In  other  words,  it  was  largely
    the  judgment  of  our  experienced  industrialists  that  there  was  a  bet-
    ter way  to  achieve  this  purpose.

    Representative  Price.  It  is  a  little  hard  to  follow  that  line  of  rea-
    soning.    Do  you  know  who  the  official  spokesman  was?

    Mr.  LeBaron.  No  ;  I  don't  know  who  it  was.

    Representative  Price.  Evidently  it  must  have  been  someone  high
    in  the  Defense  Establishment,  and  they  must  have  had  a  consultation
    with  someone  who  was  familiar  with  this  program.  You  do  not  have
    any  idea  who  might  have  said  that  ?

    Mr.  LeBaron.  No;  I  don't.

    Representative  Price.  But,  at  the  time  they  were  talking  about  call-
    ing a  halt  to  planned  expansion,  would  that  not  slow  down  the  pro-
    gram somewhat?

    Mr.  LeBaron.  I  would  like  to  say  unequivocally  about  those  articles
    that  those  were  not  the  sentiments  of  anyone  in  the  Department  of
    Defense  that  I  knew  anything  about.  They  were  not  the  views  of  the
    Secretary  or  the  Deputy.

    Representative  Price.  Was  there  ever  any  conversation  or  discus-
    sion about  that?

    Mr.  LeBaron.  There  were  no  decisions.  Of  course,  we  have  all
    discussed  the  problem  about  how  to  get  ahead  best  with  the  expansion
    program.  But  it  is  not  a  correct  reflection  of  the  opinion  of  the
    Department  of  Defense  that  we  have  been  against  any  basic  expansion
    facilities.  Our  views  have  always  been  directed  to  the  mechanics
    and  the  methods  of  reaching  these  objectives  -with  the  best  use  of  the
    taxpayers'  dollar,  and  at  the  same  time  with  the  best  method  of  get-
    ting the  program  ahead.

    Representative  Price.  That  brings  forth  this  question.  Was  the
    decision  in  regard  to  the  reactor  progi'ams  on  the  basis  of  economy,  or

    78  ATOMIC    POWER    DEVELOPMENT

    was  it  based  on  a  lack  of  military  interest,  say,  in  an  aircraft  carrier
    reactor  ?

    Mr.  LeBaron.  The  prime  basis  for  the  decision  on  the  CVR  was  a
    managerial  decision  on  how  best  to  accomplish  the  end  desire  of  the
    Joint  Chiefs  of  Staff.  Economy  was  the  secondary  factor.  We  were
    looking  for  reviews  from  the  economy  standpoint  as  a  part  of  the
    overall  review  of  the  budget.  But  those  conditions  were  definitely
    secondary  to  the  main  business  of  how  we  would  accomplish  the  ful-
    fillment of  the  requirement  of  the  Joint  Chiefs.

    Representative  Price.  Do  you  have  a  feeling  now  that  the  program
    is  being  carried  on  at  a  more  rapid  pace  than  it  was  before  you  made
    the  decisions  ?     Or  have  you  slowed  up  at  all  ?

    Mr.  LeBaron.  I  don't  think  we  have  slowed  up  at  all.  I  think  we
    are  in  a  much  better  position  today  than  we  were  4  months  ago.

    Representative  Price.  In  what  way  are  you  in  a  better  position  ?

    Mr.  LeBaron.  From  this  standpoint.  We  have  been  talking  about
    the  CVR  reactor.  The  keel  of  that  vessel  won't  be  in  the  water  until
    about  1963.  There  are  10  years  between  now  and  that  time,  in  which
    all  sorts  of  new  developments  in  technology  can  happen.  If  we  froze
    the  technology  today,  3  years  from  now  we  might  have  a  project  half
    completed  in  which  we  had  invested  a  large  sum  of  money,  which
    would  not  only  be  wasted,  in  the  circumstances

    Representative  Price.  Of  course,  you  would  not  want  to  freeze  it»
    You  were  talking  about  freezing  it.

    Mr.  LeBaron.  Well,  in  the  CVR  we  were  freezing  the  design,  and
    we  were  freezing  the  basis  of  expansion.  That  is  one  of  the  things  we
    were  objecting  to.

    Representative  Price.  It  looks  to  me  like  you  are  doing  a  better  job
    of  freezing  under  the  new  program  than  you  were  under  the  old.  You
    had  several  roads  to  go  under  the  old.

    Mr.  LeBaron.  Well,  let  me  point  out  our  thinking  there.  As  it
    stands  today,  the  so-called  CVR  reactor,  which  is  a  natural-uranium
    pressurized  water  reactor  of  the  type  which  it  is  generally  agreed  is
    the  natural  civilian  type,  is  going  forward  in  an  advanced  stage.  If
    there  is  anything  of  military  value  that  comes  out  of  that,  we  will  be
    aware  of  that,  and  we  will  have  an  opportunity  to  incorporate  that  in
    new  thinking.

    There  are  other  ways  in  which  we  will  probablj'  ask  for  added  de-
    velopments from  the  military  need  standpoint,  which  will  throw  more
    light  on  the  way  in  which  the  whole  reactor  technology  for  military
    propulsion  develops.  I  think  it  is  only  common  prudence  and  common
    sense  to  say  that  we  should  not  finalize  the  way  in  which  we  go  in  that
    business.

    Representative  Price.  My  point  is  that  you  are  closer  to  finalizing  it
    under  your  present  approach  than  you  were  under  the  old.

    Mr.  LeBaron.  Well,  I  just  don't  understand  that,  sir,  in  view  of
    the  fact  of  what  we  have  done.

    Representative  Price.  It  seems  to  me  that  you  have  come  to  a  point
    where  somebody  has  recommended  to  the  Defense  Establishment,  "We
    will  go  this  way.  We  will  just  do  this  one  thing."  Under  the  old  pro-
    gram you  had  people  going  several  different  ways,  with  the  prospects
    of  somebody  arriving  at  the  goal  ahead  of  the  other  team.

    Mr.  LeBaron.  I  don't  know  any  way,  any  alternate,  which  has  been
    dropped  as  a  res\dt  of  the  actions  of  the  last  3  or  4  months.

    ATOMIC    POWER    DEVELOPMENT  79

    Representative  Price.  All  right.  What  is  the  difference,  then,  be-
    tween the  two  programs  ?  What  was  it  before  you  made  these  recom-
    mendations, and  since?  There  must  be  some  difference.  There  is  a
    difference  in  approach.

    Mr,  LeBaron.  There  is  a  difference  in  approach.  There  is  the  busi-
    ness that  3'ou  might  want  to  call  resorting  the  objectives  and  putting
    the  civilian  ideas  over  into  the  civilian  economy,  in  other  words,  to
    have  the  military  program  more  strictly  conform  to  military  needs.
    There  is  a  difference  of  somewhere  between  50  and  75  million  dollars  of
    expenditure  which  would  have  been  cranked  into  the  old  CVR  pro-
    gram in  trying  to  make  it  fit  a  naval  vessel  while  you  were  developing
    it,  w^hich  we  believe  is  largely  a  direction  w^hich  can  be  avoided.

    Representative  Price.  Let  me  ask  you  this  question :  Was  the  deci-
    sion based  on  a  matter  of  policy,  or  was  it  the  recommendation  of  the
    technical  people  who  were  actually  doing  the  job  ?

    Mr.  LeBaron.  Well,  it  was  the  decision  of  the  Secretary  and  the
    Deputy  Secretary  based  largely  on  their  managerial  experience.

    Representative  Price.  Managerial  experience  does  not  count  too
    much  on  this  type  of  program,  I  don't  think.  It  helps  in  the  admin-
    istration of  it.  But  in  the  basic  research,  I  would  rather  take  advice
    from  the  technical  people  who  are  handling  the  research  problems.

    Mr.  LeBaron,  Well,  I  use  the  word  "managerial"  in  the  sense  that  it
    involved  the  engineering  and  technical  considerations.  I  don't  really
    want  to  go  any  further  than  that  into  the  reasons.

    Representative  Holifield.  Will  the  gentleman  yield  ?

    Mr.  LeBaron,  was  there  ever  a  scientific  evaluation  of  the  CVR
    program  that  resulted  in  an  evaluation  which  caused  you  to  want  to
    cancel  that  in  favor  of  some  other  type  of  reactor  ?

    Mr.  LeBaron.  Not  to  my  knowledge.

    Representative  Holifield.  Then  the  present  $7  million  appropria-
    tion for  the  construction  of  a  large  prototype  of  a  land-based  type
    of  reactor  is,  in  your  mind,  a  better  way  of  handling  this  than  to
    let  the  same  amount  of  money  be  spent  on  a  ship-type  reactor,  on  a
    CVR  type?

    Mr.  LeBaron.  Well,  I  don't  want  to  give  the  impression  that  I  am
    evading  the  answer,  but  in  our  philosophy  this  is  at  this  stage  of  the
    game  primarily  the  Commission's  responsibility  to  develop  the  reactor,
    and  our  military  judgment  on  it  won't  be  finalized  until  the  progress
    is  further  along  the  road.

    Representative  Holifield.  All  right.  Under  the  present  circum-
    stances, then,  they  are  only  going  forward  with  one  type  of  prototype?

    Mr.  LeBaron.  In  that  specific  program,  yes.

    Representative  Holifield.  In  that  program.  I  realize  they  are
    going  ahead  with  the  submarine  program.

    Mr.  LeBaron.  And  tlie  Commission  is  also  going  ahead  with  a
    number  of  other  reactor  types  which  may  presently  develop  into  some-
    thing of  interest.

    Representative  Holifield.  Your  logic — and  if  I  understand  you
    wrongly,  please  tell  me — is  that  there  is  need  for  further  experimenta-
    tion and  develo]:)ment  of  different  types  of  reactors  before  you  freeze
    it  into  a  usable  full-size  reactor?

    Mr.  LeBaron.  That  is  correct.

    80  ATOMIC    POWER    DEVELOPMENT

    Representative  Holifield.  Now,  as  far  as  you  are  concerned,  it
    makes  no  difference  to  the  military  who  does  that  type  of  research  and
    development,  as  long  as  it  is  done?

    Mr.  LeBaron.  That  is  right.      Yes,  sir.

    Representative  Holifield.  Then  if  the  Government  proceeds  along
    the  line  of  several  different  types  of  reactor  development,  you  would
    be  satisfied  ?

    Mr.  LeBaron.  Yes.

    Representative  Holifield.  And  if  private  industry  would  come  in
    and  put  up  the  money  to  do  it,  you  would  be  satisfied  with  that  ?

    Mr.  LeBaron..  Yes.

    Representative  Price.  On  that  point,  Mr.  Chairman :

    Do  you  think  private  industry  is  ready  to  come  in  and  take  over
    the  CVR  program  ?

    Mr.  LeBaron.  Well,  I  don't  think  we  are  really  competent  to  give
    you  an  answer  on  that,  because  that  depends  almost  entirely  on  what
    happens.

    Representative  Price.  The  reason  I  asked  you  that  question  is  be-
    cause the  spokesman  who  has  been  giving  stories  to  newspapermen  is
    quoted  in  an  article  in  one  of  the  local  newspapers  here  as  recently
    as  June  14,  intimating  that  if  the  Pentagon  removed  its  backing,  that
    is,  for  the  continuation  of  the  program  as  it  is  now  under  AEC,  pri-
    vate industry  could  carry  along  the  development,  and  atomic  power
    would  be  developed  by  private  enterprise  rather  than  Government,  not
    only  cutting  Government  expenditure  but  conforming  more  to  re-
    publican principles  than  present  practice.  Does  this  represent  your
    opinion?

    Mr.  LeBaron.  No,  sir.  In  the  first  place,  I  think  we  have  to  say
    again  that  a  great  many  people

    Representative  Price.  You  see,  the  reason  I  am  bringing  this  out
    is  because  there  have  been  these  confusing  stories  in  the  newspapers,
    and  I  think  we  ought  to  know  just  what  the  situation  is.  Is  private
    industry  ready  to  come  in  and  do  these  things  ?  Or  does  the  Govern-
    ment still  have  to  participate,  and  on  a  contractual  basis  bring  private
    enterprise  in?  Do  you  know  of  any  company  that  is  ready  to  come
    in  and  do  this  CVR  job?

    _Mr.  LeBaron.  Well,  it  really  isn't  our  business,  sir,  to  have  any
    views  on  something  which  is  a  monopoly  business  of  the  Commission.
    I  am  very  happy  to  clear  up  the  uncertainty

    Representative  Price.  The  reason  I  ask  these  questions  is  because
    all  these  statements  are  supposed  to  come  from  the  Department  of
    Defense.

    Mr.  LeBaron.  Let  me  say  something  in  response  to  that.  There
    have  been  a  barrage  of  statements  about  the  position  of  the  Depart-
    ment of  Defense,  and  to  the  best  of  my  knowledge  none  of  them  have
    any  real  basis  of  support.  They  are  really  trial  balloons  in  an  effort
    to  smoke  out  the  views  of  the  Department,  by  people  who  want  them
    for  some  purpose  or  another.  Now,  I  don't  believe  that  we  can  take
    any  official  cognizance  of  those  newspaper  articles  in  circumstances
    like  this.

    ATOMIC    POWER    DEVELOPMENT  81

    Representative  Price.  But  sometimes  they  bring  in  names  and  inti-
    mate that  the  stories  come  from  certain  sources.  This  particular
    article  says  this,  and  I  would  like  you  to  comment  on  it.    It  says :

    The  whole  approach  of  Robert  LeBaron,  Wilson's  assistant  on  atomic  matters
    and  Chairman  of  the  Military  Liaison  Committee  to  the  AEC,  was  reduction  of
    the  arms  budget  and  getting  someone  else  to  assume  what  the  Pentagon  regarded
    as  largely  a  nonmilitary  project,  the  AEC.  *  *  *

    Now,  they  seem  to  tie  you  up  in  it,  and  that  is  the  reason  why  I
    would  like  to  have  your  opinion.

    Mr.  LeBaron.  Well,  let  me  be  very  definite  about  that.  I  have
    never  made  such  statements.  I  do  not  know  Mr.  Norris,  who  wrote
    it.  And  if  you  read  his  statement,  you  will  find  that  it  ends  with
    the  statement,  "So  the  AEC  and  Congressmen  say."  And  there  is
    no  basis  for  that  statement  or  the  views  expressed  in  it.  It  is  a  com-
    plete matter  pulled  out  of  thin  air.

    Representative  Price.  One  of  the  reasons  for  these  public  hearings
    is  to  clear  up  a  lot  of  misunderstandings.

    Mr.  LeBaron.  I  understand  that  legally  I  have  no  redress  against
    this  statement,  because  it  is  a  quote  of  what  someone  else  has  said.
    I  did  not  say  it.  I  have  never  met  Mr.  Norris.  I  do  not  know  him.
    And  the  character  of  most  of  the  statements  which  have  confused  this
    issue,  I  suspect  is  such  that  they  are  in  a  similar  category.  I  think
    I  would  know  if  any  interviews  or  any  statements  were  made  in  the
    Pentagon,  and  I  am  quite  sure  that  most  of  these  things  have  just
    come  out  of  thin  air.

    Chairman  Cole.  Any  further  questions  of  Mr.  LeBaron?

    Representative  Hinshaw.  I  would  like  to  ask  a  question  of  Mr.
    LeBaron  just  briefly.

    As  I  understand  it,  the  so-called  CVR  program  is  a  program  for
    ship  propulsion,  whether  that  ship  be  a  naval  vessel  or  the  Queen
    Elizabeth  or  any  other  kind  of  a  vessel.  It  is  a  matter  of  propulsion,
    and  not  of  a  particular  type  of  vessel ;  is  that  correct?

    Mr.  LeBaron.  That  is  correct.

    Representative  Hinshaw.  And  hence  the  building  of  a  hull  loaded
    with  enough  concrete  to  cause  it  to  go  clown  to  the  Plimsoll  line  would
    be  enough  of  a  hull  in  which  to  test  out  such  an  engine,  would  it  not?

    Mr.  LeBaron.  Well,  except  that  the  design,  the  physical  engineer-
    ing design,  of  the  engine,  would  have  a  great  deal  to  do  with  the  design
    of  the  hull.  In  other  words,  I  understand  from  the  Bureau  of  Ships
    in  the  Navy  that  it  was  not  practical,  for  example,  to  put  nuclear
    power  plants  in  existing  hulls,  because  of  this  fundamental  difference
    in  the  nature  of  the  structure.

    Representative  Hinshaw.  I  was  thinking  about  having  a  floating
    test  bed,  where  the  engine  was  not  necessarily  a  vehicle  which  might
    ultimately  be  put  to  use.  You  can  have  a  floating  test  bed  without
    having  any  particular  type  of  test  bed.  Therefore,  the  question  of
    whether  a  single  reactor  power  source,  which  is,  I  suppose,  proposed
    to  be  built  under  the  CVR  program,  is  to  have  a  floating  test  bed  of
    one  sort  or  another,  is  of  little  consequence.     Is  that  correct?

    Mr.  LeBaron.  That  is  rijrht.

    82  ATOMIC    POWER    DEVELOPMENT

    Representative  Hinshaw.  Now,  heretofore  it  has  been  my  under-
    standing that  it  was  considered  that  the  CVR  program  was  specifically
    to  provide  a  single  engine  for  installation  as  one  of  a  number  of
    engines  on  a  carrier,  but  that  the  carrier  is  not  important  to  the  test-
    ing of  the  original  prototype.     Is  that  correct  ?

    Mr.  LeBakon.  Well,  I  think  we  are  talking  about  two  separate
    problems,  and  I  am  not  sure  that  I  understand  how  we  are  joining
    them.  The  military  requirement  for  the  CVR  was  developed  by  the
    the  Joint  Chiefs  of  Staff,  as  I  recall,  some  2  years  ago.  The  tech-
    nical developments  in  the  program  since  that  time  are  such  that  I
    would  assume  and  presume  that  the  basis  of  the  original  requirement
    would  be  subject  to  review,  in  the  light  of  present  technology.

    Representative  Hinshaw.  Exactly.  In  other  words,  we  are  inter-
    ested in  developing  an  engine,  whatever  its  end  use  may  be.

    Mr.  LeBaron.  That  is  correct.

    Representative  Hinshaw.  And  we  are  proceeding  along  that  line
    in  a  little  bit  slower  but  in  a  considerably  less  expensive  way  than  we
    started  out.

    Mr.  LeBaron.  I  would  also  like  to  point  out  that  from  the  stand-
    point of  the  overall  development,  by  going  a  little  slower,  and  deter-
    mining what  the  ultimate  courses  of  action  are  at  this  time,  we  may  be
    able  to  close  in  at  the  end  much  faster  and  much  more  surely  than  we
    would  if  we  had  a  program  spread  out  too  far  in  the  early  stages.

    Representative  Hinshaw.  Exactly  so.  And  in  the  meantime,  we
    are  saving  the  taxpayers  something,  between  sixty-five  and  a  hundred
    million  dollars,  which  is  worth  while.  And  as  I  remember  the  testi-
    mony, this  would  not  seriously  slow  down  the  equijDping  of  our  fleet  in
    case  we  wanted  to  equip  it  with  such  engines ;  in  the  long  run  it  would
    not  delay  that  ?

    Mr.  LeBakon.  That  is  correct.

    Representative  Hinshaw.  That  is  all,  Mr.  Chairman.

    Chairman  Cole.  Are  there  any  other  questions?

    Thank  you,  Mr.  LeBaron.

    Mr.  LeBaron.  Thank  you.

    Chairman  Cole.  The  next  witness  is  Dr.  Rabi,  Chairman  of  the
    General  Advisory  Committee.

    Doctor,  we  are  happy  to  see  you  out  in  the  open,  too.  Would  you
    tell  us  and  the  public  something  about  what  the  General  Advisory
    Committee  is,  how  long  you  have  served  as  a  member  of  it,  how  long
    as  chairman,  what  consideration  has  been  given  by  the  GAC  to  the
    question  of  industrial  power,  what  consideration  is  given  to  the  power
    policy  statement  of  the  Commission,  whether  the  committee  was  con-
    sulted by  the  Commission  before  the  policy  statement  was  promulgated,
    whether  the  committee  has  considered  the  description  of  legislation
    necessary  to  carry  out  the  Commission's  power  policy?

    STATEMENT  OF  I.  I.  RABI,  CHAIRMAN,  GENERAL  ADVISORY  COM-
    MITTEE, UNITED  STATES  ATOMIC  ENERGY  COMMISSION

    Dr.  Rabi.  Yes,  sir.  I  will  try  to  answer  the  question  as  well  as  I
    can  remember  them.  I  hope  you  will  prompt  me  if  I  should  forget
    some.

    The  General  Advisory  Committee,  as  I  remember,  has  met  since
    January  1947.     I  happen  to  be  the  only  member  of  the  General  Ad-

    ATOMIC    POWER    DEVELOPMENT  83

    visory  Committee  who  was  one  of  the  original  members  of  this  com-
    mittee.

    The  committee,  as  you  are  well  aware,  is  set  up  by  the  Atomic  Energy
    Act,  appointed  by  the  President  to  advise  the  Atomic  Energy  Com-
    mission. The  chairman  of  the  committee  is  selected  by  the  committee
    itself,  and  until  he  went  off  the  committee,  I  think  last  August,  Dr.
    J.  R.  Oppenheimer,  was  the  chairman  of  the  committee  throughout  its
    life.  When  Dr.  Oppenheimer  went  off  the  committee,  on  the  expira-
    tion of  his  term,  I  was  first  selected  as  acting  chairman  of  the  com-
    mittee, and  in  accordance  with  our  rules  the  chairman  of  the  committee
    is  reelected  every  year,  and  I  was  elected  chairman  of  the  committee
    at  its  first  meeting,  in  January  of  this  year.

    Chairman  Cole.  There  are  nine  members  of  the  committee?

    Dr.  Ram.  There  are  nine  members  of  the  committee,  and  if  you  wish
    me  to  put  the  names  of  the  members  of  the  committee  in  the  record,
    I  will  read  them  to  you.    I  have  them  right  here.

    There  is  myself  as  chairman.

    There  is  Dr.  Oliver  E.  Buckley,  formerly  chairman  of  the  board  of
    the  Bell  Telephone  Laboratories,  now  retired;

    Dr.  J.  B.  Fisk,  who  is  director  of  physical  research  at  the  Bell  Tele-
    phone Laboratories ;

    Dr.  W.  F.  Libby,  professor  of  chemistry  at  the  University  of  Chi-
    cago and  a  member  of  the  Institute  of  Nuclear  Science  at  that  uni-
    versity ;

    Dr.  E.  V.  Murphree,  president,  Standard  Oil  Development  Co.,  and
    a  well-known  chemist  in  his  own  right;

    Also,  there  is  Dr.  John  von  jSTeumann,  a  professor  at  the  Institute  for
    Advanced  Study,  who  is  a  world-famous  mathematician ;

    Dr.  J.  C.  Warner,  the  president  of  the  Carnegie  Institute  of  Tech-
    nology, who  is  a  chemist  of  great  repute ;

    Dr.  Walter  G.  Whitman,  presently  Chairman  of  the  Research  and
    Development  Board  of  the  Department  of  Defense,  and  formerly,  I
    presume  presently  to  go  back  to,  the  INIassachusetts  Institute  of  Tech-
    nology, where  he  is  head  of  the  department  of  chemical  engineering;

    And  Dr.  Eugene  P.  Wigner,  professor  of  physics  at  Princeton
    University.

    I  might  add  that  the  secretary  of  the  committee  is  Dr.  Richard  W.
    Dodson,  who  is  the  chairman  of  the  department  of  chemistry  at  the
    Brookhaven  National  Laboratory  and  also  a  professor  of  chemistry  at
    Columbia  University.  His  principal  field  is  in  radio  chemistry.  That
    constitutes  the  committee.

    Chairman  Cole.  And  you  are  the  only  member  of  the  committee  as
    presently  constituted  who  has  been  a  member  of  the  committee  from
    the  beginning?

    Dr.  Rabi.  Yes,  sir.  I  was  appointed  for  a  short  term  originally,  and
    then  reappointed  for  a  full  term.

    Chairman  Cole.  Thank  you.  You  may  proceed  with  your  state-
    ment in  any  way  that  you  wish.

    Dr.  Rabi.  Yes,  sir.    I  will  read  this  statement.

    The  General  Advisory  Committee  from  the  beginning  has  discussed
    the  question  of  nuclear  power  for  industrial  purposes.  Llowever,  the
    views  expressed  in  this  statement  are  my  own  and  not  the  collective
    opinion  of  the  General  Advisory  Committee,  since  there  was  not  suf-
    ficient notice  of  this  hearino-  for  the  committee  to  meet  and  agree  on  a

    84  ATOMIC    POWER    DEVELOPMENT

    statement  of  position.  1  would  like  to  have  that  very  well  understood,
    for  reasons  which  may  come  out  later.

    From  my  discussions  with  properly  qualified  scientists  and  engi-
    neers, I  have  come  to  the  opinion  that,  from  the  technical  point  of  view,
    the  time  is  ripe  to  proceed  to  the  design  and  construction  of  power-
    plants  to  derive  heat  or  electrical  energy  from  nuclear  fission.  There
    are  many  areas  of  the  world,  and  perhaps  even  in  the  United  States
    and  its  Territories,  where  nuclear  power  would  be  competitive  with
    power  derived  from  combustion  of  fuel.

    The  future  of  nuclear  power  will  depend  on  the  same  factors  which
    determined  the  future  of  other  new  industries,  such  as  the  electrical
    industry,  the  telephone,  oil,  and  chemical  industries,  and  more  recently
    the  television  industry.  These  factors  were  chiefly  research,  invention,
    and  development,  which  led  to  designs  and  techniques  which  resulted
    in  improved  product  and  improved  service.  In  due  time  new  materials
    and  methods  were  developed  under  the  influence  of  public  demand  and
    commercial  competition,  which  brought  about  lower  costs  and  more
    efficient  operation.

    If  the  same  influences  are  permitted  to  operate  in  the  field  of
    nuclear  power,  the  nuclear  power  industry  would  become  an  important
    component  of  our  American  economy  in  the  next  25  years.  Nuclear
    power  in  the  foreseeable  future  will  have  very  strong  competition  from
    power  derived  from  the  combustion  of  fuel,  and  we  therefore  do  not
    have  to  fear  that  a  strong  monopoly  would  be  set  up  in  the  power
    industry  through  the  possession  of  some  basic  patent  or  secret  process.
    There  are  many  different  designs  which  are  possible,  and  it  is  not  likely
    that  any  one  design  would  have  an  overwhelming  advantage.  I  wish
    to  support  the  position  taken  by  the  Atomic  Energy  Commission  in  its
    Statement  of  Policy  on  Nuclear  Power  Development,  with  the  single
    exception  that  although  I  believe  that  the  construction  of  experimental
    power  reactors  to  be  desirable,  I  am  not  convinced  they  are  a  necessary
    step.  More  desirable  would  be  the  construction  of  a  power  reactor  with
    close  attention  to  economy  in  construction  and  operation,  and  which
    would  serve  a  useful  purpose  to  provide  power  for  some  useful  de-
    mand. The  sooner  we  get  started  on  such  a  project  the  better  our
    ultimate  position  will  be  in  the  international  competition  for  leader-
    ship in  this  field.

    If  organizations  outside  the  Atomic  Energy  Commission  are  to
    make  progress  in  the  field  of  nuclear  power,  it  will  be  necessary  for
    them  to  have  access  to  the  unique  experimental  and  testing  facilities
    which  are  now  AEC  property.  In  addition,  the  advice  of  and  consul-
    tation with  AEC  scientists  and  engineers  will  be  necessary  in  all
    stages  of  the  development  of  suitable  designs.

    It  is  vital  to  the  nuclear-power  program  for  the  AEC  to  continue
    vigorous  support  of  research  and  development  in  the  fundamental  arts
    which  are  basic  to  reactor  development.  These  include  basic  physics,
    particularly  in  the  measurement  of  various  neutron  cross  sections  of
    all  nuclear  species,  fundamental  chemistry  and  metallurgy  of  the
    elements  and  compounds  which  are  important  for  reactor  technology,
    heat-exchange  phenomena,  and  the  health  precautions  which  are  so
    essential  in  the  handling  of  these  dangerous  materials.

    These  and  other  basic  studies  and  researches  will  also  help  the  AEC
    in  its  other  programs  in  the  production  of  fissionable  materials  and

    ATOMIC    POWER    DEVELOPMENT  85

    their  utilization  in  the  weapons  program  and  should  result  in  greater
    abundance  and  lower  cost.

    Finally,  I  would  say  the  generally  optimistic  tone  of  this  statement
    is  a  result  of  the  great  progress  which  has  been  made  in  recent  years,
    mostly  in  the  laboratories  supported  by  the  AEC,  but  with  the  help
    and  cooperation  of  scientists  and  engineers  both  in  industry  and  in
    the  universities.  If  this  cooperation  is  maintained,  the  future  of
    nuclear  power  is  assured,  provided  wise  policies  are  adopted  which
    will  permit  the  necessary  freedom  for  private  initiative  and  skill  to
    make  its  full  contribution  toward  providing  the  public  with  nuclear
    power.

    Chairman  Cole.  Thank  you,  Dr.  Rabi.

    Are  there  any  questions  ?

    Representative  Hinshaw.  Mr.  Chairman,  there  is  one  question  that
    occurs  to  me  in  listening  to  Dr.  Rabi's  testimony.

    It  has  nothing  to  do  with  the  testimony  itself ;  but,  he  being  a  very
    eminent  scientist,  and  we  having  in  Los  Angeles  peculiar  conditions
    known  as  temperature  inversions  of  the  atmosphere,  it  seems  to  me
    from  what  little  I  know  about  the  reactors  and  their  various  emissions
    that  placing  one  in  a  position  where  temperature  inversions  are  fre-
    quent would  not  be  a  very  good  idea,  would  it?

    Dr.  Rabi.  It  would  depend  upon  the  design  of  a  particular  reactor.
    If  you  had  a  design  wliere  gases  and  materials  which  are  injurious
    to  health  would  not  escape,  I  don't  see  why  it  shouldn't  be  there.

    Representative  Hinshaw.  And  such  a  reactor  is  practical,  is  it?

    Dr.  Rabi.  I  think  it  could  be  made  to  be  so.  There  are  such  de-
    signs in  contemplation.  And,  furthermore,  you  don't  have  to  go
    very  far  away,  do  you,  to  put  it  in  the  hills  somewhere,  where  the
    atmospheric  conditions  are  more  favorable.

    Representative  Hinshaw.  Thank  you  very  much.

    Senator  Hickenlooper.  Dr.  Rabi,  I  think  we  all  realize  that  power
    reactors  can  be  built  by  the  Government  through  contracts.  If  those
    remain  the  property  of  the  Government,  then  any  developments  under
    those  circumstances  remain  the  property  of  the  Government.

    Now,  if  private  enterprise  is  to  go  into  the  power  field,  then,  under
    the  very  law  of  economics  of  the  private-enterprise  system,  private
    enterprise  would  want  to  own  and  control  what  it  put  its  money  into,
    including  any  developments  and  advancements  which  it  made,  which
    would  mean  the  ownership  of  patents  and  all  those  things  which
    would  go  into  a  normal  operation  of  that  kind.

    Also,  it  would  seem  to  me  that  private  venture  would  hesitate  a
    long  time  to  put  the  necessary  large  amounts  of  money  into  building
    and  experimenting  with  its  own  private  reactors,  unless  it  was  as-
    sured of  having  available  to  it  for  its  use  all  of  the  information  es-
    sential in  the  development  of  that  enterprise.

    Now,  do  _you  think  at  this  moment  or  within  the  near  future  private
    groups  can  be  given  all  of  the  information  that  is  in  any  way  essential
    for  the  purpose  of  experimenting  with  different  designs  and  types  of
    reactors  for  power,  without  invading  the  field  of  security  in  the
    weapons  field?  Or  would  the  Commission  have  to  hold  back  certain
    information  that  private  industry  would  say,  "We  think  that  is  es-
    sential to  us"?

    May  I  just  go  ahead  and  qualify  that  a  little  more  by  saying  that
    I  know  that  private  companies  under  atomic  contract  operate  in  a

    86  ATOMIC    POWER    DEVELOPMENT

    very  highly  restrictive  field.  But  that  is  under  a  specialized  opera-
    tion. What  they  do  is  for  the  Government.  I  am  talking  about
    them  divorcing  themselves  from  the  Govermnent  and  then  being
    given  for  their  use  the  unrestricted  use  of  information  which  would
    be  essential  to  them.

    Dr.  Rabi.  Well,  sir,  I  will  try  to  answer  that  as  best  I  can.  I  do
    not  think  we  are  at  a  point  where  most  of  the  information  or  all  of
    the  information  necessary  to  construct  a  good  economical  reactor  can
    be  given  without  security  restrictions.  I  think  that  private  industry
    which  goes  into  this  field  will  have  to  learn  to  live  with  such  security
    restrictions.  However,  I  think  that  they  have  had  a  lot  of  experience
    in  it.  A  large  fraction  of  the  big  industry  of  the  United  States  has
    worked  under  security  restrictions,  either  under  the  Department  of
    Defense,  the  Atomic  Energy  Commission,  or  others.  Therefore,  I
    do  not  consider  the  objection  to  be  insuperable.  They  have  taken
    very  strong  measures  to  clear  the  necessary  personnel.  They  have
    experience  in  how  to  work  with  these  restrictions.  It  seems  to  me
    they  could  go  right  ahead  if  there  were  a  good  profit  in  it.

    Senator  Hickenlooper.  It  seems  to  me  that  you,  as  a  contractor,
    for  instance,  for  the  Commission,  and  under  the  proper  clearances,
    as  such  a  contractor  for  the  Commission,  can  go  in  and  secure  in-
    formation that  would  be  necessary  for  you  to  carry  out  your  contract
    with  the  Commission.  But  you  are  working  under  a  different  set  of
    circumstances  than  if  you,  as  a  private  individual,  want  to  put  your
    own  hard-earned  money  into  developing  a  type  or  types  of  reactors
    which  will  be  your  property.  It  seems  to  me  there  is  a  difference  in
    the  operating  methods  there.

    Dr.  Rabi.  There  is  a  difference.  But,  nevertheless,  I  don't  see  it
    as  an  insuperable  obstacle.  It  is  some  departure  from  usual  pro-
    cedures, but  many  industries  do  operate  under  conditions  of  ordinary
    commercial  secrecy,  and  we  have  had  experience  through  the  years  in
    working  with  these  companies.  By  "we,"  I  am  referring  to  the  Com-
    mission. And  it  seems  to  me  that  methods  could  be  worked  out  which
    would  not  be  very  novel  to  industry.  And,  in  the  last  analysis,  you
    would  have  your  reactor,  and  it  is  sealed  up  and  guarded  as  a  valu-
    able piece  of  property  always  is.

    Senator  Hickenlooper.  And  still  maintain  the  reasonable  safe-
    guards against  the  disclosure  or  the  leakage  of  vital  information  re-
    lating to  our  national  security?

    Dr.  Rabi.  Yes,  sir.  I  don't  see  how  the  source  of  money  would  af-
    fect the  safeguards.  Whether  the  money  came  from  stockholders  or
    whether  the  money  came  from  the  United  States  Treasury,  the  pro-
    cedures could  be  very  similar.  And  that  is  why  I  would  think  in  the
    legislation  appropriate  safeguards  should  be  introduced,  and  a  proper
    system  of  licensing  and  reporting  and  so  on  should  exist,  one  that  is
    sound  technically  and  would  not  be  too  difficult  for  the  companies
    to  m.anage.

    Senator  Hickenlooper.  I  presume  there  would  be  two  methods  of
    procedure.  One  would  be  to  be  selective  in  the  companies  or  the
    groups  which  did  this;  but,  if  the  Government  followed  that  pro-
    cedure, then  many  others  might  say,  "Well,  we  want  to  get  into  this
    field,  too.    You  can't  set  up  the  bars  against  us."

    Dr.  Rabi.  Isn't  that  true  in  other  fields,  sir?  If  I  want  a  license
    to  run  a  radio  station,  I  have  to  show  them  I  am  personally  of  good

    ATOMIC    POWER    DEVELOPMENT  87

    character  and  responsible.  Otherwise,  my  license  would  be  taken
    away.

    Senator  HiCKENLOorER.  I  tliink  there  may  be  some  comparison  in
    that.  But  I  think  there  is  a  difference  in  case  of  a  radio  station,  be-
    cause it  uses  the  airway  and  for  other  reasons  is  subject  to  public  reg-
    ulation as  a  utility.

    Now,  in  this  field  there  might  be  some  different  elements  that  would
    at  least  lend  some  argument  to  those  people  that  said,  "Well,  you
    are  exclusive  on  this  thing.  You  let  the  A  company  get  into  this
    field,  but  you  will  not  let  us."

    Dr.  Rabi.  Well,  I  feel  there  won't  be  crowds  standing  around  with
    a  hundred  and  a  hundred  twenty-five  million  dollars.  By  the  time
    they  have  the  capital,  you  pretty  much  know  who  they  are.

    Senator  Pastore.  Do  you  envision.  Doctor,  for  some  time  to  come,
    private  industry  embarking^  on  this  development  solely  and  strictly
    on  its  own,  detached  from  Government  ?  Or  do  you  think  that  there
    has  got  to  be  a  community  of  participation  for  a  long  time  to  come,
    principally  because  of  the  problems  that  are  involved  and  the  costs
    that  are  involved,  and  therefore  you  do  have  this  cooperation  between
    private  industry  and  Government  that  will  give  us  what  we  need
    to  maintain  the  security  that  is  required  ?

    Dr.  Rabi.  Exactly,  sir.  As  I  said  in  my  statement,  they  could  not
    go  ahead  with  the  design  and  construction  without  information  from
    the  Government  and  the  use  of  Government  facilities.

    Senator  Pastore.  From  your  contacts  in  this  particular  area,  have
    you  found  any  inclination  on  the  part  of  private  industry  to  embark
    in  this  on  the  premise  of  going  it  alone  ?

    Dr.  Rabi.  One  hears  talk  about  it.  I  can't  say  very  much  about
    my  own  particular  experience.  But  as  the  field  develops,  it  becomes
    clearer  and  clearer  that  the  time  is  rapidly  approaching  where  this
    could  be  a  profitable  enterprise.

    Senator  Pastore.  Well,  now,  to  follow  it  up  with  a  further  question,
    which  I  expect  to  be  my  last :  On  the  question  of  divulging  of  secret
    processes  and  patent  rights,  how  much  do  we  have  to  get  into  that  if  we
    recognize  the  fact  that  Government  has  to  participate  because  of  the
    costs  that  are  involved  and  because  of  the  areas  that  have  already
    been  developed  by  Government  that  are  exclusive  to  Government?
    Why  must  we  go  so  far  as  to  give  away  all  of  these  patentable  rights
    and  secret  processes  ?

    Dr.  Rabi.  Well,  sir,  I  would  be  very  glad  to  answer  this  question  if
    I  understood  it.  We  have  argued  this  matter  in  the  General  Advisory
    Committee  for  meeting  after  meeting,  and  for  our  next  meeting,
    which  occurs  in  August,  we  are  going  to  have  the  counsel  of  the
    Commission  meet  with  us  to  discuss  the  matter  further.

    I  am  in  sympathy  to  a  great  degree  with  what  you  say.  It  is  not
    very  clear  to  me  what  connection  the  desire  to  sell  power  has  with
    the  establishment  of  a  patent  position.  However  there  may  be  changes
    in  the  act  which  would  make  it  simpler  and  easier  and  more  in  con-
    formity with  industrial  practice  than  to  proceed

    Senator  Pastore.  Well,  what  I  am  trying  to  get  at  is :  Is  it  the  crux
    of  this  problem,  on  the  question  of  initiative,  to  go  forward  ?  You  have
    played  it  down  in  your  statement.

    Dr.  Rabi.  Yes,  sir.  I  have  played  it  down,  because  I  do  not  under-
    stand it.

    88  ATOMIC    POWER    DEVELOPMENT

    Senator  Pastore.  You  do  not  understand  it  because  you  do  not  feel
    the  same  fear  as  other  people  do  ?

    Dr.  Rabi.  To  some  degree.  I  have  the  feeling  that  as  soon  as  this
    industry  will  be  clearly  profitable,  there  won't  be  so  much  worry
    about  the  patent  feature.  And  there  was  one  other  feature.  That  is,
    any  company,  any  group,  that  goes  into  this,  that  puts  in  their  own
    money  and  gets  the  experience,  will  be  so  far  ahead  of  others  in  having
    the  experience  and  the  prestige  that  I  am  not  quite  sure  what  the  value
    of  the  patents  would  be,  except  for  protection  against  others,  or
    protection  of  their  commercial  position.

    Senator  Pastore.  Of  course,  the  argument  as  made,  at  least  we  hear
    the  rumors  of  it,  on  the  part  of  those  who  are  opposed  to  private
    industry  participating  in  this  program,  on  the  grounds  that  this  is
    going  to  lead  to  monopoly,  that  they  are  doing  it  for  an  ulterior
    motive.  Now,  I  do  not  agree  with  that  at  all,  because  I  think  there
    is  a  lot  of  know-how  in  private  industry  that  ought  to  be  utilized  in
    this  development.

    Dr.  Rabi.  Absolutely.

    Seaiator  Pastore.  And  I  have  not  yet  heard  anyone  in  private  indus-
    try that  has  taken  the  position,  the  positive  position,  that  they  will
    not  do  this  unless  they  get  certain  patent  rights  that  will  be  made
    available  to  them.    They  seem  to  be  playing  that  down,  too.

    I  wanted  your  opinion  on  it.  Do  you  think  it  is  absolutely  essential
    that  we  make  the  concession,  in  order  to  get  private  industry  to  par-
    ticipate? Or  is  private  industry  being  limited  in  its  actions  only  be-
    cause of  the  costs  involved  in  the  investment  it  has  to  make?

    Dr.  Rabi.  I  am  not  clear  enough  on  the  subject,  sir,  to  be  able  to
    answer  that  question.

    Senator  Pastore.  I  do  hope  I  have  made  my  question  clear.

    Dr.  Rabi.  The  question  is  entirely  clear,  i)ut  I  can't  answer  it,  be-
    cause I  don't  understand  it  well  enough.  I  think  we  will  get  to  an
    understanding  in  the  fairly  near  future  as  to  what  the  preconditions
    are  for  the  participation  of  private  industry  with  full  vigor.

    Senator  Pastore.  The  reason  why  I  asked  you  the  question,  Doctor,,
    is  because  that  is  what  has  been  troubling  me  right  along.

    Dr.  Rabi.  It  has  been  troubling  us.  We  have  heard  from  people  of
    very  different  backgrounds  and  very  different  views  on  this  subject.

    Senator  Hickenlooper.  Dr.  Rabi,  I  have  not  heard  even  any  remote
    suggestion  by  any  person  who  might  be  interested  in  the  private  de-
    velopment of  power  that  the  Government  turn  over  to  them  as  an
    exclusive  property  any  existing  patents.  When  I  mentioned  patents  a
    v/hile  ago,  I  meant  patents  which  they  under  their  own  investment
    might  later  develop  in  the  future,  and  the  costs  of  which  they  might
    reasonably,  under  the  private  enterprise  theory,  have  a  right  to  ex-
    pect to  recapture  in  some  way,  by  being  protected  on  the  patents
    which  they  develop.  I  would  expect  that,  within  limits,  patents  which
    we  have  now,  I  mean  which  belong  to  the  Government,  under  such  a
    theory,  might  be  turned  over,  insofar  as  they  could  be,  without  violat-
    ing the  national  security,  to  anybody  and  everybody  that  wanted  to
    make  use  of  them.  It  is  only  the  future  development  in  which  the
    costs  of  their  research  might  well  be  claimed  as  a  recapturable  item.
    Having  spent  it,  they  would  try  to  get  it  back  in  some  way  so  that
    everybody  would  start  on  the  same  footing.

    ATOMIC    POWER    DEVELOPMENT  89

    Senator  Pastore.  I  am  speaking  of  the  same  area  myself.  I  am
    not  talking  of  the  patents  which  the  Government  had.  But  even  with
    reference  to  these  future  patents,  you  have  got  to  remember  that
    whatever  has  been  developed  has  been  developed  exclusively  by  private
    industry  because  there  has  been  Government  participation.  And  this
    whole  thing  is  predicated  upon  a  joint  effort.

    Dr.  Eabi.  My  own  guess  is  that  if  more  than  one  group  went  into
    it,  they  would  immediately  have  cross-licensino-  arrangements,  and
    it  would  not  be  a  verj^  serious  question.    That  is  just  a  guess.

    Representative  Holifield.  Dr.  Rabi,  in  your  statement,  on  page  2,
    you  say  there  are  many  different  designs,  and  that  you  do  not  fear
    that  a  strong  monopoly  would  be  set  up  in  the  power  industry  through
    the  possession  of  soniQ  basic  patent  or  secret  process.

    Dr.  Ram.  Yes,  sir.

    Representative  Holifield.  You  make  that  observation  from  the
    standpoint  of  your  background  of  knowledge  of  the  reactor  field,  I
    suppose.

    Dr.  Rabi.  Yes,  sir.  Right  now  there  are  a  number  of  competing
    designs,  and  they  all  look  pretty  good.

    Representative  Holifield.  Those  designs  have  been  made  available
    to  industry  ?

    Dr.  Rabi.  I  couldn't  answer  that  question,  sir.

    Representative  Holifield.  I  think  testimony  before  the  committee
    has  indicated  that  possibly  some  designs,  according  to  Dr.  Zinn,  have
    been  developed  by  Government,  and  also  the  study  groups  have  had
    access  to  that  type  of  information,  or  else  their  studies  would  be  no
    good.

    Now,  it  is  evident  that  if  those  types  have  been  developed  by  the
    Government  there  must  be  a  multitude  of  ways  of  building  the  reactor.
    It  is  obvious  that  none  of  those  designs  could  be  patentable,  because
    the  Government  has  already  originated  them  at  its  own  expense.

    Now,  I  see  that  you  have  no  fear  of  a  monopoly  position  on  that
    account.  And  then  if  these  designs  of  reactors  are  so  numerous,  and
    they  have  already  been  developed  to  the  point  of  theory  at  least,  that
    particular  incentive  should  not  be  too  appealing  to  industry.  That  is
    not  an  incentive,  in  other  words,  that  should  be  too  appealing  to
    industry  to  give  them  an  area  of  patent  advantage.

    Dr.  Rabi.  I  am  sorry,  sir.    I  did  not  quite  understand  the  question.

    Representative  Holifield.  Well,  let  me  try  to  state  it  in  a  different
    manner.  You  indicate  that  there  are  so  many  designs  that  there  is
    little  likelihood  of  one  design  having  such  an  overwhelming  advantage
    that  a  patent  would  be  of  extraordinary  value.  I  believe  that  is  your
    position,  is  it  not?

    Dr.  Rabi.  Yes.

    Representative  Holifield.  Then,  if  that  be  the  case,  the  require-
    ment of  a  patent  of  that  nature  would  not  be  an  important  advantage
    to  an  industrial  firm.

    Dr.  Rabi.  Well,  sir,  you  are  taking  me  a  little  out  of  my  depth.  I
    have  a  feeling  that  these  industrial  people  like  patents  for  their  own
    sake,  and  they  do  not  feel  comfortable  without  them.

    Representative  Holifield.  It  is  like  wearing  a  muffler.  They  have
    gotten  used  to  it  and  hesitate  to  take  it  off.

    Dr.  Rabi.  But  I  am  not  testifying  as  an  expert.  This  is  merely  an
    observation.

    90  ATOMIC    POWER    DEVELOPMENT

    Representative  Holitield.  As  a  matter  of  observation?

    Dr.  Rabi.  Yes.

    Representative  Holitield.  Let  us  proceed,  then,  to  something  that
    you  may  have  more  definite  opinions  on.  Let  me  ask  you  if  your
    General  Advisory  Committee  was  consulted  on  the  selection  of  the
    CVR  type  of  reactor  ?

    Dr.  Rabi.  We  were  informed,  as  I  remember — and  I  am  speaking
    purely  from  memory,  and  I  did  not  consult  the  record  since  I  did  not
    anticipate  the  question — we  were  informed,  but  I  do  not  think  we
    were  specifically  asked  about  that  particular  type.

    Representative  Holitield.  Should  that  have  been  a  matter  of  con-
    sultation with  your  group  ?  You  have  some  distinguished  scientists,
    including  yourself,  who  are  very  knowledgable  on  different  types  of
    reactors,  and  I  am  surprised  your  group  was  not  consulted.

    Dr.  Rabi.  I  would  not  say  we  were  not  consulted.  It  is  not  the  way
    we  operate  with  the  Commission  that  they  consult  us  on  every  step.
    They  consult  us  about  various  questions  which  are  especially  interest-
    ing, at  the  time  of  the  meeting,  and  we  ourselves  raise  questions  w^th
    them.  But  we  certainly  do  not  as  a  normal  thing  pass  on  every
    decision  which  they  make,  and  we  could  not  possibly  do  the  job,
    meeting  only  a  few  times  a  year  as  we  do,  and  being  busy  with  our
    other  concerns.

    Representative  Holitield.  Let  me  ask  you  this

    Dr.  Rabi.  We  were  not  unhappy  about  the  situation.

    Representative  Holitield.  You  were  not  unhappy  ?

    Dr.  Rabi.  That  is  right.

    Representative  Holitield.  Were  you  happy  ?  Let  me  put  that  in  a
    different  way,  as  we  are  perhaps  dealing  in  terms  of  the  wrong  type
    of  descriptive  adjectives.

    At  the  time  the  CVR  was  selected,  was  there  a  strong  feeling  among
    scientists  that  it  was  the  wrong  type  of  reactor  for  that  puropse?

    Dr.  Rabi.  For  that  purpose,  no.

    Representative  Holitield.  Now,  since  that  time,  in  the  2  interven-
    ing years,  has  there  been  a  strong  feeling  on  the  part  of  a  responsible
    group  of  scientists  that  a  different  type  of  reactor  would  be  more
    acceptable  ?

    Dr.  Rabi.  Not  to  my  knowledge,  sir.

    Representative  Holitield.  Not  to  your  knowledge?

    Dr.  Rabi.  No.

    Representative  Holitield.  All  right ;  we  will  turn  from  that  point
    to  another  statement  which  you  made,  in  which  you  said :

    *  *  *  although  I  believe  that  the  construction  of  experimental  power  reactors
    to  be  desirable,  I  am  not  convinced  they  are  a  necessary  step.  More  desirable
    would  be  the  construction  of  a  power  reactor  with  close  attention  to  economy  in
    construction  and  operation,  and  which  would  serve  a  useful  purpse  to  provide
    power  for  some  useful  demand.

    Now,  I  believe,  then,  that  you  take  the  position  that  we  have  gone
    far  enough  forward  in  the  science  of  reactor  technology  that  the
    building  of  various  types  of  pilot  types  are  no  longer  desirable,  but
    that  we  are  to  the  point  where  an  actual  large-type  reactor  should
    be  built.     Have  I  correctly  stated  your  position?

    Dr.  Rabi.  If  I  could  restate  it,  I  will  say  it  in  this  way :  That  there
    are  designs  which  the  scientists  and  engineers  concerned  think  could
    produce  useful  power,  and  they  would  know  how  to  do  it  and  how
    to  start  designing  it  right  now.

    ATOMIC    POWER    DEVELOPMENT  91

    Representative  Holifiei.d.  May  I  just  stop  you  there  and  ask  you
    wliat  you  mean  by  the  word  "useful"?  Do  you  also  mean  "eco-
    nomical"?

    Dr.  Rabi.  Yes,  sir.

    Representative  Holifield.  And  competitive  with  conventional
    fuels,  or  near  competitive  ?

    Dr.  Rabi,  That  is  right,  just  on  the  borderline  or  perhaps  over.
    It  would  take  an  actual  design  effort  over  a  period  of  a  year  or  two;
    but  in  design,  to  show  whether  it  would  be  competitive  or  not,  a  great
    deal  of  the  material  which  enters  into  the  cost  figures,  whether  it  is
    competitive  or  not,  are  questions  of  bookkeeping,  rates  of  amortiza-
    tion and  questions  of  that  sort,  fuel  inventorj?^,  and  it  would  take  a
    precise  design  to  answer  those  questions.

    Representative  Holifield.  Frozen  into  a  constructed  reactor?

    Dr.  Rabi.  To  be  frozen  into  a  constructed  reactor.  But  it  would
    take  an  actual,  real  desigd  of  something  which  you  fully  intend  to
    build  before  you  could  really  answer  those  questions.  In  other
    words,  they  are  expensive,  and  rather  profound  study  would  be  re-
    quired. But  the  feeling  of  the  people  of  experience  is  that  it  could
    be  done  and  would  be  either  definitely  competitive  or  just  on  the  edge.

    Representative  Holifield.  Now,  may  I  ask  you  if  that  is  just  your
    personal  opinion,  or  if  a  great  many  of  the  top-ranking  physicists
    agree  with  your  position  on  that?

    Dr.  Rabi.  I  would  say  that  a  great  many  of  the  physicists  and
    chemists  and  engineers  who  are  concerned  with  these  matters  agree,
    and  that  my  opinion  is  derived  from  them.  They  are  the  experts
    in  this  specialty,  and  not  I,  but  I  have  confidence  in  their  judgment.

    Representative  Holifield.  Well,  this  position,  of  course,  is  entirely
    different  from  the  position,  I  believe,  that  Mr.  LeBaron  took.

    Dr.  Rabi.  I  am  not  sure  that  is  the  case,  sir.  I  have  not  studied
    Mr.  LeBaron's  statement  carefully  enough  to  be  able  to  say  whether
    I  really  differ.  I  showed  my  statement  to  him  before,  and  he  did
    not  express  the  feeling  that  there  was  a  difference.

    Representative  Holifield.  I  think  the  record  will  be  self-explana-
    tory.

    That  is  all,  Mr.  Chairman,

    Chairman  Cole.  Mr.  Price?

    Representative  Price.  I  have  no  questions.

    Chairman  Cole.  Dr.  Rabi,  would  you  indicate  to  us  what  you  mean
    when  you  say  there  are  many  different  designs  of  reactors  which  are
    possible  ?     How  many  is  "many"  ?

    Dr.  Rabi.  Well,  there  are  all  sorts  of  variations.  I  would  say  half
    a  dozen.

    Chairman  Cole.  Only  half  a  dozen  ?

    Dr.  Rabi.  At  least  a  half  a  dozen,  with  different  materials,  different
    coolants,  and  different  ways  of  taking  out  the  energy,  and  different
    sorts  of  cycles.  And  there  are  questions  of  whether  one  should  have
    a  byproduct  or  not,  and  all  that  sort  of  thing.  There  are  different
    ideas  about  chemical  processing  of  the  materials,  and  it  is  a  very  wide
    range.

    Chairman  Cole.  Are  you  in  disagreement  with  the  statement  I
    have  read  attributed  to  Dr.  Zinn,  in  wliich  lie  is  said  to  have  stated
    that  if  he  had  the  time,  he  could  design  and  conceive  of  a  wagonload
    of  different  types  of  reactors  ?

    36740—53 7

    92  ATOMIC    POWER    DEVELOPMENT

    Dr.  Rabi.  I  would  agree  with  his  statement.  He  is  a  very  capable
    physicist  and  reactor  engineer,  in  my  opinion.

    Chairman  Cole.  Well,  there  is  quite  a  difference  between  your  state-
    ment that  there  are  approximately  half  a  dozen  or  so  different  types
    of  approach  for  an  economic  reactor,  and  Dr.  Zinn's  statement  wherein
    he  estimates  it  in  terms  of  wagonloads.  It  has  been  my  understanding
    that  the  field  was  as  broad  as  the  ingenuity  and  inventiveness  and
    imagination  of  the  scientists  themselves.

    Dr.  Rabi.  I  would  agree.  It  is  entirely  a  matter  of  classification.
    When  you  say  there  are  a  half  a  dozen  basic  designs  or  a  wagonload  of
    designs,  I  do  not  think  there  is  any  substantive  disagreement.

    Chairman  Cole.  You  no  doubt  were  referring,  when  you  said  half
    a  dozen  as  the  number,  to  the  basic  processes.

    Dr.  Rabl  Yes,  sir.

    Chairman  Cole.  And  Dr.  Zinn  no  doubt  was  referring  to  tlie  frills,
    the  improvements,  and  the  facets  of  the  basic  design.

    Dr.  Rabi.  Yes,  sir.

    Chairman  Cole.  Then  in  your  statement  you  said,  and  I  will  quote
    just  for  a  moment :

    More  desirable  would  be  the  construction  of  a  power  reactor  with  close  atten-
    tion to  economy  in  construction  and  operation.  *  *  *

    From  your  observation  of  the  Government's  program,  ancl  your
    understanding  of  our  industrial  private  enterprise  system,  which,  in
    your  opinion,  is  in  a  better  position  to  construct  a  power  reactor  with
    more  likelihood  of  success  from  the  standpoint  of  economy  in  con-
    struction and  economy  in  operation  ?

    Dr.  Rabi.  I  have  the  feeling  that  the  influence  of  the  power  industry,
    which  would  have  to  operate  a  reactor  and  make  a  profit,  would  be  such
    as  to  make  their  point  of  view  the  more  economical  one.  But  again,
    I  am  just  speaking  as  a  private  citizen  and  not  as  an  expert  in  the
    power  field.

    Chairman  Cole.  What  is  your  feeling  on  the  Government  monopoly
    approach  philosophy,  the  effect  of  that  upon  our  scientific  progress?
    Would  it  slow  it  down,  or,  to  express  it  differently,  if  private  enter-
    prise were  allowed  to  join  in  the  art,  is  it  probable  that  our  progress
    would  proceed  more  rapidly  than  if  private  interests  were  not  allowed
    to  enter  ?

    Dr.  Rabi.  Well,  sir,  I  have  the  feeling  that  if  the  international  situa-
    tion was  such  that  private  enterprise  could  have  joined  in  this  project
    in  the  normal  course  of  events,  we  would  have  been  further  ahead  and
    we  would  have  had  nuclear  power  by  this  time,  perhaps  inejSiciently
    and  perhaps  with  a  certain  waste  of  natural  resources,  which  has  hap-
    pened in  the  past,  but  I  think  we  would  have  been  further  along.

    Chairman  Cole.  You  have  indicated  that  your  feeling  is  that  the
    time  is  ripe  for  engagement  in  power  reactor  construction  from  a
    developmental  stage.  Do  you  feel  the  art  has  reached  the  point  where
    it  is  possible  for  exploitation  of  atomic  energy?

    Dr.  Rabi.  It  was  the  intent  of  my  statement.  I  am  not  sure  that  any
    firm  that  entered  the  business  would  make  money.  They  might  lose
    money,  and  it  would  depend  on  how  good  they  were.  But  it  seems  to
    me  tliat  that  is  a  normal  way  in  which  industries  have  developed  in
    Mie  United  States.  Not  all  automobile  companies  made  money,  and
    some  have  disappeared.    It  depends  upon  management,  and  the  kind

    I

    '     ''  ATOMIC    POWER    DEVELOPMENT  93

    of  engineering  brains  and  management  brains  they  bring  to  bear  on
    the  problem.

    Chairman  Cole.  The  Commission's  statement  on  the  subject  indi-
    cated an  approval  of  the  authority  to  grant  ownership  of  fissionable
    material  to  private  organizations  which  might  come  in  and  use  it.  I
    am  wondering  what  your  feeling  is  as  to  whether  it  is  necessary  for
    private  industry  to  actually  ow^n  the  fissionable  material,  and  thereby
    add  to  the  responsibilities  of  the  Commission  to  follow  that  fissionable
    material  wherever  it  may  flow  in  private  ownership,  or  can  the  same
    measure  of  incentive  be  accomplished  by  the  Government  retaining
    ownership  of  the  fissionable  material  at  all  times  and  making  it  avail-
    able under  some  contractual  arrangement  with  private  capital,
    through  which  private  capital  would  operate  on  the  fissionable  ma-
    terial, in  some  instances  producing  additional  fissionable  material,
    and  private  capital  be  charged  for  that  amount  or  the  value  of  the
    fissionable  material  which  it  has  consumed.  It  would  seem  to  me  that
    from  the  standpoint  of  the  responsibility  of  the  Commission  in  its
    accountability  measures,  it  would  be  easier  if  it  could  at  all  times  be
    the  owner,  rather  than  that  it  had  the  responsibility  of  being  police-
    man and  having  to  go  out  and  see  where  this  went  in  any  part  of  the
    country,  or  parts  of  the  world.    Do  you  have  any  notions  on  that?

    Dr.  Rabi.  Well,  sir,  I  feel  that  at  all  times  the  Government  will
    have  to  exercise  a  very  strict  control  over  fissionable  materials,  whether
    we  are  in  the  condition  of  international  tension  as  we  are  now,  or  in
    times  of  profund  peace,  because  this  is  very  dangerous  material.

    ^Miether  it  would  make  a  big  difference  whether  there  was  an
    appropriate  licensing  arrangement,  or  ownership,  is  very  hard  to  tell.
    It  seems  to  me  that  we  should  be  wise  enough  to  be  able  to  operate
    either  way.

    I  do  not  see  any  very  great  difference  between  a  continuing  control
    and  supervision  which  the  Government  would  have  to  have,  and  li-
    censing.   It  is  just  about  the  same  sort  of  thing.

    Chairman  Cole.  What  part  do  you  anticipate  the  National  Lab-
    oratories would  play  in  this  new  approach  ?  Would  the  labortories  be
    available  to  any  interested  capitalist  who  might  want  to  use  them,
    free  of  charge ;  or  should  the  Government  make  a  charge  to  the  user,
    measured  by  the  costs  of  that  use  to  the  Government  ?  If  private  capi-
    tal uses  the  National  Laboratories,  should  the  Government  share  on
    a  partnership  basis  which  is  equitable  with  the  private  capitalists  in
    any  patents  that  might  evolve  from  the  use  of  the  laboratory  ?

    What  part  in  this  will  our  National  Laboratories  play,  which  have
    cost  the  Government  many,  many  millions  of  dollars  ?

    Dr.  Rabi.  Well,  sir,  those  are  very  specific  questions,  and  I  should
    think  that  at  the  beginning,  when  this  industry  is  in  its  infancy,  facili-
    ties sliould  be  made  available  to  appropriate  parties,  provided  they
    can  show  they  have  the  capacity  to  use  them  properly,  at  very  low
    cost,  some  cost  but  very  low  cost.

    As  the  subject  develops,  and  the  industry  becomes  more  profitable,
    I  think  those  costs  should  be  intreased  correspondingly,  so  that  they
    share  in  the  enterprise.  When  it  becomes  a  large  industry,  well,  their
    taxes  will  to  some  degree  support  the  laboratories,  so  that  there  will
    be  sharing  of  cost  within  certain  limits.  These  laboratories  will  also
    be  used  b}^  the  Government,  I  am  sure,  at  all  times,  for  its  own  inter-

    94  ATOMIC    POWER    DEVELOPMENT

    est,  in  fields  which  are  specific  governmental  interests,  such  as  the
    Department  of  Defense  and  other  departments  of  Government .

    Chairman  Cole.  Are  there  any  further  questions  ?

    Representative  Holifield.  I  would  like  to  ask  a  question  at  that
    point.

    If  the  private  industry  uses  the  Government  laboratories,  as  they
    must,  as  they  are  Government-owned  laboratories  at  this  time  which
    are  peculiar  and  unique  and  which  private  industry  does  not  have,
    and  if  the  Government  puts  up  the  majority  of  the  funds  in  research
    and  development,  should  private  industry  be  given  patent  rights  based
    on  a  small  investment  when  it  is  obvious  that  they  would  also  be  based
    upon  all  previously  acquired  technology  and  a  necessary  cooperation
    on  the  part  of  Government  in  this  interim  period,  let  us  say,  of  3  to  5
    years?

    Dr.  Rabi.  That  is  a  very  difficult  question,  sir,  and  it  can  be  phrased
    in  various  ways — in  some  ways  which  look  fair,  and  some  ways  which
    look  unfair.  If  you  consider  the  whole  body  of  scientific  knowledge
    which  has  been  developed  through  the  centuries,  which  is  open  and
    yet  enabled  people  to  take  out  patents,  one  might  say  from  one  point
    of  view  that  it  is  somewhat  unfair.  But,  on  the  other  hand,  as  a  matter
    of  public  policy,  we  have  realized  from  the  beginning  of  this  Republic
    that  it  was  necessary  to  give  that  kind  of  incentive  to  inventive  genius.

    So,  I  would  say,  let  them  have  patents,  but  in  such  a  way  that  they
    could  not  get  a  monopoly,  and  they  would  have  to  give  licenses  under
    a  fair  royalty  return.  People  have  gotten  rich  on  patents,  and  people
    have  gone  to  the  poorhouse  on  patents,  in  the  course  of  years.

    Representative  Holifield.  Without  getting  into  the  whole  philos-
    ophy of  patents,  which  I  realize  is  a  part  of  our  economy,  and  neces-
    sarily so,  the  patents  in  the  automobile  industry  and  other  industries
    were  in  the  majority  of  cases  built  upon  individual  risk  capital  and
    individual  experimentation,  and  not  built  upon  an  expenditure  of
    many  billions  of  dollars  of  the  taxpayers'  money  in  that  particular
    field.

    Now,  we  have  a  unique  situation  here,  and  we  have  a  new  industry,
    an  industry  that  has  been  brought  into  fruition  and  brought  to  a  high
    state  of  development  by  the  expenditure  of  tax  money.  So,  we  are  in
    a  different  position  than  Henry  Ford  was  in  at  the  time  he  was  ex-
    perimenting in  his  backyard  garage,  with  his  own  funds  and  his  own
    tools  and  so  forth.

    It  is  true  that  he  drew  from  general  knowledge  and  certain  scien-
    tific theories  of  the  internal-combustion  engine,  but  we  are  in  a  dif-
    ferent position  today.  We  have  expended  billions  of  dollars  bring-
    ing this  new  industry  up  to  the  point  where  it  is;  and  now  shall  we,
    for  the  investment  of  a  very  few  millions,  allow  private  industry  to
    stake  out  patent-right  areas  based  on  a  continued  cooperation  from
    Government  funds,  and  based  on  this  great  mass  of  technological  in-
    formation which  was  paid  for  by  Government  funds?

    That  is  the  position  the  committee  finds  itself  in,  in  passing  legis-
    lation.

    Dr.  Rabi.  I  see  your  point,  sir,  but  I  would  like  to  make  this  com-
    ment, at  least  from  my  point  of  view.  Most  of  these  billions  which
    were  spent  were  spent  for  the  national  defense  and  security.

    Representative  Holifleld.  That  is  true.

    ATOMIC    POWER    DEVELOPMENT  .  95

    Dr.  Rabi.  I  think  on  the  whole,  we  have  gotten  an  excellent  return
    from  that,  for  the  national  defense  and  security.

    Representative  Holifield.  That  is  true.

    Dr.  Rabi.  And  it  does  not  seem  to  me  to  be  reasonable  to  turn  around
    and  say  this  was  spent  as  a  background  for  the  power  industry.  It  is
    true  it  was  a  byproduct.

    Representative  Holifield.  I  have  not  said  that.

    Dr.  Rabi.  Just  as  we  have  the  situation  that  we  spent  enormous
    sums  of  money  during  the  war  in  the  development  of  radar  for  the
    national  defense,  and  later  on  these  techniques  became  available  for
    further  exploitation  by  private  industry,  and  patents  were  taken  but
    based  on  the  knowledge  which  was  acquired  through  public  expendi-
    tures at  the  time  of  war.  The  whole  subject  of  communications  and
    techniques  involving  radar  is  booming,  and  is  very  much  in  the  na-
    tional interest.

    Representative  Holifield.  But  is  it  not  true  that  such  a  patent
    knowledge  which  has  been  developed  by  Government  funds  is  looked
    upon  as  free  technical  information  to  everyone  ?  Now,  I  am  certainly
    not  against  private  industry  taking  out  patents,  but  I  am  against  let-
    ting a  few  people  come  into  this  program  when  it  is  on  the  verge  of
    accomplishment,  let  us  say,  and  in  the  last  few  hours  of  the  day  col-
    lecting an  unreasonable  or  restrictive  benefit  over  other  people.  It
    seems  to  me  that  we  should  draw  the  line,  and  put  everybody  on  the
    line  at  the  same  time,  and  let  them  go  forward ;  and  then  such  addi-
    tional inventions  as  they  acquire,  let  them  patent  them.

    Let  us  not  put  a  few  people  in  through  an  interim  period  and  give
    them  an  advantage  and  a  special  opportunity  to  stake  out  private  pat-
    ent equities.

    Dr.  Rabi.  Well,  sir,  would  you  say,  then,  that  we  ought  to  wait  until
    some  future  peaceful  era  comes  when  we  can  make  all  of  this  entirely
    public,  all  of  this  knowledge  which  was  developed  by  the  Government
    entirely  public,  and  then  have  a  catch-as-catch-can  race  as  to  who  can
    develop  the  most  patents  fastest?

    Representative  Holifield.  No,  sir.  I  would  be  perfectly  willing  to
    go  ahead  just  as  we  have  gone  ahead  for  the  last  7  years,  with  the  aid
    of  private  industry,  paying  private  industry  for  its  contribution,  and
    not  only  in  terms  of  paying  them  dollars  but  paying  them  in  terms
    of  their  national  security,  which  should  be  just  as  dear  to  them  as  it
    is  to  you  and  to  me  as  an  individual.

    Dr.  Rabi.  Yes,  sir.

    Representative  Holifield.  And  letting  them  participate  as  they
    have  in  the  past,  until  we  get  to  the  point  where  we  have  something
    of  practical  value  to  offer  to  American  industry,  and  then,  in  con-
    sideration of  our  international  obligations,  and  taking  into  considera-
    tion our  national-security  problems  in  a  troubled  world,  make  avail-
    abe  to  all  companies  at  the  same  time  tlie  same  amount  of  information
    which  we  could  under  security  regulations.

    Dr.  Rabi.  There  is  no  difference  between  us,  except  I  think  we  are
    there  right  now ;  and,  if  not  now,  the  next  G  months  or  a  year.  I  think
    we  are  at  the  point  where  we  should  expect,  in  the  normal  course  of
    events,  if  private  capital  has  the  initiative  it  has  shown  in  the  past,  for
    it  to  enter  this  field.

    96  ATOMIC    POWER    DEVELOPMENT

    Representative  Holifield.  Well,  of  course,  that  is  a  question
    whether  they  are  ready  to  risk  their  money  or  not,  or  whether  they
    want  further  Government  subsidization,  and  during  that  further  Gov-
    ernment subsidization  stake  out  some  private  equity  interests.

    Dr.  Rabi.  I  would  say  to  them,  "Put  up  or  shut  up."

    Representative  Holifield.  I  think  this  committee  will  say  that  to
    them.

    Chairman  Cole.  Is  that  not  just  what  the  Commission  proposes,
    Dr.  Rabi,  that  they  will  make  this  information  available  to  anybody
    who  wants  to  come  in,  who  has  the  necessary  capital  to  do  so,  and  who
    win  be  ready  to  comply  with  the  restrictions  and  regulations  ?

    Dr.  Rabi.  That  is  my  understanding.

    Chairman  Cole.  I  have  not  acquired  the  conception  that  there  was
    a  thought  at  any  time  of  the  Commission  picking  out  John  Doe  Co.,
    to  be  allowed  to  go  into  this  activity  to  the  exclusion  of  Jim  Brown's
    company.  I  thought  that  anybody  who  has  the  money  and  shows  that
    he  has  the  capacity,  and  indicates  that  he  is  ready  to  comply  with  the
    restrictions,  will  be  welcomed  into  the  program.

    Dr.  Rabi.  That  was  my  understanding,  too,  sir.

    Chairman  Cole.  I  am  glad  to  hear,  Doctor,  that  your  committee
    is  going  to  meet  this  summer  to  discuss  the  legal  aspects  of  this  pro-
    posal.

    Dr.  Rabi.  We  do  not  have  a  lawyer  on  the  committee,  you  under-
    stand.

    Chairman  Cole.  I  understand,  but  you  are  going  to  have  the  benefit
    of  some  counsel.  I  hope  that  you  will  make  available  to  the  committee
    any  conclusions  that  you  may  be  able  to  reach  after  your  discussion
    of  the  legal  aspects.

    Let  me  also  suggest  that  you  indicate  to  the  other  members  of  your
    committee,  since  you  have  spoken  not  in  their  behalf  but  simply  on
    your  own,  that  this  committee  would  welcome  any  expressions  that
    they  may  individually  care  to  make  to  the  committee  on  this  subject,
    and  we  would  be  happy  to  receive  their  statements.

    Dr.  Rabi.  I  shall  write  to  them  to  that  effect,  sir.

    Chairman  Cole,  If  there  are  no  other  questions,  the  meeting  will
    adjourn,  and  the  next  meeting  will  be  held  Monday  afternoon  when
    we  will  hear  the  Secretary  of  Commerce,  the  Secretary  of  the  Interior,
    and  the  Chairman  of  the  Federal  Power  Commission.

    (Whereupon,  at  4:  20  p.  m.,  Thursday,  June  25,  1953,  the  meeting
    was  adjourned  until  2  p.  m.,  Monday,  June  29,  1953.)

    ATOMIC  POWER  DEVELOPMENT  AND  PEIYATE
    ENTERPEISE

    MONDAY,   JUNE   29,    1953

    Congress  of  the  United  States,
    Joint  Committee  on  Atomic  Energy,

    Washington^  D.  C.

    The  joint  committee  met  at  2  p.  m.,  pursuant  to  recess,  in  room  P-63
    of  tlie  Capitol,  Hon.  W.  Sterling  Cole  (chairman  of  the  joint  com-
    mittee) presiding.

    Present:  Representative  Cole  (chairman),  presiding,  Senator  Pas-
    tore;  Representatives  Patterson,  Durham,  Holifiekl,  and  Price.

    Professional  staff  members  present:  Corbin  C.  Allardice,  executive
    director;  and  Wayne  P.  Brobeck,  Francis  P.  Cotter,  Walter  A.  Hamil-
    ton, and  J.  Kenneth  Mansfield  of  the  professional  staff  of  the  joint
    committee.

    Chairman  Cole.  The  committee  will  come  to  order.

    This  is  a  continuation  of  the  series  of  open  hearings  exploring  the
    problems  involved  in  setting  policy  on  atomic  power  development.
    The  Atomic  Energy  Commission  has  presented  its  policy  recom-
    mendation, and  on  the  following  day  Mr.  LeBaron  for  the  Defense
    Department  and  Mr.  Smith  for  the  State  Department  gave  us  their
    assurances  that  privately  financed  atomic  power  development  and
    ownership  should  bring  the  benefits  of  competition  and  stimulation.
    In  general,  they  seemecl  to  think  private  industry  could  do  more,  if
    allowed  to  do  so,  and  that  we  could  benefit  both  at  home  and  abroad,
    in  peacetime  and  in  wartime,  if  atomic  power  can  be  realized.

    Dr.  Rabi,  chairman  of  the  General  Advisory  Committee,  also  told
    us  that  in  his  opinion  it  is  time  to  start  building  atomic  power  plants
    on  a  businesslike  basis.

    Today  we  have  invited  three  additional  Federal  spokesmen  to  give
    us  their  opinions  and  views  before  we  start  hearing  from  industry
    representatives  on  Wednesday  of  this  week.  The  Departments  of
    Commerce  and  Interior  have  much  to  do  both  with  formulation  and
    execution  of  policy  regarding  regulation  and  development  of  power
    economy  and  our  resources.

    Even  though  there  is  a  special  agency  to  deal  with  atomic  energy,
    it  is  the  hope  of  everyone  that  as  the  peacetime  side  of  the  atom  is
    developed  it  can  be  integrated  more  and  more  completely  into  our
    normal  way  of  living  in  this  country.

    By  the  same  token,  regulation  of  the  generation  of  electric  power  is
    the  function  of  the  Federal  Power  Commission.  We  have  heard  over
    and  over  again  that  atomically  generated  electricity  looks  no  different
    to  a  light  bulb  or  a  pump  than  electricity  from  coal  or  oil-fired  boilers.
    But  there  are  some  special  problems  which  will  confront  the  Federal

    97

    98  ATOMIC    POWER    DEVELOPMENT

    Power  Commission  when  atomic  power  becomes  a  reality.  We  feel
    that  we  should  start  exploring  these  problems  now.

    From  the  experience  of  all  three  of  these  Federal  agencies  and
    departments,  there  may  be  many  parallels  to  be  drawn  which  will  be
    of  benefit  in  studying  and  understanding  the  problems  which  we  may
    face  in  atomic  power  development.

    The  first  witness  to  be  heard  today  is  the  Secretary  of  the  Interior,
    Mr.  Douglas  McKay.

    Mr.  McKay,  will  you  come  to  the  table  and  make  yourself  comfort-
    able? If  you  have  a  formal  statement  we  would  be  pleased  to  hear
    it,  or  you  may  proceed  in  any  fashion  you  wish.

    STATEMENT  OF  HON.  DOUGLAS  McKAY,  SECEETAEY  OF  THE

    INTERIOR

    Secretary  McKay.  Mr.  Chairman,  I  think  I  had  best  read  a  para-
    graph from  a  letter  which  I  addressed  to  Mr.  Jones,  executive  officer
    to  the  President,  in  response  to  a  letter  from  him  a  short  time  ago.

    The  Department  of  the  Interior  has  considered  the  proposed  legislation  as  far
    as  it  could  within  th^  very  limited  time  available,  and  with  an  understanding
    that  every  precaution  would  be  exercised  to  maintain  national  security,  concurs
    generally  with  the  stated  objectives  of  the  proposed  bill.  We  have  not  had
    opportunity  to  consider  carefully  the  manner  in  which  these  objectives  could  be
    best  accomplished.  Furthermore,  because  of  lack  of  technical  and  economic
    Information,  we  are  unprepared  at  this  time  to  comment  upon  the  implications  of
    the  bill  in  terms  of  its  precise  impact  upon  aspects  of  the  national  welfare  as  to
    which  this  Department  has  heavy  responsibilities.  We  plan  to  explore  with  the
    Atomic  Energy  Commission  such  matters  as  the  need  for  protecting  fish  and
    wildlife  resources,  the  relationship  of  the  proposed  atomic  program  to  the  use
    of  other  sources  of  energy,  and  the  effect  of  such  a  program  upon  the  utilization
    of  land  and  water  resources  generally.

    I  recognize  it  is  not  a  very  accurate  statement,  but  I  am  a  little  at  a
    loss  to  know  much  more  about  it  than  that.  I  would  be  glad  to  try  to
    answer  any  questions  that  you  may  wish  to  ask  me.

    Chairman  Cole.  Well,  is  it  the  feeling  of  the  Department  of  Inte-
    rior that  it  presently  has  a  special  interest  in  the  adaptation  of  atomic
    energy  to  the  creation  of  industrial  power  ?

    Secretary  McKay.  Yes,  definitely.  Because  we  are  in  the  distribu-
    tion business  as  to  hydro,  of  course,  in  many  parts  of  the  country;
    and  also,  energy  in  various  forms  is  one  of  the  greatest  problems  con-
    fronting industry  today.  So  we  feel  definitely  that  we  would  be  vitally
    interested  in  the  deevlopment  of  such  a  program.

    Chairman  Cole.  Has  your  Department  made  any  particular  study
    of  the  power  policy  declared  by  the  Commission  with  respect  to  what
    effect  it  might  have  upon  the  Department,  what  participation  might
    be  expected  from  the  Department  in  the  future,  in  case  a  program  of
    industrial  power  from  atomic  energy  is  inaugurated?

    Secretary  McKay.  Well,  not  particularl}^,  sir.  We  have  not  had  the
    information  avaihible  with  which  to  make  a  study  on  it.  In  a  general
    way  we  have  considered  it,  of  course.

    Chairman  Cole.  Then  you  are  not  now,  at  least,  in  a  position  to
    indicate  what  your  position  would  be  with  respect  to  the  distribution
    of  any  electric  power  that  might  be  generated  from  an  atomic  reactor,
    whethei'  it  should  be  tied  in  with  your  waterpower  systems,  or  whether
    it  could  be  independently  operated  ?

    ATOMIC    POWER    DEVELOPMENT  99

    Secretary  McKay.  Well,  as  we  see  it  now,  we  believe  that  it  might
    be  in  both  categories.  There  might  be  some  in  some  of  the  existing
    electrical  systems.  Furthermore,  we  feel  that  if  atomic  energy  be-
    comes useful  and  economically  feasible  in  the  generation  of  power,
    private  enterprise  should  be  licensed  in  some  way,  under  the  direction
    of  the  Atomic  Energy  Commission,  to  see  that  it  would  be  utilized
    in  the  interest  of  the  people.  We  feel  it  would  require  a  big  expansion
    program  and  w^ould  need  the  help  of  everybody  to  get  it  going  as
    rapidly  as  possible.

    Chairman  Cole.  Do  you  have  any  official  or  personal  views  as  to
    whether  industrial  power  should  be  sponsored  exclusively  by  the
    Federal  Government,  much  after  the  same  fashion  as  the  generation
    of  power  from  our  great  hydroelectric  generating  plants;  or  should
    private  capital  be  encouraged  to  move  into  the  atomic  field  to  the
    exclusion  of  Government.

    Secretary  McKay.  Well,  I  personally  do  not  believe  in  monopolies
    either  on  the  part  of  the  Government  or  on  the  part  of  private  enter-
    prise. I  think  private  enterprise  should  be  encouraged  to  move  into
    this  field.

    Another  thing,  too :  I  think  it  is  not  only  the  power  companies,  but  it
    is  industry.  Many  industrial  plants  generate  their  own  electricity.
    So  that  if  this  is  feasible  and  a  saving  in  their  operation,  from  which
    the  people  will  untimately  benefit,  I  think  industry  should  be  en-
    couraged to  explore  the  possibilities  and  to  invest  some  money  in  the
    possibilities.

    Senator  Pastore.  Mr.  McKay,  on  that  point,  how  would  the  small
    user  be  protected  ?  It  is  pretty  well  understood  generally  that  a  fur-
    ther exploration  or  experimentation  on  the  part  of  private  industry
    can  be  undertaken  only  by  those  very  large  industries.  Now,  my  per-
    sonal opinion,  like  yours,  is  that  private  industry  ought  to  be  en-
    couraged to  the  utmost  in  engaging  in  these  experiments.  But  then,
    on  the  other  hand,  if  we  recognize  the  fact  that  it  is  an  experiment
    that  can  be  undertaken  only  by  very  large  industry,  what  can  we  do —
    or  have  you  any  opinion — as  to  the  utilization  of  this  power  on  the
    part  of  small  industry  ?

    Secretary  McKay.  Well,  Mr.  Pastore,  I  believe  the  Government
    might  do  some  work,  might  build  a  sort  of  powerplant,  perhaps,  but
    I  think  if  atomic  energ}'  is  to  be  economically  competitive,  small  busi-
    ness will  get  the  advantage  of  it  if  it  is  distributed  through  a  power
    company.  If  that  is  the  going  way  of  distributing  it  in  a  particular
    locality,  any  savings  brought  about  by  atomic  energy  would  be  brought
    about  through  the  savings  in  energy  or  at  least  through  stopping
    rising  costs.

    Senator  Pastore.  The  reason  why  I  put  that  question  to  you  was
    just  for  the  purpose  of  getting  your  opinion  on  it,  Mr.  McKay,  and  not
    to  engage  in  any  debate  on  it.  There  have  been  some  observations
    made  here  that  possibly  industry  in  and  of  itself  might  not  apply  the
    proper  initiative  to  this  effort,  unless  it  was  given  some  rights  to  the
    patents  or  licenses.  Now,  that  being  the  case,  if  we  got  into  that  field,
    would  that  not  automatically  exclude  the  small  industry?

    Secretary  McKay.  Well,  it  is  not  my  understanding  from  this  bill
    that  there  would  be  any  exclusive  patent.     There  would  be  an  exclusive

    100  ATOMIC    POWER    DEVELOPMENT

    license,  of  course,  to  those  who  have  applied  and  qualified,  which  must
    be  guarded  by  the  Commission  in  order  to  safeguard  the  public  in-
    terest. But  I  would  not  think  you  would  wish  to  issue  an  exclusive
    patent  to  any  special  group,  because  this  is  a  program  developed  by
    the  Federal  Government  with  taxpayers'  money,  and  I  think  any
    benefits  which  come  by  a  peacetime  operation  should  be  given  freely
    under  the  proper  supervision  to  those  who  qualify.

    Senator  Pastore.  Am  I  fair  in  stating  that  it  is  your  opinion  that
    if  Government  money  is  used  in  any  way,  shape,  or  form  in  conjunc-
    tion with  a  private  industry  endeavor  in  order  to  further  experiment,
    anything  which  results  from  that  experimentation,  while  there  has
    been  participation  on  the  part  of  private  industry,  becomes  the  com-
    mon property  of  all  ?

    Secretary  McKay.  That  is  my  opinion.

    One  other  thing  I  might  add.  Governor,  is:  Suppose  the  Atomic
    Energy  Commission  were  to  build  a  sort  of  pilot  plant  on  this  in  a
    locality  where  the  Department  of  the  Interior  is  distributing  electrical
    energy.  We  might  possibly  take  over  the  distribution.  I  think  in  a
    thing  like  that,  where  all  people's  money  goes  into  the  development,  it
    should  be  spread  over  as  wide  a  field  as  possible  to  give  as  many  people
    as  possible  the  advantage  of  it.  It  is  a  little  different  when  private
    capital  has  a  patent  on  something.

    Senator  Pastore.  Incidentally,  let  me  say  it  is  the  first  time  I  have
    seen  you  since  the  Governors'  Conference  in  1950,  and  I  am  very  happy
    to  see  you  again.

    Secretary  McKay.  Very  happy  to  see  you,  sir.

    Chairman  Cole.  May  I  say  that  we  are  very  happy  to  provide  a
    stage  on  which  you  two  old  friends  can  renew  acquaintanceships.

    Mr.  Secretary,  can  you  see  any  parallel  with  respect  to  the  Federal
    aspects  in  connection  with  the  public  sponsorship  approach  versus  the
    private  sponsorship  approach  to  the  development  of  atomic  power,  any
    parallel  between  the  Federal  sponsorship  of  hydroelectric  power  and
    Federal  sponsorship  of  atomic  power,  having  in  mind  that  the  hydro-
    electric approach  was  predicated  upon  the  national  interest  in  con-
    servation, in  flood  control,  and  the  harnessing  of  waters  that  are
    collected  from  a  variety  of  State  jurisdictions,  and  upon  transporta-
    tion, water  navigation?  Do  those  provide  parallels  which  can  be
    applied  to  the  atomic  problem,  where  conservation  of  our  natural  re-
    sources is  not  involved,  where  navigation  is  not  involved,  where  flood
    control  is  not  involved  ?

    Secretary  McKay.  Well,  I  think  the  parallel  case,  in  my  own  opin-
    ion, is  that  in  each  instance  there  is  room  for  private  enterprise  in
    municipalities,  public  utility  districts,  and  so  on,  and  the  Federal
    Government,  working  hand  in  hand.  Because,  as  I  said  before,  the
    subject  is  so  big,  and  it  would  require,  I  think,  the  combined  efforts
    of  everyone.

    I  feel  the  same  way  about  hydro  development.  There  should  not
    be  any  roadblocks  put  in  the  way  of  anyone  that  has  a  part  to  play  in
    the  overall  program.

    I  think  this  also  applies  somewhat  to  the  synthetic-rubber  program
    developed  in  World  War  II.  The  Government  spent  many  millions
    of  dollars  in  the  war  emergency,  and  the  various  rubber  companies
    were  allowed  the  benefit  of  that  experimentation  to  better  their  mer-
    chandise to  the  public.

    ATOMIC    POWER    DEVELOPMENT  101

    Chairman  Cole.  In  response  to  a  question  from  Senator  Pastore,
    you  indicated  your  feeling  that  any  technological  improvements  which
    might  result  from  joint  Federal-private  cooperation  should  become  the
    property  of  the  public.

    Secretary  McKay.  Yes,  sir ;  (he  same  as  though  those  improvements
    were  discovered  under  Federal  auspices  exclusively.

    Chairman  Cole.  I  am  wondering  to  what  point  you  would  carry
    that.  Assume  that  private  capital  is  ready  to  take  a  chance  on  this,
    but  requires  that  it  have  the  opportunity  of  using  national  laboratories
    in  order  to  test  out  some  particular  concept  or  idea.  Would  you  feel
    that  simply  the  fact  that  the  private  entrepreneur  had  used  Govern-
    ment laboratories  to  prove  out  or  to  test  his  device  would  be  such  as
    to  give  the  Federal  Government  the  right  of  full  ownership  of  that
    device  ?

    Secretary  McKay.  No  ;  I  think  that  the  Federal  Government  should
    encourage  the  use  of  their  laboratories.  I  don't  know  whether  it
    would  be  possible  for  them  to  actually  use  them,  but  at  least  the  results
    of  their  experiments  in  private  enterprise  would  better  enable  them  to
    deliver  to  the  public  the  results  of  that  experimentation.  I  think
    there  should  be  cooperation  between  the  Government  and  private
    enterprise.

    Chairman  Cole.  Well,  if  there  is  to  be  a  sharing  of  ownership  in
    patents  or  devices  that  flow  from  Federal-private  operations,  should
    not  the  degree  of  that  ownership  be  determined  somewhat  by  the  de-
    gree of  Federal  participation  ?

    Secretary  McKay.  Oh,  yes.  The  Federal  Government's  rights  must
    be  protected.  But  I  don't  believe  that  this  should  be  in  the  form  of
    a  monopoly.  I  believe  that  this  is  for  the  good  of  all  the  people,  and
    I  don't  think  it  should  be  on  an  exclusive  basis  to  any  group.

    Chairman  Cole.  Well,  as  it  is  now,  you  realize  it  is  a  complete
    monopoly.

    Secretary  McKay.  Yes ;  of  the  Federal  Government.

    Chairman  Cole.  And  when  you  say  you  feel  it  should  not  be  a
    monopoly,  I  assume  you  mean  that  it  should  be  neither  a  Federal
    monopoly,  in  the  power  development  aspect,  nor  a  complete  private
    monopoly  as  to  any  one  industry  or  group  of  industries  or  cartel  of
    industries.

    Secretary  McKay.  That  is  right.

    Chairman  Cole.  That  the  field  should  be  broadened  as  wide  as  our
    national  security  requirements  will  permit  in  order  to  arouse  interest
    and  participation  by  private  capital,  by  municipal  capital,  irrespec-
    tive of  where  it  may  be  ?

    Secretary  McKay.  Yes,  sir.     I  agree  with  that  philosophy.

    Chairman  Cole.  That  covers  any  questions  I  have  in  mind.

    Mr.  Holifield?

    Representative  Holifield.  Mr.  Secretary,  I  unfortunately  was  a
    little  late  in  getting  here  and  did  not  hear  your  opening  statement,  but
    I  would  like  to  explore  this  subject  of  patents.  Have  you  read  section
    11,  entitled  "Patents  and  Inventions,"  of  the  Atomic  Energy  Act  of
    1946,  as  amended?

    Secretary  McKay.  Is  that  this  bill  ?    Or  the  law  ?

    Representative  Holifield.  No,  this  is  the  law.

    Secretary  McKay.  No,  I  haven't.

    102  ATOMIC    POWER    DEVELOPMENT

    Representative  Holifield.  Well,  referring  to  page  23,  paragraph
    lettered  (c),  "Nonmilitary  utilization,"  this  provides  that  if  industries
    do  obtain  patents,  and  the  patents  are  granted  on  a  secret  basis  and  on
    a  basis  of  certain  restrictions,  the  Government  shall  have  the  use  of
    these  patents,  and  so  forth,  and  these  people  who  obtain  the  patents
    shall  be  given  reasonable  compensation.  Now,  you  will  notice  about
    halfway  down  the  page  it  states :

    The  owner  of  the  patent  shall  be  entitled  to  a  reasonable  royalty  fee  for  any
    use  of  an  invention  or  discovery  licensed  by  this  subsection.  Such  royalty  fee
    may  be  agreed  upon  by  such  ovpner  and  the  licensee,  or  in  the  absence  of  such
    agreement  shall  be  determined  by  the  Commission.

    Now,  under  the  present  setup,  private  industry  can  go  ahead  and
    continue  during  this  interim  period  of,  let  us  say,  for  example,  3  to  5
    years,  before  we  obtain  an  efficient,  economically  competitive  reactor,
    assuming  that  will  be  done,  and  a  great  many  people  think  it  will  be
    done  within,  say,  from  3  to  10  years,  and  if  they  do  come  forward  as  a
    result  of  their  interest  and  their  investment  in  research,  they  are  now
    protected  by  the  basic  act  in  that  they  can  have  patent  rights  under
    certain  conditions  and  receive  a  reasonable  payment  for  them.  Now,
    as  I  understand  it,  your  testimony  is  not  to  change  that.  You  cer-
    tainly would  be  in  favor  of  that  provision  as  it  exists.  But  you  would
    not  want  to  give  them  a  restrictive  patent  right.  In  other  words,  if
    they  obtain  patents,  those  patents  shall  be  available  to  the  rest  of  in-
    dustry, if  they  are  on  a  nonmilitary  basis,  on  a  reasonable  basis,  but
    they  shall  not  have  restrictive  rights  whereby  they  can  deny  the  use
    of  aiiy  patent  procedure  to  the  rest  of  the  American  economy.  Is  that,
    in  effect,  your  position?

    Secretary  McKay.  Yes,  sir,  that  is  my  opinion.  I  believe  that  if
    we  are  going  to  get  peacetime  good  out  of  this  atomic  energy  develop-
    ment we  are  going  to  have  to  see  that  it  is  not  limited  to  certain  groups,
    and  that  it  is  not  inclusive  for  any  one  group.

    Representative  Holifield.  I  think  that  is  the  intent  of  the  act.  Be-
    cause the  act  plainly  says  that  when  the  industrial  application  be-
    comes practical  it  shall  be  made  available  under  licenses  of  the  Com-
    mission, so  as  to  strengthen  competition  and  to  avoid  restrictive  pro-
    cedures or  monopoly  procedures.  That  is  one  of  the  basic  purposes
    of  the  act  as  it  now  exists.  And  certainly  none  of  us  have  any  objec-
    tion to  that.

    Secretary  McKay.  No,  none  whatever.

    Representative  Holifield.  Do  you  think  that  the  production  of
    atomic  energy  to  its  present  state  is  comparable  to  the  production  of
    hj^droelectric  energy  ?

    Secretary  McKay.  Well,  I  have  no  way  of  knowing,  because  I  do
    not  know  the  cost  of  the  kilowatts.

    Representative  Holifield.  I  was  speaking  of  the  processes  by
    which  atomic  development  has  been  brought  about.  It  has  been
    brought  about  exclusively  by  Government  investment.  Hydroelectric
    power  was  not  brought  about  exclusively  by  Government  investment.
    In  fact,  most  of  the  investment  in  hydroelectric  power  was  done  on  a
    private  basis.  So  we  are  faced  with  a  different  situation  here  than
    we  are  in  the  hydroelectric  field.  We  cannot  compare  the  origination
    or  the  development  of  this  new  source  of  energy  to  the  electrical  in-
    dustry, because  in  the  atomic  instance  it  has  been  completely  by  Gov-
    ernment funds,  taxpayers'  funds,  and  in  the  other  instance  it  was

    ATOMIC    POWER    DEVELOPMENT  103

    partly  taxpayers'  funds,  along  with  a  great  deal  of  investment  on  the
    part  of  private  industry  and  the  using  of  private  patents  on  motors
    and  dynamos  and  turbines  and  all  that  sort  of  thing.  So  it  is  not,
    strictly  speaking,  a  comparable  situation.

    Secretary  McKay.  No,  that  is  correct.  But,  on  the  other  hand,  I
    think  the  Government  has  invested  its  money  in  the  development
    of  atomic  energy,  which  apparently  is  going  to  be  to  the  ultimate  good
    of  the  civilian  population.  I  would  dislike  to  see  the  Government  re-
    strict it  so  that  the  people  could  not  get  the  full  benefit  of  it.

    Representative  Holifield.  I  think  every  member  of  the  committee
    will  agree  with  you  on  that.

    That  is  all,  Mr.  Chairman.

    Chairman  Cole.  Mr.  Secretary,  do  you  see  anything  in  the  supply  of
    uranium,  upon  which  any  power  program  for  industrial  use  must  be
    predicated  as  far  as  we  presently  know,  which  would  justify  placing
    in  the  category  of  a  natural  resource,  uranium  ore  in  the  same  fashion
    that  water  in  some  areas  is  placed  under  Federal  control,  or  forests
    are  placed  under  Federal  control?  Or  do  you  consider  uranium  in
    that  respect  as  simply  another  ore,  another  metal,  which  should  stand
    on  its  own  the  same  as  any  other  of  our  natural  resounrces  ?  In  other
    words,  do  you  feel  that  there  is  anything  about  the  uranium  ore  exist-
    ing in  this  country  that  requires  that  it  be  subject  to  Federal  control,
    under  the  same  arguments  and  philosophy  that  provide  Federal  con-
    trol over  our  forests  and  some  of  our  water  resources  ?

    Secretary  McKay.  I  hardly  know.  Because  my  information  on
    uranium  and  atomic  energy  is  very  limited.  However,  it  seems  to  me
    that  the  Atomic  Energency  Commission  would  have  control  similar
    to  what  the  Federal  Power  Commission  has  in  the  way  of  control
    over  the  granting  of  franchises  for  the  building  of  dams  for  hydro.
    But  it  may  be  possible  that  uranium  would  come  under  that  category
    later  on,  and  I  have  no  way  of  knowing.

    Chairman  Cole.  Of  course,  there  certainly  should  be  control  of
    uranium  from  the  standpoint  of  our  national  security.  Everybody
    agrees  tliere  should  be  that  control.  But  do  you  see  anything  in  the
    future  of  industrial  nuclear  power,  so  far  as  you  now  can  see  that
    picture,  which  would  prompt  you  to  urge  that  the  Government  control
    uranium  from  the  standpoint  of  its  being  a  natural  resource?

    Secretary  McKay.  Well,  just  as  an  offhand  guess,  I  would  think
    that  the  Atomic  Energy  Commission  is  now  doing  that  very  thing.
    I  would  dislike  to  see  it  taken  away  from  them.  I  think  it  should
    remain  there  to  be  controlled.

    Chairman  Cole.  Then  is  it  correct  that  the  intent  of  your  testimony
    today  is  that  the  Department  of  the  Interior,  although  it  is  mindful
    of  the  potential  of  industrial  power  from  nuclear  energy,  feels  that
    private  enterprise  should  be  encouraged  to  participate  in  the  develop-
    ment of  that  field  under  provisions  of  law  which  will  at  all  times  pro-
    tect the  national-security  interests  and  the  public  interests  to  the
    end  that  there  should  be  no  monopoly,  either  of  Government  or  of
    private  capital  in  the  field  ?

    Secretary  McKay.  That  is  correct.

    Chairman  Cole.  And  tliat  the  Department  of  the  Interior  for  the
    time  being  at  least  is  willing  to  rely  upon  the  judgment  of  the  Atomic
    Energy  Commission  to  protect  the  Federal  interest  in  this  problem?

    X04  ATOMIC    POWER    DEVELOPMENT  ^^^

    Secretary  McKay.  Yes,  sir.  I  think  they  are  the  best  qualified  of
    any  Government  agency  to  handle  it  at  this  time.

    Chairman  Cole.  If  there  is  nothing  further,  Mr.  McKay,  we  thank
    you  very  much  for  taking  the  time  to  come  down  here  with  us.

    Secretary  McKay.  Thank  you  very  much.

    Chairman  Cole.  The  next  witness,  who  was  to  appear  in  behalf  of
    the  Department  of  Commerce,  was  Secretary  Weeks.  Mr.  Weeks  is
    unable  to  attend,  and  Mr.  Williams,  the  Under  Secretary  of  Com-
    merce, is  here  as  the  representative  of  the  Department.

    Do  you  have  a  statement,  Mr.  Williams  ?

    STATEMENT  OF  HON.  WALTER  WILLIAMS,  UNDER  SECRETARY  OF

    COMMERCE

    Mr.  Williams.  Mr.  Chairman  and  members  of  the  committee,  I
    should  like  to  say  first  that  my  associate,  the  Secretary  of  Commerce,
    Sinclair  Weeks,  expressed  his  keen  regret  that  he  could  not  be  here,
    but  matters  coming  up  the  latter  part  of  last  week  which  he  could  not
    control  prevented  him.  Actually,  however,  I  am  not  so  sure  but
    what  it  may  be  just  as  well,  for  the  reason  that  he  will  be  very  glad
    to  come  back  later  on,  and,  inasmuch  as  our  statement  today  is  more
    or  less  a  springboard,  you  might  call  it,  for  discussion,  with  the  findings
    and  our  actions  to  come  a  little  later  on,  I  think  perhaps  his  appear-
    ance later  on  may  be  more  effective  even  than  at  the  present  time.

    The  Department  of  Commerce  is  vitally  interested  in  the  subject
    of  application  of  atomic  energy  for  industrial  purposes.  Atomic
    energy,  within  which  term  we  include  for  present  purposes  source
    and  fissionable  materials,  the  major  production  facilities,  and  pos-
    sibly to  some  extent  the  processes  themselves,  is  in  a  real  sense  a
    national  treasure  of  inestimable  value.  This  treasure  should  be  used
    from  the  start  in  the  interest  of  all  the  people  and  on  an  equitable
    basis  for  the  benefit  of  our  entire  economic  community.  It  should
    be  developed  by  private  enterprise  so  far  as  practicable  and  feasible.

    We  strongly  support  the  sound  objective  of  promptly  expanding  the
    availability  of  atomic  power  to  industry.  The  establishment  of  a
    close  partnership  between  Government  and  business  respecting  this
    subject  is  indispensable  both  to  our  national  security  and  to  the
    continued  development  of  our  economy.  The  possibilities  of  atomic
    power  in  industry  are  vast,  even  though  not  clearly  now  predictable.
    Atomic  energy  will  mean  for  American  industry  eventual  expansion
    of  productive  capacity  and  reduction  of  production  costs.

    In  1900  our  annual  energy  supply  from  mineral  fuels  and  water-
    power  was  7,893  trillion  B.  t.  u.  In"  1950  it  was  38,600  trillion  B.  t.  u.
    This  indicates  the  magnitude  of  our  power  and  energy  consumption
    even  with  conventional  sources  of  energy  production.

    The  introduction  of  atomic  power  in  industry,  which  the  testimony
    of  the  Atomic  Energy  Commission  indicates  may  well  become  practical
    within  a  period  of  not  more  than  10  years,  will  result  in  an  expansion
    of  both  power  capacity  and  power  utilization.  The  various  atomic-
    power  installations  will  doubtless  take  many  forms,  for  example,  the
    submarine,  marine,  or  even  airplane-motive  unit  on  the  one  hand
    and  the  massive  electric-generating  plant  on  the  other.  The  explora-
    tion and  determination  of  practical  uses  in  the  economic  field  will  be
    of  greatest  importance  to  the  Nation  during  the  next  few  years.    We

    ATOMIC    POWER    DEVELOPMENT  105

    are  prepared  to  cooperate  in  such  process  to  the  fullest  extent  neces-
    sary to  fulfill  our  responsibilities  concerning  business  and  commerce.
    The  implication  of  atomic-energy  development  on  the  economic
    structure  of  the  Nation,  including  revenue-return  aspects,  definitely
    falls  within  the  province  and  responsibility  of  the  Commerce  Depart-
    ment. Assuming  the  removal  of  present  barriers  to  appropriate
    utilization  of  nuclear  reactors  and  related  materials  and  processes
    by  private  industry,  there  are  five  particular  aspects  of  special  concern
    to  us  as  we  now  see  the  problem  from  the  business  point  of  view:

    1.  What  measures  can  and  should  this  Department  presently  under-
    take to  assist  the  Atomic  Energy  Commission  and  other  interested
    branches  of  the  Government  to  explain  and  otherwise  promote  the
    sound  utilization  by  industry  of  atomic  power,  mai-shaling  the  full
    resources  of  private  initiative  and  private  investment  behind  this
    development  ?

    2.  What  will  be  the  impact  of  commercial  atomic-energy  installa-
    tions by  industry  on  existing  competitive  business  relationships?

    3.  What,  if  any,  additional  controls  or  stabilizing  machinery,  from
    an  economic  point  of  view,  should  be  considered  to  avoid  disruptive
    or  unstabilizing  effects  during  the  transition  from  conventional
    power  to  atomic-power  conditions  ?

    4.  What,  if,  any  measures  should  be  taken  by  the  administrative
    agencies  or  the  Congress,  or  both,  to  assure  the  equitable  distribu-
    tion of  benefits  to  all  classes,  types,  and  areas  of  business?

    5.  Wliat,  if  any,  revenue  or  similar  measures  should  be  considered
    in  this  connection  in  application  of  sound  economy  within  industry
    and  of  the  budgetary  principles  of  the  administration  ?

    We  are  glad  to  note  the  fine  cooperative  relationship  existing  be-
    tween the  Atomic  Energy  Commission  and  industry  in  working  out
    problems  of  experimentation,  development,  and  organization,  in  con-
    nection with  production  and  related  aspects  of  industrial  use  of  atomic
    energy.  This  Department  expects  to  be  called  upon  to  cooperate  with
    industry  in  somewhat  parallel  manner,  to  the  extent  found  appropri-
    ate by  the  administration  and  by  Congress,  in  development  of  an
    aggressive  attack  on  the  type  of  economic  problem  we  have  mentioned.
    In  our  opinion  it  is  essential  that  this  kind  of  thinking  and  planning
    on  a  fully  cooperative  basis  proceed  contemporaneously  with  the
    scientific  and  technical  work  already  so  well  advanced,  in  full  protec-
    tion of  the  public  interest.

    The  time  is  ripe  to  marshal  the  full  resources  of  private  initiative
    and  private  investment  behind  practical  industrial  development  of
    atomic  power.  Under  the  law  as  it  has  been  written,  great  progress
    has  been  made.  However,  the  experience  of  many  seems  to  indicate
    that  some  legislative  changes  are  now  necessary  to  afford  the  full
    benefits  of  the  private-enterprise  system  in  securing  American  leader-
    ship in  the  civilian  application  of  atomic  power.

    This  Department  has  already  set  in  motion  an  authoritative  ex-
    ploration of  those  aspects  of  this  subject  affecting  business  and  com-
    merce, over  and  above  the  economic  provisions  already  contained  in
    the  law.  Our  exploration  will,  of  course,  be  coordinated  with  those
    of  other  interested  branches  of  Government  as  well  as  with  business.
    It  will  be  timed  to  accord  with  technical  advancement  toward  full
    competitive  use  of  atomic  power  in  industry.

    106  ATOMIC    POWER    DEVELOPMENT

    Any  plan  for  the  utilization  of  atomic  power  by  industry  should
    g^ive  special  attention  to  the  respective  needs  and  interests  of  the  dif-
    ferent types  and  classes  of  business.  At  an  early  date  we  firmly  intend
    to  devise  a  plan  or  plans  for  the  fullest  possible  utilization  of  atomic
    power  by  the  different  types  and  classes  of  business  and  we  are  con-
    tinuously studying^  that  matter.  To  the  extent  technically  prac-
    ticable, these  benefits  should  be  made  available  on  a  nondiscriminatory
    basis,  to  both  large  and  small  business,  and  to  all  geographical  regions
    of  our  Nation  as  when  needed.  Careful  study  and  planning  from
    the  economic  point  of  view  are  in  our  opinion  required  to  make  ef-
    fective the  sound  objective  of  expanded  industrial  use  and  full-scale
    peacetime  development  of  atomic  energy,  so  well  stated  in  the  policy
    provision  of  the  Atomic  Energy  Act  of  1946  as  follows :

    *  *  *  it  is  declared  to  be  the  i)olicy  of  the  people  of  the  United  States  that,
    subject  at  all  times  to  the  paramount  objective  of  assuring  the  common  defense
    and  security,  the  development  and  utilization  of  atomic  energy  shall,  so  far
    as  practicable,  be  directed  toward  improving  the  public  welfare,  increasing
    the  standard  of  living,  strengthening  free  competition  in  private  enterprise,  and
    promoting  world  peace.

    This  Department  is  prepared  to  do  its  full  part  in  making  this  objec-
    tive a  reality,  and  believes  the  success  of  this  whole  venture  a  vital
    factor  in  America's  future.

    Chairman  Cole.  Thank  you,  Mr.  Williams.

    Are  there  any  questions  of  Mr.  Williams  ?

    Senator  Pastore.  No.  All  I  wanted  to  say  is  that  I  think  in  very
    fair  language  you  present  the  problem  that  really  confronts  us.  And
    I  await  with  eagerness  and  anxiety  the  presentation  that  you  will
    make  later  on  as  to  how  this  should  be  done.  I  think  it  is  the  $64
    question.

    Mr.  Williams.  There  may  be  more  than  these  five  questions  we
    have  enumerated,  but  at  least  they  give  some  starting  points  from
    which  to  work.

    Representative  Holifield.  Mr.  Chairman?

    Chairman  Cole.  Mr.  Holifield.

    Mr.  Holifield.  Mr.  Williams,  I  think  your  statement  on  the  face
    of  it  is  a  fair  statement.  There  might  be  some  points  in  it  which
    need  a  little  clarification.  I  notice  in  your  objectives  Nos.  2  and  3
    on  page  3,  you  assume  as  part  of  your  duties  the  charge  which  is
    given  to  the  Atomic  Energy  Commission.  They  are  specifically
    charged  by  the  act  to  do  exactly  what  you  have  outlined  in  2  and  3.
    And  I  assume  that  in  accepting  that  responsibility,  you  are  accepting
    it  under  the  general  interest  of  your  Department  and  in  full  coopera-
    tion with  their  specified  and  directed  legal  obligations.

    Mr.  Williams.  Oh,  very  definitely.  I  think  I  referred  throughout
    to  the  need  for  cooperation  not  only  with  the  Atomic  Energy  Com-
    mission but  with  other  branches  of  the  Government.  We  would  cer-
    tainly not  expect  to  operate  unilaterally.

    Kepresentative  Holifield.  In  other  words,  your  expression  of  your
    concern  at  "the  impact  of  commercial  atomic-energy  installations  by
    industry  on  existing  competitive  business  relationships"  refers  to
    cooperation  on  your  part  and  not  to  superseding  the  obligations  of
    tlie  AE(^  to  make  that  same  kind  of  study  and  to  report  to  the
    President.

    Mr.  AViLLiAMS.  You  have  stated  our  feelings  on  that  exactly.

    ATOMIC    POWER    DEVELOPMENT  107

    Representative  Holifield.  At  the  bottom  of  the  page,  page  3,  you

    say:

    The  time  is  ripe  to  marshal  the  full  resources  of  private  initiative  and  private
    investment  behind  practical  industrial  development  of  atomic  power.

    I  think  we  can  agree  that  at  all  times  we  want  to  use  the  full  resources
    of  the  Nation  for  the  benefit  of  the  Nation.  However,  as  to  the  timing
    and  as  to  the  price  we  might  have  to  pay  to  put  private  industry
    into  this  program  on  their  own,  that  might  be  a  matter  of  some  de-
    bate, as  to  the  timing  of  it.  In  other  words,  if  we  have  to  put  private
    industry  into  this  program  at  this  time  by  making  concessions  to
    them  by  which  they  can  stake  out,  either  through  patent  rights  or
    excessive  amortization  or  discriminatory  participation,  certain  advan-
    tages, selfish  advantages,  to  private  groups,  then  it  certainly  would
    not  be  the  time  to  do  it,  would  it  ?

    Mr.  Williams.  No.  I  think  as  much  as  anything  else,  the  psy-
    chology of  the  situation  is  indicated  by  that  statement.  As  everyone
    knows,  because  it  is  public  informa,tion,  it  apparently  will  not  be
    too  long  a  time  now  before  we  have  tlie  realization  of  our  atomic-
    powered  submarine.  Now,  I  suspect  that  once  that  becomes  a  reality,
    then  psychologically,  perhaps  more  than  any  single  event  in  connec-
    tion with  the  development  of  the  peacetime  use  of  atomic  energy,  we
    will  certainly  come  to  the  realization  that  the  atomic  power  age  has
    arrived.  And  I  think  this  emphasizes  the  fact  that  we  are  now  right
    here  on  the  threshold,  where  we  want  to  marshal  all  of  our  forces  to
    get  the  job  done  as  fast  as  we  can  and  as  effectively  as  we  can.

    Representative  Holifield.  But  in  coordination  with  the  Atomic
    Energy  Act's  objectives  and  the  welfare  of  the  Nation,  as  you  say  in
    the  quoted  paragraph  on  page  5.

    Mr.  Williams.  That  is  correct.

    Representative  Holifield.  Now,  in  the  last  paragraph  on  page  4,
    you  say :

    To  the  extent  technically  practicable,  these  benefits  should  be  made  available
    on  a  nondiscriminatory  basis,  to  both  larpe  and  small  business,  and  to  all
    geographical  regions  of  our  Nation  as  and  when  needed.

    I  think  that  is  a  very  fine  statement,  and  I  w^ould  just  ask  you  at
    this  time :  What  do  you  mean — and  this  is  for  clarification  only — by
    the  phrase  "to  the  extent  technically  practicable"?  Does  that  have
    regard  to  the  security  problems,  the  availability  of  uranium  ore  'i

    Mr.  Williams.  Well,  it  would  have,  I  think,  to  do  with  not  only
    the  production  end  of  it,  but  also  from  the  standpoint  of  distributing
    factors.  I  can  imagine  a  good  many  factors  perhaps  that  would  not
    be  practicable  in,  let  us  say,  the  desert  areas  of  Nevada  that  would  be
    practicable  in  Chicago.  I  had  in  mind  among  other  things  the  dif-
    ferent kinds  of  conditions  which  exist  in  different  areas  of  our  country.
    Maybe  I  could  have  used  the  words  "to  the  extent  practicable"  and  left
    out  the  word  "technically"  and  ^et  the  broader  term.  But  to  the  extent
    that  the  program  and  the  development  can  be  made  practicable,  then
    these  benefits  should  be  made  available,  and  so  on.

    Representative  Holifield.  I  think  that  is  a  fine  statement,  sir,  of
    your  intent  in  that  paragraph.

    That  is  all,  Mr.  Chairman.

    Chairman  Cole.  Mr.  Price?

    3fi740 — 53 8

    108  ATOMIC    POWER    DEVELOPMENT

    Representative  Price.  Mr.  Williams,  your  reference  to  the  sub-
    marine reactor  kind  of  leads  me  to  detect  a  little  school  of  thought
    that  we  do  not  have  to  do  any  further  research  on  the  power  ques-
    tion because  we  are  goini;  to  have  the  submarine  reactor.  Is  there
    any  such  thoug-ht  going  on  i

    Sh\  W1L1.1AMS.  I  don't  mean  to  imply  that,  sir,  no.  I  simply  men-
    tioned the  fact  that  psychologically  we  will  perhaps  feel  we  have
    arrived.  Now,  of  coui-se.  that  may  be  the  starting  point,  because  I
    think  it  will  give  impetus  to  our  development.  In  no  sense  do  I
    mean  that  now  we  have  arrived  and  there  is  nothing  more  to  do.
    No :  I  think  the  testimony  that  has  been  given  before  this  committee
    up  to  this  point  evidences  the  fact  that  not  only  have  we  made  rapid
    progress,  but  we  have  tremendous  strides  yet  to  take  before  we  reach
    the  zenith.     I  suppose  that  will  go  on  for  decades  and  decades.

    Representative  Peice.  Do  you  believe  that  we  acted  wisely  a  short
    time  ago  when  we  gave  indication  that  we  were  willing  to  kick  out  the
    window  several  of  these  reactor  programs,  CVR  for  instance?

    Mr.  Williams.  Well,  I  don't  know  as  to  just  what  the  point  is  you
    are  raising.  But  certainly,  in  this  whole  development  of  the  atomic
    energy  as  well  as  the  atomic-power  problems,  it  has  been  trial  and
    error,  and  I  suppose  there  have  been  discouragements,  and  there  cer-
    tainly have  been  lots  of  differences  of  opinion.

    Representative  Price.  The  reason  I  ask  that  question  is  because  of
    your  discussion  of  the  atomic  submarine  reactor.  I  thought  I  detected
    that  maybe  there  was  a  school  of  thought  that  that  was  all  the  distance
    we  had  to  go.

    ;Mr.  Williams.  I  didn't  mean  to  leave  that  impression  at  all.

    Representative  Price.  It  has  been  indicated  over  the  last  months
    tliat  some  people  may  think  that  way.

    Mr.  Williams.  That  certainly  is  not  to  be  read  into  my  remarks.
    And,  furthermore,  I  should  agree  with  you  very  heartily  that  we
    should  dislike  very  much  to  think  that  the  fact  that  we  had  developed
    a  submarine  powered  by  atomic  energy  meant  that  that  was  the  end
    of  the  line.    It  still  becomes  very  much  the  beginning  of  the  line.

    Representative  Price.  Wliat  sort  of  setup  do  you  have  in  the  De-
    partment of  Commerce  on  atomic  eiiergv'?

    Mr.  Williams.  Well,  we  don't  have  any  specially  constituted  body.
    We  have  a  small  unit  there.  We  have  been  in  the  process  of  recon-
    stituting what  was  the  NPA  and  hatching  something  to  be  known  as
    Business  Services  Administration:  and  in  connection  with  that  pro-
    gram there  are  relationships  with  all.  you  might  say,  of  the  various
    businesses  in  certainly  the  major  industries  of  America.  And  we  have
    a  hard  core  of  people  down  there  who  will  be  prepared  to  help  hatch
    out  a  program  along  these  lines  and  do  a  job  of  research.  I  suspect,
    just  as  your  connnittee  in  these  hearings  is  feeling  its  way  along,  we
    are  feeling  our  way  along.

    Representative  Price.  Do  you  have  a  separate  division  down  there?

    Mr.  Williams,  Xot  in  the  way  of  a  separate  division,  as  such.  We
    have  a  small  unit,  a  group  of  men  down  there  who  are  giving  a  larger
    proportion  of  their  time  to  this  particular  problem.

    Representative  Price.  But  when  you  referred  to  these  specific  prob-
    lems being  made,  wlio  would  be  conducting  those  studies?

    Mr.  Wiloams.  Well,  coming  back  to  what  I  said  a  moment  ago,
    what  we  have  at  the  moment  down  there  is  a  starting  point.    As  this

    ATOMIC    POWER    DEVELOPMENT  109

    whole  program  continues,  we  shall  hope  and  expect  to  strengthen  by
    added  personnel  the  study  unit.  At  the  present  time  there  are  just  a
    few  men  down  there.

    Representative  Price.  But  what  sort  of  background  would  those  men
    have  ?    Would  they  have  any  background  in  the  field  of  atomic  energy  ?

    Mr.  Williams.  I  am  afraid  I  can't  give  accurate  information  by
    way  of  answer  to  that  question.  I  think  there  is  one  man  down  there
    who  I  know  has  had  rather  direct  contact  with  the  atomic  energy
    group;  but,  just  how  far  he  and  any  of  his  associates  are  possessed
    of  a  background  of  technical  and  scientific  knowledge,  I  am  not  pre-
    pared to  answer.

    Representative  Price.  The  reason  I  ask  that  is  that  there  has  been
    reference  to  various  studies  going  on,  and  I  just  wondered  who  was
    conducting  them  and  how  far  advanced  they  were.

    Mr.  Williams.  They  are  not  too  far  advanced.  Let  me  say  that.
    They  are  just  at  the  threshold  of  this  whole  business.

    Representative  Holifield.  In  your  paragraph  on  page  4,  where
    you  say  the  benefits  should  be  made  available  on  a  nondiscriminatory
    basis  to  both  large  and  small  business  and  to  all  geographical  regions
    of  our  Nation  as  and  when  needed,  you  would  include  in  that,  I
    suppose,  not  only  large  and  small  businesses  but  States  and  munic-
    ipalities in  case  they  were  interested  in  the  acquisition  of  atomic-
    power-producing  facilities?

    Mr.  Williams.  I  would  think  so.  Of  course,  here  again  I  think
    we  are  sort  of  at  the  threshold  of  trying  to  make  decisions  with
    respect  to  circumstances  that  have  not  yet  arrived.  But,  so  far  as
    we  can  see  the  situation  now,  I  would  concur  with  your  interpre-
    tation.

    Representative  Price.  Mr.  Williams,  in  your  statement  on  page
    2,  you  state :

    We  are  prepared  to  cooperate  in  such  process —

    you  are  talking  about  the  utilization —

    to  the  fullest  extent  necessary  to  fulfill  our  responsibilities  concerning  busi-
    ness and  commerce.

    What  additional  tools  would  you  need  to  carry  on  that  cooperation?

    Mr.  Williams.  I  think  the  honest  answer  to  that,  Mr.  Price,  is  that
    we  don't  know.     I  think  we  have  to  explore  that  out.

    Representative  Price.  Then,  actually,  you  are  not  prepared  to  co-
    operate.    You  are  willing  to  cooperate.

    Mr.  Williams.  I  think  maybe  I  would  be  willing  to  accept  that
    correction;  yes.     It  is  an  expression  of  intention  and  desire.

    Representative  Price.  Because  you  don't  have  the  facilities  down
    there.  You  do  not  have  a  separate  division  to  study  the  problems  of
    atomic  power.

    Mr.  Williams.  Not  as  Ave  are  constituted  presently,  no.

    Representative  Durham.  It  seems  to  me  that  in  your  No.  2,  relat-
    ing to  the  impact  of  commercial  atomic-energy  installations  by  indus-
    try on  existing  competitive  business  relationships,  you  have  what
    would  be  your  major  problem  in  the  Department  of  Commerce.
    Because,  after  all,  it  is  primarily  concerned  with  the  effect  that  this
    would  have  on  business  throughout  the  country.

    Mr.  Williams.  I  think  one  of  our  big  problems  is  not  to  be  found
    so  mucli  ill  being  a  group  of  atomic  experts  ourselves,  through  the

    110  ATOMIC    POWER    DEVELOPMENT

    Department,  but  rather  in  trying  to  put  together  a  competent  staff
    capable  of  analyzing  the  disruptions  that  will  be  occasioned  or  will
    be  threatened  between  and  among  the  different  types  of  energj^
    That  is  related,  of  course,  to  the  technical  development,  but  it  is  strictly
    on  the  economic  side.  So,  of  course,  I  agree  with  you.  I  think  that
    is  one  of  the  major  problems  that  we  have  got  to  wrestle  with.

    Kepresentative  Durham.  When  we  talk  about  a  pound  of  uranium
    containing  21^  million  times  the  energy  contained  in  a  pound  of  coal,
    it  would  bring  that  problem  clearly  to  mind,  would  it  not  ?

    Mr.  Williams.  Or,  as  someone  brought  out  in  the  hearings  here,  the
    fact  that  in  the  year  2000  we  are  expecting  to  be  using  the  same
    amount  of  energy  that  was  used  from  the  birth  of  Christ  to  the  year
    1860.  And  there  are  bound  to  be  many  dislocations  that  we  will  have
    to  wrestle  with  and  study  out  answers  to.

    Representative  Durham.  Well,  this  is  the  point  as  I  see  it  in  this
    l^atent  field  of  operations,  I  do  not  think  we  have  reached  anywhere
    near  the  end  of  what  is  going  to  exist  in  patents  probably  in  this  field.
    Because  when  we  have  only  taken  out  about  6  percent  of  the  energy,
    at  the  present  time  with  all  the  patents  that  exist  today,  that  is  where
    we  have  got  to  engage  in  the  development  of  reactors  if  we  expect  this
    thing  to  ever  come  to  a  point  where  it  can  be  used  commercially  on  a
    competitive  basis.  And  I  think  that  difference  of  90  percent  is  going
    to  see  patent  rights  flow  from  somewhere,  either  the  Government  or
    private  enterprise,  which  is  going  to  be  enormous,  and  that  is  bound
    to  come.

    Mr.  Williams.  And  there  are  about  40,000  patents  being  issued
    every  year  through  the  Patent  Office,  and  I  suspect  a  lot  of  them  will
    come  in  this  field.

    Representative  Holifield.  Mr.  Williams,  I  suggest  before  you  em-
    bark on  any  program  in  your  Department  down  there,  you  study  very
    closely  sections  11  (a)  and  (b)  on  the  utilization  of  atomic  energy.
    And  on  the  issuing  of  licenses  under  the  act  you  will  see  clearly  there
    the  responsibilities  of  the  AEC,  and  you  will  be  better  able  to  coordi-
    nate your  own  policies.

    Mr.  Williams.  I  have  already  read  those  sections,  and  I  am  familiar
    with  that.

    Chairman  Cole.  Mr.  Williams,  in  making  this  study,  do  you  antici-
    pate any  difficulty  in  arriving  at  a  full  consideration  of  the  problems
    without  having  to  go  into  highly  sensitive  information  ?

    Mr.  Williams.  I  couldn't  possibly  answer  that  question  today,  Mr.
    Cole.  I  just  am  not  informed  at  all  on  that.  I  wouldn't  have  any
    way  of  knowing  what  we  are  going  to  run  into.

    Chairman  Cole.  Well,  from  the  extent  of  the  studies  that  your  peo-
    ple have  made  so  far,  have  any  of  them  been  cleared  for  sensitive
    information  ?

    Mr.  Williams.  I  can't  answer,  that.  I  think  most  of  the  studies
    thus  far  have  been  along  the  lines  of  the  economic  rather  than  getting
    into  the  technical.  I  don't  think  we  are  embroiled  in  the  technical
    field.  It  may  very  well  be  that  the  two  will  intermesh  a  little  later
    on,  but  I  don't  think  we  have  had  that  problem  to  deal  with  yet.

    Chairman  Cole.  I  direct  your  attention  to  No.  5  of  the  factors  which
    you  feel  your  Department  should  concentrate  your  study  on.  What
    did  you  have  in  mind  when  you  suggested  that  it  might  be  necessary
    to  give  consideration  to  special  revenue  measures  ?

    ATOMIC    POWER    DEVELOPMENT  111

    Mr.  Williams.  Perhaps  that  question  can  be  answered  by  saying
    it  is  something  in  the  nature  of  a  shotgun  reply.  But  I  can  narrow  it
    to  a  rifleshot  perhaps  by  drawing  an  analogy  between  what  this
    may  be,  could  be,  and  the  St.  Lawrence  seaway  project.

    Now,  all  of  the  years  that  that  has  been  before  the  Congress  and
    the  various  administrations,  it  has  always  been  on  a  noneconomic
    return  basis.  Now  for  the  first  time  it  is  before  us  on  an  economic
    return  basis,  a  self-liquidating  basis.

    Now,  this  is  not  put  in  there  with  any  notion  that  it  is  to  suggest
    that  this  must  be  it.  It  is  simply  suggestive  of  a  possibility,  another
    one  of  the  avenues  to  explore.     That  is  all.

    Chairman  Cole.  What  kind  of  measures  do  you  think  might  be
    applied  ?

    Mr.  Williams.  Well,  it  is  conceivably  possible  that  some  facet  of
    this  whole  program  might  be  leased,  and  if  it  were  leased  it  might
    then  be  on  a  royalty  or  revenue  basis.  I  suppose  that  at  any  one  of
    the  stages  all  the  way  down  the  line  from  the  very  inception,  even
    from  the  mining  stage  on  down,  there  might  be  possibly,  as  a  result
    of  careful  studies,  steps  at  any  one  of  which  you  might  consider  it
    would  be  in  order  for  the  Government,  if  it  is  on  the  owning  end  of
    this,  to  make  a  charge  to  the  State  or  city,  as  was  pointed  out  a  little
    while  ago,  or  the  private  enterprise  unit,  as  the  case  might  be,  for  the
    use  of  that  particular  benefit.  There  is  nothing  spelled  out  there.  I
    want  that  made  plain.  This  is  merely  stating  the  problem  and  stating
    a  potential  field  that  might  be  studied.

    Chairman  Cole.  Then  you  did  not  anticipate  that  you  might  be
    justified  in  establishing  a  special  tax  law  which  would  provide  revenue
    as  revenue,  for  the  Goveinment;  but  rather  that  in  the  exercise  of
    general  laws  there  might  be  required  appropriate  adjustments?

    Mr.  Williams.  Yes.     That  is  the  interpretation  we  place  on  it.

    Chairman  Cole.  Not  for  the  purpose  of  simply  raising  money  for
    Government  purposes  ?

    Mr.  Williams.  No.  That  wasn't  the  thought.  In  fact,  I  suppose
    it  could  be  just  a  little  further  elaboration  of  the  present  act  of  1916,
    because  at  one  stage  there  it  saj^s  the  Government  may  license  or
    sell — I  have  forgotten  just  what  the  words  are — with  or  without  com-
    pensation,.that  is,  "With  or  without  charge."  You  see,  that  thought
    has  already  been  registered.  We  are  simply  lifting  that  in  a  sense  and
    putting  it  in  here  as  one  other  field  that  might  well  be  studied.

    Chairman  Cole.  That  might  well  be  used  to  protect  the  public
    interest  in  this  field  ?

    Mr.  Williams.  And  to  provide  revenue.

    Chairman  Cole.  And  not  primarily  as  a  source  of  revenue.

    Mr.  Williams.  Well,  not  from  the  standpoint  that  you  interpreted
    a  little  while  ago.  It  could  be  a  source  of  revenue  in  that  the  Govern-
    ment was  deriving  compensation  for  something  it  had  to  lease  out.

    Chairman  Cole.  I  think  you  might  have  in  mind  something  like  the
    oil  leases  today  on  Government-owned  lands.

    Mr.  Williams.  That  would  be  an  example ;  yes.  I  think  your  proj-
    ect on  the  St.  Lawrence  seaway  might  come  closer.  But  that  was
    simply  to  point  up  something  that  might  require  examination.

    Chairman  Cole.  You  have  set  up  five  very  penetrating  and  very  per-
    tinent points.  Now,  I  am  curious  to  know  just  how  soon  you  can  pro-
    vide the  answers  to  them.

    112  ATOMIC    POWER    DEVELOPMENT

    Mr.  Williams.  I  didn't  bring  my  crystal  ball  along,  and  all  I  can
    say  in  answer  to  that,  Mr.  Chairman,  is  that  I  think  all  of  those  who
    are  identified  with  the  Commerce  Department  are  anxious  to  do  our
    share  as  well  as  we  possibly  can  in  helping  to  speed  the  day  when
    American  citizens  can  derive  the  maximum  benefits  from  atomic  power
    development.  And  so  far  as  I  am  personally  concerned,  I  am  anxious
    that  we  give  as  much  impetus  as  we  can  to  the  program  in  Commerce
    so  that  Commerce  will  do  its  full  share  of  speeding  the  day.

    Senator  Pastore.  Coming  back  to  what  Mr.  Price  asked  you,  do  you
    think  you  are  adequately  staffed  to  do  that  ?

    Mr.  Williams.  Definitely  not  today.  And  I  do  not  know  what  the
    answer  to  that  will  be,  other  than  that  we  have  got  to  feel  our  way
    along  and  try  to  develop  whatever  staff  seems  to  be  justified  by  what
    we  run  into.

    Senator  Pastore.  Have  any  attempts  been  made  to  bring  about  that
    adequacy  in  personnel?

    Mr.  Williams.  Not  excepting  in  a  very  feeble  way.  I  think  one  of
    the  values,  as  a  matter  of  fact,  of  this  whole  hearing  is  in  the  fact  that
    it  focuses  up  to  the  different  departments  and  other  branches  of  Gov-
    ernment, those  directly  interested,  the  fact  that  here  is  another  very
    important  program  to  pay  heed  to.

    Senator  Pastore.  Of  course,  the  only  trouble  there  is  that  we  are
    going  to  fall  into  a  vacuum  if  all  we  do  is  point  it  up  without  doing
    anything  about  it.

    Mr.  Williams.  I  meant  to  convey  the  impression,  Senator,  that  the
    very  fact  that  it  has  been  focused  to  the  attention  of  the  public  and  to
    our  attention  makes  it  stand  out  now  as  a  program  that  has  become  a
    must  item  in  our  Deparment  to  get  a  job  done.

    Senator  Pastore.  What  is  remarkable  is  that  you  do  take  the  posi-
    tion, and  rightfully  so,  in  my  opinion,  that  the  Department  of  Com-
    merce is  going  to  be  a  very  integral  part  of  these  studies  and  this
    development.  And  yet  as  far  as  I  have  been  able  to  observe  from  what
    you  have  said,  you  are  not  adequately  staffed  to  do  that.

    Mr.  Williams.  We  are  not  at  the  present  time.

    Senator  Pastore.  When  do  you  expect  to  be  so  staffed  ?

    Mr.  Williams.  It  depends  upon  what  Congress  does,  of  course,  with
    our  budget.  But  I  think  we  must  learn  to  walk  before  we  run,  and
    1  think  I  can  only  say  we  are  barely  started  at  the  present  time,  and
    as  we  get  along  we  will  try  to  do  what  we  can  to  get  our  organization
    going  properly.

    Senator  Pastore.  As  I  said  before,  you  have  posed  to  us  the  $64
    question.    And  you  must  provide  the  answers.

    Representative  Durham.  This  is  the  first  time,  I  believe,  since  1946
    that  the  Department  of  Commerce  has  been  asked  to  comment  on  this
    question.

    Mr.  Williams.  As  far  as  I  am  concerned,  this  is  the  first  time.  I
    have  not  been  here  that  long.

    Chairman  Cole.  Even  if  you  were  adequately  staffed  with  technical
    people,  would  you  be  able  to  provide  more  than  a  best  guess  as  to  the
    answers  to  these  five  questions,  at  the  beginning  of  a  period  such  as
    this?

    Mr.  Williams.  Oh,  I  doubt  it.  Because  I  believe  everybody  is  do-
    ing a  "best  guessing"  job  in  whatever  field  they  are  in  at  the  present
    moment.

    ATOMIC    POWER    DEVELOPMENT  113

    Chairman  Cole.  And  the  answers  to  your  five  factors  can  be  found
    only  as  experience  unfolds  and  as  this  program  develops,  and  what-
    ever you  might  recommend  now  or  at  the  conclusion  of  your  initial
    studies  should  be  expected  to  be  modified  as  time  and  experience  move
    along.

    Mr.  Williams.  That  is  exactly  right.

    Chairman  Cole.  Do  you  feel,  in  order  that  we  may  have  some  target
    date  in  mind  to  anticipate  the  answers  to  your  five  questions,  that  you
    might  be  in  a  position  to  present  a  reasonably  sound  recommendation
    on  those  points  some  time  early  next  year  ?

    Mr.  Williams.  Well,  we  certainly  could  give  a  progress  report.  I
    don't  suppose  we  could  give  any  more  than  that  then.

    Chairman  Cole.  Can  you  indicate  now  as  to  whether  it  would  be  a
    helpful  progress  report?

    Mr.  Williams.  Well,  I  happened  to  graduate  in  chemical  engineer-
    ing, and  I  have  learned  by  that  training  that  you  cannot  predict  the
    outcome  of  a  chemical  experiment  until  you  have  reached  the  end  of
    it.  Perhaps  as  you  get  going  on  it,  you  can  make  some  statements  as  to
    what  the  conclusion  is  going  to  be.  But  I  think,  applying  that  state-
    ment here,  about  all  we  can  do  is  draw  upon  the  very  best  information
    that  we  can  get  from  Government  agencies  and  from  private  agencies
    and  then  move  along  step  by  step  getting  our  conclusions  reached
    as  fast  as  we  can.  And  then,  of  course,  we  know  that  when  we  reach
    those  conclusions,  new  experience  is  going  to  cause  us  to  go  forward
    beyond  that  stage.  So  I  don't  know  how  it  would  be  possible,  Mr.
    Chairman,  at  the  moment,  to  say  more  than  that  we  want  to  get  the
    ])rogi-am  set  up  beyond  its  initial  stage,  which  characterizes  it  now.
    We  want  then  to  move  forward  and  be  prepared  to  give  just  as  helpful
    a  progress  report  as  possible  early  next  year,  as  you  suggested.

    Chairman  Cole.  What  I  am  trying  to  learn  is  your  present  inten-
    tion. Is  it  your  intention  to  concentrate  on  a  study  of  these  problems
    as  far  as  your  Department  is  coiicerned,  or  are  you  going  to  rock  along
    until  the  Congress  may  forcibly  require  you  to  do  it,  to  make  the
    studies  ?

    Mr.  Williams.  Well,  the  question  was  asked  a  little  while  ago,  or
    the  comment  w^as  made,  I  believe,  by  Mr.  Durham,  that  as  far  as  he
    knew  this  was  the  first  time  since  1946  that  the  Department  of  Com-
    merce has  been  brought  before  this  committee.  That  would  probably
    answer  the  q^uestion,  then,  as  to  what  Commerce  has  been  doing  with
    respect  to  direct  relationship  with  this  on  this  program.  Now  we
    have  made  the  start,  and  it  is  my  very  deep  conviction  personally  that
    this  is  one  of  the  most  important  things  the  Department  of  Commerce
    could  sink  its  teeth  into.  Because  the  atomic  age,  and  the  atomic
    power  age  are  certainly  here,  or  practically  here,  and  everyone  of  us
    knows  that  the  implications,  the  effects,  upon  our  economy,  are  going
    to  be  terrific.  Then,  of  course,  it  just  reposes  itself  as  one  of  the  major
    problems  I  think  we  should  address  ourselves  to  down  there.

    Chairman  Cole.  I  am  very  glad  to  hear  you  express  those  sentiments,
    which  indicate  a  determination  to  put  your  teeth  into  the  problem  and
    to  chew  it  as  rapidly  as  possible.

    Kepresentative  Durham.  I  might  add  to  that  that  it  shows  very
    clearly  the  wisdom  of  the  selection  of  chemical  engineers  for  this  type
    of  job.

    114  ATOMIC    POWER    DEVELOPMENT

    Chairman  Cole.  Are  you  in  a  position  to  speak  for  the  Department
    with  respect  to  its  endorsement  of  the  power  policy  and  description  of
    legislative  requirements  made  by  the  Atomic  Energy  Commission?

    Mr.  Williams.  No,  sir,  I  am  not  prepared  to.

    Chairman  Cole.  That  power  policy  and  the  recommendations  of  a
    general  nature  were  not  submitted  to  the  Department  of  Commerce
    tor  comment  ?

    Mr.  Williams.  I  think  not.  They  haven't  been  brought  to  my
    attention.

    I  understand  from  the  counsel  that  they  have  been  submitted,  but
    we  have  not  had  the  opportunity  yet  to  prepare  replies.

    Chairman  Cole.  I  am  not  speaking  of  the  proposed  draft  of  legis-
    lation. I  am  speaking  of  the  description  of  the  legislative  require-
    ments which  might  be  necessary  to  carry  out  the  Commission's  power
    policy.

    Mr.  Williams.  We  apparently  have  not  been  asked  for  specific
    comments  on  that.

    Chairman  Cole.  Very  well.  If  there  are  no  further  questions,  Mr,
    Williams,  you  may  be  excused.

    We  thank  you  very,  very  much  for  coming  down  to  be  with  us.
    And  we  entertain  the  hope,  or  at  least  I  do,  that  when  we  call  upon
    you  again  w^ithin  the  next  24  months  or  sooner,  you  will  be  in  a  posi-
    tion to  give  us  some  reasonably  accurate  answers  to  those  very  fine
    5  goals  you  have  set  yourselves.

    Thank  you  very  much.

    Mr.  Williams.  We  will  do  the  best  we  can.    Thank  you  very  much.

    Chairman  Cole.  Our  next  witness  is  a  representative  of  the  Federal
    Power  Commission,  Mr.  Dale  Doty,  who  himself  is  a  member  of  the
    Commission.

    Mr.  Doty,  we  are  glad  to  see  you  here  this  afternoon.  We  hope  that
    you  can  give  us  some  encouragement  as  well  as  enlightenment  on  the
    problem  that  confronts  us.

    STATEMENT  OF  HON.  DALE  E.  DOTY,  MEMBEE,  ACCOMPANIED  BY
    FRANCIS  L.  ADAMS,  CHIEF,  BUREAU  OF  P0V7ER;  AND  HOWARD
    E.  WAHRENBROCK,  ASSISTANT  GENERAL  COUNSEL,  BUREAU  OF
    LAW,  ALL  OF  THE  FEDERAL  POWER  COMMISSION

    Mr.  Doty.  Thank  you,  Mr.  Chairman.

    I  wish  to  state  at  the  outset  that  any  views  that  I  may  express  on
    belialf  of  the  Commission  have  not  received  the  usual  clearances  that
    are  required  by  the  Bureau  of  the  Budget.  I  am  speaking  for  the
    Commission  in  my  prepared  statement.  As  to  anything  that  I  may
    be  asked  after  my  prepared  statement,  of  course,  I  will  just  have  to
    watch  myself  to  be  sure  that  I  am  expressing  their  viewpoint.

    Mr.  Chairman,  I  am  Dale  E.  Doty,  a  member  of  the  Federal  Power
    Commission.  In  response  to  your  letter  of  June  23,  1953,  I  have  been
    requested  by  Chaii-man  Kuykendall  to  give  you  a  short  statement  on
    1  lie  views  of  the  Commission  on  some  of  the  problems  incident  to  the
    definition  of  a  Federal  policy  on  industrial  atomic  power  develop-
    ment.

    I  know  you  will  appreciate  that  the  Commission  has  not  had  time
    to  undertake  a  comprehensive  study  of  these  problems.  However,  the
    Power  Commission  believes  that  it  has  information  and  exp(rrience

    ATOlXnC    POWER    DEVELOPMENT  115

    with  respect  to  electric  utilities  and  their  regulation,  the  licensing  of
    the  development,  transmission,  and  utilization  of  power  from  water-
    power  sites,  and  the  administration  of  such  licensing  requirements,
    which  may  be  of  value  in  considering  a  Federal  policy  on  industrial
    atomic  power  development.  In  seeking  to  promote  the  development
    of  electric  energy  from  atomic  energy  by  utilizing  the  initiative  of
    private  and  other  non-Federal  enterprise  there  is  a  parallel  in  the
    basic  ideas  embodied  in  the  Federal  Water  Power  Act  of  1920  (now
    pt.  I  of  the  Federal  Power  Act,  16  U.  S.  C.  791a  U.  S.  C.  et  seq.)
    under  which  non-Federal  development  of  the  Nation's  waterpower
    resources  has  successfully  proceeded  for  a  third  of  a  century.

    The  approach  adopted  in  that  act  to  encourage  the  development
    and  utilization  of  the  Nation's  water-power  resources  was  to  provide
    for  the  issuance  of  licenses  for  limited  terms  of  not  to  exceed  50  years,
    and  subject  to  conditions  which  would  encourage  private  or  other
    non-Federal  development,  and  at  the  same  time  assure  that  the  Na-
    tion as  a  whole  should  share  in  the  benefits  which  could  be  derived
    from  that  great  energy  resource.

    If  the  approach  to  the  problem  now  before  you  is  to  be  through  the
    method  of  issuing  licenses  authorizing  the  production  of  electric
    energy  from  atomic  power  it  is  suggested  that  legislation  should  pro-
    vide that  the  conditions  of  such  licenses  should  not  be  governed  solely
    by  standards  relating  to  the  use  of  fissionable  materials  and  the  pro-
    tection of  those  interests  of  national  defense  and  security  which  are
    particularly  associated  with  the  development  of  atomic  power  for
    military  purposes.

    We  believe,  as  was  provided  for  in  the  issuance  of  licenses  for  hy-
    droelectric development  under  the  Federal  Power  Act,  that  provision
    should  also  be  made  in  any  sucli  legislation  for  the  consideration  of
    private  and  public  interests  in  the  production,  transmission,  and  dis-
    tribution or  utilization  of  electric  power.

    If  on  the  other  hand,  it  is  decided  that  the  consideration  of  such
    interests  should  be  left  to  existing  utility  regulatory  agencies  operating
    as  at  present,  any  legislation  with  respect  to  the  development  of  atomic
    23ower  should  be  designed  to  facilitate  and  not  hamper  such  regula-
    tion. Thus  under  both  Federal  and  State  statutes,  electric  utilities  are
    required  to  report  detailed  information  and  data  regarding  their
    finances,  facilities,  and  operations.  Under  section  311  of  the  Federal
    Power  Act,  for  example,  this  Commission  has  the  responsibility  and
    duty  to  secure  information —

    *  *  *  regarding  the  generation,  transmission,  distribution,  and  sale  of  electric
    energy,  however  produced,  throughout  the  United  States  and  its  possessions,
    whether  or  not  otherwise  suhject  to  the  jurisdiction  of  the  Commission,  includ-
    ing the  generation,  transmission,  distribution,  and  sale  of  electric  energy  by  any
    agency,  authority,  or  instrumentality  of  the  United  States,  or  any  State  or
    municipality  or  other  political  subdivision  of  a  State.

    Under  this  and  other  provisions  of  the  act  the  Federal  Power  Com-
    mission collects  financial,  engineering,  and  operating  information  and
    data  which  are  used  by  the  financial  community  in  marketing,  and  in
    investing  in,  electric  utility  securities  by  the  industries  planning
    developments  dependent  upon  power  supply ;  and  b}'  the  Federal  Gov-
    ernment for  national  defense  and  many  other  purposes  in  addition  to
    the  regulation  of  utility  rates  and  services.

    If  such  information  and  data  are  to  be  of  real  utilit}'  for  these  pur-
    poses they  must  include  information  with  respect  to  production  of

    116  ATOMIC    POWER    DEVELOPMENT

    electric  energy  from  atomic  power  sources  corresponding  to  that  ob-
    tained with  respect  to  production  from  coal,  gas,  oil,  other  fuels,  and
    waterpower.  Therefore  we  feel  that  in  any  such  legislation  under
    which  the  development  or  utilization  of  atomic  power  is  licensed  it
    should  be  made  clear  that  the  so-called  atomic  energy  licensees  which
    are  engaged  in  the  electric  utility  operations  or  which  supply  electric
    energy  for  that  purpose  shall  not  be  exempt  from  regulation  and  re-
    porting requirements  under  otherwise  applicable  State  and  Federal
    statutes.  Consideration  should  also  be  given  to  the  possibility  of
    conflicts  which  may  arise  between  the  present  requirements  of  such
    State  and  Federal  regulatory  statutes  and  the  security  requirements
    which  might  be  imposed  in  the  legislation  authorizing  the  use  of
    atomic  power.  In  this  regard  we  suggest  that  the  Atomic  Energy
    Commission  should  be  authorized  and  directed  to  work  out  methods
    and  procedure  for  eliminating  such  conflicts  or  accomplishing  the  es-
    sential objectives  of  the  State  and  Federal  regulatory  statutes  in  a
    manner  compatible  with  the  accomplishment  of  the  development  of
    the  use  of  atomic  power.

    In  order  to  encourage  capital  investment  for  atomic  power  devel-
    opment it  would  seem  to  be  necessary  to  issue  licenses  for  terms  cov-
    ering a  considerable  number  of  years  and  correspondingly  to  enter
    into  long-term  contracts  for  the  purchase  of  fissionable  or  byproduct
    material.  Protection  of  the  public  interest  may  require  limitation  on
    the  license  term  as  in  the  case  of  licenses  issued  under  the  Federal
    Power  Act.  On  the  other  hand,  we  do  not  believe  that  it  is  possible
    now,  or  will  be  possible  at  any  time  within  the  next  few  years,  to  fix
    prices  or  other  terms  or  conditions  which  will  be  equitable  over  the
    entire  period  of  a  long-term  license  or  contract.  We,  therefore,  sug-
    gest that  the  license  and  contract  conditions  should  be  subject  to  peri-
    odic review  and  renegotiation,  say  at  intervals  of  not  more  than  5
    years.

    Consideration  should  also  be  given  to  making  provision  that  upon
    the  termination  of  a  license,  if  the  licensee  has  in  its  possession  struc-
    tures or  materials  which  can  be  used  only  under  license,  they  may  be
    taken  over  at  the  net  cost  to  the  licensee  as  provided  for  in  the  case  of
    water  power  projects  in  section  14  of  the  Federal  Power  Act.

    In  the  event  it  would  be  considered  necessary  in  order  to  enforce
    the  provisions  of  the  license  that  the  Government  be  authorized  to
    take  immediate  possession  of  the  nuclear  reactor  and  processing  fa-
    cilities where  a  licensee  fails  to  comply  with  the  provisions  of  a  license,
    consideration  should  be  given  to  the  problem  of  continued  supply  of
    the  electric  utility  load  dependent  upon  that  source  of  energy.
    Inasmuch  as  any  termination  or  severance  of  a  power  supply  of
    a  public  utility  may  have  a  direct  effect  on  service  to  the  public  it  is
    suggested  that  provision  be  made  that  in  the  event  Government  repos-
    session is  invoked  against  a  public  utility,  continuance  of  the  power
    supply  be  made  by  the  Government  until  alternate  arrangements  can
    be  made.  In  other  words,  that  the  public  not  be  penalized  for  viola-
    tion of  the  license  by  a  utility  operator  or  licensee.

    Mr.  Chairman,  I  have  with  me  today  the  head  of  our  Bureau  of
    Power,  Mr.  Francis  Adams,  and  Mr.  Wahrenbrock,  our  Assistant
    Chief  Counsel  of  the  Bureau  of  Law,  who  can  answer  any  technical
    questions  that  I  may  not  have  at  my  fingertips.

    ATOMIC    POWER    DEVELOPMENT  117

    Chairman  Cole.  Thank  you  very  much,  Mr.  Doty  for  the  very  pre-
    cise statement,  in  fact,  so  precise  that  I  am  not  sure  I  understand  it
    -completely.

    Are  there  any  questions  the  members  of  the  committee  wish  to
    ask?

    Representative  Holifield.  Mr.  Chairman,  I  looked  down  to  see  if
    Senator  Pastore  wanted  to  exercise  the  prerogative  of  a  member  of
    the  other  body  to  question  first.

    Senator  Pastore.  I  defer  to  you,  sir.

    Representative  Holifield.  Mr.  Doty,  I  want  to  say  that  this  pre-
    sentation here,  although  only  on  2I/2  sheets  of  paper,  is  probably  one
    of  the  most  provocative  and  most  informative  statements  that  has
    been  presented  to  this  committee.

    You  point  out  very  thoroughly  some  of  the  problems  which  are
    involved,  and  in  place  of  giving  us  a  group  of  generalizations  you
    point  out  specific  points  for  the  committee  to  consider.

    Without  commenting  on  the  merits  of  your  suggestions,  you  at  least
    have  given  us  some  direct  evidence  on  some  of  the  problems,  just  g^me
    of  the  problems  that  this  committee  is  f  aCecl  with.

    Now  it  is  the  opinion  of  the  Federal  Power  Commission,  I  suppose,
    that  this  production  of  power,  once  it  has  been  produced,  must  of
    necessity  be  integrated  with  existing  power  policies  and  power  laws
    throughout  the  United  States  ?

    Mr.  Doty.  That  is  correct,  sir;  we  consider  this  another  source  of
    power  like  coal  and  oil  and  gas.

    Representative  Holifield.  Regardless  of  its  peculiar  origination,
    it  becomes  power,  and  as  such  it  comes  under  the  many  laws  and  many
    public  policies  which  have  already  been  developed?

    Mr.  Doty.  We  feel  that  it  should.

    Representative  Holifield.  Let  us  go  behind  that  point.  I  do  not
    expect  you  to  be  technically  qualified,  possibly,  on  some  of  these
    questions,  but  it  would  be  your  opinion,  would  it  not,  that  in  the  de-
    velopment of  this  power,  so-called,  for  release  at  the  bus  bar,  that
    the  investment  of  the  taxpayers  of  the  United  States  should  receive
    first  consideration  in  seeing  that  the  benefits  are  applied  as  widely
    as  possible  throughout  the  Xation  ?

    Mr.  Doty.  I  would  certainly  agree  with  that,  speaking  for  myself,
    and  I  believe  I  can  speak  for  the  Commission  as  a  whole  on  that
    point.

    Representative  Holifield.  You  would  have  no  objection,  of  course,
    to  private  industry  participating  in  this  as  long  as  it  did  not  result
    in  any  deletion  of  those  benefits  to  the  people  or  prohibition  of  those
    benefits?

    Mr.  Doty.  No,  sir,  I  would  not.  Of  couree,  the  Federal  Power
    Act  was  basically  established  as  a  way  for  private  hydroelectric
    companies  to  use  a  Government  resource.  And  under  the  Federal
    Power  Act  a  public  body.  State,  municipality,  has  a  preference  to
    secure  a  license  for  a  particular  site  if  it  can  show  that  its  plans  for
    the  comprehensive  development  of  that  area  are  equal  or  better  than
    those  of  the  private  bodies.

    Representative  Holifield.  In  other  words,  the  city  in  a  locality
    near  the  Bonneville  Dam,  for  instance,  has  a  preference  in  the  ac-
    quisition of  bus-bar  power?

    llg  ATOMIC    POWER    DEVELOPMENT

    Mr.  Doty.  I  am  speaking  of  construction,  Congressman  Hoiifield.

    Kepresentative  Hglipield.  Construction  ?

    Mr.  Doty.  Construction  at  a  site.

    Kepresentative  Holifield.  At  a  site.  The  Federal  Power  Com-
    mission would  endorse  the  construction  at  a  site  of  a  public  body's
    application  ?

    ]Mr.  Doty.  Project,  if  it  is  equal  in  other  respects  to  the  plans  pre-
    sented by  the  private  power  company.

    Representative  Holifield.  But  in  case  no  public  body  wishes  to
    take  advantage,  it  would  be  open  to  any  private  industry?

    Mr.  Doty.  Yes,  or  in  the  discretion  of  the  Commission  to  submit
    the  matter  to  Congress  with  its  recommendation.

    Representative  Holifield.  In  setting  up  power  rates  for  the  public
    to  pay,  there  would  be  no  difference  in  the  consideration  of  atomic-
    generated  power  over  hydroelectric  or  steam-generated  power,  would
    there  ?

    Mr.  DoTT.  No,  there  would  not.

    Representative  Holifield,  And  do  you  think  that  all  the  policies
    and  laws  which  now  apply  to  our  public-power  policy  as  a  Nation
    should  apply  to  this  new  source  of  power  when  it  is  available  ?

    Mr.  Doty.  It  is  a  question  of  how  far  the  Congress  wants  to  go  in
    that  particular  respect.  Some  of  the  laws  of  Congress,  as  far  as
    power  is  concerned,  have  preference  provisions  as  far  as  cooperatives,
    municipalities,  and  public  bodies  are  concerned.

    Representative  Holifield.  That  is  a  matter  then  for  Congress  to
    determine  ?

    Mr.  Doty.  It  is  a  question  of  policy  whether  they  want  to  incor-
    porate into  any  legislation  on  this  subject  parts  of  the  legislation
    involved  in  TVA  Act  and  the  Flood  Control  Act.

    Representative  Holifield.  But  those  questions  are  involved  in  any
    change  of  the  law  whereby  this  development  would  be  turned  over
    to  private  industry  ?

    Mr.  Doty.  That  is  right,  in  our  opinion  anyhow.

    Representative  Durham.  Your  agency,  of  course,  has  not  come  into
    this  field  at  the  present  time  much  except  for  the  hope  that  in  the
    future  something  will  develop  that  will  be  useful.  So  you  will  not
    enter  the  picture  until  the  power  is  produced;  then  you  begin  your
    regulatory  outline  as  you  have  stated  here.

    Mr.  Doty.  We  have  not  been  in  this  field  to  any  great  extent,  Mr.
    Durham.  We  have  done  work  at  the  request  of  the  Atomic  Energy
    Commission.

    Representative  Durham.  You  made  no  study  of  reactors  or  any-
    thing like  that  like  you  do  of  dam  sites  or  other  facilities  for  pro-
    ducing power  ?

    Mr.  Doty.  At  the  request  of  the  Atomic  Energy  Commission  we
    have  made  studies  in  various  areas  in  the  country  to  determine  com-
    parative costs  of  power.

    Representative  Durham.  But  not  on  the  design  of  a  reactor,  you
    have  not  gotten  into  that  picture  at  all  ?

    Mr.  Doty.  No,  we  have  not  gotten  into  that  picture  at  all.

    Representative  Holifield.  You  speak  of  studies  of  costs  of  con-
    ventional power?

    Mr.  Doty.  Costs  of  conventional  power  in  order  to  determine  what
    the  high-cost  areas  of  the  country  are.    We  have  a  cooperative  ar-

    ATOMIC    POWER    DEVELOPMENT  119

    rangement  with  the  Atomic  Energy  Commission  where  we  make
    studies  at  their  request.

    Representative  Durham,  In  making  that  study  now,  did  you  go
    into  the  field  of  the  need  for  a  facility  of  this  type,  which,  of  course,
    can  be  placed  without  having  to  have  water  and  having  to  have  other
    facilities  that  do  not  exist  in  some  of  these  areas?  Did  you  go  into
    that  field  as  to  the  areas  in  the  country  that  needed  such  facilities?

    Mr.  Doty.  I  wonder  if  I  might  ask  the  Chief  of  our  Bureau  of
    Power  if  he  could  answer  that  question?  He  could  answer  it  more
    correctly,  Mr.  Adams.

    Mr.  Adams.  No,  sir;  we  did  not  go  into  that  question.

    Representative  Durham.  Is  it  contemplated  you  are  going  to  make
    any  such  studies  ?

    Mr.  Adams.  We  have,  as  Commissioner  Doty  stated,  a  cooperative
    arrangement  with  the  Atomic  Energy  Commission  which  might
    possibly  lead  to  such  studies,  but  up  to  now  we  have  not.

    Representative  Durham.  As  I  look  at  your  field  of  operation,  it
    is  one  of  the  requirements  to  make  such  a  type  of  study  as  to  where
    it  it  needed  in  a  particular  area.  Of  course,  it  cannot  apply  to
    something  like  the  Hoover  Dam,  but  the  transportation  of  coal  to
    some  parts  and  some  areas  of  the  country  becomes  very  expensive.  I
    wondered  if  you  were  looking  at  it  from  that  standpoint.

    Mr.  Doty.  We  have  the  engineers  that  could  be  helpful  on  such
    matters.

    Representative  Durham.  You  have  not  done  it  yet  ?

    Mr.  Doty.  No.

    Representative  Patterson.  Mr.  Doty,  I  notice  at  the  bottom  of  page
    2  you  speak  of  venture  capital.  Are  you  also  going  to  take  into  con-
    sideration the  geographical  location  of  the  licenses  in  the  issuing  of
    these  licenses?  For  instance,  there  might  be  one  sector  of  the  country
    where  there  would  be  more  capital  that  could  be  readily  used  as  in-
    vestment than  with  respect  to  another  section.  How  are  you  going
    to  get  around  that,  or  are  you  just  going  to  issue  them  strictly  on  the
    ability  of  the  investor  ?

    Mr.  Doty.  We  are  not  suggesting.  Congressman  Patterson,  that  we
    do  this  licensing.  We  feel  that  we  can  give  the  committee  assistance
    from  the  experience  we  have  had  under  the  Waterpower  Act.  If  the
    Congress  would  wish  to  give  us  any  responsibility  under  that,  that
    would  be  a  different  matter.  But  we  feel  that  in  the  30-year  history
    of  the  Waterpower  Act,  and  we  think  it  is  very  similar,  since  atomic
    energy  is  a  Government-owned  resource,  we  can  suggest  matters  for
    consideration  which  may  be  helpful.

    Of  course,  in  the  w^aterpower  field  we  get  applications  which  are
    for  particular  locations.  We  try  to  determine  what  the  effect  of  the
    full  development  of  that  waterpower  site  is  going  to  be  on  the  whole
    area,  and  to  require  that  the  plans  that  are  submitted  will  give  the
    greatest  results  in  comprehensive  development  of  the  site.  In  other
    w^ords,  we  would  not  permit  a  partial  development  of  a  particular
    electric  site.

    Representative  Patterson.  Of  course,  I  had  in  mind  your  own
    statement  here,  these  long-term  contracts  for  the  purchase  of  this
    fissionable  matter.  One  section  of  the  country  could  tie  tliat  up
    geographically,  where  some  other  section  would  be  left  entirely  out.

    120  ATOMIC    POWER    DEVELOPMENT

    Mr.  Doty.  That  is  right ;  it  could.  I  think  it  is  one  of  the  things
    tliat  should  be  given  consideration  by  whatever  body  issues  licenses  if
    it  is  decided  to  go  on  a  licensing  basis.

    Representative  Patterson.  That  is  right.

    Representative  Holifield.  Mr.  Doty,  the  Atomic  Energy  Act  re-
    quires the  Commission  to  prepare  a  report  to  the  President  stating  all
    the  facts  with  respect  to  industrial  use  and  impact  upon  the  social^
    political,  economic,  and  international  conditions  of  our  country,  when
    and  if  these  licenses  are  issued.  It  also  provides  supervision  by  the
    Congress  for  those  licenses.

    Now,  in  the  preparation  of  that  report — which  incidentally  has  not
    been  prepared — I  suppose  that  your  Federal  Power  Commission  would
    probably  have  available  more  economic  statistics,  more  quantitative
    electrical  energy  producing  statistics  per  region  than  any  other  com-
    mission in  the  Government  on  the  subject  of  power?

    Mr.  Doty.  That  is  right.  Under  section  311  of  the  Federal  Power
    Act  every  electric  utility  is  required  by  law  to  report  to  us  on  various
    phases  of  the  electric  industry.

    Representative  Holifield.  If  the  Commission  took  upon  itself  the
    obligation  of  the  act  to  make  such  a  report,  it  would  be  almost  neces-
    sary for  them  to  come  to  you  for  the  background  of  facts  in  relation
    (o  the  regions  of  the  United  States  so  that  they  could  make  a  proper
    analysis  of  the  impact  which  cheap  atomic  power  might  have  on  exist-
    ing investments,  would  it  not?

    INIr.  Doty.  Yes,  sir.

    Representative  Dukham.  What  is  the  span,  would  you  say,  on  the
    cost  of  the  present  production  of  power  in  the  United  States :  that  is,
    the  lowest  cost  and  the  highest  cost  ?

    Mr.  Adams.  The  energ}'  cost  from  fuel  electric  plants,  which  would
    be  com}xirable  to  energy  production  by  a  nuclear  reactor,  is  the  lowest
    in  the  Southwest,  where  natural  gas  is  a  relatively  cheap  fuel.

    Representative  Dukham.  ^^Tiat  does  that  cost?

    Mr.  Adams.  Ranging  down  to  about  3  or  4  mills  per  kilowatt-hour.

    Representative  Durham.  Then  up  to  what?     What  is  the  highest?

    Mr.  Adams.  The  highest  costs  run  up  to  about  15  mills,  possibly
    higher  in  small  communities.

    Representative  Durham.  Do  we  have  some  that  cost  that  in  the
    United  States— 15  mills?

    ISIr.  Adams.  Yes,  sir.  These  are  costs  of  production  that  I  am
    speaking  of,  not  cost  to  the  ultimate  consumer.

    Representative  Durham.  Not  cost  to  the  ultimate  consumer.  ^Vhat
    is  the  span  between  the  consumer  costs,  the  lowest  and  the  highest?

    Mr.  Adams.  I  do  not  have  those  figures.  It  would  depend  on  the
    rate  schedule  to  which  we  were  referring,  the  type  of  service  rendered.
    But  I  believe  we  can  make  the  comparison  of  atomic  power  versus
    conventional  sources  better  from  the  standpoint  of  the  cost  of
    l)r()duction.

    Representative  Durham.  Can  you  make  such  a  comparison  ^

    Mr.  AnA:Ms.  We  have  made  studies  of  the  cost  from  conventional
    sources,  but  we  do  not  yet  know  what  the  cost  would  be  from  atomic
    energy'.

    Repi-esentative  Durham.  What  did  you  base  those  fio-ures  on^
    information  received  from  the  Atomic  Energv  Commission?

    ATOMIC    POWER    DEVELOPMENT  121

    Mr.  Adams.  The  figures  for  conventional  sources  are  based  on  infor-
    mation the  Power  Commission  has.

    Representative  Durham.  You  do  not  have  the  other  information?

    Mr.  Adams.  We  do  not  have  the  otlier.  We  have  discussed  with,
    the  Atomic  Energy  Commission  the  problem  of  what  are  the  high-
    cost  power  areas  and  what  would  be  the  competition,  so  to  speak,  a
    nuclear  reactor  would  have  in  terms  of  conventional  costs  today;  but
    we  do  not  know,  and  they  are  unable  to  state  today,  what  the  costs
    would  be  from  a  nuclear  reactor.

    Representative  Dukham.  Of  course,  this  whole  thing  is  the  ques-
    tion of  costs  when  w^e  get  down  to  an  atomic-energ\^-producing  reactor.
    Tliat  is  why  I  asked  the  question  on  the  span  between.  You  say  your
    lowest  cost  is  3  mills  and  the  highest  cost  is  around  15  mills  at  the
    bus  bar,  not  distributed  ?

    Mr.  Adams.  That  would  be  at  the  generating-plant  bus  bar;  yes,  sir.

    Representative  Durham.  In  other  words,  the  distributing  plant?

    Mr.  Adams.  Yes,  sir.

    Representative  Durham.  That  is  quite  a  span  there.

    Mr.  Adams.  Yes,  sir;  that  varies  with  location.  Cost  of  fuel  has
    a  decided  effect,  the  size  of  a  generating  plant,  the  location  of  the
    load — of  course  that  affects  the  delivered  costs — but  the  cost  at  the
    generating  plant  is  greatly  affected  by  plant  location,  fuel  costs,  size
    of  the  plant,  labor  costs,  and  so  forth.

    Representative  Durham.  Is  there  a  pretty  sizable  percentage  of
    your  power  that  is  costing  15  mills  at  the  present  time  in  the  United
    States?  Would  you  hazard  a  guess  as  to  what  percentage  is  costings
    that  of  the  overall  production  of  power  ?

    Mr.  Adams.  That  would  be  a  very  small  percentage.

    Representative  Durham.  A  very  small  percentage?

    Mr.  Adams.  Yes,  sir.

    Chairman  Cole.  Where  would  those  areas  be  located?

    Mr.  Adams.  Those  areas  would  be  largely  in  communities  or  areas
    that  are  remote  from  fuel  supply,  and  transportation  costs  are  high ;
    for  instance,  northern  Maine,  the  central  part  of  the  country,  and
    areas  like  Nevada.  Florida  has  some  relatively  high-cost  areas,  par-
    ticularly central  Florida  where  fuel  oil  is  the  principal  source  of
    heat.  When  you  get  away  from  the  port  areas  and  have  the  trans-
    portation costs  inland,  the  interior  areas  of  Florida  are  relatively
    high-cost  areas.

    Representative  Durham.  Do  you  have  available  the  costs  at  the
    bus  bar  for  power  in  some  other  parts  of  the  world,  foreign  countries?

    Mr.  Adams.  We  can  work  up  something  from  files  we  have  on  for-
    eign countries.

    Representative  Durham.  Can  you  supply  that  for  the  record?

    Mr.  Adams.  Yes,  sir.

    Representative  Durham.  I  think  it  would  be  very  valuable  to  the
    committee  in  making  our  study.

    Mr.  Adams.  Yes,  sir.

    Representative  Holifield.  With  particular  reference  to  European
    countries,  please.

    Mr.  Adams.  Yes,  sir.

    Representative  Durham.  Any  countries  you  have,  South  America
    or  wherever.

    122  ATOMIC    POWER    DEVELOPMENT

    Representative  Van  Zandt.  Could  we  have  a  memorandum  for
    each  member  of  the  committee  and  also  one  for  the  record  ?
    Mr.  Adams.  Yes,  sir.
    (The  information  referred  to  follows:)

    Fedeeal  Power   Commission   Memorandum   on    Cost   of   Producing   Electeio
    Power  in  Foreign  Countries

    Pursuant  to  the  committee's  request  during  the  Federal  Power  Commission
    testimony  on  June  29,  1953,  a  review  has  been  made  of  the  data  in  the  Bureau
    of  Power  files  on  electric  power  in  foreign  countries  to  determine  the  extent
    to  which  information  is  available  on  the  cost  of  producing  electric  power  as
    compared  to  costs  in  the  United  States.  The  information  in  our  foreign  power
    files  is  fairly  complete  with  respect  to  general  plans  of  other  nations  to  meet
    existing  power  shortages,  but  reliable  data  on  power  costs  were  found  to  be
    very  limited.

    In  order  to  supplement  the  cost  information  obtained  from  the  Commission's
    files,  the  subject  was  discussed  with  various  other  possible  sources  which  were
    able  to  furnish  some  additional  data.  These  sources  included  the  Mutual  Secur-
    ity Administration,  World  Bank,  Export-Import  Bank,  manufacturers  of  elec-
    tric power  equipment,  American  engineering  firms  handling  foreign  power
    projects,  the  staffs  of  several  embassies,  and  others.

    Viewing  the  problem  as  a  whole,  in  the  ligjit  of  the  information  available  from
    the  above  sources,  it  must  be  stated  that,  with  a  few  exceptions  where  detailed
    costs  are  available,  a  discussion  of  power  costs  in  foreign  countries  can  be
    presented  in  only  general  terms.  It  is  believed,  however,  that  the  information
    presented  in  the  following  pages  will  be  sufl3cient  to  give  the  committee  some
    conception  of  the  probable  relationship  between  costs  in  the  United  States  and
    those  in  other  countries.

    Most  of  the  nations  of  the  world  are  now  engaged  in  extensive  construction
    programs  which  will  result,  in  many  instances,  in  doubling  or  trebling  their
    prewar  generating  capacities.  It  is  observed  from  consultation  with  American
    engineers  connected  with  some  of  these  projects  that  the  new  equipment  now
    being  installed  is  considerably  more  efficient  than  similar  equipment  installed
    prior  to  World  War  II ;  hence  less  fuel  is  required  to  produce  a  kilowatt-hour
    and  less  operating  labor  is  required  per  kilowatt  of  capacity.  However,  in-
    flationary factors,  which  are  responsible  for  rising  construction,  fuel,  and  op-
    erating labor  costs,  tend  to  hold  the  overall  costs  up.  Reports  of  the  operational
    organizations  in  many  foreign  countries  contain  statements  relative  to  sharp  in-
    creases in  all  elements  of  power  costs  (construction,  operation,  fuel,  etc.).  Most
    of  these  reports  make  specific  mention  of  the  necessity  of  increasing  the  rates
    for  electric  power  in  order  to  avoid  operating  at  a  loss.

    It  is  extremely  difficult  to  make  any  direct  comparison  between  the  cost  of
    operation  of  a  foreign  business  enterprise  and  a  similar  American  enterprise,
    if  for  no  other  reason  than  the  basic  differences  in  financing  methods  and
    accounting  procedures.  Privately-owned  utilities  in  the  United  States  are
    operated  under  local.  State,  and  national  regulatory  bodies  that  require  uniform
    accounting  practises  and  the  reporting  of  detailed  construction  and  operating
    cost  data  on  a  comparable  basis.  Most  of  the  foreign  data  available  to  us
    pertain  to  publicly  owned  or  quasi  publicly  owned  undertakings,  which  results
    in  a  quite  different  financial  structure  from  the  American  utility  and  directly
    affects  the  fixed-charge  component  of  power-production  costs.

    I  stated  during  the  course  of  the  hearing  that  the  total  cost  of  producing
    steam-electric  power  in  the  United  States,  including  fixed  charges  on  the  capital
    investment,  varied  from  about  3  mills  to  15  mills  or  more.  The  average  cost
    would  be  about  G  to  8  mills  with  a  relatively  small  percentage  of  the  total
    generated  at  the  low  cost  of  3  mills  per  kilowatt-hour  in  the  Southwest  where
    the  fuel,  natural  gas,  has  been  relatively  cheap.  At  the  top  of  the  cost  range
    is  found  a  still  smaller  percentage  of  the  total  power  produced  in  very  small
    and  relatively  inefficient  plants  at  isolated  locations  usually  distant  from  fuel
    supply  sources.

    During  the  year  1952,  according  to  reports  filed  with  this  Commission,  the
    class  A  and  R  privately  owned  electric  utilities  in  the  United  States,  operating
    683  steam-electric  generating  plants  with  a  total  capacity  of  53.5  million  kilo-
    watts, produced  2G7.9  billion  kilowatt-hours.  The  actual  production  costs,  oper-
    ation, and  maintennace,  including  fuel,  amounted  to  4.57  mills  per  kilowatt-hour

    ATOMIC    POWER    DEVELOPMENT

    123

    of  which  3.38  mills  was  the  fuel  cost.  The  reported  investment  in  these  gener-
    ating facilities  was  $6.5  billion.  Assuming  an  annual  fixed  charge  rate  of  11.7
    pei'cent  ^  on  the  investment  to  cover  return,  depreciation,  and  taxes,  the  estimated
    annual  fixed  charges  will  be  $760  million  or  2.84  mills  per  kilowatt-hour  gener-
    ated. Adding  the  production  costs  of  4.57  mills  and  the  estimated  fixed  charges
    of  2.84  mills  gives  an  estimated  average  total  cost  per  kilowatt-hour  of  steam-
    electric  power  of  7.41  mills  for  1952.

    The  corresponding  kilowatt-hour  unit  costs  for  27  major  interconnected  power
    pools  generating  over  60  percent  of  the  above-mentioned  total  are  as  follows :

    Mills

    Fuel 3.04

    Operation  and  maintenance 1.  01

    Subtotal 4.05

    Estimated  fixed  charges 2.  69

    Total  estimated  cost 6.  74

    The  lowest  overall  total  costs  for  3  post-war  plants  utilizing  the  3  principal
    fuels  are  as  follows :

    [Mills  per  kilowatt-hour]

    Coal

    OU

    Gas

    Fuel

    1.80
    .46

    3.77
    .60

    1  15

    Operation  and  maintenance .

    25

    Subtotal         .      ---      -.

    2.26
    1.63

    4.37
    1.94

    1  40

    Estimated  fixed  charge _  .  .    ..      .    .

    1  12

    Total  estimated  cost

    3.89

    6.31

    2  52

    The  coiTesponding  available  data  for  European  and  other  foreign  nations  are
    summarized  in  the  following  paragraphs.

    Great  Britain

    The  annual  report  of  the  British  Electricity  Authority  for  the  year  ending
    March  31,  1952,  its  4th  year  of  operation  as  a  state  or  governmental  undertaking,
    states  that  55.8  billion  kilowatt-hours  (includes  a  negligible  amount  of  diesel
    and  hydro  generation)  were  generated  in  its  steam-electric  plants  for  the  English
    grid  system  at  an  average  total  cost  of  7.72  ^  mills  per  kilowatt-hour.  Of  this
    amount  5.25  mills  represented  fuel  costs,  .95  mills  the  operation  and  maintenance
    costs,  and  1.56  mills  the  "other"  generating  costs  which  roughly  approximates
    our  "fixed  charges."  It  is  to  be  noted  that  the  interest  costs  are  not  comparable
    with  our  estimated  return  costs  and  that  for  the  year  reported  there  is  no  tax
    liability  for  any  of  the  English  income  taxes.  (Federal  income  taxes  are  50
    percent  of  the  United  States  tax  item  included  in  estimated  fixed  charges.)

    Irish  Free  State

    The  Electric  Supply  Board  of  the  Irish  Free  State,  in  the  fiscal  year  ending
    March  31,  1950,  generated  782  million  kilowatt-hours  in  its  steam-electric  and
    hydroelectric  plants,  totaling  244  megawatts  of  installed  capacity.  Steam
    plants  produced  60  percent  of  this  power.

    As  i.';  the  case  with  many  of  the  foreign  nations  there  is  no  breakdown  between
    steam  and  hydroproduction  costs.  The  operating  and  maintenance  cocts,  includ-
    ing the  fuel  for  steam  generation,  were  reported  as  5.90  mills  per  kilowatt-hour.
    The  unit  fuel  cost  was  given  as  7.41  mills  for  steam  generation  only.  We  were
    unable  to  determine  the  fixed  charges  associated  with  the  generating  plant  in-
    vestment. Therefore,  the  5.90  mills  per  kilowatt-hour  is  not  a  total  cost  com-
    parable with  the  above-mentioned  United  States  and  British  costs.

    Belgium,  France,  Italy,  and  Spain

    No  production  cost  data  are  available  at  this  time.  Some  data  may  be  made
    available  at  a  later  date.

    ^  Used  by  the  Bureau  of  Power  in  powor-valu»>  calculations.  Based  on  average  repre-
    sentative costs  as  follows:  Cost  of  money,  5M.>  percent;  depreciation  (sinking  fund),  1.4
    percent:   taxes    (State,   local,  and  Federal),  4. .5   percent:  insurance,  0.3  percent.

    ^  In  this  and  following  examples  foreign  currency  has  been  converted  to  the  United
    States  dollar  on  average  rates  of  exchange  effective  during  the  period  covered.

    36740—53-

    -9

    124  ATOMIC    POWER    DEVELOPMENT

    About  90  percent  of  Italy's  power  is  produced  in  their  northern  hydroelectric
    plants.  New  steam  and  hydroplants  are  now  under  construction  to  cope  with  a
    national  power  shortage.  A  report  on  the  situation  deals  at  some  length  with  the
    high  construction  costs  and  the  cost  of  money  required  for  financing  the  con-
    struction.   Fuel  oil  for  Italy's  steam  plants  is  relatively  high  priced.

    Norway  and  Sweden

    Hydroelectric  power  predominates  in  both  nations  where  power  resources  are
    highly  developed.  Complete  data  are  not  available.  Recent  reports  from  Nor-
    way indicate  that  hydroelectric  power  from  two  new  hydroprojects  will  be
    produced  and  delivered  to  the  Oslo  gi-id  system  at  total  costs,  including  fixed
    charges,  at  about  2.1  and  4.2  mills,  respectively.  These  costs  are  reported  as
    indicative  of  high  and  low  figures  for  new  Norway  hydropower  from  new  plants.
    The  costs  of  power  at  the  older  plants  in  northern  and  western  Norway  are
    generally  lower.

    There  are  no  available  data  on  Swedish  power  production  costs.

    Denmark

    Primarily  thermal  power — no  reported  information.

    Greece  and  Turkey

    No  production  cost  data.  Power  generating  facilities  are  being  increased  in
    both  nations.  The  estimated  investment  cost  of  a  modern  steam  plant  under  con-
    struction in  Greece  is  $200  to  $225  per  kilowatt  for  a  plant  of  about  40,000-kilowatt
    capacity.  Oil,  which  is  the  principal  fuel,  is  reported  as  costing  ,55  cents  per  rail-
    lion  B.  t.  u.  in  Greece.  It  is  planned  to'  burn  lignite  which  may  be  available
    at  a  considerably  lower  cost  as  soon  as  new  mines  can  be  developed.

    Union  of  South  Africa

    The  Electricity  Supply  Commission,  a  state  project  consisting  of  eight  under-
    takings ( according  to  its  29th  annual  report  covering  1951  operations ) ,  produced
    7.3  billion  kilowatt-hours  in  its  plants,  over  99  percent  of  which  was  steam  gener-
    ation. The  production  cost  is  given  as  1.95  mills  of  which  1.25  mills  represented
    fuel.  Coal,  in  terms  of  American  money,  is  still  cheap  in  South  Africa,  being
    about  $1.25  per  ton  delivered  at  the  plants.  The  fixed  charges  are  not  available.
    The  Electricity  Supply  Commission  recently  borrowed  $30  million  at  4  i>ercent
    from  the  World  Bank  to  extend  its  power  generating  and  transmission  facilities.

    Latin  and.  South  American  Nations

    Modern  oil  and  coal  burning  stations  are  being  built  in  Brazil  at  $200  to  $275
    per  kilowatt  for  medium-size  plants.  Such  costs  appear  to  be  typical  in  these
    countries.  Oil  is  the  principal  fuel  although  coal  is  available  in  some  areas.  The
    price  of  fuel  oil  at  this  time  varies  from  15  cents  to  $1.06  i>ev  million  B.  t.  u.,
    the  low  price  being  applicable  only  in  oil-producing  areas  .

    No  specific  data  are  vailable  on  production  costs.  However,  despite  the  low
    fuel  costs  for  some  plants  the  fixed  charges  on  the  large  investment  will  probably
    keep  total  costs  per  kilowatt-hour  on  a  relatively  high  level.

    Cuha

    No  production  cost  data  are  available.
    The  Repyblic  of  the  Philippines

    A  new  75,000  kilowatts  oil-burning  plant  is  under  construction  in  Manila.
    Current  estimates  of  the  total  cost  of  power,  including  fixed  charges,  indicate
    about  9  mills  per  kilowatt-hour.  Fuel  accounts  for  6  mills  or  two-thirds  of  the
    total  cost.     No  data  are  available  on  the  older  prewar  plants.

    Japan

    An  estimate  of  the  cost  of  producing  8.4  billion  kilowatt-hours  in  1952  indicated
    a  total  cost  of  20  mills  per  kilowatt-hour.  This  is  a  composite  cost  for  hydro
    and  stojiin  power.  Production  costs  including  fuel  for  steam  generation  are
    e:s(iiii;ito^  Commission,  addressing  Founder's  Day,  Univer-
    sity of  Michigan  Law  School,  April  25.  1952.

    The  time  has  now  arrived  to  take  the  next  great  step,  and,  by  appropriate  re-
    visicm  of  the  statute,  to  make  use  of  American  private  industry  along  with  the
    established  Government  industry  to  give  the  Nation  the  full  benefit  of  atomic
    energy.

    Respectfully  submitted.

    E.  Bi.YTHE  StasoN,
    Dean,  School  of  Law,  Unirasitu  of  Michigan.

    150  ATOMIC    POWER    DEVELOPMENT

    [Telegram]

    Washington,  D.  C,  May  .),  195S.
    Walker  Cisler,

    President,  Detroit  Edison  Co.,  Detroit,  Mieh.:
    Would  greatly  appreciate  statement  by  you  for  .ioint  committee  use  as  to
    whether  or  not  Detroit  Edison  proposes  to  build  a  reactor  suitable  for  ship  pro-
    pulsion ;  if  so  whether  this  reactor  proposal  depends  upon  Government  subsidy
    or  Government  purchase  of  byproducts ;  the  number  of  years  required  to  design
    and  construct  the  reactor  after  satisfactory  changes  in  the  law  are  made;  your
    ideas  as  to  the  personnel  and  facilities  you  would  use ;  whether  any  such  com-
    pany proposal  has  support  of  Detroit  Edison  board  of  directors ;  and  details  as
    to  how  your  present  proposal,  if  any,  for  a  ship  reactor  differs  from  the  proposal
    for  a  stationary  reactor  you  have  already  submitted  to  the  Atomic  Energy  Com-
    mission.   Thank  you  kindly  for  your  cooperation.

    W.  Steeling  Cole,
    Chairman,  Joint  Committee  on  Atomnic  Energy^

    [Telegram]

    Mat  5,  1953.

    Hon.  W.  Sterling  Cole,

    Chairman.  Joint  Committee  on  Atomic  Enerfiy,  Congress  of  the  United  States,
    Washington,  D.  C. :
    The  project  in  which  the  Dow  Chemical  Co.  and  the  Detroit  Edison  Co.  have
    l)een  engaged  in  for  some  time  past,  and  presently  are  continuing  research  and
    development  work,  relates  to  a  high-temperature  breeder  reactor  suitable  for
    stationary  land  installation.  Others  are  associated  with  us  in  this  undertaking.
    We  have  not  heretofore  made  any,  statements  of  its  possible  use  for  ship  propul-
    sion, and  to  the  best  of  our  knowledge  it  would  not  be  appropriate  for  shipboard
    use.  Our  studies  relate  to  a  reactor  which  if  successful  will  provide  an  eco-
    nomical method  for  utilizing  atomic  energy  as  a  supplement  to  conventional  fuels
    in  the  generation  of  electric  power.  This  program  previously  submitted  to  the
    AEC  has  the  approval  of  the  board  of  directors  of  the  Detroit  Edison  Co.,  and  in
    a  summary  way  may  be  stated  as  follows  :

    1.  The  Dow  Chemical  Co.  and  the  Detroit  Edison  Co.,  together  with  others  asso-
    ciated with  us,  ai'e  studying  and  developing  the  technical  problems  and  design  of
    a  high-temperature  breeder  reactor  which  we  believe  would  be  best  suited  for  the
    widespread  generation  of  electric  power  or  other  heat-energy  requirements.

    2.  This  research  and  development  has  been  and  now  is  being  carried  out  to
    the  extent  permitted  under  existing  laws  by  the  use  of  our  funds  and  of  those
    engaged  with  us  in  the  effort.  All  of  our  work  has  been  and  is  oi)en  to  Commis-
    sion inspection.

    3.  We  have  made  much  use  of  research  performed  by  the  Commission  labora-
    tories. We  also  are  utilizing  additional  results  as  they  become  available  from
    research  at  the  Experimental  Breeder  Reactor,  Material  Testing  Reactor,  and
    other  locations,  performed  as  a  part  of  the  Commission  activities  not  directly
    related  to  our  pro.1ect.  In  addition,  certain  specific  research  and  development
    work  needed  to  complete  our  studies  requires  facilities  presently  available  only
    in  the  AEC  National  Laboratories  such  as  Ames  and  MTR.  Because  a  solution
    of  the  problems  involved  and  the  results  of  the  research  will  be  of  interest  to
    the  entire  atomic-energy  development,  it  genei'ally  has  been  assumed  that  this
    work  would  be  assisted  by  research  facilities  of  the  Commission.  The  results
    of  any  research  and  development  carried  on  in  the  laboratories  of  AEC  for  us
    are  of  course  available  to  the  Commission  and  to  others  that  may  be  entitled  to
    them.

    4.  If  our  studies  indicate  that  a  high-temperature  breeder  reactor  is  commer-
    cially competitive,  considering  both  heat  energy  and  reactor  products,  and  we  are
    hopeful  they  will,  we  propose  to  design,  construct,  test,  and  operate  such  a  reactor
    using  private  investment  funds  and  without  Government  subsidies,  plutonium-
    purcbase  contracts,  or  guaranties  of  any  kind.  Although  our  program  must
    .justify  itself  on  this  basis,  we  believe  that  if  breeder  reactors  are  a  success  this
    country  eventually  can  be  made  independent  of  overseas  soui'ces  of  raw  uranium.
    In  addition,  the  military  would  have  a  further  source  of  high-grade  materials  for
    defense  purposes.

    n.  This  design,  construction,  testing,  and  operating  program  is  contingent  upon
    modifications  of  the  Atomic  Energy  Act  which  would  make  such  action  lawful
    and  possible  as  in  other  normal  industrial  development.

    '^       ATOMIC    POWER    DEVELOPMENT  151

    6.  A  high-temperature  breeder  reactor  would  produce  plutonium  as  a  byproduct,
    which  we  consider  to  be  a  high-grade  fuel.  This  material  would  be  suitable  for
    the  initial  inventory  for  other  high-temperature  breeder  reactors,  or  possibly  as
    the  fuel  for  other  types  of  reactors,  as  well  as  for  military  purposes.

    7.  We  have  said  repeatedly  that  the  development  of  atomic  energy  for  civilian
    peacetime  applications  should  be  carried  forward  on  the  basis  of  competitive
    industry.  We  also  have  envisaged  that  the  AEC  at  the  same  time  should  vigor-
    ously carry  forward  those  matters  related  to  national  security.  Tliis  function
    and  purpose  of  tlie  laboratories  should  be  protected  and  encouraged.  In  addi-
    tion, AEC  through  its  National  Laboratories,  which  alone  have  the  necessary
    facilities,  should  carry  forward  important  research  and  development  work  of
    distinct  value  to  civilian  atomic-energy  development.  This  research  and  develop-
    ment would  be  a  contribution  to  the  economic  advancement  of  the  country  and
    would  be  comparable  to  similar  activities  of  the  National  Advisory  Committee
    for  Aeronautics,  the  Department  of  Agriculture,  the  Bureau  of  Mines,  and
    others.

    We  understand  this  statement  is  for  the  use  of  the  joint  committee  and  not
    to  be  released  for  publication.     You  may  be  assured  of  our  continued  cooperation.

    Walker  L.  Cisler,
    President,  Detroit  Edison  Co.

    Memorandum  to  the  Atomic  Energy  Commission — General  Principles  To  Bb
    Considered  in  the  Revision  of  the  Atomic  Energy  Act  of  1946  to  Facilitate
    THE  (Construction  and  Operation  of  an  Atomic  Energy  Plant  by  Private
    Industry

    Submitted  by  companies  associated  with  the  Dow  Chemical-Detroit  Edison
    Breeder  Reactor  project

    When  the  Atomic  Energy  Act  of  1946  was  enacted,  relatively  little  was  known
    about  nonmilitary  utilization  of  atomic  energy  and  private  industry  was  not
    heard.  Military  uses  and  the  protection  of  the  public  against  potential  dangers
    of  misuse  were  the  only  factors  given  serious  consideration.  Possible  partici-
    pation of  this  country  in  international  agreements  regulating  atomic  energy  was
    under  consideration,  but  attention  was  primarily  directed  toward  military  appli-
    cation and  national  security.  The  nonmilitary  uses  seemed  many  years  removed.
    All  of  these  factors  dictated  that  the  act  establish  an  almost  complete  Govern-
    ment monopoly.  The  result  was  an  innovation  without  comparable  precedent
    in  the  United  States.

    As  a  result  of  the  joint  efforts  over  the  last  2  years  of  the  Atomic  Energy
    Commission  and  industrial  study  groups,  the  companies  associated  in  the  Dow
    Chemical-Detroit  Edison  project  are  convinced  that  a  new  industry,  utilizing
    atomic  energy,  is  about  to  emerge.  Traditional  competitive  free  enterprise  is
    ready  and  able  to  undertake  the  task.  I'rivate  industry  is  prepared  to  promote
    this  development  both  with  trained  personnel  and  also  with  large  investment
    of  private  capital  as  soon  as  conditions  are  right.  The  time  has  come  when
    consideration  must  be  given  to  changes  in  the  Atomic  Energy  Act  to  encourage
    substantial  investment  of  private  industrial  resoui-ces.

    The  correctness  of  the  original  assumption  that  atomic  energy  would  present
    a  jieculiar  pi'oblem  unsuited  to  development  through  the  traditional  competitive
    free-enterprise  system  is  now  without  foundation  in  fact.  It  has  become  clear,
    particularly  in  the  last  year  or  so,  that  the  development  of  atomic  energy  is
    essentially  no  different  from  other  industrial  activities,  and  that  peacetime
    utilization  can  be  carried  out  by  competitive  private  enterprise.

    The  purpose  of  the  Atomic  Energy  Commission  would  remain.  The  benefits
    of  industry's  research  and  development  would  always  be  available  to  it.

    The  question  then  becomes.  How  can  this  great  potential  inherent  in  our  private
    industry  be  best  utilized?  The  closer  the  approach  is  to  American  competitive
    free  enterprise,  while  at  the  same  time  safeguarding  the  public  health,  safety,
    and  national  security,  the  more  efficient  will  be  the  country's  utilization  of
    atomic-energy  potentials.  As  the  Atomic  Energy  Act  is  now  written,  private
    industry  is  virtually  precluded.  The  forces  of  free  competitive  enterprise  will
    more  rapidly  advance  the  art  of  utilizing  atomic  energy,  not  only  for  peaceful
    uses  but  also  in  the  interest  of  our  national  security.  We  believe  that  the  act
    can  be  so  modified  as  to  make  it  possible  not  only  to  preserve  paramount  national
    interests  but  actually  to  advance  them.

    The  Atomic  Energy  Commission  must  he  given  the  power  to  grant  long-term
    licenses,  in  the  nature  of  a  certificate  of  public  convenience  and  necessity,  to
    justify   the   use   and   employment   of   private   capital    and    development.     Such

    152  ATOMIC    POWER    DEVELOPMENT

    licenses  will,  of  course,  be  subject  to  aiipropriate  liuiitations  necessary  to  protect
    the  public  health,  safety,  and  national  security.

    Moreover  it  should  be  recognized  that  privately  owned  atomic-power  facilities,
    to  the  extent  that  they  are  used  in  traditional  public-utility  operations,  should
    be  subject  to  the  established  regulatory  authorities.

    Private  industry  recognizes  that  national  security  must  be  the  first  considera-
    tion in  the  development  of  atomic  energy  and  in  considering  any  amendments
    of  the  Atomic  Energy  Act.  Specifically,  the  companies  associated  in  the  Dow
    Chemical-Detroit  Edison  project  recommend  that  subject  to  the  foregoing  the
    Atomic  Energy  Act  be  amended  so  as  to  permit  the  following  :

    1.  Private •.o^onersMp  of  facilities  for  the  production  of  flssionabJe  material,
    tvhich  is  now  prohihited  by  section  4  of  the  act. — No  person  or  group  of  persons
    will  invest  large  funds  unless  there  is  legislative  assurance  that  the  plant  may
    be  owned  and  operated  for  a  very  long  time.  Adequate  financing  can  be  obtained
    only  if  the  law  allows  the  normal  incentives  and  security  for  private  investment.
    This  includes  private  ownership  of  plants  and  equipment.

    2.  Private  oicnersl-'o  of  fissionable  material,  which  is  nou^  prohibited  by  sec-
    tion 5  (a). — Since  fissionable  material  is  basic  in  atomic-energy  operations,  pri-
    vate financing  is  as  dependent  upon  private  ownership  of  such  material  as  upon
    private  ownership  of  production  facilities.  Subject  to  limitations  of  supply,
    prior  to  military  needs,  national  security,  and  to  regvilation  in  the  public  interest,
    there  should  be  a  free  right  to  acquire  and  sell  fissionable  material  among  the
    licensees  and  the  AEC.

    3.  Private  oionership  of  source  materials,  tvhich  is  now  prohibited  by  section
    5  (b). — The  assumption  of  private  financing  of  facilities  is  completely  unrealistic
    without  an  assured  source  of  raw  materials.

    4.  A  right  to  sell  the  bi/products  of  prrate  operations,  ichich  irill  require
    modification  of  section  5  (c). — Since  the  sale  of  byproducts  is  essential  to  profita-
    ble private  operation  of  atomic  facilities,  licensees  must  be  free  to  sell  them,
    subject  to  ne-^-essary  health  and  safety  regulations,  and  to  national  security.

    5.  A  right  to  a  long-term  license,  tvhich  tvill  reqtvire  amendment  of  section  7. —
    The  investment  of  adequate  capital  cannot  be  expected  unless  the  duration

    and  the  conditions  under  v\hich  operations  will  be  allowed  to  continue  are  known.
    These  should  be  specifically  set  forth  in  the  license  in  accordance  with  standards
    prescribed  in  the  act.  Furthermore,  licenses  should  be  subject  only  to  com-
    pliance with  specifically  stated  conditions  and  standards.

    6.  A  rii/ht  to  normal  patent  and  ''industrial  secref  protectioi\,  tvhich  ivill
    require  amevdmetit  of  sections  7  (c)  and  11. — Only  under  the  incentives  of
    competitive  enterprise  will  the  greatest  advances  in  the  art  of  producing  and
    utilizing  ptomie  energy  and  its  byproducts  be  realized.  Not  only  will  private
    development  be  greater,  but  the  military  program  will  also  benefit.  Satisfactory
    procedures  have  long  been  established  for  control  of  inventions  and  discoveries
    having  military  significance.  The  system  has  protected  the  military  and  at  the
    same  time  rewarded  the  inventor  for  his  investment  and  ingenuity.  Industry  has
    accepted  this  pattern  in  the  past.  There  is  nothing  in  the  nature  of  atomic
    energy  requiring'  a  different  treatment  except  as  may  be  required  in  the  interest
    of  national  security.  One  of  the  most  important  features  of  our  free-enterprise
    system  is  the  development  of  new  processes  and  methods.  It  seems  inappro-
    priate to  take  away  this  incentive  by  changing  patent  rights  and  requiring  full
    disclosure  to  all  competitors.  Of  course,  full  disclosure  to  the  AEC  on  a  con-
    fidential basis  should  be  required  to  protect  the  public  health  and  safety  and  to
    determine  which  have  military  significance.

    The  above  changes  are  imperative  if  a  free  competitive  atomic-energy  in-
    dustry is  to  be  established.  Such  an  industry  will  not  only  produce  the  full
    benefits  of  potential  peacetime  uses  but  will  also  provide  the  Nation  with  a
    broader  and  sounder  base  upon  which  to  build  in  time  of  emergency.  In  addi-
    tion to  the  foregoing  it  is  also  desirable  that  many  other  features  of  the  present
    Atomic  Energy  Act  be  studied  for  amendment  or  repeal :

    (1)  The  provisions  of  section  7  (c)  which  .give  the  Commission  responsi-
    bility in  antitrust  matters  probably  should  be  handled  as  other  antitrust
    matters  ar'e  handled,  by  the  office  of  the  Attorney  C.eneral.

    (2)  The  provisions  of  section  7  (d)  which  possibly  interfere  with  the
    regulation  of  public-utility  operations  by  presently  constituted  regulatory
    agencies  pi-ohably  should  be  left  to  those  Government  agencies.

    The  foregoing  is  submitted  for  the  purpose  of  discussion.  We  believe  an  oppor-
    tunity is  hereby  afforded  to  reconcile  the  fundamental  purpose  of  the  Atomic
    Energy  Act,  the  protection  of  national  security  with  the  purpose  and  advantage
    of  utilizing  private  industry's  ability  and  facilities.

    April  17, 1953.

    ATOMIC    POWER    DEVELOPMENT  153

    Mr.  CiSLER.  We  are  very  privileged  to  be  here  today,  and  we  thank
    yon  very  mnch  for  your  courtesy.

    Kepresentative  Holifield.  Mr.  Cisler,  we  are  glad  to  have  you  be-
    fore the  committee  again.
    Mr.  Cisler.  Thank  you.

    Representative  Holifield.  Is  your  statement  a  statement  on  behalf
    of  the  whole  group,  or  does  it  represent  a  statement  of  the  utilit}'
    portion  of  that  group  ?

    Mr.  Cisler.  It  is  a  statement  for  the  whole  group,  Congressman.
    Representative  Holifield.  Now,  as  I  understand,  the  utility  com-
    panies are  not  particularly  interested  in  patents,  as  such.     They  are
    interested  chiefly  in  the  power,  the  end  product  power.

    Mr.  Cisler.  I  think  it  is  very  necessary.  Congressman  Holifield,  to
    realize  that  the  heat  energy  is  just  a  part  of  this  development.  As  I
    endeavored  to  point  out  in  the  formal  presentation,  there  are  other
    aspects  in  the  commercial  value  of  the  products  and  byproducts  which
    have  a  very  definite  effect  on  the  economic  and  competitive  aspects
    of  the  generation  of  electric  power.

    Representative  Holifield.  But  in  the  main,  the  utility  group  is
    interested  in  production  of  cheap  power,  rather  than  in  patenting
    processes  and  patenting  machineries  ?

    Mr.  Cisler.  I  can  speak  for  my  own  company.  We  have  had  a
    research  and  development  program  for  many  years.  "We  have  en-
    couraged invention  by  our  employees.  We  have  also  carried  forward
    certain  research  and  development  work  as  a  corporate  undertaking.
    I  feel  that  patent  matters  are  very  definitely  a  part  of  this,  because
    we  are  concerned  with  the  development  of  equipment,  and  that  equip-
    ment must  come  out  of  the  teamwork  which  this  group  represents.
    I  don't  believe  that  it  is  possible  to  separate  one  part  from  another.
    I  think  we  have  an  unusual  situation  here,  whereby  the  electric
    power  industry,  in  order  to  carry  forward  this  development,  must  be
    very  interested  in  the  development  of  the  equipment  itself.  We  have
    always  been  concerned  with  that,  but  we  have  largely  looked  to  the
    manufacturers  of  equipment  for  much  of  the  development  work,  and
    they  in  turn  have  been  concerned  with  patent  matters.  I  do  not  be-
    lieve it  is  possible,  in  this  particular  project,  to  separate  out  the  patent
    aspects.  I  would  be  glad  for  INIr.  Gillespie,  who  is  here  with  me,  and
    who  is  much  more  versed  in  those  aspects  than  I  am,  to  speak,  if  he
    would  care  to.

    Representative  Holifield.  Well,  Mr.  Cisler,  I,  of  course,  agree  with
    you  that  the  patent  problem  cannot  be  divorced  from  the  change  in
    the  law.  And  I  regret  that  you  have  not  made  the  presentation  to
    us  which  would  state  in  clear  terms  the  types  of  patents  that  you  would
    like  to  have,  the  values  that  those  patents  would  have  to  industry,  upon
    what  basis  those  patents  could  be  given,  due  to  the  fact  that  we  already
    have  this  great  base  of  technical  knowledge  which  it  is  necessary  for
    you  to  go  to  the  Government  to  get.  Before  you  even  start  ])atent-
    ing  anything,  you  must  have  access  to  this  material,  which  in  the  last
    5  years  has  cost  the  Government  $550  million,  in  the  research  and
    develo]^ment  of  reactors  alone,  not  in  weapons  or  anything  like  that,
    but  in  the  reactor  phase  alone.  The  Government  has  spent  $550  mil-
    lion in  the  reactor  phase.  Now  industry  comes  in  with  a  desire  for
    a  change  in  the  law,  which  you  have  stated  on  several  different  oc-
    casions here,  and  yet  in  your  statement  you  have  avoided  being  exi)licit
    on  the  patent  provision.  And  yet  we  have  to  be  very  explicit  in  writ-
    ing legislation  on  that  point.

    154  ATOMIC    POWER    DEVELOPMENT

    Mr.  Gillespie.  Mr.  Holifield,  may  I  answer  your  question,  possibly
    more  explicitly  ?  We  have  discussed  the  subject  of  patents  among  the
    various  members  of  the  association,  and  it  is  our  feeling  that  the  patents
    on  power  development  developed  in  the  course  of  our  project,  provided
    that  the  act  Avere  amended,  would  be  licensed  to  the  United  States
    Government  for  military  purposes  without  charge.

    Representative  Holifield.  The  present  act  provides  for  that.

    Mr.  Gillespie.  The  operation  of  the  act,  as  expressed  by  the  regula-
    tions require  that  in  order  to  do  work  in  atomic  energy,  you  contract
    with  the  Commission,  and  in  most  instances  when  you  contract  you
    have  an  "A"  type  patent  clause  which  takes  all  of  the  patent  rights.

    Representative  Holifield.  That  is  right ;  for  military  uses.

    Mr.  Gillespie.  For  all  uses.

    Our  policy  would  be  that  the  Government,  for  military  purposes,
    would  be  granted  a  license  royalty-free.  The  associates  in  the  group
    individually  would  also  be  granted  a  license  royalty-free  for  anything
    developed  by  the  group  itself  with  its  own  money.  To  the  rest  of
    the  world,  the  patents  would  be  available  for  power  development,  but
    a  royalty  would  be  charged.

    Representative  Holifield.  What  type  of  a  royalty  ?  Would  it  be  on
    a  restricted  basis  ?

    Mr.  Gillespie.  No.  We  would  open  it  to  all  the  world.  The  for-
    ward looking  companies  of  America  today  feel  very  strongly,  as  I
    am  sure  our  companies  do,  that  the  greatest  profit  to  the  company
    comes  from  a  broad  patent  licensing  basis,  similar  to  the  chlorophyll
    illustration  that  I  gave  you  before  in  executive  session.  Let  everyone
    come  in  at  the  lowest  possible  royalty  rate.  Then  your  broad  base  of
    patent  licensing  gives  the  income,  rather  than  holding  it  to  the  re-
    stricted few  and  charging  a  high  royalty  rate.

    Now,  forward-looking  companies  feel  that  way.  I  would  assume
    that,  inasmuch  as  we  have  made  a  positive  statement  here  that  on
    power  development  we  would  license  the  patents  to  the  world,  we
    would  charge  a  royalty  rate  that  would  be  reasonable  and  right.

    Representative  Holifield.  You  would  agree,  then,  to  compulsory
    licensing  to  any  group  that  came  before  you  and  offered  to  pay  a  fair
    and  indiscriminate  royalty  ?

    Mr.  Gillespie.  I  wouldn't  agree  to  the  theory  of  compulsory  licens-
    ing. I  state  that  the  position  of  our  project  is  that  we  would  license
    voluntarily  in  the  field  of  power.

    Representative  Holifield.  Well,  if  you  would  do  it  voluntarily,  and
    that  is  your  objective,  we  are  writing  legislation,  you  know,  and  your
    personal  assurance  to  this  committee  is  accepted  at  face  value.  But
    you  may  be  dead  tomorrow,  and  the  law  may  live  on.  Now,  you
    would  object,  then,  to  compulsory  licensing  so  as  to  make  any  patent
    that  you  might  have  acquired  available  to  all  other  private  industry
    groups  and  all  States  and  political  divisions  ?

    Mr.  Gillespie.  We  would  object  to  the  theory  of  compulsory  licens-
    ing, yes.  As  far  as  we  personally  are  concerned,  we  would  give  the
    same  effect  to  our  activities  as  though  we  had  compulsory  licensing.
    But  you  see,  it  is  a  voluntary  thing,  and  that  is  different  than  com-
    pulsion.

    liepresentative  Holifield.  Well,  if  you  want  complete  widespread
    participation  in  the  benefits  of  atomic  energy,  which  you  admit  has  a
    very,  very  strong  base,  which  has  been  produced  by  Government
    expenditure,  and  if  you  want  the  widest  possible  competition,  the

    ATOMIC    POWER    DEVELOPMENT  155

    widest  possible  use,  such  as  the  chlorophyll  example  that  you  have
    just  given  to  us,  it  would  seem  to  me  that  you  wouldn't  object  to  a
    compulsory  licensing  provision.

    Mr.  Gillespie.  I  would  feel  very  strongly  that  we  shouldn't  put
    a  compulsory  licensing  clause  in  the  Atomic  Energy  Act,  for  the  rea-
    son that  it  should  be  made  as  near  like  the  patent  provisions  of  the
    general  business  of  the  world  today  as  possible,  and  compulsory
    licensing  is  not  a  usual  feature  of  patents.

    Representative  Holifield.  Well,  how  do  you  propose  to  compensate
    the  taxpayers  of  America  for  their  investment  to  date  in  this  develop-
    ment?

    Mr.  Gillespie.  Mr.  Holifield,  we  have  compiled  a  group  of  questions
    Avhich  have  been  put  from  time  to  time  by  yourself  and  others.  We
    have  attempted  to  answer  them  in  the  best  way  that  we  could.  We
    have  them  written  here.  And  I  would  like  to  leave  a  copy  of  them
    with  you,  so  that  you  might  look  over  the  answers  that  we  have  made
    to  the  sort  of  question  which  you  now  propose.

    Representative  Holifield.  Well,  it  might  be  well  to  read  into  the
    record  the  answer  that  you  have.

    Mr.  Gillespie.  All  right.  I  will  .ask  you  if  this  is  the  question
    that  you  put  to  me :

    Will  the  public  investment  of  $12  billion  be  turned  over  to  private  enterprise
    for  exploitation  if  the  act  is  amended?

    Representative  Holifield.  That  is  close  to  it.  However,  I  realize
    that  part  of  that  12  billion  has  been  along  the  line  of  military  develop-
    ment.

    Mr.  Gillespie.  That  is  true.

    Representative  Holifield.  And  I  certainly  would  not  apply  the
    $12  billion  in  toto  to  the  comparison  of  the  investment  that  your
    private  groups  have  put  in.

    Mr.  Gillespie.  Our  answer  to  that  is  this :

    Most  of  the  7  billion  that  has  been  spent  for  the  Government  atomic-energy
    program  and  the  5  billion  it  has  declared  it  will  spend  in  the  near  future  has
    been  for  military  production.  We  do  not  ask  to  take  over  the  entire  program ;
    we  do  not  want  to  make  bombs.  We,  and  we  speak  in  this  sense  as  a  member
    of  industry  generally,  ask  only  for  permission  to  use  certain  knowledge  of  small
    dollar  value  which  has  not  been  fully  exploited  by  Government.  This  knowl-
    edge will  not  be  consumed ;  it  will  be  put  to  use,  like  a  breeder  reactor,  to
    generate  more  knowledge.  This  new  knowledge,  which  we  return  to  the  Gov-
    ernment, is  the  interest  we  pay  for  use  of  the  old.

    Because  of  our  patent  policy  which  we  have  heretofore  announced,  if  we
    succeed,  the  Government  and  the  Nation  gain  by  our  success.  If  we  fail,  the
    Government  reaps  the  benefits  of  our  sad  exi>erience  without  cost.

    Senator  Hickenlooper.  I  think  we  might  have  all  those  questions
    and  answers  put  in  the  record  at  the  end  of  this  testimony,  if  that  is
    all  right.

    (The  material  referred  to  will  be  found  on  p.  107.)

    Mr.  Gillespie.  That  would  be  very  fine,  sir.

    Representative  Holifield.  Mr.  Cisler,  how  nnich  money  is  your
    company  or  your  group  prepared  to  put  into  this  development  ?

    Mr.  CiSLEK.  At  our  previous  meeting,  Congressman  Holifield,  we
    saia  that  such  a  project  might  cost  $50  million  or  more.  And  Chair-
    man Cole  asked :

    Do  you  make  the  unqualified  statement  that  you  have  $."»0  million  ready  to
    undertake  this  project  if  the  law  is  changed'.'

    36740—53 11

    156  ATOMIC    POWER    DEVELOPMENT

    My  answer  to  that  question  was  this :  (

    When  you  aske  me,  do  we  have  ?50  million  directly  in  hand,  I  must  answer'-
    that  we  do  not.  But  we  certainly  do  hope  to  have  it  when  the  time  comes  to
    carry  out  the  project.

    And  may  I  say  this  same  situation  with  respect  to  financing  is
    true  throughout  all  of  the  expansion  of  our  facilities.  This  year  alone
    our  company  has  gone  into  the  market  and  borrowed  more  than  $50
    million  to  carry  out  the  expansion  of  its  facilities.  Perhaps  later  this
    year  and  next  year,  of  course,  we  will  be  doing  more  financing.  We
    seek  the  funds  as  we  need  them  to  carry  out  the  construction.  And
    we  would  expect  to  proceed  in  a  similar  way  in  carrying  out  this
    proposed  project.

    Eepresentative  Holifield.  Would  you  plan  to  build  a  single-use
    reactor  or  a  dual  purpose  reactor  producing  plutonium  as  well  as
    power?

    Mr.  CiSLER.  Oh,  indeed  a  reactor  producing  plutonium  as  well  as
    power,  a  fast  high  temperature  breeder  reactor,  which  is  a  producer
    of  energy  to  be  used  for  the  generation  of  power  as  well  as  for  the
    production  of  plutonium,  which  of  course,  is  a  military  material  and
    is  also  a  very  high  grade  fuel,

    Representative  Holifield.  I  assume  that  you  would  want  con-
    tracts with  the  Government  to  purchase  that  plutonium  ?

    Mr.  CiSLER.  No ;  we  do  not  seek  any  contracts  for  the  purchase  of
    the  plutonium.  And  if  I  may  take  just  a  moment  further,  I  would
    like  to

    Representative  Holifield.  Well,  you  know%  no  one  else  would  be
    allowed  to  buy  it  under  present  law,  and  certainly  it  could  not  be  re-
    leased in  an  uncontrolled  fashion  into  the  general  market  as  other
    materials  are,  because  of  its  bomb-making  properties.

    Mr.  CiSLER.  That  is  true.  Whatever  use  would  be  made  of  the
    plutonium  produced  would  have  to  be  in  keeping  with  the  law  as  it
    is  written.  But  I  do  want  to  make  it  clear  that  we  are  not  seeking
    any  contract,  any  guarantee,  for  the  purchose  of  plutonium  on  the
    part  of  the  Government.  What  we  produce  must  find  its  place  in
    competition  with  the  Government's  own  production  of  plutonium.

    Representative  Holifield.  Well,  now,  assuming  that  your
    plutonium  is  not,  from  a  cost  standpoint,  a  fuel  which  is  competitive
    with  convention  fuel,  it  would  be  very  doubtful  if  it  would  have  a
    very  widespread  sale  outside  of  the  Government.

    Mr.  CiSLER.  Well,  it  is  possible  that  it  could  be  used  as  a  premium
    fuel  for  power  generation  in  remote  areas  wdiere  fuel  costs  are  high.
    We  must  keep  in  mind  that  the  justification  for  a  nuclear  heat  power
    reactor  would  be  influenced  greatl}'  by  the  cost  of  the  competitive  fuel.
    Conditions  will  be  different  for  all  parts  of  the  country.  The  competi-
    tive justification  of  atomic  fuels  certainly  will  not  occur  first  in  those
    areas  where  conventional  fuel  costs  are  lowest.

    Representative  Holifield.  Well,  in  view  of  the  fact  that  the  Nation
    has  large  coal  resources  and  oil  resources  available  to  it,  do  you  think
    tliat  now  is  the  time  for  the  Government  to  subsidize  the  production
    of  atomic  power  by  private  industry  ?

    Ml'.  (Jlslek.  No;  1  do  not.

    Representative  Holifield.  You  would  not  require  any  form  of  sub-
    sidization in  the  form  of  abnormal  tax  amortization  or  long-term
    Government  financing  at  low  interest  rates  or  contracts  for  the  pur-
    chase of  plutonium  at  fixed  prices?

    Ml-.  CiSLER.    No.

    ATOMIC    POWER    DEVELOPMEKT  157

    Kepresentative  Holifield.  You  would  depend  upon  the  patent
    rights  and  its  economic  vahie  to  the  market  to  svistain  it  'i

    Mr.  CisLER.  Yes.  I  think  it  is  important,  too,  to  remember  that
    up  to  the  present  time  the  atomic-energy  industry  has  really  been  a
    military  industry,  and  it  has  been  an  industry  that  has  consumed
    great  quantities  of  power  rather  than  produced  power.  We  are  en-
    deavoring to  make  it  produce  power.

    Representative  Holifield.  Assuming  that  the  Congress  were  to
    grant  private  industry  the  privilege  of  producing  plutonium  for  sale
    to  the  Government  or  to  other  facilities,  how  many  firms  should  be
    allowed  to  have  that  privilege  ?

    Mr,  CisLER.  I  think  as  many  as  would  care  to  engage.

    Representative  Holifield.  As  many  as  can  raise  the  80  to  125  mil-
    lion dollars  to  build  a  reactor  ?

    Mr.  CiSLER.  And  they  would  do  so  on  the  economic  justification.

    Representative  Holifield.  Why  is  it  necessary  for  you  to  own  the
    reactor  ?  When  you  want  to  take  the  power,  when  your  chief  inter-
    est is  in  the  end  product,  could  not  the  federally  owned  reactors  de-
    livering power  to  the  private  utilities  company,  so  called,  at  the  bus-
    bar— why  could  not  tliat  arrangement  be  satisfactory  ^

    Mr.  GiLLEsriE.  In  the  first  place,  the  Government  reactors  presently
    in  being  are  not  competent  for  doing  so.

    Representative  Holifield.  Well,  that  is  true.  There  is  no  reactor
    in  existence  at  the  present  time.    It  is  all  in  the  planning  stage.

    Mr.  Gillespie.  And  we  propose  to  build  that  reactor.  That  is
    why  that  could  not  be  done.

    Representative  Holifield.  Wait  a  minute.  The  Government  could
    build  the  new  type  of  reactor  just  the  same  as  private  industry.

    Mr.  Gillespie.  There  is  no  question  about  it,  but  they  have  not
    done  it.

    Representative  Holifield.  Neither  has  private  industry.  So  that  is
    no  argument.

    Mr.  Gillespie.  We  are  asking  the  opportunity.

    May  I  go  back,  Mr.  Holifield,  to  your  last  question?  You  made
    the  statement  tliat  in  order  to  have  the  qualification  to  get  into  the
    atomic  industry  under  this  ]:>rogram,  we  should  have  to  have  a  hun-
    dred million  dollars.  I  think  that  we  have  got  to  think  a  little  further
    than  that.  There  would  be  a  lot  of  small  business.  There  would  be
    a  lot  of  inventors,  men  who  are  not  now  participating,  that  would  be
    qualified.  And  I  think  that  the  AEC  would  license  them  to  take
    patents,  people  who  today  can't  patent  their  material,  because  they
    are  not  in  the  study  gToups  and  not  in  the  places  where  they  would
    have  the  access  to  it.  This  would  open  up  a  broad  new  field  to  people
    qualified  under  the  regulation  of  the  Atomic  Energy  Commisison,
    from  the  public-health  and  national-security  standpoints.  So  it  would
    not  mean  by  any  means  that  you  would  have  to  have  the  qualification
    of  a  hundred  million  dollars  to  get  into  the  business  because  of  the
    fact  that  the  law  were  changed.

    Representative  Holifield.  Just  a  minute.  At  the  present  time,  of
    course,  any  properly  cleared  person  can  have  access  to  the  laboratories
    of  the  Government,  just  the  same  as  your  gToup  has  been  given  access
    to  this  mass  of  information.  Now,  no  backyard  mechanic  is  going  to
    go  in,  in  this  highly  complicated  technical  field,  and  start  making
    inventions  which  are  new  and  novel,  but  they  have  to  be  qualified
    people  trained  along  the  line  of  chemistry  and  nuclear  physics,  as

    158  ATOMIC    POWER    DEVELOPMENT

    you  know,  and  those  people  can  obtain  clearance,  and  as  a  matter  of
    fact,  the  majorit}^  of  the  people  in  the  United  States  that  are  quali-
    fied, I  believe  are  associated  in  one  way  or  another  with  this  pro-
    gram. I  mean  those  that  are  highly  qualified.  There  may  be  some
    others  that  may  get  into  it  later.

    Mr.  Git  lespie.  There  are  some  people  in  universities,  I  believe,  that
    are  qualified  that  do  not  come  in.

    Representative  Holifield.  We  have  a  very  strong  university  pro-
    gram, as  you  know.

    Mr.  Gillespie.  That  is  true.

    Bepresentative  Holifield.  I  yield  to  my  friend.

    ilepresentative  Patterson.  Just  following  your  statement  here,
    is  it  not  true  that  the  large  corporations  would  have  an  advantage  and
    might  build  patent-protected  monopolies  and  freeze  out  these  little
    fellows  ?

    Mr.  Gillespie.  Oh,  I  think  that  would  be  very  unlikely  ?

    Representative  Patterson.  Why  would  it  be  unlikely  ?

    Mr.  Gillespie.  If  you  will  just  pardon  me  one  moment,  I  think  we
    have  answered  that  in  one  of  these  questions.  We  have  discussed
    that,  and  1  will  give  you  the  answer  that  we  have  developed  on  that.

    Representative  Patterson.  Well,  maybe  you  could  tell  me  how  the
    smaller  companies  would  have  an  equal  opportunity  to,  say,  capitalize
    on  this  public-financed  background  there,  of  your  own  study  groups.

    Mr.  Gillespie.  The  smaller  companies?

    Represe;itative  Patterson.  Yes.

    Mr.  Gillespie.  Well,  the  smaller  companies  are  joining  in  our  study
    group.  We  have  electric  companies  that  are  smaller  companies.
    They  aren't  large ;  they  are  very  small  companies.  And  where  there
    may  be  a  possibility  that  at  the  core  of  most  of  these  study  groups
    you  will  iind  a  company  w^iich  is  more  expert  and  has  had  more  ex-
    perience in  the  atomic-energy  field,  but  each  of  these  projects  has
    gathered  in  new  companies.  For  instance,  our  group  is  now  1  of  30
    companies  involved.  Not  all  of  them  are  associated.  I  think  there
    are  3  or  4  of  them  that  are  hired,  but  there  are  30  involved.  And  of
    all  these  30  companies,  only  7  of  them  had  ever  had  any  contracts
    or  a  chance  at  being  on  the  inside  of  the  atomic-energy  program  be-
    fore. So  we  have  23  new  companies  associated  in  the  program.  And
    you  have  the  scientists,  the  engineers  of  these  companies  creating  a
    great  reservoir  of  new  people  added  to  the  atomic  energy  research
    program.  It  is  a  great  reservoir  that  is  being  added,  of  large  and
    small  companies ;  some  are  very  small  companies.

    Representative  Patterson.  What  is  the  answer  now  to  the  ques-
    tion I  just  propounded?

    Mr.  Gillespie.  The  answer  is  on  page  9.    The  question  is :

    Isn't  private  enterprise  best  served  vrith  more  companies  involved?  The
    amendment  of  the  act  now  would  limit  participation  to  relatively  few  large
    businesses  on  the  "inside."

    And  we  point  out  there  that  we  have  added  23  companies  to  the
    "inside"  jn-oup,  so  to  speak,  and  that  included  in  these  23  companies
    are  some  very  capable,  brilliant  men.  And  we  have  added  $10  billion
    of  resources  to  the  program.

    Representative  Patterson.  Would  these  companies  be  dependent
    upon  your  organization?

    Mr.  Gir.LESPiE.  In  the  inception,  the  training  of  the  new  people  is
    dependent  upon  the  organizations  who  have  had  contractual  expe-

    ATOMIC    POWER    DEVELOPMENT  159

    rience,  but  soon  they  fly  upon  their  own.  It  doesn't  take  too  long
    for  them  to  catch  up.

    Representative  Van  Zandt.  Is  it  not  true  that  your  group  is  actu-
    ally spearheading  the  effort  for  the  industry  in  general?

    Mr.  CiSLER.  I  do  not  believe  that  we  are  spearheading  for  the
    industry  in  general.  I  do  not  think  that  is  true.  Those  who  are
    associated  with  us  have  done  so  because  they  wished  to.  There  are
    others  not  now  in  the  group  who  are  desirous  of  joining  the  group.
    We  have  not  asked  the  Atomic  Energy  Commission  to  include  them,
    but  we  thhik  it  would  be  desirable  to  have  them  as  members  of  the
    group.

    Representative  Van  Zandt.  In  other  words,  you  are  independent,
    this  group  is,  of  the  industry  in  general?

    Mr.  CiSLER.  Yes,  we  are  entirely  independent,  and  we  do  not  speak
    for  the  industry.     We  speak  for  only  those  who  are  associated  with  us.

    Representative  Van  Zandt.  Suppose  you  were  successful  in  the
    development  of  a  fast  reactor,  and  you  actually  constructed  the  plant.
    What  would  be  necessary  for  another  member  of  the  industry  to  become
    part  of  your  group  ?  Would  they  have  to  buy  in  under  rules  estab-
    lished by  you  ?

    Mr.  CiSLER.  I  believe  that  that  would  come  about  largely  through
    whatever  royalties  they  might  pay  as  a  part  of  the  purchase  cost  on
    equipment  and  the  like  which  would  be  used.  This  would  not  be  un-
    usual, because  in  the  history  of  the  power  industry  equipment  has  been
    developed,  and  certainly  the  producers  of  that  equipment  have  had
    definite  rights,  patent  rights.  Those  holding  the  patents  have  licensed
    others  to  build  similar  equipment,  and  the  proposed  plans  would  be
    no  different  than  that.

    Representative  Patterson.  But  in  a  situation  like  that,  who  would
    control  the  patent  rights?

    Mr.  CiSLER.  In  our  project,  the  associated  group.

    Representative  Patterson.  It  looks  to  me  like  the  building  of  a
    monopoly.

    Mr.  CiSLER.  I  don't  believe  so,  Mr.  Patterson.  I  believe  that  the
    necessary  precautions  should  be  taken  to  prevent  that.

    Senator  Hickenlooper.  If  you  do  not  mind,  may  I  ask  a  question
    here  that  might  illustrate  this?

    For  instance,  Westinghouse  and  General  Electric  probably  operate
    very  few  powerplants  delivering  electricity  to  the  people.  But  they
    build  generators  and  things  of  that  kind  and  sell  them  to  the  industry.
    Is  it  possible  that  such  a  development  might  come,  where  individual
    powerplants  would  not  want  to  put  any  part  of  the  money  into  re-
    search, but  they  might  be  perfectly  willing  to  buy  the  designs  and  the
    plants,  as  they  do  generators  that  they  now  buy  from  the  people  who
    specialize  in  making  them?

    Mr.  CiSLER.  And  Avhich  also  may  have  royalties  or  patents  involved
    in  them.

    Senator  Hickenlooper.  Certainly.  In  other  words,  it  is  not  neces-
    sarily envisioned  that  each  company  that  wants  to  use  an  atomic
    furnace  to  create  some  heat  for  power  will  build  its  own,  is  it  ?

    Mr.  CiSLER.  That  is  true.

    Senator  Hickenlooper.  Probably  it  is  impossible  for  many  that
    would  use  it  to  build  their  own  plant.

    Mr.  CiSLER.  Traditionally  the  electric  power  systems,  the  operators,
    have  bought  their  equipment  from  the  manufacturers.  Now  we  must
    be  a  part  of  the  development  of  that  equipment  for  future  use.

    160  ATOMIC    POWER    DEVELOPMENT

    :  Might  I  just  say,  Mr.  Holifield,  that  this  particular  project  iuvolves
    a  complete  system.  It  is  more  than  just  the  reactor.  It  includes  the
    processing  of  the  reactor  products  and  the  byproducts.  It  starts
    ■with  the  source  material  and  carries  right  through  to  the  end  point.

    Representative  Holifield.  You  mean  you  are  planning  to  do  all
    of  that?

    Mr.  CisLEK.  We  are  planning  to  do  all  of  that  as  a  part  of  this
    project.     Our  plans  do  not  stop  with  the  reactor.

    Representative  Holifield.  I  hope  you  are  not  planning  to  do  that
    for  $50  million,  or  even  a  hundred  million,  or  even  $500  million.
    Because  the  processing  in  the  plants  that  process  this  material,  to
    clean  it  up  after  it  becomes  contaminated,  I  assure  you  is  expensive.

    Mr.  CisLER,  I  am  aware  of  that.  We  believe  that  we  can  do  it  at
    less  than  the  present  cost.

    Representative  Van  Zandt.  Will  the  gentleman  yield  ?
    -    Will  you  tell  us  about  how  much  the  plant  you  have  in  mind  will
    cost?

    Mr.  CisLER.  We  have  used  a  figure  of  approximately  $50  million.

    Representative  Van  Zandt.  Where  are  you  going  to  get  the  man-
    power ?

    Mr.  CiSLER.  To  build  ?  i

    ■    Representative  Van  Zandt.  No,  to  operate.

    Mr.  CiSLER.  We  would  develop  the  manpower,  train  it,  or  seek  it
    from  other  sources  of  experience.

    For  example,  at  the  present  time  we  have  about  50  people  working
    full  time  on  this  project  Those  men  are  from  the  various  organiza-
    tions associated  with  us.  They  have  had  experience  at  Oak  Ridge.
    They  have  had  experience  at  Schenectady.  They  have  had  exper-
    ience elsewhere.  We  have  endeavored  to  mobilize  this  experience,
    this  manpower  resource,  to  make  it  useful  in  carrying  forward  this
    development.  This  procedure  has  been  a  very  essential  part  of  our
    project  and  has  been  made  possible  by  the  widespread  participation.
    Mr.  Rincliffe  from  Philadelphia  has  people  with  us;  Mr.  Lindseth
    from  Cleveland;  Mr.  Fairman  from  New  York.  And  so  I  could
    name  all  of  those  participating.  The  men  from  these  companies  are
    working  in  different  locations,  in  the  manufacturing  plants,  back
    in  Detroit,  Midland,  New  York,  and  elsewhere.

    Representative  Van  Zandt.  Another  question,  Mr.   Chairman.

    I  notice  that  the  total  investment  of  your  group  represents  about
    $8  billion.  Do  you  know  of  any  other  combination  of  companies
    within  your  industry  that  could  form  a  similar  group  and  probably
    come  up  with  $50  million  for  this  purpose  ?

    Mr.  CisLER.  I  am  not  prepared  to  say,  because  I  personally  should
    not  speak  for  any  other  part  of  the  industry  which  is  not  associated
    with  us,

    .  Senator  Pastore.  May  I  ask  a  question  on  that  point  at  this  junc-
    ture?

    Could  you  invest  all  this  money  without  the  permission  of  your
    local  activity  administrator?

    Mr.  CiSLER.  We  believe  that  the  public  service  commissions  should
    be  kept  fully  informed  of  the  development.  As  a  part  of  the  project,
    we  at  very  early  stages  requested  the  Atomic  Energy  Commission
    to  clear  Mr.  McCarthy,  the  chairman  of  the  Michigan  Public  Service
    Commission,  and  he  has  been  cleared.     He  was  with  us  here  when

    ATOMIC    POWER    DEVELOPMENT  161

    we  appeared  before  this  committee  a  few  weeks  ago  in  executive  ses-
    'sion.  The  NARUC,  which  is  the  organization  of  utility  commission-
    ers throughout  the  United  States,  has  appointed  an  atomic  energy
    committee,  and  in  the  membership  of  that  committee  there  is  a  mem-
    ber from  Michigan,  a  member  from  Wisconsin,  a  member  from  Cali-
    fornia, I  think  one  from  Missouri,  and  they  are  going  to  be  concerned
    v.'ith  this  development  from  a  Commission  standpoint.  I  believe  that
    the  Commission  has  had  a  request  to  clear  those  people  so  that  they
    can  be  inforced.  We  believe  that  our  Commission  in  Michigan  should
    be  kept  informed,  because  we  are  expending  funds.  Whenever  we
    are  going  into  tlie  market  to  attract  funds  into  our  enterprise,  we  do
    so  with  the  full  knowledge  and  approval  of  the  Commission  our  ex-
    penditures on  atomic  energy  should  be  on  the  same  basis.

    Senator  Pastore.  Therefore,  is  it  reasonable  for  me  to  assume  that
    any  investments  made  would  be  supervised  from  the  standpoint  of
    the  public  interest?

    Mr.  CiSLER.  I  believe  so.

    Senator  Pastore.  Here  is  another  question  I  would  like  to  ask  you,
    Mr.  Cisler.  Your  thesis  that  you  have  developed  here  today  is  pre-
    dicated exclusively  upon  private  funds  being  invested  in  this  ex-
    periment, exclusive  of  any  Federal  appropriations  ?

    Mr.  CisLER.  Yes,  sir.

    Senator  Pastore.  Am  I  right  in  that  assumption  ?

    Mr.  CiSLER.  Yes;  M^ith  the  exception  of  the  work  which  is  being
    done  at  the  national  laboratories.  And  there  we  have  said  that  if
    the  Atomic  Energy  Commission  should  decide  that  there  should  be
    a  charge  made  for  the  work,  then  industry  would  have  the  alternative
    of  meeting  that  expense  or  seeking  other  similar  facilities  to  carry  on
    the  work.  -*^-    -..

    Senator  Pastore.  And  if  these  changes  which  you  have  suggested
    are  made  in  the  law,  do  you  see  private  industry  building  a  reactor
    within  a  reasonable  time?
    •     Mr.  Cisler.  Yes ;  I  do.

    Senator  Pastore.  Would  you  venture  a  guess  on  the  number  a  year?

    Mr.  Cisler.  We  have  said  in  this  presentation  that  we  would  hope
    to  iiave  our  preliminary  research  and  development  work  accomplished
    by,  say,  the  end  of  1954,  and  that  we  could  then  proceed  with  the
    detailed  engineering  design  and  later  construction.  As  you  know,
    even  the  conventional  powerplant  today  requires  3  to  4  years  for  its
    construction.  Certainly  it  would  require  a  longer  period  of  time  to
    carry  out  the  design  and  construction  of  a  nuclear  reactor  plant.
    Going  M'ith  that  nuclear  reactor  would  be  the  same  type  of  generating
    equipment  which  is  used  in  the  conventional  plant,  and  which  requires
    about  3  years  for  its  manufacturp  and  erection.

    We  would  hope  to  accomplish  this  entire  project  in  a  period  of  10
    years  or  less.

    Senator  Pastore.  And  one  further  question,  Mr.  Cisler.  To  merely
    get  your  opinion  on  the  record  on  this  question :  Do  you  see  nuclear
    energy  or  power  being  developed  for  civilian  commercial  use  b}'  Gov-
    ernment alone?

    Mr.  Cisler.  Being  developed  b}'  Government  alone  ?

    Senator  Pastore.  Do  you  see  any  prospects  of  that  within  the  10-
    3'ear  span  that  you  are  talking  about?

    162  ATOMIC    POWER    DEVELOPMENT

    Mr.  CiSLER.  I  think  that  it  would  be  possible,  of  course,  for  Govern-
    ment to  do  it  in  that  period  of  time.  Whether  Government  should  or
    should  not  do  it  I  think  is  a  matter  for  Government  to  decide.

    We  have  said  in  our  summary  here  that  the  opportunity  that  we  are
    seeking  does  not  in  any  sense  preclude  Government  from  doing  what-
    ever those  in  responsible  charge  may  decide  should  be  done.

    Senator  Pastore.  Do  you  think  that  private  industry  can  do  it
    better  and  faster  ?

    Mr.  CiSLER.  I  do.

    Representative  Van  Zandt.  May  I  add,  Mr.  Chairman,  cheaper?

    Mr.  CiSLER.  Yes ;  from  the  overall  standpoint.

    Senator  Hickenlooper.  Senator  Bricker,  do  you  have  any  ques-
    tions ?

    Senator  Bricker.  You  mentioned  a  moment  ago  that  this  group
    banded  together  anticipating,  of  course,  the  development  of  power  for
    public  utility  consumption  as  well  as  private  consumption.

    Mr.  CiSLER.  Yes,  Senator  Bricker.  For  example,  with  us  in  Michi-
    gan, we  are  interconnected  with  the  Public  Lighting  Commission  of
    the  city  of  Detroit.  We  exchange  power  with  them.  The  Consumers
    Power  Co  of  Michigan,  interconnected  with  us,  interchanges  power
    with  the  city  of  Lansing,  Mich.,  which  has  its  own  plant.  The  Ford
    Motor  Co.  has  a  large  powerplant  of  its  own.  We  interchange  power
    with  them.  So  that  any  economies  tliat  could  be  brought  about  by
    the  use  of  atomic  energy  for  power  generation  would  benefit  all  of  the
    users  of  power ;  because  power  is  interchanged  on  an  economic  basis,
    and  it  ultimately  reflects  in  lower  costs  to  the  user.

    Senator  Bricker.  You  mentioned  a  moment  ago  that  a  committee
    has  been  appointed  by  the  National  Association  of  Utilities  Commis-
    sioners for  the  purpose,  I  suppose,  of  just  keeping  in  touch  with  the
    development  throughout  the  country  of  the  private  utilization  of  this
    new  source  of  energy.  The  Commissioners  at  the  present  time,  of
    course,  would  not  be  interested  in  the  program  as  such,  except  that
    it  might  deplete  the  resources  of  some  public  service  company,  to  the
    extent  where  it  would  affect  the  character  of  the  services  that  were
    rendered.

    Mr.  CiSLER.  Yes.

    Senator  Bricker.  That  is  the  only  place  that  their  jurisdiction
    would  attach.  Would  they  "blue  sky"  your  investments  in  this  new
    operation  ?

    Mr.  CiSLER.  They  would  be  concerned,  for  example,  with  the  period
    of  amortization  and  the  reserves  to  be  set  up.  The  period  of  amortiza-
    tion might  be  shorter,  or  it  might  be  longer.  As  we  said,  the  con-
    ventional powerplant  has  a  useful  life  in  excess  of  30  years.  We  are
    using  equipment  that  has  had  40  years  of  useful  life.  If  there  had  to
    be  a  more  rapid  amortization,  because  replacements  or  improvements
    of  nuclear  reactors  were  necessary  the  public  service  commissions
    would  be  concerned.

    Senator  Bricker.  That  is  after  you  begin  to  render  service,  of
    course.

    Mr.  Cisler.  Yes.

    Senator  Bricker.  At  the  present  time,  you  are  not  thinking  of
    developing  this  as  a  public  utility.

    Mr.  Cisler.  Well,  of  course,  the  power  would  be  used  in  the  public
    or  industrial  systems.    The  actual  carrying  out  of  the  project  might

    ATOMIC    POWER    DEVELOPMENT  163

    be  done  as  a  separate  undertaking,  contracting  for  the  sale  of  the
    power  to  the  system  in  tlie  area.

    Senator  Bricker.  Where  do  you  anticipate  building  this  reactor?

    Mr.  CiSLER.  We  don't  know,  Senator  Bricker.  At  the  present  time
    a  very  large  exclusion  area  is  required.  We  hope  that  the  exclusion
    area  requirement  can  be  lessened  greatly  because  the  economic  con-
    sideration will  be  influenced  greatly  by  the  amount  of  land  required.
    Certainly  we  would  have  use  for  such  an  installation  in  Michigan.  I
    am  sure  there  are  many  other  States  where  such  an  installation  could
    be  placed  on  an  economic  basis,  provided,  of  course,  that  the  disad-
    vantages as  to  area  requirements  or  distance  do  not  make  it  an  unsound
    economic  venture.

    May  I  say  this:  that  we  expressed  what  our  associated  group  are
    doing  in  the  way  of  expenditures  and  increasing  the  capability  of  their
    systems.  The  interconnected  power  systems  of  the  United  States,
    those  which  are  privately  or  investor  owned,  those  which  are  federally
    owned,  and  those  which  are  nonfederal,  such  as  Los  Angeles,  have
    under  construction  more  than  40  million  kilowatts  of  additional  gen-
    erating capability  scheduled  to  come  into  service  in  the  period  1953
    through  1956.  Of  that  40  million  kilowatts  more  than  36  million
    kilowatts  is  in  the  form  of  fuel-generated  electricity.  This  shows  that
    predominantly,  the  electric  power  of  the  future  in  this  country  is
    going  to  come  from  the  use  of  fuels.  That  is  borne  out  by  the  present
    President's  Materials  Policy  Committee  report.  The  fuel  reserves  of
    the  country  are  far  greater  than  the  hydraulic  reserves.

    Senator  Bricker.  This  is  hypothetical  only,  but  if  you  are  going  to
    build  this  in  Michigan,  would  you  anticipate  going  to  the  Michigan
    Public  Utilities  Commission  for  authorization?

    Mr.  CiSLER.  Yes,  certainly,  as  a  public  utility.

    Seantor  Bricker.  My  first  question  was:  You  are  going  to  proceed
    on  the  theory  that  this  is  a  public  utility,  and  a  public  utility  service
    will  be  rendered?

    Mr.  CiSLER.  Oh,  yes.  Very  definitely.  The  Detroit  Edison  Co.,
    speaking  for  the  company,  could  not  proceed  on  any  other  basis.

    Senator  Pasture.  As  a  matter  of  fact,  if  this  experiment  were  a
    failure,  that  cost  might  have  to  be  passed  on  to  the  consumer  in  that
    area ;  might  it  not  ?

    Mr.  CiSLER.  If  it  was  a  failure,  it  certainly  would  be  a  cost  to  the
    owners  of  the  property,  and  there  would  be  a  cost  certainly  that  would
    come  out  of  the  revenues,  or  the  reserves  that  you  have  set  up.

    Senator  Pastore.  It  might  affect  the  rate  base?

    Mr.  CiSLER.  It  might  affect  the  rate  base.

    Senator  Bricker.  It  would  not  affect  the  rate  base.  It  might  affect
    the  cost  of  service,  if  it  were  not  used  and  useful.  If  it  did  not  become
    used  and  useful,  it  would  have  nothing  to  do  with  the  rate  base,  and
    then  there  wovdd  be  the  question  o  fwhether  or  not  it  was  a  legitimate
    expenditure  for  the  purpose  of  rendering  the  present  power  service.

    Mr.  CiSLER.  Yes,  sir.

    Representative  Holifield.  Mr.  Cisler,  during  the  past  7  years,  there
    has  been  a  tremendous  development  in  the  atomic-energy  field,  as  you
    well  know\  We  have  improved  our  reactors.  As  you  know,  we  had
    trouble  at  Hanford  with  certain  processes,  problems  which  have  now
    been  solved.  AVe  have  develojjed  a  great  many  special  metals,  zirco-
    nium, for  instance;  we  brought  the  price  down  from  several  hundred

    164  ATOMIC    POWER    DEVELOPMENT

    dollars  a  pound  to  a  few  dollars  a  pound.  We  have  developed  pumps,
    special  machinery,  and  all  that  sort  of  thing,  to  do  this  job.  And
    last  and  probably  most  important  we  have  got  the  genesis  of  the
    breeder  process  pretty  well  established,  although  it  will  be,  as  Mr.
    Dean  said,  probably  5  years  before  we  get  the  benefit  of  the  breeder
    process.

    Now,  you  are  aware  that  that  progress  was  made  by  private  in-
    dustry, using  Government  funds.

    Mr.  CiSLER.  Yes.

    Representative  Holifield.  They  made  it  under  contract.  So  I  am
    a  little  bit  at  a  loss  when  you  say  that  private  industry  can  do  some-
    thing so  much  better  than  private  industry  has  done  in  the  past,  when
    we  have  had  the  biggest  and  the  best  industrial  companies  in  the
    Nation  doing  this  job,  and  they  have  had  an  unlimited  amount  of
    funds,  and  they  have  not  had  to  answer  to  stockholders,  and  they  have
    not  had  to  hesitate,  and  they  have  not  had  to  raise  funds  to  do  this
    job.  And  they  have  been  given  the  privilege  of  going  down  many
    avenues  of  research  and  development,  which  a  private  company  could
    not  afford  to  do.

    It  somewhat  amazes  me  to  hear  you  say  that  now,  by  the  invest-
    ment of  a  very  few  million  dollars,  private  industry  is  going  to  bring
    about  some  miracles  in  the  next  3  to  5  years.

    Mr.  CisLER.  Mr.  Holifield,  I  was  speaking  about  this  particular
    higli-temperature  fast  breeder  reactor  project.

    Kepresentative  Holifield.  Well,  now,  let  us  speak  about  that.  Was
    that  not  developed  by  Dr.  Zinn  and  some  of  his  colleagues?  That
    was  not  developed  by  the  group  that  you  are  affiliated  with.  In  fact,
    your  group,  all  of  your  men,  got  their  training  from  these  men  in  the
    Government-managed  facilities.  They  went  to  these  different  private
    companies,  like  GE,  at  Hanford,  and  Ihe  Berkeley  Laboratory,  which
    is  under  contract,  and  they  got  the  knowledge  of  these  thirty-odd
    different  types  of  reactors,  and  they  have  already  been  thought  about
    and  put  down  in  writing,  you  might  say,  although  not  developed  in
    detail.  So  you  are  not  coming  up  with  an  original  contribution  in
    this  high-temperature  reactor.

    Mr.  CisLER.  Much  of  the  data  has  been  known.  In  fact,  some  of
    the  scientific  information  was  known  before  even  the  Government
    carried  on  its  military  program.

    Representative  Holifield.  Oh,  I  am  sure  that  is  true.

    The  early  history  of  atomic  energy  is  the  history  of  what  occurred
    m  the  private  laboratories,  in  educational  institutions  in  this  country
    and  overseas.  The  basic  principles  have  been  Imown.  Certainly  pri-
    vate industry  has  benefited.  I  hope  that  private  industry  has  con-
    tributed also.

    Representative  Holifield.  I  think  private  industry  deserves  great
    credit  for  the  development  of  atomic  energy  to  date,  even  though  they
    have  clone  it  witli  Government  funds.  I  think  in  the  operational  field
    they  have  been  the  ones  who  have  done  it,  and  I  am  anxious  to  give
    them  that  credit.

    Mr.  CiSLER.  We  have  for  several  year  been  doing  work  in  Michigan
    for  Argonne  to  carry  out  certain  research  and  test  work  for  the  Gov-
    ernment.

    Representative  Holifieij).  I  realize  that.

    ATOMIC    POWER    DEVELOPMENT  165

    Mr.  CisLER.  And  the  Government  has  used  many  others ;  ourselves
    in  only  a  small  way.     Certainly  we  have  benefited  greatly.

    I  would  believe  that  the  carrying  out  of  a  specific  project  of  this
    kind,  a  complete  system,  would  draw  on  a  great  deal  of  the  back-
    ground of  knowledge  now  had  and  knowledge  which  will  be  gained  by
    research  and  development  now  under  way.

    We  have  had  wonderful  cooperation  from  the  Atomic  Energy  Com-
    mission and  its  staff  throughout.

    Representative  Holifield.  I  think  this  committee  has  pushed  them,
    if  "pushed"  is  the  right  word,  out  of  the  operational  field,  or  prevented
    them  rather,  from  getting  into  the  operational  field,  as  a  Government
    operation,  and  has  insisted  that  they  act  as  a  management  group  and
    contract  for  the  actual  operation  to  be  in  private  industry.  This  was
    a  protection  against  the  growth  of  a  great  Government  bureaucracy.

    Mr.  CiSLER.  I  have  felt  personally  very  close  to  this,  because  I  was
    a  consultant  for  the  Atomic  Energy  Commission  in  1947,  to  assist  in
    setting  up  the  controls  over  the  export  of  materials  and  equipment,
    and  I  felt  it  was  a  privilege  to  be  able,  as  a  citizen,  to  help  the  Com-
    mission and  its  organization  in  certainly  a  small  way  to  advance
    forward  atomic  energy.

    Representative  Holifield.  I  am  sure  you  have  rendered  valuable
    service,  sir.  I  wouldn't  want  the  line  of  questioning  I  am  taking  to
    indicate  that  I  am  antagonistic  to  private  industry  participating  in
    this.  I  do  say  that  I  have  some  question  as  to  the  timing  and  type
    of  participation.  And  I  would  like  to  ask  you  what  you  think  about
    this.

    Let  us  assume  that  out  of  the  30 — and  I  use  the  figure  "30"  loosely —
    reactors  that  could  be  built,  10  of  the  most  promising,  or  5,  were
    selected,  and  the  Government  went  ahead,  at  the  cost  of  approximately
    $10  million,  and  built  fairly  large  pilot  types,  large  enough  so  that
    from  an  operational  standpoint  we  would  get  many  of  the  answers
    that  we  want  in  this  period  of  interim  development.  At  the  end  of
    that  time,  with  an  experimentation  of,  say,  a  hundred  million  dollars,
    we  could  develop  the  10  most  promising  types  of  reactors,  under  the
    actual  operation  of  private  industry,  just  as  we  have  proceeded  in  the
    past.  Then,  at  the  end  of,  say  3  to  5  years  of  experimentation  along
    that  line,  it  seems  to  me  that  private  industry  would  be  in  a  position
    to  select  from  out  of  that  10  the  1  or  2  most  promising  types.  And
    then  they  could  go  ahead  with  actual  knowledge,  in  the  investment  of
    their  stockholders'  money,  and  from  that  time  forward,  the  field  would
    be  open  to  everyone,  without  exclusive  patent  rights  obtained  in  this
    interim  period,  or  exclusive  claims  of  any  type  of  advantageous  equity
    for  these  few  groups  that  can  participate — and  they  must  be  few
    because  of  the  amount  of  money  that  is  involved.

    And  it  would  seem  to  me  that  private  industry  would  then  be  in  a
    much  safer  position,  wath  their  own  stocklioklers'  money,  and  they
    would  certainly  be  in  a  more  knowledgeable  position,  after  a  3-  to
    5-year  experimentation  period  along  this  line.  And  you  admit  that
    you  could  not  get  a  hirge  reactor  into  operation  for  less  than  6  or  10
    years.  And  you  might  then  find  that  in  tlie  meantime  development
    has  brought  about  processes  which  woukl  make  j'our  reactor  obsolete.

    So  it  seems  to  me  that  you  are  entering  into  a  ])eriod  of  extreme
    risk  for  capital  investment  right  at  this  experimental  stage.  What
    would  be  wrong  with  that  type  of  a  program,  may  I  ask  ?

    166  ATOMIC    POWER    DEVELOPMENT

    Mr.  CiSLER.  Well,  I  think  that  it  would  not  accomplish  results  as
    quickly  or  as  effectively  as  I  believe  they  can  be  accomplished  by  per-
    mitting private  industry  now  to  use  its  resources  of  all  kinds  to  carry
    forward  this  development.  I  believe  that  private  industry  ought  now
    to  put  its  shoulder  to  the  wheel  in  carrying  forward  atomic-energy
    development.  Private  industry  has  great  resources,  in  experience,  in
    manpower,  in  financial  resources.  Certainly  it  has  been  the  history
    of  industry  that  once  an  opportunity  and  a  development  gave  promise,
    it  would  move  forward.  We  believe  there  is  promise.  We  believe
    this  is  serious  business  for  us,  and  that  we  ought  to  engage  in  it  now
    as  rapidly  as  we  can ;  that  we  should  carry  forward  the  research  and
    development  work  with  the  hope  and  the  expectation  that  we  could
    then  move  forward  into  the  actual  construction.

    I  think  that  there  may  be  no  one  best  type  of  reactor.  We  believe
    this  type  is  the  one  which,  to  us,  holds  forth  the  greatest  promise  of
    being  competitively  and  commercially  successful.

    Senator  Hickenlooper.  You  mean  there  may  be  several  types  of
    color  television  ?

    Mr.  CiSLER.  Yes.

    Representative  Holifield.  Mr.  Chairman,  I  am  going  to  desist  in
    my  questioning,  although  I  have  a  great  many  more  questions,  but  I
    think  there  will  be  other  witnesses  that  I  can  ask  the  other  questions.
    But  I  would  like  to  say  this,  that  in  case  the  newspaper  reporters
    take  the  $50  million  figure  you  gave  as  a  complete  cost  for  building
    a  practicable  reactor  and  the  processing  and  the  generating  equip-
    ment that  would  go  along  with  it,  and  the  chemical  processing  cost  of
    the  fissionable  material,  I  would  warn  them  that  $50  million  would
    be,  in  my  opinion,  about  between  10  and  20  percent  of  the  cost  in-
    volved, and  not  the  total  cost.  I  do  not  think  you  would  want  to  let
    that  $50  million  stand,  would  you,  sir,  as  your  estimate  of  that  total
    process  ?

    Mr.  CiSLER.  We  have  used  that  figure,  after  very  careful  thought.
    We  would  hope  that  we  can  find  ways  and  means  of  decreasing  the
    capital  expenditure,  and  that  would  be  a  necessary  part  of  the  accom-
    plishment.

    Representative  Holifield.  Well,  I  hope  you  can.

    Mr.  Gillespie.  In  connection  with  your  last  question,  Mr.  Holifield,
    we  have  gone  through  this  same  process  of  selection  ourselves,  very
    naturally,  before  we  arrived  at  the  idea  that  this  was  the  type  of
    reactor  that  should  be  developed  as  the  type  that  we  wanted  to  invest
    our  stockholders'  money  in,  and  that  is,  of  course,  the  reason  we  do  it.

    Mr.  Cisler.  We  really  seek  the  opportunity  of  moving  forward.

    Senator  Hickenlooper.  I  understand  your  testimony,  Mr.  Cisler,
    along  that  line.  You  have  not  been  in  this  business  before.  You
    ai"e  treading  in  a  new  field,  and  you  would  be  pioneering  in  a  field
    Avhere  you  cannot  exactly  calculate  costs  at  this  moment.  You  would
    have  to  revise  your  estimates  from  time  to  time  up  or  down  or  other-
    wise as  the  art  developed  along  the  lines  that  you  expect  to  proceed.
    Is  that  correct  ?

    Mr.  Cisler.  Yes.

    Senator  Hickenlooper.  Thank  you  very  much,  Mr.  Cisler.  Do  you
    have  anything  further?

    Mr.  Cisler.  No,  sir.

    ATOMIC    POWER    DEVELOPMENT  167

    (The  question  and  answer  supplement  referred  to  on  p.  155
    follows:)

    Questions    and    Answers    Supplementing    Dow-Detroit    Edison    Statement
    Made  to  Joint  Committee  on  Atomic  Enekgy  July  1,  1953

    1.   WHY  is  nuclear  POWER  NOW  NECESSARY?

    There  are  five  persuasive  reasons.
    A.  To  support  the  foreign  policy  of  the  United  States.

    Our  status  as  a  Nation  will  be  affected  by  the  place  we  take  in  world  develop-
    ment of  atomic  energy.  Every  conceivable  sort  of  atomic  research  must  be  car-
    ried forward  to  insure  for  this  country  a  first  place  as  a  scientific  Nation  as  well
    as  a  first  Nation  in  military  strength.

    Also  the  trading  advantage  of  power  with  small  natural  resource  necessary
    to  back  it  up  is  of  inestimable  value  in  trading  with  countries  with  small  coal
    and  oil  resource  and  few  transportation  facilities.

    li.  To  conseri-e  national  resources.

    To  us  in  the  United  States  coal  and  oil  are  commonplace  and  plentiful,  but
    under  urgent  military  necessity  even  our  vast  supplies  may  dwindle,  or  be  in-
    capable of  production  as  quickly  as  the  situation  may  require.  New  uses  for
    coal  and  oil  may  accelerate  depletion,  transpoi-tation  bottlenecks  may  close
    powerplants,  so  that  in  consideration  of  these  things  a  new  source  of  power  is
    most  desirable.

    C.  To  provide  military  strength.

    The  breeder  reactor  will  give  our  country  great  military  strength  not  presently
    possible  without  huge  outlays  of  capital.

    D.  For  specialised  uses.

    Because  of  the  fact  that  relatively  little  material  is  used  to  fuel  a  nuclear
    reactor,  gi'eat  adaptability  is  achieved.  It  can  be  located  at  remote  places  other-
    wise removed  from  transportation  facilities  or  natural  resources.  The  tech-
    nology learned  can  be  utilized  to  operate  vessels  on  land,  sea,  and  air,  and  to
    perform  functions  for  mankind  not  now  dreamed  of.

    E.  To  be  made  economic.

    If  we  are  ever  to  know  how  to  produce  nuclear  power  cheaply,  eflSciently,  and
    effectively,  selective  research  must  be  started  now  to  choose  and  develop  the
    commercial  appi'oach.

    2.   WHY  SHOULD  PRIVATE  INDUSTRY  DEVELOP  NUCLEAR  POWER?

    Private  industry  need  not  develop  nuclear  power  alone,  but  the  advantages  of
    a  team  of  the  Government  developinj,'  the  military  phases  using  the  technology  of
    private  industry  added  to  that  technology  already  held  by  Government  creates  a
    great  reservoir  of  strength  which  is  greater  than  that  of  Government  alone.

    Private  industry,  to  be  competitive,  will  seek  to  practice  economies  which  will
    accomplish  the  goal  and  inure  to  the  benefit  of  Government.  Private  industry
    will  attempt  research  which  the  Government  dare  not  attempt  because  of  the
    responsibility  to  not  fail  when  using  tax  moneys.  Military  urgencies  fluctuate
    with  world  situations.  The  urgency  to  produce  the  best  the  most  cheaply,  which
    is  the  essence  of  competition,  is  always  present.

    Lastly,  the  success  of  capitalism  is  based  on  freedom  of  industry  to  participate
    in  l)usiness  and  not  to  reserve  islands  of  business  to  monopoly,  either  Govern-
    ment or  private.

    "Where  the  military  is  not  concerned  directly,  there  is  no  reason  that  atomic
    energy  should  differ  from  any  other  business  in  that  regard.

    3.    UNDER    THE    PRESENT    LAW,    ('OUrJ)N'T    PRIVATE    INDUSTRY    AND    PARTICUr..\RLY    OUR
    PROJECT    PROCEED   AS    PI>^\NNED    EXCEPT   UNDER    GOVERNMENT    CONTR.VCT?

    This  question  goes  to  the  basic  philosophy  of  who  is  to  do  the  business  of  the
    country — the  Government  or  free  enterprise.  Every  arginnent  for  free  enter-
    prise is  an  argument  here.  We  are  willing  to  do  our  patriotic  duty  and  to  give
    without  price  or  contract  the  fruits  of  our  research  and  know-how  for  the  purpose

    168  ATOMIC    POWER    DEVELOPMENT

    of  meeting  military  requirements,  but  beyond  that  point,  it  is  traditional  that
    the  fruits  of  an  individual's  effort  belong  to  the  individual.  We  would  not
    contract  to  furnish  anyone,  even  the  Government,  the  data  to  build  a  new  industry
    which  will  destroy  us.  The  history,  the  concepts,  nor  the  Constitution  of  the
    United  States  do  not  require  it,  nor  does  the  history  of  the  world  ever  disclose
    a  country  which  has  survived  under  the  operation  of  national  socialism.

    4.  ADMITTING  THAT  THERE  WILL  BE  A  PLACE  FOR  PRIVATE  INDUSTRY,  WHY  NOT  WAIT
    TILL  SOMETHING  MORE  TANGIBLE  EMERGES?  WHY  NOT  WAIT  TILL  THE  TIME  OF
    PRACTICAL  VALUE  MENTIONED  IN  THE  ACT?

    We  are  in  this  program  for  two  altruistic  reasons.  First,  we  feel  that  stringent
    peacetime  development  of  power  reactors  has  been  neglected  by  the  Government,
    not  through  any  fault  of  anyone,  but  by  the  exigency  of  military  necessity,  and
    that  our  efforts  will  be  instrumental  in  revival  of  nuclear  power  for  the  peacetime
    benefit  of  the  American  people.  Second,  the  value  of  our  work  to  the  military,  if
    successful,  will  be  enormous.  However,  we  are  profitmaking  organizations  and  it
    would  be  dishonest  to  our  stockholders  if  we  went  about  this  work  without
    obtaining  the  profits,  if  any  are  to  be  had,  for  them.  Therefore,  we  can  no  longer
    invest  our  money  or  the  time  of  our  engineers  and  scientists  without  amendment
    of  the  act.

    It  is  our  firm  belief  that  if  we  are  proven  right,  the  Nation's  economy  and  mili-
    tary might,  will  be  enhanced.  If  we  are  wrong,  we,  and  not  the  country,  will
    bear  the  loss.

    The  framers  of  the  act  foresaw  that  the  act  would  not  always  be  sufficient  and
    the  amendment  would  be  necessary.  To  quote  from  section  1  of  the  act :  "It  is  a
    field  where  unknown  factors  are  involved.  Therefore,  any  legislation  will
    necessarily  be  subject  to  revision  from  time  to  time."

    Amendment  of  the  act  should  not  be  the  cause  of  loss  of  momentum.  Govern-
    meht  and  industry  must  move  toward  the  goal  of  peacetime  utilization  of  nuclear
    energy  for  power.  Who  arrives  first  at  the  goal,  whether  it  is  the  Government,
    Dow-Detroit  Edison,  or  some  other  project,  is  immaterial,  the  Nation  is  the
    gainer.  The  important  thing  is  that  every  responsible  approach  is  persistently
    developed.  As  Chairman  Cole  of  this  committee  has  so  aptly  pointed  out,  the
    development  of  peacetime  uses  of  Atomic  Energy  is  most  important  to  our  posi-
    tion in  the  world.

    5.  TO  WHAT  EXTENT  DO  YOU  EXPECT  GOVERNMENT  PARTICIPATION   IN   YOUR  PROJECT?

    We  do  not  expect  any  financial  appropriation  to  the  project.

    There  is  work  and  effort  of  great  importance  being  directed  by  the  outstanding
    scientists  of  the  AEC  laboratories  which  is  of  great  interest  to  all  reactor  projects.
    To  duplicate  these  efforts  would  be  a  disastrous  loss  in  time  and  a  great  waste  of
    our  national  resources.  We  could  duplicate  this  work  if  we  could  hire  these  good
    minds  and  if  we  were  allowed  to  carry  out  this  research,  but  it  is  so  much  more
    practical  to  put  questions  to  the  laboratories  and  let  them  be  solved  in  the
    regular  course  of  the  work.

    This  is  not  a  great  contribution  in  the  point  of  money  and  we  ask  no  patent
    rights  from  this  work  and  we  offer  the  Government  a  full  disclosure  of  our  total
    know-how  for  military  necessity  as  our  payment  therefor.  Indeed,  to  date,
    everything  we  have  accomplished  has  been  given  gratis  to  the  Government,  with-
    out any  preservation  of  rights  to  ourselves.  Any  work  which  we  can  get  done
    outside  of  the  Government  laboratories,  we  propose  to  do.  We  have  already  hired
    several  commercial,  scientific  and  engineering  companies  to  do  part  of  the  work
    which  we  cannot  do  and  it  is  only  when  these  possibilities  are  exhausted,  do  we
    call  on  the  Government.  To  put  a  value  on  this  work  done  by  the  Government
    in  dollars  is  very  difficult,  but  we  feel  that  before  the  first  reactor  is  built,  the
    value  of  our  contribution  will  be  substantially  greater  than  that  of  the  Govern-
    ment. If  the  Government  is  unwilling  to  make  this  contribution,  some  of  our
    scientists  are  willing  to  go  it  alone.

    6.  WHAT  WILL  INDUSTRY  DO  TO  CUT   THE  COST  OF  POWER  THAT  GOVERNMENT   WOULD

    NOT   DO?

    Eternal  vigilance  is  maintained  by  industry  to  cut  a  penny  here  and  a  quarter
    of  a  cent  tliere  in  its  normal  production.  The  same  vigilance  would  be  exerted
    to  cut  the  many  coi-ners  necessary  to  make  nuclear  power  possible  economically.

    Specific  examples  often  quoted  by  our  scientists  are :

    (1)   Design  for  minimum  cost  for  exclusion  area.

    ATOMIC    POWER    DEVELOPMENT  l69

    ,    (2)  Reduce  the  cost  of  fuel  processing.

    (3)  Use  low-cost  fuel  with  maximum  breeding  gain.

    (4)  Design  for  optimum  size  without  extensive  prototypes.

    (5)  Maintain  low  inventories.

    (6)  Design  for  maximum  self-regulation.

    7.  ISr^'T  PRIVATE  ENTERPRISE  BEST  SERVED  WITH  MORE  COMPANIES  INVOL%^D  ?  THE
    AMENDMENT  OF  THE  ACT  NOW  WOULD  LIMIT  PARTICIPATION  TO  RELATIVELY  FEW
    LARGE  BUSINESSES   ON   THE   "INSIDE"

    ^  "VVe  feel  that  the  larger  the  segment  of  private  industry  working  on  this  prob-
    lem, the  better.  We  have  30  companies  involved  iu  our  project.  Of  this  30,  only
    about  7  had  ever  deax?etime
    a})plications  of  atomic  energy.

    Representative  Holifield.  Would  you  prefer  to  finish  your  state-
    ment before  you  are  questioned  ?

    Mr.  PuTZELL.  If  you  don't  mind,  sir.

    As  to  the  first  recommendation — private  ownership  of  nuclear  re-
    actors— we  feel  that  no  one  in  industry  can  think  very  seriously  about
    or  risk  his  money  on  the  development  of  new  applications  of  nuclear
    reactors  so  long  as  he  knows  that  it  is  illegal  to  own  the  plant  even
    if  he  should  discover  a  novel  and  unusual  way  of  using  its  nuclear
    heat  and  radiation.  In  our  view,  the  restriction  against  private  own-
    ership of  nuclear  reactors  calls  for  serious  reconsideration.  It  does
    not  serve  security  puri)oses,  for  it  does  not  protect  the  large  body  of
    unclassified  infoi-mation  on  reactors.  It  only  prevents  industiy,  with
    its  scientific  and  technical  personnel,  from  being  able  to  develo]:)  and
    adajit  reactor  technology.  And  here  again  I  do  not  refer  to  military
    applications  of  atomic  energy,  but  solely  to  nuclear  reactors.

    Thus,  the  net  effect  of  the  restriction  against  reactor  ownership  is
    to  hamper  this  country's  development  of  reactors.  For  w^e  are  of
    the  opinion   that  able  American   scientists  having  available   some

    ATOMIC    POWER    DEVELOPMENT  175

    uranium,  perhaps  slightly  enriched,  and  only  the  large  body  of  un-
    classified reactor  information  available  today,  but  none  of  the  classi-
    fied material,  can  design  and  build  workable  nuclear  reactors.  The
    unavailability  of  classified  information  would  slow  down  their  prog-
    ress, but  it  would  not  prevent  them  from  succeeding.  And  if  able
    American  scientists  can  do  it  with  unclassified  reactor  information,
    why  can't  equally  skilled  foreign  scientists,  unhampered  by  the  Atomic
    Energy  Act's  restriction  against  private  ownership,  also  do  it?

    Also,  in  connection  with  the  point  on  private  ownership  of  reactors,
    it  is  worth  noting  that  past  experience  shows  that  companies  choose
    to  accept  all  the  incidents  of  ownership,  including  the  risk  of  loss,  in
    order  to  be  free  to  manage  their  businesses  in  the  most  effective  and
    economical  manner.

    As  to  the  second  recommendation  relating  to  the  national  patent
    policy  in  the  atomic-energy  field — we  believe  that  the  incentive  which
    traditional  patent  rights  would  provide  will  help  greatly  to  advance
    the  technology.  Admittedly,  patents  and  inventions  dealing  solely
    with  the  utilization  of  atomic  energy  for  military  ])urposes  should
    remain  the  exclusive  property  of  the  Government.  However,  to  give
    maximum  encouragement  to  industrial  development  of  atomic-power
    reactors,  there  should  be  a  modification  in  the  present  policy  which
    forbids  the  granting  of  patents  on  any  invention  or  discovery  which
    is  useful  solely  in  the  production  or  utilization  of  fissionable  material.
    While  it  is  understandable  that  such  a  rule  be  adopted  during  times
    when  almost  all  inventions  were  obtained  at  Government  expense,  it
    seems  that  Avith  the  approaching  possibility  of  major  industrial  prog-
    ress in  the  field  of  atomic  power,  a  review  of  such  policy  is  in  order.

    For  example,  should  not  there  be  some  right  to  the  protection  of  its
    inventions  granted  to  a  company  which  has  at  its  own  expense  and
    effort  done  substantial  research  and  development  work  in  order  to  find
    a  new  and  different  application  of  atomic  reactors  as  a  direct  tool  and
    aid  for  use  in  the  chemical-manufacturing  industry?

    As  you  know,  research  in  the  atomic-energy  field  is  expensive,  and
    patentable  inventions  are  not  easy  to  come  by.  Together  with  the
    Union  Electric  Co.  of  Missouri,  we  have  spent  a  little  less  than  a  half
    million  dollars  of  our  funds  studying  the  feasibility  of  atomic  power,
    and  have  no  patentable  ideas.  Nor,  may  I  say,  did  we  undertake
    the  study  for  the  purpose  of  securing  patents.  However,  the  only
    way  in  which  industry  can  hope  to  get  back  such  moneys  is  from  the
    sale  of  products  resulting  from  the  research  effort.  To  do  this  requires
    that  one  must  protect  at  least  for  a  while  the  competitive  advantage
    that  has  been  gained.  For  if  a  competitor  is  assured  of  being  able  to
    use  the  same  results  without  any  research  and  development  effort
    on  his  part,  it  will  inevitably  affect  the  willingness  of  the  company
    making  the  invention  to  invest  more  of  its  funds  for  further  research.
    To  put  it  another  way,  if  research  results  are  available  to  competitors
    without  effort  on  their  part,  then  each  is  likely  to  wait  for  the  other
    to  spend  research  dollars  and  overall  progress  in  the  field  will  slow
    down.

    As  to  our  final  recommendation — the  continued  examination  of  re-
    actor technology  by  reputable  firms — we  believe  this  will  enlarge  the
    reservoir  of  technically  trained  peo{)le  available  to  support  our  atomic
    energy  program  in  its  peacetime  and  national  defense  aspects.  The
    handling  of  any  classified  information  by  such  firms  should  of  course

    176  ATOMIC    POWER    DEVELOPMENT

    accord  with  the  Government's  standards  of  security.  Thus,  the  secu-
    rity of  that  technology  which  has  military  value  can  be  maintained
    while  at  the  same  time  permitting  the  development  of  the  new  in-
    dustrial technology  which  we  need.

    In  conclusion,  let  me  say  that  what  we  need  is  more  study  and  de-
    veloi^ment  on  nuclear  reactors  rather  than  less,  and  private  enterprise
    provides  the  framework.  By  allowing  industry  to  work  on  the  use
    of  nuclear  heat  and  radiation  to  solve  its  problems,  the  element  of
    competition  is  immedately  introduced  into  the  nuclear  reactor  field
    yvith  the  inevitable  reduction  in  costs.  As  we  train  more  people  in
    this  new  business,  we  also  broaden  the  technical  base  for  even  further
    developments  in  atomic  energy.  The  construction  of  more  nuclear
    reactors  by  private  industry  could  make  for  a  greater  dispersal  of
    such  facilities,  which  might  be  of  great  importance  in  the  event  of
    war.  And  finally,  we  can  expect  the  development  of  new  industries
    through  the  possible  discovery  of  new  materials  and  products  as  well  as
    different  and  cheaper  methods  of  producing  existing  ones.  This,  of
    course,  would  bring  with  it  increased  employment  and  greater  pros-
    perity. This  is  the  American  way,  and  it  is  the  way  of  making  sure
    that  the  people  of  this  country  will  benefit  most  from  their  present
    large  investment  in  atomic  energy.

    We  can  hope  that  the  United  States  will  continue  to  lead  the  way  in
    constantly  improving  man's  standards  of  living.  In  peacetime  uses
    of  atomic  energy — some  foreseen,  many  not  yet  contemplated — we
    have  a  great  tool  for  contributing  materially  to  our  economic  and
    social  development.  The  most  expeditious  means  that  we  can  see  for
    hastening  the  advent  of  such  peacetime  uses  is  by  encouraging  the
    industrial  development  of  nuclear  reactors.  By  tradition  and  experi-
    ence, peacetime  applications  of  science  and  engineering  in  all  fields
    are  in  this  country  a  function  and  responsibility  of  private  industry.
    We  in  Monsanto  believe  that  now  is  the  time  for  the  Congress  to
    amend  the  Atomic  Energy  Act  with  legislation  which  will  enable
    and  encourage  private  industry,  under  Government  security  ajid
    safety  regulations,  to  develop  economic  atomic  power  and  other  peace-
    time uses  of  atomic  energy  in  its  own  plants,  at  its  own  expense  and
    under  our  competitive  system.

    Senator  Hickenlooper.  Thank  you  very  much,  Mr.  Putzell.  Chair-
    man Cole  has  returned  now,  and  I  shall  happily  turn  the  responsibili-
    ties over  to  him.

    Chairman  Cole.  I  am  sure  the  Vice  Chairman  has  been  performing
    creditably,  and  I  suggest  he  continue.

    Mr.  Putzell.  Senator  Hickenlooper,  Mr.  J.  Wesley  McAfee,  the
    president  of  the  Union  Electric  Co.,  of  Missouri,  was  also  unfor-
    tunately unable  to  attend,  and  I  believe  he  wrote  a  letter  to  the
    chairman  of  the  committee  asking  that  I  be  permitted  to  read  his
    statement  into  the  record.  I  will,  or  will  file  it  with  you,  sir,  as  you
    desire.

    Chairman  Cole.  I  wonder  if  it  would  not  be  better  for  you  to.
    expose  yourself  to  questions  from  the  committee  with  respect  to  your
    own  statement,  before  you  inject  the  thoughts  of  Mr.  McAfee.

    Mr.  Putzell,  Certainly.

    Chairman  Cole.  Are  you  in  position  to  subject  yourself  to  cross-
    questioning  on  Mr.  McAfee's  statement?

    ATOMIC    POWER    DEVELOPMENT  177

    Mr.  PuTZELL.  No,  sir,  I  am  not.  I  am  speaking  for  Monsanto
    alone  so  far  as  the  questions  go,  and  I  just  read  the  statement  of
    Monsanto.    Mr.  McAfee's  statement  is  a  separate  document.

    Chairman  Cole.  Are  there  any  questions  that  the  members  of  the
    committee  desire  to  ask  Mr.  Putzell  ?

    Senator  HicivEnlooper.  Just  1  or  2  questions,  along  the  line  of  the
    feasibility  of  competitive  economic  power  from  this  source.

    Are  you  convinced  that  it  is  feasible,  that  is,  at  a  competitive  rate?

    Mr.  Putzell.  Are  you  talking  now  about  a  dual  purpose  reactor,
    sir,  or  the  general  field  ?

    Senator  Hickenlooper.  I  am  talking  about  the  investment  of
    private  capital  in  the  field  of  producing  power  with  atomic  energy
    fission  as  its  source,  whether  it  is  dual  purpose  or  otherwise.  Does
    your  company  from  its  studies  believe  that  it  is  feasible?  You  may
    not  have  the  methods  yet  at  hand,  but  are  you  convinced  of  its
    feasibility  ?

    Mr.  Putzell.  Yes,  sir,  we  are.  In  fact,  we  so  reported  to  the
    Atomic  Energy  Commission  quite  some  time  age.

    Senator  Hickenlooper.  And  based  on  your  studies  and  your  judg-
    ment, if  the  law  is  adequately  revised  to  permit  it,  you  are  willing  to
    risk  a  lot  of  your  own  money,  and  your  associates  are  willing  to  risk  it?

    Mr.  Putzell.  Senator,  we  wouldn't  make  such  representations  be-
    fore committees  if  we  didn't  feel  convinced  that  the  matter  had  merit
    and  was  one  we  should  stand  behind  when  the  time  came  to  get  into
    it.

    Senator  Hickenlooper.  I  am  glad  to  hear  you  say  that.  Because
    the  purpose  of  my  question  went  to  this  point :  Is  this  an  experimental
    venture,  in  wdiich  from  your  standpoint  companies  might  get  into  it  a
    little  bit  and  say,  "Well,  it  is  a  little  too  burdensome,  and  we  will
    drop  it"  ?  Or  would  you  intend  to  go  at  it  vigorously  and  with  a  real
    determination  to  develop  an  economically  sound  operation?

    Mr.  Putzell.  Senator  Hickenlooper,  Monsanto  has  been  in  this
    business  since  1942  in  one  war  or  another.  We  have  run  for  the
    Government  the  Oak  Ridge  laboratories.  We  are  now  running  an
    installation  for  the  Atomic  Energy  Commission.  Some  of  our  best
    technical  manpower  has  devoted  lots  and  lots  of  time  to  this  business.
    And  if  we  were  not  convinced  that  the  peacetime  applications  of
    atomic  energy  have  a  future,  and  that  the  chemical  industry  has  a
    position  in  the  development  of  the  peacetime  uses,  not  just  power
    but  all,  whatever  they  may  be,  I  assure  you  again,  sir,  that  we  would
    not  continue  over  10  years  to  push  and  put  our  own  money  into  it.

    Senator  Hickenlooper.  Let  me  assure  you  that  there  is  no  question
    in  my  mind  about  the  stability  and  ability  of  Monsanto.  I  am  asking
    you  these  questions  for  the  purpose  of  the  record.

    Mr.  Putzell.  Surely.

    Senator  Hickenlooper.  I  need  no  reassurance  of  your  determina-
    tion and  the  art  which  you  could  bring  to  this  field.  I  am  well  aware
    of  that.

    Thank  you.     That  is  all.

    Chairman  Cole.  Mr.  Holifield  ?

    Representative  Holifield.  Of  course,  the  building  of  a  civilian
    power  reactor  would  be  an  experimental  venture.  There  is  no  such
    thiiiff  in  existence  at  this  time.

    178  ATOMIC    POWER    DEVELOPMENT

    Mr.  PuTZELL.  Well,  sir,  our  approach  to  this  thing  would  be  in  keep-
    ing with  the  way  the  chemical  industry  always  approaches  new  prod-
    ucts, new  ideas,  and  I  can  suggest  to  you  the  nylon  situation,  the
    krilium  soil-conditioner  situation,  just  about  any  new  development
    in  the  chemical  field.  And  this  is  the  way  it  goes,  Mr.  Holifield.
    After  they  get  an  idea  of  a  new  product  and  a  new  process  and  they
    take  it  through  the  laboratories,  they  don't  jump  into  full-scale  pro-
    duction. They  do  what  they  call  pilot-planting.  That  is,  they  build
    the  model.  They  test  out  the  theories,  get  the  kinks  out  as  best  they
    can,  on  a  pilot-plant  basis,  and  from  that  they  go  into  the  full  scale.

    And  so  we  would  treat  this  just  like  we  do  any  other  new  idea  in
    the  chemical  industry.  We  would  want  to  pilot-plant  it,  to  get  out
    a  lot  of  kinks,  and  to  get  many  answers  which  we  don't  now  have  in
    this  field  of  reactor  development.

    Representative  Holifield.  In  other  words,  it  would  be  necessary
    for  you  to  proceed  by  a  prototype  or  pilot-plant  method  ?

    Mr.  PuTZELL.  I  am  not  sure  what  you  mean  by  "prototype."

    Representative  Holifield.  Let  us  call  it  the  pilot-plant  method.
    That  would  not  involve  the  amount  of  money  that  would  be  necessary
    to  build  a  full-scale  civilian  reactor  of  a  type  that  would  produce,  say,
    150,000  kilowatt-hours.

    Mr.  PuTZELL.  Of  course,  we  don't  go  this  far  in  without  having
    some  reason  for  feeling  that  we  can  succeed.  And  therefore  when
    we  come  before  you  and  make  proposals,  it  not  only  envisages  that
    reactor  development  ought  to  go  through  the  pilot-plant  stage,  if  you
    take  the  route  we  suggest  as  being  the  quickest,  but  also  into  the  full-
    scale  plant.

    Representative  Holifield.  If  it  proves  feasible;  if  it  proves  eco-
    nomically feasible.  But  it  has  not  been  proven  to  be  economically
    feasible  yet.

    Mr.  PuTZELL.  But  we  have  reason  to  believe  that  it  will  be.

    Representative  Hollifield.  You  have  reason  to  believe  that  it  will
    be,  and  I  hope  so,  too.

    Now,  in  your  statement,  on  page  10,  you  brought  out  the  point  of
    the  examination  of  reactor  technology.  What  did  you  refer  to  there?
    A  continued  examination  of  the  Government  reactors?  Or  did  you
    mean  the  reactors  which  some  of  your  competitors  might  be  build-
    ing?

    Mr.  PuTZELL.  We  were  referring  to  that  work  which  can  only,  under
    the  present  law,  be  done  in  the  Commission  facilities,  sir.

    Representative  Holifield.  In  the  Commission  facilities.  But  you
    would  not  oj)en  up  your  own  reactor  techniques  to  the  Government
    except  on  an  exclusive  military  basis?

    Mr.  PuTZELL.  I  am  not  quite  sure — You  mean  assuming,  now,  we
    have  a  power  plant  in  operation?

    Representative  Holifield.  Assuming  that  you  are  building  a  re-
    actor. That  would,  of  course,  be  your  own  investment,  and  you  would
    be  entitled  to  keep  that  secret  from  your  competitors  and  also  from
    the  (iovernment,  as  far  as  industrial  application  is  concerned,  but  not
    from  the  standpoint  of  any  military  use?

    Mr.  PuTzELL.  That  is  right,  sir.  Nor  from  the  health  and  security
    angles.

    Representative  Hoijfield.  So  your  thought  in  the  continued  exam-
    ination of  reactors  is  that  you  should  be  allowed  to  continue  to  coop-

    ATOMIC    POWER    DEVELOPMENT  179

    erate  and  absorb  the  developments  in  Government  reactors  in  Gov-
    ernment laboratories,  as  they  are  developing.

    Mr.  PuTzELL.  Such  as  they  may  be,  sir.  We  envisage  a  partner-
    ship here,  in  a  sense.  We  look  on  this  as  trying  to  get  it  into  its
    more  traditional  channels  in  American  life — getting  industry  to  put
    in  some  of  its  own  skills,  its  own  experience,  and  its  own  money,  to
    take  some  of  the  risk  of  loss,  and  to  go  forward  in  this  field  hand  in
    hand  with  the  Government.

    Representative  Holifield.  How  much  money  is  the  Monsanto  Co.
    prepared  to  put  up  for  this  type  of  an  experiment  ?

    Mr.  PuTzELL.  I  can't  answer  that  today,  Mr.  Holifield.  But,  as
    I  said  to  Senator  Hickenlooper  a  moment  ago,  sir — or,  rather,  I
    didn't  tell  him  this;  an  analogy  has  just  come  to  my  mind.  A  couple
    of  years  ago,  we  decided  we  wanted  to  make  a  new  product  for  us,
    which  is  called  a  acrylonitrile,  a  long  name,  but  it  is  a  simple  little
    chemical  when  you  come  out  at  the  end  of  the  manufacture.  We
    didn't  have  the  know-how.  We  knew  it  would  cost  many  millions  of
    dollars.  So  we  went  to  Germany  and  to  other  places  here  and  abroad
    and  decided  that  it  was  worth  the  risk  to  do  something  which  hadn't
    been  done  before  commercially  in  this  country.  We  didn't  then  have
    the  money.  But  having  made  the  decision  that  the  risk  was  a  reason-
    able one  and  one  that  "we  in  the  chemical  industry  could  and  should
    take,  we  went  forward.  And  the  money  we  got,  we  provided.  AVe
    raised  last  year  about  a  hundred  million  dollars  of  new  funds  for  the
    expansion  of  our  business.  And,  of  course,  as  you  know,  the  chemical
    business  has  a  reputation  for  raising  money  and  developing,  growing,
    wnth  that  new  money.

    Representative  Holifield.  Your  participation,  I  believe,  both  you
    and  Dr.  Thomas  have  repeatedly  said,  is  contingent  upon  the  sale  of
    plutonium  to  the  Government.

    Mr.  PuTZELL.  Our  point,  sir,  is  that  we  think  that  now  is  the  time  to
    get  into  the  peacetime  applications  of  atomic  energy,  including  power.
    The  quickest  way  that  we  have  been  able  to  find  is  a  dual-purpose
    reactor,  which  involves  the  plutonium  sale  as  well  as  the  power
    production.

    Now,  if  there  are  others  who  have  other  ways,  we  certainly  believe
    that  in  keeping  with  the  theory  of  competition  they  ought  to  be  given
    every  encouragement,  and  they  may  well  have  a  better  way  than  we.

    Representative  Holifield.  Now,  if  you  plan  to  produce  a  reactor
    large  enough  to  produce  plutonium  in  any  quantity  and  power  in  any
    quantity,  you  would  naturally  expect  to  spend  in  the  neighborhood
    of,  as  Mr.  Cisler  says,  $50  million,  and  as  Mr.  Dean  says,  $83  million,
    and  as  some  others  say,  $125  million.  So  we  will  not  pin  you  to  a
    specific  amount.    But  you  would  envisage  an  investment  of  that  type?

    Mr.  PuTZELL.  Yes,  sir;  we  would  envisage  a  substantial  investment.

    Representative  Holifield.  And  in  a  case  like  that,  of  course,  would
    you  want  to  apply  to  that  plant  the  regular  rate  of  amortization,  say
    a  30-year  rate  of  amortization,  to  that  plant,  that  equipment,  that
    experiment^  or  would  you  Avant  it  on  the  basis  of  a  certificate  of  mili-
    tary necessity,  which  would  allow  you  to  write  it  off  in  5  veal's?

    Mr.  PuTZELL.  ]Mr.  Holifield,  you  have  put  your  finger  on  one  of  the
    unanswered  questions  in  this  thing,  on  the  technical  side.  That  is,
    What  is  the  reasonably  expected  life  of  a  thing  like  this  ?  We  don't
    know.

    ISO  ATOMIC    POWER    DEVETjftFMENT

    Representative  Holifield.  That  is  right.  Neither  does  this  com-
    mittee know.  In  order  to  write  the  legislation,  we  have  got  to  guess
    at  it.    And  neither  does  the  AEC  know.

    Mr.  PuTZELL.  Well,  the  period  of  amortization  would,  to  a  large
    measure,  depend  upon  the  expected  reasonable  life  of  such  a  plant.
    Now,  if  we  have  as  a  goal  here,  as  one  of  our  national  goals,  getting
    into  the  peacetime  applications  of  atomic  energy  promptly,  before
    somebody  else  does,  or  maybe  as  quickly,  then  we  may  have  to  go  the
    route  of  a  certificate  of  necessity,  which  has  been  done  with  many  other
    established  products,  as  you  know,  on  a  national  basis,  during  the  last
    war  and  at  the  present  time.

    Representative  Holifield.  I  am  not  criticizing  your  planned
    method.    I  am  just  trying  to  find  out  what  your  planning  is.

    Mr.  PuTZELL.  It  depends  upon  just  what  the  policy  is,  in  our  view,
    as  to  whether  or  not  promptness  is  important  in  this  thing.

    Representative  Holifield.  And  you  would  expect  the  Government
    to,  of  course,  furnish  you  with  the  plutonium  slugs  for  your  reactor,  I
    .suppose  ?

    j\Ir.  PuTZELL.  Yes,  sir.

    Representative  Holifield.  In  case  the  Government,  for  military
    uses,  found  it  necessary  to  cancel  the  furnishing  of  those  fuel  elements,
    would  you  require  cancellation  damages,  in  ca'se  you  invest  50  or  100
    million  dollars  in  this  plant?

    Mr.  Putzell.  Well,  again,  that  is  the  kind  of  thing  that  is  going
    to  have  to  be  worked  out  just  as  we  do  when  we  build  a  huge  plant
    for  the  Government  in  some  other  field ;  this  plutonium  being  a  matter
    of  armament,  a  national-defense  item.

    ;  Representative  HoLiFmLD.  I  might  say  we  are  at  the  present  time
    making  a  contract  with  the  Ohio  utility  group,  in  which  cancellation
    equities  run  up  into  many,  many  millions  of  dollars,  and  they  are  put-
    ting in  a  plant,  and  of  course  the  Government  says,  "We  are  going  to
    use  your  energy,  and  if  we  do  not  use  it,  we  will  pay  you."  So  I  am
    •merely  asking  the  question  along  the  line  of  what  is  now  being  done.
    ■  Mr.  Pltzell.  Yes,  sir.  I  read  the  legislation  that  enables  that
    particular  contract  to  be  executed.  I  believe  it  wouldn't  have  been
    legal,  or  the  length  of  time  involved  wouldn't  have  been  authorized,
    under  prior  law.

    Representative  Holifield.  You  would  want  a  guaranty  of  raw
    material  from  the  Government,  of  course,  in  such  a  plant?

    Mr.  Putzell.  Yes,  sir.    That  would  be  the  only  source  we  know  of.

    Representative  Holifield.  Would  you  want  a  fixed  price  over  a
    period  of  vears  for  the  plutonium?  Would  you  want  a  contract  with
    the  Government  to  take  the  plutonium  off  your  hands  at  a  fixed  price?

    Mr.  Putzell.  I  can  only  say  "probably."  Because  here  again,  ex-
    perience in  operating  plants  may  well  indicate  some  economies,  some
    shortcuts,  that  may  be  in  the  interest  of  the  overall  organization.  But
    it  certainly  would  be  clear  that  if,  on  the  basis  of  a  contract  with  the
    Governmrjit,  and  a  change  in  the  law,  and  these  other  things  we  have
    been  talking  about,  Monsanto  went  out  and  raised  many  millions  of
    dollars  to  build  such  a  plant,  there  ought  to  be  some  fair  degree  of  as-
    suredness m  the  relationship  with  the  Government,  so  that  if  the  Gov-
    ernment did  cancel  its  contract  shortly  after  the  thing  was  set  up,
    those  who  invested  their  money  in  it  would  not  be  just  sitting  there
    without  anything.

    ATOIMIC    POWER    DEVELOPMENT  181

    Representative  Holifield.  Of  course,  I  ao;ree  with  you  on  that
    point.  I  say  that  if  you  go  into  an  industry  which  has  the  element  of
    risk,  that  this  has  in  it  at  this  particular  time,  I  think  you  would  be
    perfectly  within  your  right  to  request  that  type  of  a  contract.  The
    problem  this  committee  has  to  solve  is  whether  now  is  the  right  time,
    or  whether  we  should  wait  possibly  3  to  5  years  when  the  development
    of  reactor  technology  has  advanced  to  the  point  where  we  know  a  little
    more  about  it,  and  where  the  risk  of  a  long-time  contract  at  a  price  for
    plutoniun)  which  might  be  different  5  years  from  this  time.

    Mr.  PuizELL.  I  understand  that  is  one  of  the  problems.  I  would
    like  to  say  that  this  suggestion  we  made  as  one  of  the  quick  ways  of
    getting  into  this  whole  field  is  based  on  the  assumption  that  there  is
    a  decision  made  by  the  Government  that  it  needs  plutonium  in  the
    national  interest.  If  that  need  does  not  exist  as  a  matter  of  national
    policy,  then  this  suggestion  we  made  is  without  foundation.

    RepreseLtative  Holifield.  Of  course,  the  need  does  exist,  but  we
    do  not  know  how  long  it  will  exist  nor  how  much  plutonium  we  will
    need,  and  we  do  not  know  what  new  process  will  double,  triple,  or
    quadruple  the  supply  we  have  on  hand.  So  in  that  area  we  are  at  sea
    also.

    One  final  question.  I  suppose  that  you  would  require  the  same  type
    of  normal  patents  as  now  are  given  to  private  industry?

    Mr.  Pu'izELL.  Sir,  we  have  not  worked  out  any  final  answer  on  that
    any  more  than  I  take  it  other  have.

    Representative  Holifield.  Of  course,  that  is  the  key  to  the  whole
    legislation  or  one  of  the  keys,  at  least,  and  something  this  committee
    has  to  consider.

    Mr.  PuTZELL.  Yes,  sir.  I  would  like  to  make  one  general  observa-
    tion if  I  may.  One  cannot  get  patents  on  just  coming  across  a  rule
    of  nature.  Naturally,  the  law  of  gravity  is  not  patentable.  It  has
    to  be  an  invention,  and  it  has  to  be  novel.  While  I  am  the  first  to
    admit  as  my  second  point  and  recommendation  had  to  do  with,  the
    need  for  an  alteration  of  the  patent  ])olicies  in  the  Atomic  Energy  Act,
    I  do  think  it  is  very  easy  to  look  on  all  ideas  in  this  field  as  being  subject
    to  patent  or  as  having  value  from  the  patent  angle  when  in  fact  that
    is  not  and  will  not  be  so.
    ■    Representative  Holifield.  That  is  all.  Chairman  Cole.

    Senator  Pastore.  ISIr.  Putzell,  directing  your  attention  to  page  9
    of  your  written  statement,  I  would  like  to  ask  a  question  or  two  on  a
    point  that  you  raise  because  I  do  think  you  make  considerable  sense.
    You  say  that  the  only  way  in  which  we  can  hope  to  get  back  such
    moneys,  that  is  the  money  that  you  put  into  these  ideas,  is  from  the
    sale  of  products  resulting  from  the  research  effort.  To  do  this  one
    must  protect  at  least  for  a  while  a  competitive  advantage  which  was
    gained.  We  must  admit  that  the  whole  field  of  atomic  energy'  is  more
    or  less  a  monopoly  on  the  part  of  Government.  You  make  the  ]ioint
    that  private  industry^  must  shnre  in  this.  Who  Avill  share  in  the  lie-
    ginning  is  a  rather  selective  group  and  not  by  choice,  but  by  capabil-
    ities, and  they  will  be  large  concerns.

    The  question  has  been  often  asked,  how  do  you  give  this  monopoly
    that  belongs  to  all  the  people  to  all  private  industry  on  an  equal  basis.

    Mr.  PtrrzELL.  Senator,  I  go  back  to  many  other  developments,  and
    I  hope  I  may  not  be  wrong  in  doing  so.  Let  us  take  radar  as  an
    example.     I  would  doubt  that  all  the  people  in  the  sense  that  everj^-

    182  ATOMIC    POWER    DEVELOPMENT

    body  who  has  a  machine  shop  or  laboratory  has  an  opportunity  to
    use  the  radar  know-how  that  was  developed  at  Government  expense.
    It  certainly  follows,  it  seems  to  me,  that  if  any  company  can  meet  the
    normal  requirements  of  the  Government  in  terms  of  finance,  in  terms
    of  management  responsibility,  in  terms  of  security,  in  terms  of  those
    minimum  essentials  which  the  Government  requires  when  it  contracts
    for  the  building  of  an  airplane  or  tank  or  for  anything  else  that  it
    needs  for  its  military  arm,  then  that  company  ought  to  be  able  to
    participate  in  this  field  on  a  fair  basis  with  all  others.

    Senator  Pastore.  But  you  are  willing  to  admit  now  that  that  would
    be  a  rather  select  group,  of  course.

    Mr.  PuTZELL.  As  Mr.  Cisler  said  a  moment  ago,  I  am  not  so  sure^
    because  lots  and  lots  of  little  people  get  into  it.  In  the  manufacture  of
    an  airplane,  I  would  imagine  that  there  were  an  awful  lot  of  small
    manufacturers  who  make  plastic  parts,  who  make  small  bulbs,  who
    make  maybe  the  paint  that  goes  in  it,  who  make  all  sorts  of  supplies
    and  components  which  go  into  the  airplane  made  by  a  large  airplane
    company.

    Senator  Pastore.  Do  you  not  think  because  of  the  very  nature  of
    the  problem  we  are  talking  about,  taking  into  account  the  fact  that
    this  is  a  governmental  monopoly — and  I  think  the  people  of  this
    country  would  like  to  have  it  shared  with  private  enterprise,  if  it  is
    rocess  equipment  manufacturers,  is  being
    directed  toward  the  development  of  a  nuclear  powerplant  that  em-

    ATOMIC    POWER    DEVELOPMENT  193

    phasizes  the  "power  only"  desion  and  is  not  dependent  upon  the
    market  for  weapons  materiaL  The  term  "power  only"  in  this  case
    is  defined  as  that  design  which  has  power  as  its  primary  purpose
    although  fissionable  and  other  materials  may  be  produced  in  the  proc-
    ess, which  can  either  be  utilized  as  a  fuel  or  processed  for  sale  to  other
    users.

    To  arrive  at  the  basic  criteria  of  an  overall  design  wdiich  might  pro-
    vide the  best  characteristics  for  "power  only''  application,  the  study
    group  has  been  engaged  in  examining  and  correlating  the  technical
    and  economic  data  in  the  field  of  nuclear  power.  In  doing  this  we
    have  been  faced  with  determining  methods  of  analyzing  proposed
    designs  and  comparing  them  under  similar  economic  conditions  which
    might  exist  in  a  peacetime  power  industry.  Such  analysis  requires
    investigation  of  related  fields  as  well  as  the  physical  characteristics
    of  the  plant  as  other  ramifications  become  evident.  Some  of  these
    are  hazard  evaluation,  possibility  of  byproduct  utilization,  available
    supplies  and  markets,  and  economic  influences.

    Although  the  summarization  of  this  data  has  not  been  entirely  com-
    pleted, it  is  evident  that  no  existing  reactor  in  our  opinion  can  fit  into
    the  economic  "power  only"  picture  without  further  development  work
    and,  in  most  cases,  complete  redesign  of  many  components.  The  re-
    search and  experimental  reactors  which  are  in  operation  have  pro-
    vided much  of  the  basic  information  for  new  design.  However,  more
    experience  is  needed  to  prove  hoAv  this  basic  information  can  be  used
    to  produce  reactors  of  the  type  and  size  which  can  fit  into  the  power
    generating  field.

    The  Atomic  Energy  Commission  has  carried  out  basic  research  and
    development,  and  has  designed  and  built  reactors  for  military  and
    other  purposes.  Accordingly,  industry  is  dependent  on  the  Govern-
    ment for  the  foundations,  and  will  continue  to  be  so  for  much  of  the
    expansion  of  this  basic  work  in  the  immediate  future.  However,  in-
    dustry can  and  should  experiment  with  new  ways  of  utilizing  this
    work,  and  building  on  it,  to  attain  the  characteristics  necessary  for  a
    nuclear  powerplant  to  operate  competitively.

    The  interest  of  the  Foster  Wheeler-Pioneer  Service  team  stems,
    not  only  from  general  progress  and  some  previous  participation  in
    phases  of  the  nuclear-energy  development,  but  also  from  a  definite
    feeling  that  a  new  power  source  for  industry  can  become  available
    sooner  with  the  benefit  of  widespread  business  participation  on  a
    nonmilitary  basis.  Only  by  such  broad  participation  with  the  result-
    ing increased  scope  of  clevelopment  attack  can  we  be  certain  that  the
    utilization  of  atomic  energy  will  be  speeded  toward  improving  the
    public  welfare,  increasing  standards  of  living,  and  strengthening  free
    competition.

    We  believe  that  the  })roblems  of  atomic-power  applications  can  be
    worked  out  most  economically  in  terms  of  manpower,  time,  and  cost,
    if  many  more  scientists  and  engineers  can  be  brought  in  contact  with
    such  problems  through  increased  industry  participation  outside  of
    Government  agencies,  but  in  coo])eration  therewith.

    The  Atomic  Energy  Act  of  1946  is  a  most  useful  document,  but
    changes  and  modifications  are  needed  to  encourage  private  business
    to  strive  for  solutions  much  more  forcibly,  and  on  a  broader  front,  if
    we  are  to  speed  up  the  day  when  this  new  powei-  is  really  useful  to  our
    citizens.

    194  ATOMIC    POWER    DEVELOPMENT

    We  concur  in  the  statement  of  policy  on  nuclear-power  development
    already  submitted  here  by  the  Atomic  Energy  Commission.  We  are
    convinced  that  the  greater  freedom  there  envisioned  will  be  the  key  to
    wider  and  more  intensive  interest  and  activity  in  the  progress  of
    the  new  source  of  energy  for  the  production  of  power.

    We  wish  to  acknowledge  our  understanding  and  appreciation  of
    the  situation  as  expressed  recently  by  one  of  the  members  of  the
    Atomic  Energy  Commission,  Dr.  Henry  D.  Smyth,  in  a  talk  at  Case
    Institute,  when  he  said —

    that  reasons  for  change  in  the  present  methods  of  operation  are  "compelling,"
    even  thought  difficult  because  the  technologj  .'  'niclear^power  production  is
    inextricably  mixed  with  the  technoiogy  of  prou  ^--^  materials  from  which

    atomic  bombs  are  made.

    The  "compelling"  reasons  for  change  were  given  as —

    (1)  The  long-range  weakness  of  any  monopoly  because  of  the  lack  of  con-
    tinuing, competitive  stimulus;  (2)  the  inherent  difficulty  of  running  a  large
    industry  directly  under  Government  supervision;  and  (3)  the  increasing  interest
    in  uranium  as  a  potential  source  of  commercial  power.

    We  also  wish  to  point  out  that  many  benefits  have  accrued  to  the
    Navy  over  the  years  in  the  fields  of  design  and  construction  for  both
    combatant  and  auxiliary  types  of  ships  by  reason  of  including  the
    commercial  engineering  and  industrial  facilities  in  such  developments.
    Some  of  these  benefits  would  undoubtedly  have  come  in  time,  but
    the  advantages  in  accelerating  these  gains  not  only  made  for  faster
    progress  but  tended  to  keep  the  Government's  designers  and  engineers
    on  their  mettle  by  the  stimulus  of  competition  and  the  freshness  of
    different  viewpoints.  The  participation  of  industry  broadened  the
    fields  tremendously  and  such  participation  in  nuclear-power  develop-
    ments will  bring  many  similar  advantages  as  time  goes  on.  Competi-
    tion is  the  soul  of  progress  and  every  Government  activity  has  benefited
    from  such  influences.

    The  Foster  Wheeler-Pioneer  Service  study  group  is  just  complet-
    ing an  interim  report,  the  basic  purpose  of  which  is  to  aid  the  partici-
    pants in  the  selection  of  avenues  worthy  of  most  intensive  study  during
    the  remaining  period  of  the  contract.  Upon  the  conclusion  of  the
    contract  period  a  formal  report  will  be  submitted  to  the  Atomic
    Energy  Commission  containing  our  conclusions  and  recommendations
    in  accordance  with  basic  objectives.

    Many  of  the  conclusions  in  our  interim  report  are  at  this  time  to  be
    regarded  as  indicative  rather  than  conclusive.  Among  the  reasons
    for  this  are :

    1.  The  avowed  initial  purpose  of  narrowing  the  field  before  pro-
    ceeding to  a  study  in  intimate  detail.

    2.  The  unavailability  of  certain  cost  data  essential  to  development
    of  a  true  economic  status.

    However,  on  the  basis  of  our  interim  report,  the  following  state-
    ments may  be  made  at  this  time :

    1.  Wliile  we  do  not  refute  the  place  of  dual-purpose  reactors  in
    special  situations,  we  believe  the  specific  field  of  nuclear  power  will
    in  t]\(i  ultimate  be  best  served  by  concentration  on  reactors  designed
    on  the  "power  only"  premise,  to  operate  and  compete  in  the  conditions
    under  which  private  electric  utilities  must  operate  in  a  peacetime
    economy.

    ATOMIC    POWER    DEVELOPMENT  195

    2.  Present-day  conventional  fuel  costs  in  the  continental  United
    States  place  a  heavy  burden  on  the  nuclear  powerplant  in  its  effort
    to  compete  with  conventional  steam  powerplants.  Fuel  cost  in  many
    foreign  countries  creates  a  brighter  prospect  for  nuclear  plants.  De-
    spite this  factor  we  feel  that  it  would  be  contrary  to  American  tradi-
    tion to  neglect  to  look  to  the  future  both  with  respect  to  our  historical
    aggressiveness  in  pursuing  new  developments  and  the  fact  that  con-
    ventional fuels  may  one  day  be  less  plentiful  and  more  costly.

    3.  Present  day,  large  thermal  production  reactors  cannot  be  con-
    verted to  economical  power  producers.

    4.  Certain  thermal  re«  'iS  bftsed  on  broad  modifications  of  material
    production  units  ap'^  b6  competitive  if  fuel  may  be  subjected  to
    long-term  irradiation.

    The  philosophy  of  our  group  has  been  that  the  path  followed  should
    have  the  prospects  of  attaining  a  goal  of  producing  power  at  a  cost
    less  than  power  by  conventional  means.  A  path  which  would  lead  to
    the  production  of  power  at  the  same  cost  as  a  conventional  plant  would
    be  an  insufficient  incentive  for  investment  in  nuclear  powerplants.

    5.  Reactors  which  we  believe  to  be  worthy  of  more  detailed  study
    are  fast  breeders,  and  fluid-fuel  thermal  reactors,  as  typified  b}^  the
    aqueous  homogeneous  reactor  and  the  fluiclized  solids  reactor.

    Of  these  designs  the  fluid  systems  seem  at  this  time  to  warrant
    major  consideration  by  our  group  since:

    1.  They  contain  the  desirable  possibilities  of  (a)  Low  capital  invest-
    ment; (h)  reasonable  selling  price  of  power;  (c)  increasing  power
    output  without  marked  increase  in  total  capital  investment,  and  {d)
    decreasing  fuel  operating  cost.

    2.  The  Foster  Wheeler  Corp.  has  had  much  experience  with  fluidized
    solids  systems.

    3.  Many  of  the  mechanical-design  problems  can  be  tested  without
    using  nuclear  fuel.

    Accordingly,  recommendations  are  under  consideration  to  gradually
    enlarge  the  group  and  to  begin  design  evaluation  of  the  promising
    systems.  The  group  would  map  out  the  research  and  development
    program  needed  on  the  above  basis.  During  this  phase  some  essential
    experiments  should  be  carried  out.

    I  wish  to  add  at  this  point  that  at  a  meeting  yesterday  we  have  de-
    cided to  rroceed  in  accordance  with  the  statement  set  forth  just  above.

    I  now  ri'ss  to  the  question  of  suggestions  for  revisions  of  the  Atomic
    Energy  Act  of  1946.

    We  believe  that,  in  order  to  encourage  the  investment  of  private
    capital  for  the  development  of  industrial  utilization  of  nuclear  en-
    ergy, changes  in  the  Atomic  Energy  Act  of  194G  should  be  based  on
    the  following  principles :

    I.    OWNERSHIP  or  NUCLEAR  FACILITIES

    Private  ownership  of  fissionable  materials  and  facilities  for  produc-
    ing fissionable  materials  and  nuclear  power  by  appropriately  licensed
    firms  only,  should  be  legalized  with  authority  in  the  Atomic  Energy
    Commission  to  formulate  minimum  standards  of  competence  and  re-
    sponsibility to  be  met  by  firms  seeking  to  be  licensed  to  own  and  oper-
    ate nuclear  material  or  nuclear-energy  production  facilities;  with  ap-
    propriate safeguards  regulating  the  export  of  nuclear  materials  or

    196  ATOMIC    POWER    DEVELOPMENT

    eqiiipmert  capable  of  producing  fissionable  materials;  and  to  grant
    licenses  to  qualified  firms  if  consistent  with  national  security  and  an-
    titrust la^Ys;  and  to  formulate  and  enforce  uniform  accountability  and
    security  standards  to  be  adhered  to  by  licensed  firms  in  the  acquisi-
    tion, production,  disposal,  and  loss-control  of  fissionable  materials.

    1.  Licensing  should  not  be  required  by  firms  engaged  only  in  the
    development,  design,  manufacture,  or  construction  of  equipment  or
    facilities  for  the  production  or  use  of  fissionable  materials,  but  firms
    utilizing  ?uch  equipment  or  facilities  for  the  actual  production  or
    use  of  fissionable  materials  should  be  licensed.

    2.  Sale  of  fissionable  materials  by  the  Atomic  Energy  Commis-
    sion, if' feasible  without  impairing  national  security,  to  licensed  firms
    and  sales  or  acquisitions  of  fissionable  material  by  and  between  li-
    censed firms,  should  be  legalized  subject  to  accountability  and  security
    regulatioi.s  in  effect.

    3.  Sale  or  acquisition  of  source  materials  (unrefined  ores)  should
    not  require  licensing  except  for  export.

    4.  Licenses  once  granted  should  be  revocable  only  for  cause,  i.  e.,
    violation  cf  the  terms  of  the  license.

    II.    SAFETY

    The  Atomic  Energy  Commission  and  private  industry,  until  such
    time  as  private  industry  can  assume  full  responsibility,  should  share
    responsibility  for  establishing  and  enforcing  appropriate  codes  and
    standards  for  the  safe  construction  and  operation  of  industrial  nu-
    clear facilities  insofar  as  hazards  peculiar  to  atomic  energy  affect  the
    public  in  the  vicinity  of  nuclear  activities,  particularly  across  State
    borders.

    Private  industry  should  immediately  assume  full  responsibility  for
    establishing  and  controlling  safety  procedures  within  the  confines
    of  individual  industrial  nuclear  facilities  and  eventually  for  the  for-
    mulation of  appropriate  construction  codes  by  voluntary  cooperative
    standard^;  and  code-writing  bodies,  including  representatives  of  the
    various  States,  operating  in  a  manner  similar  to  the  boiler  and  pres-
    sure vessel  code  committee  of  the  American  Society  of  Mechanical
    Engineers  in  cooperation  with  duly  authorized  inspection  and  en-
    forcement agencies.

    III.  RESEARCH  AND  DEVELOPMENT

    1.  The  Atomic  Energy  Commission  should  continue  its  program
    of  basic  research  and  development  in  the  nuclear  materials  and  nu-
    clear energy  fields,  encourage  and  assist  private  industry  in  its  own
    self-finanf ed  research  and  development  projects  in  these  fields  by
    making  available  to  appropriately  qualified  persons  or  organizations
    the  results  of  its  work  subject  to  the  national  security  requirements.

    2.  The  Atomic  Energy  Commission,  in  turn,  should  have  the  right  of
    access  to  the  results  of  research  and  develo])ment  work  carried  out  by
    private  industry  and  to  utilize  the  results  in  the  national  interest.

    IV.  PATENTS

    1.  Private  ownership  of  patents  should  be  legalized  on  inventions
    of  processes  or  equipment  for  the  production  of  fissionable  materials

    ATOMIC    POWER    DEVELOPMENT  197

    of  all  grades,  including  weapons  grades,  or  for  the  utilization  of
    fissionable  materials  except  in  atomic  or  thermo-nuclear  weapons;
    except  that  the  Government  shall  have  the  right —

    (a)  To  acquire  and  own  all  patents  on  inventions  of  processes  or
    equipment  solely  applicable  to  the  utilization  of  fissionable  materials
    in  atomic  or  thermo-nuclear  weapons.

    (b)  To  acquire  nonexclusive,  irrevocable,  royalty-free  licenses  to  all
    patents  on  inventions  of  processes  or  equipment  adaptable  to  the
    production  or  utilization  of  fissionable  materials  for  military  uses.

    (2)  Appropriately  qualified  organizations  should  be  granted  free
    use  of  all  patents  on  inventions  of  processes  or  equipment  for  the  pro-
    duction or  utilization  of  fissionable  materials  in  scientific  investiga-
    tions and  in  research  or  development  projects.

    CONCLUSION

    Considerable  development  work  is  required  to  bring  to  fruition  com-
    petitive nuclear  poAver.  As  a  first  step,  certainly,  and  probably  for
    some  time  to  come,  nuclear  powerplants  will  supplement  conventional
    installations.  However,  we  feel  the  field  offers  sufficient  promise  to
    warrant  the  application  of  the  collective  talents  of  all  those  engaged
    in  the  field.  We  earnestly  believe  that  the  time  has  arrived  when
    steps  to  permit  a  wider,  fuller  participation  by  industry  are  well
    advised.  Given  the  opportunity  within  the  bounds  of  national  secu-
    rity, it  is  our  belief  that  the  inventive  genius  and  practical  engineering
    "know-how,"  resident  in  private  industry  and  waitino;  to  be  of  service,
    will  hasten  the  day  when  nuclear  power  will  realize  its  vast  potential
    for  peaceful  service.

    I  would  like  to  add  at  this  point,  gentlemen,  that  we  subscribe  to
    nearly  everything  that  has  been  said  previously  in  this  hearing  this
    afternoon,  and  where  we  have  varied  from  those  considerations,  we
    have  so  indicated  in  this  short  memorandum.

    I  would  like  to  say  in  response  to  some  of  the  questions  that  have
    been  previously  asked  that  I  certainly  agree  with  Senator  Brickers
    summarization  a  few  moments  ago  that  the  big  benefit  that  will
    accrue  to  the  people  of  this  country  by  reason  of  commercial  or  pri-
    vate industry's  entering  into  this  field  is  in  making  available  to  all
    of  the  people  at  an  earlier  date  the  good  that  can  be  realized  from
    competitive  nuclear  power,  and  probably  even  at  a  much  cheaper  rate.

    Chairman  Cole.  Mr.  Kellogg,  do  you  care  to  add  anything  to  what
    Admiral  Mills  has  given?

    Mr.  Kellogg.  I  think  not,  Mr.  Cole.  This  is  a  joint  statement,  and
    we  concur  fully  in  what  has  been  said.

    Chairman  Cole.  ,It  is  a  fine  statement.  It  shows  that  you  have
    given  a  great  deal  of  thought  to  it.  I  com]iliment  you  for  making
    concrete  suggestions  with  res])ect  to  legislation  Avhich  you  have  ex-
    pressed in  a  general  way  you  feel  would  be  necessary  to  accomplish
    the  goal  which  all  of  us  seek  to  achieve.  I  think  you  have  done  a
    fine  job.

    Admiral  Mills.  Thank  you,  sir.

    Chairman  Cole.  Are  there  any  questions?     Mr.  Holifield.

    Representative  HoLiriELn.  I  want  to  add  my  conunendation  to  tlie
    type  of  statement  you  have  made,  sir.  It  shows  you  have  given  the
    problem  a  great  deal  of  tliouglit,  and  you  have  made  some  very  con-

    198  ATOMIC    POWER    DEVELOPMENT

    striictive  and  thoughtful  suggestions  in  your  statement.  There  are
    a  few  places  in  it  that  I  might  differ  with  you  in  a  minor  degree,  but
    on  the  whole  I  think  your  statement  is  going  to  be  of  help  to  the
    committee.

    Admiral  Mills.  Thank  you.

    Representative  Van  Zandt.  I  want  to  add  my  commendations  and
    at  the  same  time  tell  the  Admiral  I  am  glad  to  see  him  again.  It  takes
    us  back  to  our  years  of  associations  in  the  Navy.

    Admiral  Mills.  Thank  you.

    Representative  Van  Zandt.  On  page  3  you  say :

    We  wish  to  point  out  tliat  many  benefits  iiave  accrued  to  the  Navy  over  the
    years  in  the  fields  of  design  and  construction  for  both  combatant  and  auxiliary
    types  of  ships  by  reason  of  including  the  commercial  engineering  and  industrial
    facilities  in  such  developments.

    When  you  read  this  portion  of  your  statement,  I  got  to  thinking
    about  the  diesel  engine.

    Admiral  Mills.  Yes,  sir.

    Representative  Van  Zandt.  You  are  familiar  with  its  history,  I
    am  sure.

    Admiral  Mills.  Yes,  sir.

    Representative  Van  Zandt.  Could  you  tell  us  how  the  diesel  was
    handled?  I  think  the  Navy  Department  and  the  Bureau  of  Mines
    took  it  over,  did  they  not  ?

    Admiral  Mills.  The  problem  we  were  faced  with,  Mr.  Van  Zandt,
    as  you  are  probably  quite  familiar,  was  the  necessity  of  getting  a  fast
    running,  light-weight  diesel  engine  which  we  did  not  have  in  the
    United  States  at  that  time.

    Chairman  Cole.  When  was  that  time  ?

    Admiral  Mills.  That  started  in  the  early  1930's,  Mr.  Cole.  Of
    course,  we  had  what  we  considered  to  be  for  that  time  a  reasonably
    satisfactory  diesel  engine  but  we  were  handicapped  by  the  amount
    of  power  we  could  take  out  of  it.  The  only  way  we  could  improve
    the  operational  ability  of  the  submarine  was  to  get  a  higher  speed
    diesel  and  to  get  one  that  we  could  take  more  power  out  of  for  less
    weight.

    We  surveyed  the  field  in  Germany.  We  also  surveyed  the  field
    in  the  United  States.  We  chose,  with  the  help  of  that  information
    wliicli  we  got  from  Germany,  to  make  a  domestic  development  of  the
    diesel  engine,  and  we  interested  four  of  the  leading  diesel  engine
    manufacturers  in  this  country  and  gave  additional  information  to
    a  number  of  others  who  might  be  interested  in  developing  this  field,
    and  we  came  out  with  a  fast-running,  light-weight  diesel  engine
    which  not  only  enabled  us  to  realize  the  ultimate  from  our  submarines
    from  the  development  that  had  taken  place  up  to  that  time,  but  it
    also  served,  like  most  other  developments,  a  purpose  which  we  did  not
    realize  at  the  time — the  basis  for  the  dieselization  of  the  railroads
    today.  I  say  that  because  it  was  the  light-weight,  fast-running  diesel
    engine  which  made  it  possible  for  the  railroads  to  realize  the  gains
    thev  have  made  in  utilizing  that  engine  in  locomotives.

    Representative  Van  Zandt.  You  can  add  also  the  trucks  on  the
    highways.

    Admiral  Mills.  Yes,  sir.  Anything  that  can  utilize  a  light-weight
    source  of  power  has  benefited  from  that  investigation  and  develop-
    ment.

    ATOMIC    POWER    DEVELOPMENT  199

    Representative  Van  Zaxdt.  How  did  you  acquire  the  infonnatiou
    from  the  Germans?  Was  it  from  the  German  Government  or  Ger-
    man industry  ?

    Admiral  Mills.  ^Ye  got  it  primarily  from  the  contacts  through  t\\e-
    German  Government,  but  basically  from  German  industry  through  the
    German  Government.  Of  course,  all  we  got  really  out  of  the
    German  development  was  what  the  gentleman  from  Monsanto  re-
    ferred to  awhile  ago  as  the  idea,  and  the  real  development  of  our
    diesel  engine  took  place  in  the  United  States.  I  give  full  credit  to
    the  commercial  and  industrial  facilities  and  engineering  talents  that
    were  put  to  work  for  the  excellent  results  we  have  received  in  that
    field.

    Representative  Van  Zandt.  Was  it  the  Navy  alone  or  did  the  Bu-
    reau of  Mines  join  the  Navy?

    Admiral  Mills.  The  Bureau  of  Mines  joined  the  Navy  in  the  origi-
    nal contact.

    Representative  Van  Zandt.  Have  you  any  idea  how  much  money
    the  American  taxpayers  put  into  the  effort?

    Admiral  Mills.  Mr.  Van  Zandt,  that  is  a  dangerous  answer  to  try
    to  give  you  off  the  cuff,  but  I  would  say  somewhere  in  the  neighbor-
    hood of  $12  million.

    Representative  Van  Zandt.  What  method  did  the  Government  em-
    ploy in  making  available  the  information  to  the  public?

    Admiral  Mills.  We  made  this  information  widely  available  to  in-
    dustry, and  after  we  had  made  it  available  to  industry  we  set  up
    projects  for  them  to  develop  prototype  engines  for  test  to  determine
    whether  or  not  we  were  reaching  the  goal  we  were  interested  in.

    Representative  Van  Zandt.  Ever  since  these  hearings  began,  I  have
    had  in  mind  the  effort  of  the  Navy  and  the  Bureau  of  Mines  to  develop
    the  diesel  engine,  and  I  have  tried  to  parallel  this  atomic  development.

    Admiral  Mills.  There  is  one  other  development  that  is  parallel,
    Avhich  I  think  is  indicative  of  the  benefit  that  can  be  realized  by  wide-
    spread use  of  the  talents  in  industry,  not  only  from  the  standpoint  of
    increasing  the  breadth  of  attack  and  the  freshness  of  the  viewpoints,
    as  I  emphasized  awhile  ago,  but  to  bring  also  to  memory  that  we
    have  not  always  had  our  own  turbine  and  gear  development  in  this
    country  at  the  point  we  were  able  to  utilize  during  the  last  war.  It
    has  not  been  many  years  ago  that  we  were  almost  dependent  upon
    licenses  from  abroad,  particularly  the  English,  for  the  production
    of  turbines  used  in  our  combatant  and  auxiliary  ships.  Having  de-
    cided that  was  not  a  good  position  to  be  in,  we  enlisted  the  aid  of
    industry  to  solve  the  problem,  and  I  think  the  outgi'owth  of  that
    development  through  the  help  of  industry  has  resulted  in  the  United
    States  Navy  having  the  finest  motive  power  of  any  navy  in  the  world
    today.  I  say  that  without  any  fear  of  contradiction.  We  have  devel-
    oped what  I  call  out  of  that  development  "an  American  turbine"  as
    opposed  to  our  dejiendence  in  })rior  years  upon  a  foreign  development
    for  powering  our  ships.

    Representative  Van  Zandt.  Therefore,  Admiral,  what  we  are  try-
    ing to  do  with  atomic  energy  from  the  stand])oint  of  making  it  avail-
    able to  industry  is  not  new  in  the  affairs  our  our  Government.

    Admiral  Mills.  In  my  viewpoint,  it  is  very  desirable.  That  is  the
    only  reason  I  brought  in  this  question  of  the  gains  that  had  been

    200  ATOMIC    POWER    DEVELOPMENT

    realized  by  other  Government  agencies  who  are  certainly  interested
    in  the  technical  field  to  a  maximum  extent.

    Representative  Van  Zandt.  That  is  all,  Mr.  Chairman.

    Representative  Holifield.  Mr.  Chairman,  I  am  tempted  to  remark
    that  I  favor  the  Government  proceeding  and  setting  up  a  prototype
    project,  and  having  private  industry  work  them  out  just  as  in  the
    diesel.     That  happens  to  be  my  position.

    Chairman  Cole.  As  Chief  of  the  Bureau  of  Ships,  Admiral,  while
    you  are  here,  tell  us  what  the  practice  of  the  Navy  was  and  as  far  as
    you  know  still  is  with  respect  to  new  ideas  that  are  discovered  in
    (Grovernment  yards.  Here  we  have  a  situation  where  the  Govern-
    ment is  in  the  business  of  building  ships  in  navy  yards.

    Admiral  Mills.  That  is  right.

    Chairman  Cole.  Right  across  the  bay  or  adjacent  there  might  be  a
    commercial  enterprise  doing  the  same  thing.  How  do  you  handle
    patentable  ideas?

    Admiral  Mills.  The  situation  is  not  a  great  deal  different,  Mr.
    Chairman,  from  what  is  proposed  in  these  patent  suggestions.  Even
    in  our  navy  yards  we  permit  an  engineer  who  develops  a  patentable
    idea  to  patent  that  idea,  but  the  Government  has  free  use  of  that  idea
    if  it  was  developed  on  Government  time,  and  is  the  result  of  working
    on  a  Government  project.  But  he  is  allowed  to  accrue  to  himself
    those  applications  which  may  be  commercial.  So  that  a  man  can  get
    a  very  valuable  patent,  but  the  Government  has  free  right  to  the  use
    of  any  of  its  applications  in  the  Government  service ;  it  does  not  pro-
    hibit him  from  getting  benefits  from  commercial  applications.

    We  have  tried  to  emphasize  that  point  by  asking  all  ])ersonnel  in
    Government  service  to  list  their  patentable  ideas,  and  the  Government
    gives  them  assistance  in  obtaining  these  patents.  We  found  that  sys-
    tem works  very  well.

    Coming  back  to  this  question  of  patents,  it  has  been  discussed  here
    rather  completely.  I  think  it  has  been  made  adequately  clear  that
    industry  does  not  expect  to  benefit  from  information  in  a  patentable
    sense  that  has  already  been  developed  by  the  Atomic  Energy  Com-
    mission and  by  its  predecessor,  the  Manhattan  district,  under,  I  think,
    a  situation  that  has  been  remarkably  successful.  But  the  point  I  do
    want  to  emphasize  is  that  we  are  in  clanger  of  limiting  our  attack  on
    the  development  of  new  ideas  if  we  restrict  it  to  a  Government  activity
    solely,  and  we  are  also  failing  to  take  advantage,  as  I  tried  to  point
    out  briefly  in  my  paper,  of  a  lot  of  talent  and  a  lot  of  different  view-
    ])oints  that  industry  is  anxious  to  put  on  this  project.  AVhat  we  are
    interested  in  from  the  patent  clauses  are  the  new  ideas  that  may  be
    developed  in  the  future.  We  feel  that  there  should  be  some  protec-
    tion on  that  basis  along  the  same  lines  as  the  Government  recognizes
    in  individual  and  company  rights  with  respect  to  ideas  developed
    in  other  fields.

    Now,  with  respect  to  handling  patentable  ideas  from  corporations
    engaged  in  the  building  of  ships,  as  they  are  developed,  as  I  said
    awhile  ago,  in  exactly  parallel  principle  in  building  and  working  on
    a  Govei'nment  contract,  the  Government  has  the  right  to  use  the
    patents  in  its  own  special  uses.  But  for  any  commercial  exploitation,
    if  you  please,  they  are  allowed  to  benefit  where  it  does  not  involve  a
    Government  contract  or  restricted  use.

    ATOMIC    POWER    DEVELOPMENT  201

    Chairman  Cole.  Then  the  practice  in  the  navy  j^ards  with  respect
    to  the  patentable  ideas  is  that  a  patentable  idea  that  has  been  con-
    ceived by  an  employee  of  the  Federal  (jovernment  who  works  on  Gov-
    ernment time,  who  uses  Government  laboratories,  and  through  that
    opportunity  conceives  a  new  idea,  the  Government  has  the  right  to
    use  that  idea  without  cost,  but  that  individual,  even  though  public
    funds  helped  him  accomplish  the  idea,  may  license  it  under  royalty
    to  anyone  he  wishes?

    Admiral  Mills.  For  commercial  application.  That  is  the  only  way
    that  you  can  stimulate  the  development  of  new  ideas.

    In  other  words,  the  hope  that  the  individual  can  benefit  thereby,
    as  well  as  the  corporation.

    Representative  Holifield.  The  Navy  uses  that  for  any  purpose
    it  wants  to  use  it.

    Admiral  Mills.  In  Government  service.

    Representative  Holii^ield.  Not  only  in  a  military  way  ?

    Admiral  Mills.  That  is  correct,  sir.

    Representative  Holifield.  It  so  happens  that  would  be  different
    from  your  presentation  here,  because  your  presentation  says  only
    where  this  fissionable  material  would  be  used  in  a  military  way.  The
    Government  has  other  uses  for  fissionable  material  than  a  military
    use.

    Admiral  Mills.  I  think  you  misunderstood  my  statement  about  the
    other  application.  If  it  is  a  commercial  use,  the  Government  does
    not  try  to  interfere  with  the  individual.

    Representative  Holifield.  I  know  it  does  not  interfere  with  the
    individual.  But  under  the  present  act,  if  the  Government  as  a  by-
    product produces  energy  in  any  of  these  atomic-energy  plants,  it
    can  use  that  energy  rather  than  to  go  out  and  buy  the  energy  from
    TVA  or  from  the  Ohio  Electric  group.  The  present  act  provides
    that  the  Government  can  use  that  power.  It  even  provides  that  it  can
    sell  that  power  to  other  Government  agencies  if  it  wants  to.  That
    is  the  way  the  present  act  is.

    Now,  if  a  company  comes  in  and  utilizes  the  laboratories  and  facili-
    ties of  the  Government  and  by  utilizing  that  background  of  technical
    knowledge  and  the  facilities  which  they  say  are  necessary  to  go  ahead
    and  proceed  in  a  cooperative  way  on  this  material,  you  have  no  ob-
    jection to  the  Government  utilizing  that?

    Admiral  Mills.  I  would  say  only  for  military  purposes,  Mr.  Holi-
    field.

    Representative  Holifield.  But  you  would  not  say  they  could  use  it
    in  their  own  atomic-energy  plant  to  cut  down  the  electric  bill  so  we
    cut  down  the  cost  of  the  weapons  ?

    Admiral  Mills.  If  that  electric  plant  is  being  used  for  commercial
    purposes,  I  would  say  no,  sir.

    Representative  Holifield.  I  do  not  follow  your  reasoning  there.
    We  are  taking  TVA  power,  wliich  is  produced  by  the  Government  at
    this  time  at  cost  into  the  Oak  Ridge  plant.  Wc  are  utilizinof  that
    power  at  cost.  We  are  also  taking  commercial  power  and  utilizing
    it  in  that  plant  at  the  rates  agreed  upon  with  the  commercial  com-
    panies. So  there  is  a  mingling  there  of  government-produced  power
    and  ])rivate  power.

    Admiral  Mills.  I  see.    It  occurs  at  a  lot  of  other  ])laces,  too.

    202  ATOMIC    POWER    DEVELOPMENT

    Eepresentative  Holifield.  Yes,  that  is  true.  You  are  in  effect  say-
    ing that  notwithstanding  the  fact  that  an  individual  is  working  in
    the  Government's  laboratories  and  utilizing  the  Government's  facili-
    ties, and  if  he  develops  a  reactor  which  the  Govermnent  can  use  to
    produce  its  own  power  to  cut  down  its  purchased  power  in  that  plant,
    that  the  Government,  because  it  is  a  commercial  and  not  military
    item,  it  cannot  use  it  ?

    Admiral  Mills.  If  you  do  that,  I  thing  you  are  removing  a  lot  of
    incentive  for  developing  new  and  patentable  ideas.

    Representative  Holifield.  I  cannot  follow  you  there  because  the
    Government  has  not  removed  the  incentive  for  developing  patentable
    ideas  according  to  your  own  testimony  in  its  Navy  procedure.  As  I
    understand  it,  the  Government  can  use  anything  that  is  patented  both
    for  shooting  a  gun  or  mowing  a  lawn,  regardless  of  whether  it  is  for
    military  use,  or  what  you  would  ordinarily  call  common  use.

    Admiral  Mills.  The  illustration  I  gave  you,  Mr.  Holifield,  I  was
    applying  to  the  shipbuilding  industry.  We  have  not  attempted  to
    encroach  on  individual  patents  for  application  to  anything  except  the
    shipbuilding  industry  on  Government  contracts.

    Eepresentative  Holifield.  Let  me  question  you  there.  The  Gov-
    ernment builds  ships  and  private  companies  build  ships.

    Admiral  Mills.  That  is  right.

    Representative  Holifield.  Let  us  assume  that  men  working  on  a
    Government  construction  ship  job  originate  a  patentable  idea.  Would
    the  Government  foreclose  its  own  use  of  that  patentable  idea  'i

    Admiral  Mills.  The  Government  has  a  right  to  use  that  in  a  ship-
    building application,  whether  it  is  being  built  by  a  private  firm  or  a
    Government  yard.

    Representative  Holifield.  That  was  my  understanding.

    Admiral  Mills.  But  it  does  not  attempt  to  exercise  the  free  use  of
    that  patent  for  commercial  purposes.

    Representative  Holifield.  No,  it  does  not.

    Admiral  Mills.  There  has  been  a  good  deal  of  complaint  against
    that  provision,  Mr.  Holifield,  and  that  is  one  of  the  points  of  issue
    here  at  the  present  time — where  are  you  going  to  draw  your  line
    against  commercial  application  itself  and  against  strictly  govern-
    mental military  applications,  and  I  thought  were  were  trying  to  draw
    a  line  here.

    Chairman  Cole.  Where  do  you  draw  the  line  in  the  shipbuilding
    industry  ?

    Admiral  Mills.  We  draw  the  line  at  whether  it  is  a  Government
    contract  for  use  by  the  Government  in  ships  which  it  is  either  building
    or  having  built.

    Chairman  Cole.  Suppose  you  were  to  build  in  a  shipyard  a  vessel  to
    carry  people.  In  fact,  I  had  in  mind  something  comparable  to  the
    LT.  S.  S.  America  or  U.  S.  S.  WeM  Point.  The  troop  ship  is  nothing
    more  than  another  commercial  ship.

    Admiral  Mills.  You  mean  if  she  is  being  built  in  a  Government
    shipyard?

    Cliaii-man  Cole.  Yes,  for  Navy  use.  You  would  not  expect  to  pay
    (liat  inventor  for  his  royalty?

    A(hniral  Mills.  No,  sir.

    Chairman  Cole.  Even  though  it  has  a  semblance  of  commercial
    application?

    ATOMIC    POWER    DEVELOPMENT  203

    Admiral  Mills.  What  you  are  really  saying  is  that  if  the  Govern-
    ment solely  built  a  transport  which  is  used  for  the  carrying  of  pas-
    sengers really  under  military  supervision,  we  would  expect  to  use
    that  patent  if  it  was  developed  on  Government  time.  But  there  is
    the  diif  erence  that  you  want  to  remember.  It  should  be  apparent  that
    is  developed  with  Government  facilities  on  Government  time.

    Representative  Van  Zandt.  With  Government  money.

    Admiral  Mills.  Yes,  sir.  I  think  the  distinction  that  I  am  trying
    to  bring  out  here  against  the  application  that  I  was  discussing  with
    Mr.  Holifield  is  that  we  are  talking  about  patents  in  the  nuclear  energy
    field,  which  are  developed  by  commercial  firms  with  their  money.  In
    addition  to  those  ideas  which  have  been  developed  or  would  have
    been  considered  patentable  up  to  the  time  this  law  is  changed.

    Chairman  Cole.  What  is  the  practice  with  respect  to  patents  that
    are  conceived  in  private  shipyards  which  you  want  to  use  to  adapt  to
    a  Navy  ship?  Does  the  Government  pay  the  inventor  for  the  use  of
    the  patent  ?

    Admiral  Mills.  We  have  paid  royalties  on  a  number  of  patents,  sir.

    Chairman  Cole.  That  is  the  general  practice.  Are  there  any  cases
    that  you  know  of  where  the  Government  has  the  right  to  use  a  patent
    without  paying  a  royalty  except  those  patents  that  may  have  been  the
    result  of  its  own  employees  or  its  own  laboratories  ?

    Admiral  Mills.  I  do  not  know  of  any  case.

    Representative  Holifield.  What  is  the  application  of  that  principle
    to  the  ships  built  for  the  Maritime  Commission,  do  you  happen  to
    know?

    Admiral  Mills.  No,  sir,  I  do  not.  I  would  not  want  to  express  an
    opinion  on  it.  I  happen  to  know  about  the  Navy's  procedure,  but  I
    would  be  guessing  on  the  other.

    Representative  Van  Zandt.  Admiral,  are  you  acquainted  with  the
    activities  of  the  National  Advisory  Committee  for  Aeronautics  ?

    Admiral  Mills.  To  some  extent,  sir.

    Representative  Van  Zandt.  How  do  they  handle  the  development
    of  aircraft  when  it  comes  to  the  patents?

    Admiral  Mills.  My  understanding  is  that  they  try  to  do  it  on  the
    same  basis  as  I  outlined  for  ships.

    Representative  Van  Zandt.  In  other  words,  the  aircraft  industry  to-
    day enjoys  many  benefits  from  the  research  conducted  by  the  National
    Advisory  Committee  for  Aeronautics  ?

    Admiral  Mills.  I  do  not  think  there  is  any  question  about  that,
    sir.

    Chairman  Cole.  You  mean  that  the  aircraft  personnel  have  the
    right  to  use  Government  aircraft  laboratories,  and  if  as  a  result  of
    that  use  they  conceive  a  new  idea,  that  the  private  company  or  indi-
    vidual obtains  a  patent  on  which  the  Government  has  no  claim  what-
    ever?

    Admiral  Mills.  If  it  is  developed  by  the  firm  itself  with  its  own
    money,  yes,  sir.

    Chairman  Cole.  But  in  a  Government  laboratory  ?

    Admiral  Mills.  That  is  correct,  sir.

    Representative  Van  Zandt.  Admiral,  let  us  take  one  of  the  large
    aircraft  companies,  say  Boeing.  Do  they  not  have  the  right  to  send,
    we  will  say  to  the  NACA  test  plant  at  INIoffatt  Field,  a  plane — maybe

    30740 — 53 14

    204  ATOMIC    POWER    DEVELOPMENT

    a  prototype — for  testing  purposes,  and  the  test  is  actually  conducted
    there  ?

    Admiral  Mills.  Particularly  if  the  Government  has  an  interest  in
    that  test.  But  that  is  a  question  of  convenience,  usually,  of  facilities,
    Mr,  Van  Zandt.

    Chairman  Cole.  Admiral,  do  you  care  to  comment  on  the  provision
    of  law  providing  for  secrecy  orders  against  any  patent  of  vital  interest
    to  our  security  ?

    Admiral  Mills.  Not  beyond  the  point  except  that  I  think  I  made
    clear  in  my  statement,  sir.  We  feel  if  it  has  a  direct  application  to
    military  uses,  the  Government  should  have  the  right  to  utilize  those
    patents  if  they  have  been  developed  as  a  result  of  information  which
    has  been  made  available  by  the  Government.

    Chairman  Cole.  My  understanding  of  the  effect  of  the  secrecy
    order  provision  relating  to  the  patents  is  that  the  Government  has
    tlie  right  to  grant  a  patent  to  the  inventor  but  to  deny  him  the  use  of
    it,  even  though  the  Government  itself  does  not  use  it.

    Admiral  Mills.  I  think  that  is  a  result  of  security,  sir.

    Chairman  Cole.  It  prevents  him  from  using  it.  But  even  under
    that  secrecy  order,  where  the  Government  does  exercise  that  right,  the
    (Tovernment  is  obliged  to  pay  that  inventor  for  the  (Tovernment's  use
    or  nonuse.

    Admiral  Mills.  That  would  strike  me  as  being  fair,  sir.

    Chairman  Cole.  What  I  was  trying  to  seek  is  whether  you  thought
    the  same  philosophy  prevailing  with  respect  to  secrecy  orders  on
    patents  affecting  our  national  security  should  also  apply  to  the  nuclear
    field.

    Admiral  Mills.  If  you  have  a  definite  military  application,  the  Gov-
    ernment certainly  should  be  the  one  to  indicate  whether  or  not  they
    want  to  put  that  under  secrecy.

    Chairman  Cole.  They  might  not  have  any  particular  use  for  it
    themselves.

    Admiral  Mills.  But  they  want  to  deny  it  for  other  purposes,  that  is
    correct,  sir.

    Chairman  Cole.  In  that  case  even  though  they  have  no  use  for  it
    themselves,  simply  on  the  basis  of  denial  to  another,  they  are  required
    to  pay  the  inventor.

    Admiral  Mills.  Yes,  sir.    I  think  that  is  fair.

    Representative  Holieield.  I  think  that  is  one  of  our  difficulties,
    that  is,  trying  to  divorce  these  processes  and  improvements,  that  is,
    the  military  from  the  civilian  application,  because  the  same  reactor
    that  makes  plutonium  for  power  makes  plutonium  for  the  bomb.  That
    is  one  of  the  difficult  problems  that  the  committee  faces,  that  is,  the
    field  where  if  we  make  a  lot  of  this  technology  widely  known,  it  would
    in  effect  give  to  an  enemy  advance  technology  in  the  production  of
    bomb  material.

    I  do  not  know  how  we  are  going  to  resolve  that.  I  am  anxious  to
    resolve  it.

    Admiial  Mills.  As  a  suggestion  I  would  draw  the  line  as  between
    commeicial  a})p]ication,  military  application,  and  a  third  category,
    those  applications  which  you  wish  to  deny  for  security  reasons.

    Chairman  Cole.  Just  one  other  question.  Admiral.  Do  you  feel
    it  is  necessary  at  this  stage  of  the  game  for  a  private  company  to  have
    the  riglit  of  ownership  of  the  fissionable  material,  or  is  it  sufficient

    ATOMIC    POWER    DEVELOPMENT  205

    for  our  purposes  simply  that  he  should  have  the  right  to  use  it  under
    license  with  the  ownership  of  the  material  remaining  with  the  Gov-
    ernment (

    Admiral  Mills.  You  probably  could  accomplish  the  same  results
    by  either  method.  But  I  believe  that  you  would  get  along  faster  and
    make  more  progress  if  you  changed  the  law  to  permit,  under  proper
    national  safeguards,  of  course,  the  ownership.  I  say  that  because  I
    believe  you  have  a  better  interest  from  the  standpoint  of  the  commer-
    cial approach  by  industry  to  these  problems  if  they  realize  that  they
    have  something  that  they  are  responsible  for  and  which  is  their
    property,  sir.

    Chairman  Cole.  I  have  in  mind  particularly  the  problem  of  polic-
    ing, whichever  method  is  used — whether  by  way  of  leasing  the  mate-
    rial or  by  way  of  granting  the  outright  ownership — either  way  in-
    volves a  great  amount  of  accounting  processes  and  security  surveil-
    lances and  I  wonder  if  it  would  not  simplify  those  aspects  of  the
    problem  if  we  were  not  concerned  with  the  question  of  ownership.

    Admiral  Mills.  I  do  not  believe  so,  Mr.  Cole.  I  rather  believe  that
    there  might  be  a  benefit  that  would  accrue  from  the  other  side  of  the
    picture,  and  that  is  tliat  you  can  set  up  such  standards  of  security  and
    accountability  as  j'ou  desire,  and  you  can  make  industry  responsible
    for  carrying  out  and  policing  them.  I  think  we  have  indicated,  cer-
    tainly my  experience  with  industry  when  I  was  on  the  other  side  of
    the  fence  in  Government  service,  and  my  own  experience  with  it  now,
    I  do  not  think  there  are  any  security  regulations  imposed  by  any
    proper  agency,  such  as  the  Atomic  Energv  Commission,  that  cannot
    be  properly  administered  by  industry.  It  is  being  demonstrated  every
    day,  sir.

    Chairman  Cole.  I  know,  but  when  you  were  in  the  naval  harness
    you  were  not  concerned  with  things  so  minute  as  a  kilogram.

    Admiral  Mills.  On  the  other  hand,  I  think  that  the  very  nature  of
    this  product  that  we  are  talking  about  lends  itself  to  a  pretty  strict
    accountability.

    Cliairman  CoLE.  Very  well.  Thank  you  very  much.  Admiral,  and
    Mr.  Kellogg.     You  have  been  very  helpful.

    Admiral  Mills.  Thank  you.

    Chairman  Cole.  Our  final  witness  is  Mr.  (nile,  chairman  of  Com-
    monwealth Edison  Co.

    STATEMENT  OF  WILLIS  GALE,  CHAIRMAN,  COMMONWEALTH
    EDISON  CO..  ACCOMPANIED  BY  MURRAY  JOSLIN,  VICE  PRESI-
    DENT, COMMONWEALTH  EDISON  CO.

    Chairman  Cole.  Let  me  apologize  for  keeping  you  waiting  so  long.
    Realizing  what  the  hour  is,  since  you  are  the  last  witness,  I  think  we
    can  conclude  with  you.

    Ml'.  CrALE.  1  would  like  to  say  that  I  have  with  me  Mr.  Murray
    Joslin,  who  is  a  vice  president  of  Commonwealth  Edison,  and  who  has
    been  closely  associated  with  our  study  i)roject  from  its  beginning.

    The  Ci.  MKMAX.  We  are  glad  to  see  Mr.  Joslin  back  with  you  again.
    We  welcome  you  both,  Mr.  Gale.     1  assume  you  have  a  statement.

    Mr.  Gale.  I  have,  sir.

    The  CuAiRMAx.  You  may  proceed.

    206  ATOMIC    POWER    DEVELOPMENT

    Mr.  Gale.  May  I,  first  of  all,  thank  this  committee  and  the  Atomic
    Energy  Commission  for  inclncling  Commonwealth  Edison  Co.  and  its
    recently  m«rged  subsidiary,  Public  Service  Co.  of  Northern  Illinois,
    as  one  of  the  four  private  industry  teams  originally  assigned  to  investi-
    gate the  feasibility  of  nuclear  electric  power.  Our  participation  in
    this  program  has  been  a  real  challenge.

    To  it  we  have  brought  enthusiasm  and  hard  work.  From  it  we
    have  gained  knowledge  which  is  its  own  reward  for  the  time,  eli'ort,.
    and  expense  we  have  put  into  our  studies.  I  appreciate  the  oppor-
    tunity to  discuss  with  you  today  some  of  the  results  of  those  studies.

    Chairman  Cole.  You  do  not  mind  the  interruption.  Can  you  indi-
    cate for  the  record  the  expense  which  has  occurred  to  your  group  in
    making  these  studies  ?

    Mr.  Gale.  Actual  outlay  out  of  pocket  is  on  the  order  of  $150,000^
    possibly  another  $50,000  if  every  cent  involved  were  charged  to  the
    project.

    Chairman  Cole.  In  order  that  the  record  may  show  what  the  other
    companies  have  paid,  it  is  my  recollection  that  one  group  has  invested
    as  much  as  $500,000  in  these  studies,  and  another  group  something  of
    the  order  of  $250,000.  I  speak  of  that  only  to  indicate  the  willingness
    of  your  groups  to  incur  this  expenditure  partially  out  of  a  sense  of
    public  responsibility.  The  expense  of  your  studies  or  the  other
    groups  has  not  been  shared  by  the  Government  in  any  sense.  The
    money  has  been  spent  by  you  in  making  the  study  out  of  your  own
    pocket,  and  the  only  thought  of  reward  in  addition  to  the  satisfaction
    or  gratification  of  knowledge  you  have  learned  is  that  some  day  you,
    as  well  as  other  private  capital,  in  the  country,  can  benefit  from  the
    results  of  the  study.

    Mr.  Gale.  That  is  correct,  sir.

    Commonwealth  Edison  is  an  Illinois  public  utility  serving  approxi-
    mately 1,725,000  electric  customers  in  Chicago  and  across  the  northern
    part  of  the  State.  We  operate  our  business  on  the  theory  that  if  we
    do  a  good  job  our  customers  will  permit  us  to  continue  to  perform  this
    service  and,  at  the  same  time,  compensate  our  security  holders  fairly
    for  the  use  of  their  money.  Accordingly,  we  have  an  important  inter-
    est in  the  possible  development  of  atomic  energy  since  it  may  some  day
    be  a  low-cost  source  of  power.

    We  are  regulated  by  the  Illinois  Commerce  Commission.  There-
    fore, we  are  permitted  to  earn  only  a  limited  return.  If  we  should
    obtain  a  cheaper  source  of  power,  the  saving  would  be  passed  on  to  our
    customers.  If  we  did  not  do  this  voluntarily,  the  commission  would
    rightfully  make  us  do  it.  Nothing  would  please  us,  or  our  commis-
    sion, more  than  if  the  cost  of  generating  electricity  were  cut  in  half —
    even  though  the  saving  would  all  accrue  to  our  customers.

    Conversely,  as  a  regulated  public  utility,  we  are  in  no  position  to
    lose  money  on  a  venture  into  the  uncertain  field  of  atomic  power.  Any
    such  loss  would  be  borne  by  our  stockholders  who  would  have  nothing
    to  gain  financially  if  the  venture  were  a  success.  We  cannot,  there-
    fore, speculate  in  big  figures  on  such  a  venture.

    Despite  this  valid  limitation,  we  have  made  a  thorough  study  of
    the  engineering  and  economic  possibilities  of  atomic  power.  We  have
    been  foi'tiinate  in  having  tlie  tivmendously  valuable  help  of  the  Ar-
    gonne  National  Laboratory.     The  proximity  of  our  two  groups  in

    ATOMIC    POWER    DEVELOPMENT  207

    the  Chicago  area  made  this  working  relationship  an  inherently  good
    one.

    Our  study  resulted  in  the  completion  of  three  preliminary  designs
    of  reactor  powerplants.  All  three  are  practical,  we  think,  from  an
    engineering  and  operating  standpoint.  But  I  will  discuss  only  the
    two  wliich  appear  to  have  the  best  economic  promise.

    One.  using  natural  uranium  fuel  with  heavy  water  as  coolant  and
    moderator,  would  have  a  net  electric  power  output  of  211,500  kilo-
    watts. The  other,  using  slightly  enriched  uranium  fuel  with  ordi-
    nary water  as  coolant  and  moderator,  would  have  a  net  electric  power
    output  of  246,000  kilowatts.  These,  of  course,  are  units  of  a  very
    substantial  size.

    Our  original  assignment  from  the  Atomic  Energy  Commission  vras
    to  develop  designs  of  plants  which  would  produce  both  plutonium
    and  electric  power.     The  designs  we  submitted  will  do  so.

    In  addition,  we  studied  how  plants  of  our  design  would  operate
    with  relatively  long  burnup  of  the  uranium  fuel  to  make  power  at
    the  lowest  possible  cost.  The  byproduct  would  not  be  weapons-
    grade  plutonium,  but  rather  a  possible  fuel  for  other  reactors.

    Neither  the  heavy  water  nor  the  ordinary  water  design,  operating
    w^ith  long  fuel  burnup,  would  today  produce  power  at  a  price  com-
    petitive with  coal,  taking  into  account  both  investment  and  fuel  costs.
    But  these  designs  do  have  good  potentialities  in  this  direction.

    Based  on  today's  level  of  a  utility  company's  fixed  charges,  an  80-
    percent  capacity  factor,  a  oO-year  life,  and  our  educated  guess  as  to
    the  cost  of  the  atomic  ingredients,  we  estimate  that  our  lieavy-water
    design  Avould  produce  power  on  a  long  burnup  basis  at  a  cost  of  about
    1  cent  a  kilowatt-hour.

    On  the  same  assumptions,  we  estimate  that  the  ordinary  water  de-
    sign would  produce  power  for  something  in  excess  of  1  cent  a  kilowatt-
    hour.

    Thus  we  believe  that  our  designs  are  not  too  far  from  economic
    feasibility.

    It  is  my  understanding  that  the  committee  is  concerned,  among
    other  things,  with  the  future  direction  of  the  atomic-power  program.
    We  of  Commonwealth  Edison  are  not  experts  in  such  matters.  How-
    ever, based  on  the  knowledge  and  experience  we  have  gained  from  our
    2-year  study,  we  do  have  some  very  general  ideas.

    Our  first  recommendation  is  that  an  atomic-power  plant  be  built
    in  the  not  too  distant  future.  We  are  convinced  tliat  the  i:)resent
    technology  warrants  this  conclusion.  We  repeat  the  statement  of
    Dr.  W.  H.  Zinn  of  Argonne  National  Laboratory  that  we  will  know
    what  it  takes  to  make  an  economically  competitive  nuclear-power
    plant  only  after  we  have  gained  experience  in  oi)erating  tb.e  first  re-
    actor which  is  desigiied  and  constructed  specifically  as  a  central  sta-
    tion powerplant.

    As  a  matter  of  fact,  it  is  entirely  possible  that  more  than  one  plant
    ought  to  be  built.  The  potentialities  of  atomic  ]:>ower.  in  our  o]:)inion,
    are  so  important,  that  serious  consideration  should  be  given  to  starting
    down  more  than  one  road.  V^e  take  it  for  granted,  of  course,  that  the
    dictates  of  national  defense  will  be  given  first  consideration.

    Our  second  recommendation  is  that  this  plant,  or  plants,  be  for  the
    primary  purpose  of  producing  power.     The  problem,  as  we  see  it,  is

    208  ATOMIC    POWER    DEVELOPMENT

    essentially  one  of  economics.  If  the  plant  must  achieve  other  objec-
    tives, economic  results  are  likely  to  be  obscured.  Perhaps  an  atomic
    powerplant  should  be  built  for  some  other  primary  purpose.  Such  a
    plant  would,  no  doubt,  contribute  to  our  store  of  technical  knowledge.
    But,  from  the  point  of  view  of  economics,  the  primary  purpose  should
    be  to  produce  power.

    Our  tliird  recommendation  is  that  the  plant  be  full  scale  and  not
    a  pilot  version.  While  we  agree  that  technical  knowledge  would  be
    gained  from  a  pilot  plant,  we  doubt  that  it  would  make  a  worthwhile
    contribution  to  the  solution  of  the  economic  problem.  There  are
    capable  people  who  would  disagree  with  this  recommendation.  They
    may  be  right.

    Our  fourth  recommendation  is  that  the  first  plant  be  built  under
    some  sort  of  partnership  arrangement  between  the  Government  and
    private  industry.

    We  believe  that  it  would  be  a  serious  mistake  if  the  entire  atomic-
    power  program  were  to  be  turned  over  to  private  industry  at  this
    time.  For  example,  how  could  private  industry  spend  $100  million
    more  or  less  on  a  powerplant  without  any  real  knov.'ledge  as  to  the
    cost  of  fuel  ?

    We  would  regard  it  as  an  equal,  if  not  greater  mistake,  were  private
    industry  to  be  shut  out  of  the  program  entirely.  We  are  confident
    that  atomic  power  at  competitive  cost  will  be  a  reality  much  sooner
    i  f  private  companies  participate.

    Our  fifth  recommendation  is  that  careful  consideration  be  given  to
    various  types  of  partnership  arrangements.

    One  type  is  the  much-discussed  proposal  that  the  Government  par-
    ticipate by  making  a  long-term  agreement  for  the  purchase  of
    plutonium  at  a  fixed  price.  We  would  not  favor  this  type  of  plan
    because,  as  I  have  indicated,  we  would  not  contemplate  the  production
    of  weapons-grade  plutonium  except  when  needed  for  defense.

    We  have  discussed  with  the  Commission  staff  in  a  preliminary  way
    another  type  of  partnership  plan.  I  am  not  sure  that  the  board  of  di-
    rectors of  Commonwealth  Edison  would  like  it,  to  say  nothing  of  the
    Commission  or  your  committee.  In  fact.  I  am  not  even  sure  that  I  like
    it.  However,  it  is  illustrative  of  another  possibility.  I  will  sum-
    marize the  plan  for  that  reason.

    The  company  would  put  up  that  part  of  the  cost  of  the  plant  which
    would  be  equal  to  the  value  of  its  recoveral)le  investment  should  the
    Government  later  decide  to  terminate  the  arrangement.  This  might
    be  on  the  order  of  20  percent  of  the  total  plant  cost.  The  Government
    would  put  up  the  balance.  To  meet  the  requirements  of  the  Atomic
    Energy  Act,  the  Government  would  hold  title  to  the  reactor  and  its
    fuel.  The  plant  would  be  connected  with  the  utility's  transmission
    system,  and  the  utility  would  receive  the  power  produced.  The  entire
    operation  would  be  carried  out  under  a  long-term  contract.  Under  it,
    the  utility  would  pay  for  the  electricity  received  on  the  basis  of  the
    cost  of  producing  the  same  electricity  in  a  modern,  conventional  sta-
    tion. If  the  nuc]ear-]>ower  cost  were  moi-e,  the  (xovernment  would
    stand  the  excess.  Perhaps  I  should  qualify  this  by  saying  that  the
    utility  would  receive  an  appropriate  credit  because  of  its  capital
    investment.

    Such  an  arrangement  would  protect  the  private  utility  against  ab-
    normal financial  risks.  We  also  believe  that  it  would  be  fair  to  the
    Government.

    ATOMIC    POWER    DEVELOPMENT  209

    There  are  other  ways  by  which  the  Government  and  private  compa-
    nies coLild  join  in  the  financing  of  the  first  atomic  powerplant.  One
    objection  to  onr  pLan  is  its  complexity.  Other  plans  may  have  the
    advantage  of  greater  simplicity.

    These  are  our  specific  recommendations.  May  I  list  some  of  the
    advantages  of  getting  started  soon  on  the  building  of  one  or  more
    full-scale  atomic  plants  for  the  primary  purpose  of  producing  electric
    power :

    1.  To  do  so  should  establish  our  Nation's  leadership  in  the  nuclear-
    power  field.  We  are  already  the  acknoAvledged  leader  in  the  field  of
    atomic  weapons.

    2.  It  would  hasten  the  day  when  nuclear  power  becomes  competitive
    with  power  from  other  fuels.

    3.  Knowledge  would  be  gained  which  comes  only  from  actual  ex-
    perience w^ith  a  full-scale  operating  plant.

    4.  A  standby  facility  would  be  provided  for  producing  weapons-
    grade  plutonium  in  the  event  of  a  national  emergency.

    5.  A  facility  would  be  provided  for  the  production  of  fuel-grade
    plutonium  for  other  reactors.

    6.  The  program  would  contribute  to  the  advancement  of  reactor
    technology  in  general,  including  atomic  ship  propulsion.

    May  I  again  urge  that  tliis  program  proceed  on  a  partnership  basis
    between  the  Government  and  private  industry.  In  this  connection,  I
    would  again  remind  you  that,  insofar  as  our  particular  industry  is
    concerned,  any  benefits  from  atomic  power  would  accrue  only  to  our
    customers.  I  hope  that  you  have  noted  I  have  not  said  that  Common-
    wealth Edison  Co.  should  be  authorized  to  build  a  plant.  It  is  more
    important  to  decide  that  one  or  more  plants  be  built  tlian  it  is  to  de-
    termine which  particular  company  or  companies  should  build  them.

    Whatever  future  course  may  finally  be  charted  for  the  development
    of  atomic  power,  Commonwealth  Edison  is  greatly  ajipreciative  of  the
    small  part  it  has  been  ]>ermitted  to  ])lay  thus  far.  We  liope  that  we
    may  be  allowed  the  opportunity  of  continued  participation.

    The  Chairman.  That  is  a  very  fine  statement,  Mr.  Gale:  the  kind
    we  expected  to  come  from  3'ou  as  a  hardheaded.  realistic  businessman.
    Are  there  any  questions?

    Representative  HoLiriELD.  I  just  Avant  to  say,  Mr.  Gale,  that  I
    think  that  is  a  very  good  statement.  I  think  it  is  completely  in  line
    with  the  public  interest,  and  with  the  ol)jectives  of  the  Atomic  Energy
    Act.  I  might  discuss  with  you  a  little  bit  the  advisability  of  proceed-
    ing witli  a  full-scale  type  reactor  as  against  testing  out  3  or  4  ])ilot
    jjlants  at  this  time.  There  might  be  some  doubt  in  my  mind.  But  if
    I  was  assured  by  competent  physicists  of  the  type  of  Dr.  Zinn,  that
    we  know  enough  about  these  theoretical  plants  that  have  never  j^et
    been  built  to  proceed  on  full  scale,  I  might  withdraAv  my  reservation
    on  that  point.

    1  have  a  great  deal  of  respect  for  Di-.  Zinn  aud  for  some  of  his
    colleagues  in  the  reactor  field.  If  they  w(»uld  feel  that  the  time  has
    come  to  ]noceed  Avith  a  full-scale  iilaut.  I  would  consider  carefully
    any  reservation  I  Avould  have  on  experimenting  witli  more  tlian  one
    type  of  prototype  |)lant.

    Mr.  Gale.  We  feel,  in  the  case  of  the  thermal  reactor  that  the
    technology  has  adA'anced  to  the  point  Avhere  it  is  ])ractiral  to  j^roceed

    210  ATOMIC    POWER    DEVELOPMENT

    to  design  and  build  a  full-scale  plant.  We  feel  that  the  problem  is
    working  out  the  bugs  from  the  point  of  view  of  economics.  We  think
    that  you  just  have  to  work  with  that  until  you  get  to  the  answer.

    Representative  Holifield.  At  the  end  of  that  time,  let  us  assume  we
    would  proceed  on  a  partnership  basis  and  build  this  full-scale  proto-
    type plant.  We  would  no  doubt  find  certain  bugs  which  we  would
    gradually  eliminate,  and  obtain  cost  figTires  which  we  do  not  have
    now.  At  the  end  of  that  time  would  you  be  willing  to  allow  all  the
    industry  in  the  United  States  to  have  the  benefit  of  that  experiment
    and  then  let  tliem  proceed  from  there  on  the  basis  of  the  race  belong-
    ing to  the  swiftest  in  regard  to  additional  improvements?

    Mr.  Gale.  I  am  reluctant  to  speak  of  the  patent  side  of  this.  I  think
    industrial  companies  as  distinguished  from  utility  companies  have
    the  real  interest  in  the  patent  situation.  I  do  not  think  that  patents
    have  plaved  a  very  great  part  in  the  development  of  the  private  utility
    industry.  Our  company  like  Detroit  Edison,  does  a  considerable
    amount  of  research  every  year.  I  never  have  heard  of  a  dollar  of
    royalty  that  our  company  has  obtained.  I  do  not  mean  that  we  are
    running  an  eleemosynary  institution,  but  we  just  do  not  operate  that
    way.

    Therefore,  I  think  that  it  is  not  fair  for  a  utility  man  to  undertake
    to  speak  for  industrial  companies  in  the  patent  area.

    Representative  Holifield.  That  is  a  fair  statement.     Thank  you.

    Chairman  Cole.  Mr.  Van  Zandt.

    Representative  Van  Zandt,  No  questions,  INIr.  Chairman.

    Representative  Holifield.  Could  I  be  recognized  at  this  time  to
    make  a  very  short  statement  and  request  ?

    Chairman  Cole.  Yes.  Thank  you  very  much,  Mr.  Gale  and  Mr.
    Joslin.

    Mr.  Gale.  Thank  you.

    Chairman  Cole.  Mr.  Holifield.

    Representative  Holifield.  As  you  know,  I  have  made  some  critical
    remarks  about  the  Atomic  Energy  Commission's  proposed  new  policy
    and  legislation  on  atomic  power.  In  the  Congressional  Record  of
    June  22,  1953,  at  pages  7251  to  7253  I  made  a  rather  detailed  analysis
    of  the  Commission's  policy  statement.  Mr.  Gordon  Dean,  the  retir-
    ing Chairman  of  the  Atomic  Energy  Commission,  presented  this
    policy  statement  to  the  committee  in  the  hearing  of  June  24,  1953.

    I  want  to  say,  Mr.  Chairman,  that  I  appreciate  your  placing  in  the
    Congressional  Record  of  June  30,  1953,  a  further  statement  by  Mr.
    Dean  commenting  on  my  analysis  and  amplifying  the  views  of  the
    Commission.  Mr.  Dean  emphasizes  that  the  proposed  new  policy  on
    atomic  powder  is  not  a  "give-away"  program.  I  know  the  Congress  and
    the  country  will  be  glad  to  have  this  assurance,  but  I  note  that  Mr.
    Dean  omits  any  reference  whatever  to  the  Commission's  requested
    autliority  to  make  commitments  for  long-term  purchases  of  plutonium
    by  private  producers.  This  is  the  heart  of  the  subsidy  issue.  This
    contains  a  give-away  possibility  that  Mr.  Dean  does  not  discuss.  I
    ti'ust  that  the  industrial  witnesses  will  throw  light  on  the  matter  of
    Government  commitments  to  buy  plutonium  as  a  device  for  promoting
    ])iivate  development  of  atomic  power.

    I  am  glad  to  note  Mr.  Dean's  assurance  that  the  Commission  does
    not  propose  to  give  away  any  Government-owned  facilities  in  the
    atomic-energy  program.    This  clarification  is  important,  because  the

    ATOMIC    POWER    DEVELOPMENT  211

    terms  of  the  draft  legislation  prepared  by  the  Commission  would  per-
    mit Government  disposal  of  atomic  facilities.

    Finally,  I  want  to  call  attention  to  this  significant  paragraph  in  Mr.
    Dean's  letter  which  says  in  effect  that  whatever  private  enterprise  does
    in  the  atomic  energy  field,  the  Government  intends  to  continue  its  own
    program,  whether  it  be  power  development  or  anything  else.  The
    paragraph  reads  as  follows :

    In  sniiimary,  all  the  power  policy  does  is  permit  .croups  other  than  the  Com-
    mission to  come  into  the  power-development  program  with  their  own  talent  and
    their  own  money.  What  they  do  will  be  in  addition  to  what  the  Government  has
    done,  is  doing,  and  will  do.  Under  the  policy  they  cannot  encroach  1  inch  upon
    the  Government's  own  program,  and  they  can  have  only  what  they  buy  and
    pay  for.  And  when  I  say,  "they"  I  do  not  mean  simply  private  concerns,  I  mean
    also  other  agencies  of  the  Federal  Government,  State  governments,  and  local
    governments.

    In  view  of  the  fact  that  Mr.  Dean,  in  his  public  testimony,  before  the
    commitee  and  in  his  subsequent  communication  to  you,  has  referred  to
    my  analysis  of  the  Commission's  policy  on  atomic  power,  I  believe  it
    would  be  appropriate,  Mr.  Chairman,  to  include  in  the  printed  record
    of  these  hearings,  in  connection  with  Mr.  Dean's  testimony,  my  analy-
    sis of  the  Commission's  policy  and  Mr.  Dean's  statement  in  rebuttal
    of  same  which  was  given  to  you  dated  June  29,  1953.

    I  make  the  request  that  those  two  articles  be  included  in  the  record
    following  Mr.  Dean's  testimony.

    Chairman  Cole.  Without  objection  that  will  be  done.

    I  wonder  whether  Mr.  Dean  should  have  an  opportunity  to  respond
    to  the  statement  you  make  today?

    Representative  Holifield.  I  think  I  am  in  accord  with  most  of  his
    statement,  and  if  there  is  any  variance,  or  if  he  wishes  to  take  up  the
    one  matter  I  call  attention  to  there,  he  may  do  so.

    Chairman  Cole.  With  that  understanding,  in  case  that  is  brought  to
    Mr.  Dean's  attention  and  he  may  desire  to  respond  to  your  statement
    today,  his  response  may  be  put  in  the  record  where  Ave  will  include
    ]\Ir.  Dean's  letter  of  the  day  before  yesterday  to  me  and  Mr.  Holifield's
    statement  of  today.

    (The  information  referred  to  follows  :)

    Chairman  Gordon  Dean,  of  the  Atomic  Energy  Commission,  recently  an-
    nounced in  a  speech  before  the  Edison  Electric  Institute,  a  trade  association  of
    private  utilities,  that  an  atomic  breeder  reactor  had  been  successfully  demon-
    strated. INIembers  of  the  Joint  Committee  on  Atomic  Enei-gy  have  known  of  this
    development  since  October  19."i2.  While  the  announcement  was  hailed  as  n  for-
    ward step  in  civilian  power  production  from  atomic  energy,  the  journey  toward
    that  goal  is  still  long  and  arduous.

    Application  of  the  breeder  principle  to  practical  use  is  extremely  complicated
    and  will  require  several  years  of  further  development.  The  breeder  reactor,
    when  finally  perfected,  will  help  solve  the  problem  of  hard-to-get,  expensive
    source  materials  for  atomic  fission.  By  producing  more  atomic  fuel  than  is
    burned,  the  breeding  process  ultimately  will  lessen  our  dependence  on  limited
    uranium  ores,  now  largely  imported,  as  the  basic  source  of  fissioTiable  materials.
    However,  the  complex  engineering  and  mechanical  problems  of  converting  heat
    energy,  released  by  atomic  fission,  into  economically  usable  electric  power,  still
    remain.  And  the  crucial  issues  of  public  policy  posed  by  industrial  applications
    of  atomic  power  likewise  remain.

    On  June  1  I  presented  to  the  House  a  detailed  analysis  of  atomic  enorLW  devel-
    opments in  relation  to  proposals  for  atomic  power  production  by  private  industry.
    I  iirge  the  Members  to  read  these  remarks  carefully,  if  they  have  not  already
    done  so.  They  will  find  that  the  po.ssibilities  of  atomic  power  have  been  greatly
    exaggerated  for  self-serving  ends.

    212  ATOMIC    POWER    DEVELOPMENT

    Today  I  direct  attention  to  policy  statements  on  atomic  power  formulated
    by  the  Atomic  Energy  Commission.  These  have. been  mentioned  frequently  in
    recent  newspaper  accounts.    They  merit  careful  examination.

    The  Atomic  Enei-gy  Commission  has  prepared  for  the  consideration  of  other
    Government  agencies  and  the  Joint  Congressional  Committee  on  Atomic  Energy
    certain  policy  statements  and  a  draft  of  proposed  new  legislation  in  the  atomic-
    energy  field.  These  documents  consist  of,  first,  Preface  to  Statement  of  Policy
    on  Nuclear  Development ;  second,  Statement  of  Policy  on  Nuclear  Power  Develop-
    ment; third.  Description  of  Proposed  Legislation;  and,  fourth,  draft  of  an
    act  to  encourage  the  early  development  of  the  peacetime  uses  of  atomic  energy.
    Following  are  a  summary  and  analysis  of  the  above-listed  policy  statements.
    The  proposed  legislation  will  be  analyzed  in  subsequent  remarks.

    PREFATORY   STATEMENT   SUMMARIZED

    The  preface  to  statement  of  policy  contains  five  points :

    First.  Atomic  power  is  technically  feasible  and  there  is  widespread  confidence
    as  to  its  ultimate  commercial  practicability.

    Second.  Nuclear  power,  in  the  present  state  of  technology,  could  not  compete
    with  conventional  sources  such  as  coal,  oil,  and  hydropower ;  however,  nuclear
    research  to  date  has  emphasized  military  needs,  and  if  the  specific  aim  of  pro-
    ducing economic  power  is  adopted,  there  is  considerable  optimism  that  it  can  be
    attained  in  a  few  years.

    Third.  The  Commission  judges  it  is  time  to  announce  a  positive  policy  designed
    to  recognize  the  development  of  economic  nuclear  power  as  a  national  objective ;
    an  Important  element  of  this  policy  is  to  promote  and  encourage  free  competition
    and  private  investment  in  development  work,  with  the  Government  accepting
    certain  responsibilities  for  furthering  technical  progress  to  provide  a  necessary
    basis  for  such  development.

    Fourth.  Concluding  that  atomic  power  has  not  yet  been  developed  to  the  point
    of  economic  use  and  that  a  report  under  section  7  (b)  of  the  Atomic  Energy
    Act  is  not  timely,  the  Commission  believes  it  imperative  to  create  a  favorable
    atmosphere  to  hasten  that  day.  The  United  States  should  continue  leadership  in
    peacetime  applications  of  atomic  energy  and  not  wait  until  circumstances  force
    practical  realization  on  a  short-time  scale.

    (Note. — Section  7  (b)  of  the  Atomic  Energy  Act  requires  the  Commission  to
    report  to  the  I'resident  and  the  (^ongress  when  the  industrial  uses  of  atomic
    energy  are  practical,  such  report  to  estimate  the  social,  political,  economic,  and
    international  effects  of  such  use  and  to  give  the  Commission's  recommendations
    for  necessary  or  desirable  supplemental  legislation.)

    Fifth.  To  this  end,  the  Commission  has  endorsed  a  statement  of  policy  as  a
    basis  of  discussion  with  the  executive  agencies  and  the  Congress.

    POLICY  STATEMENT   SUMMARIZED

    The  Statement  of  Policy  on  Nuclear  Power  Development  contains  six  points :

    First.  The  Commission  believes  the  attainment  of  economically  competitive
    nuclear  power  to  be  a  goal  of  national  importance;  this  goal  seems  achievable
    in  the  foreseeable  future  if  the  Nation  continues  to  support  a  strong  development
    effort.  To  let  leadership  in  nuclear  power  development  slip  out  of  American
    hands  would  be  a  major  setback.

    Second.  Accordingly,  the  Commission  recognizes  its  responsibility  to  continue
    research  and  development  in  atomic  energy  and  to  promote  construction  of  experi-
    mental reactors  advancing  the  power  reactor  art  and  leading  to  the  design  of
    economic  units.

    Third.  The  Commission  also  is  convinced  that  progress  toward  nuclear  power
    can  be  further  advanced  through  participation  of  qualified  outside  groups  in  the
    development  program.

    Fourth.  Recognizing  the  need  for  reasonable  incentives  to  encourage  wider
    participation,  the  Connnission  proposes  seven  moves:  (a)  Interim  legislation  to
    permit  ownership  and  operation  of  nuclear  power  facilities  by  groups  other  than
    the  ('onunissioii ;  (h)  interim  legislation  to  permit  lease  or  sale  of  fissionalile
    material  undei-  adequate  security  safeguards;  (c)  interim  legislation  permitting
    owners  of  reactors  to  use  and  trnnsfer  fissionable  and  byproduct  materials  not
    purchased  by  the  Commission,  sul)ject  to  regulation  in  the  interest  of  security
    and  pul)lic  safety;  (d)  such  research  and  development  work  in  Commission  lab-
    oratories on  specific  iwnver  projects  deemed  warranted  in  the  national  interest;
    (e)  more  Ul)eral  patent  rights  as  may  seem  appropriate  to  the  Commission  and

    ATOMIC    POWER    DEVELOPMENT  213

    consistent  with  existing:  law;  (f)  c-onsideration  of  a  prosrressively  adjusted  code
    for  safety  and  exclnsion  a?-ea  requirements:  (fi)  progressively  liberalized  in-
    formation policy  in  the  power  reactor  field.

    Fifth.  The  objective  of  this  policy  is  to  further  the  development  of  nuclear
    plants  which  are  economically  independent  of  Government  commitments  to  pur-
    chase weajfons-jiTade  plutonium.

    Sixth.  The  next  few  years  are  viewed  as  a  development  period  looking  toward
    the  realization  of  practical  nuclear  iwwcr :  therefore  it  is  concluded  that  the  time
    is  not  yet  at  hand  for  the  report  called  for  in  section  7  (1))  of  the  Atomic  Energy
    Act.

    COMMENTS  ON  AEG  POLICY   STATEMENTS

    These  policy  statements  prepared  by  the  Atomic  Energy  Commission  to  explain
    why  new  legislation  is  being  proposed  are  disarming.  Taken  at  face  value  they
    seem  moderate  and  eminently  reasonable.  Agencies  or  individuals  not  well
    acquainted  with  the  Atomic  Energy  Act  and  Commission  policies  would  be  in-
    clined to  give  them  ready  acceptance.

    Careful  perusal  of  the  poliosals  to  date  made
    by  private  utility  or  industrial  companies  for  the  development  of  atomic  power
    offer  only  one  avenue  of  feasibility — dual-purpose  reactors  producinu  plutonium
    for  atomic  weapons  and  byproduct  power  from  the  energy  released  in  the  fission
    process.  These  jirivate  companies  want  the  law  changed  so  Ihat  they  can  pro-
    duce the  plutonium  in  their  ovrn  facilities,  sell  it  profitably  to  the  Government  at
    set  prices  in  a  guaranteed  market,  and  use  this  assure4(i,  the  Comnnssion,
    whenever  it  believes  that  any  industrial,  conunei'cial,  or  otli«M-  nomnilitary  use
    of  fissionable  material  or  atomic  energy  has  been  sufiiciei\tly  developed  to  be  of
    practical  value,  shall  prepare  a  report  to  the  Tresident  and  the  Congress  stating
    all  the  facts  with  respect  to  such  use,  estimating  the  social,  ixtlitical,  economic.

    214  ATOMIC    POWER    DEVELOPMENT

    and  international  effects  and  making  recommendations  for  necessary  or  desirable
    supplemental  legislation.  This  same  section  provides  that  before  the  Commis-
    sion can  issue  any  license  for  manufacture,  production,  export,  or  use  of  atomic
    energy  equipment  or  materials,  a  report  must  be  submitted  to  the  Congress  90
    days  in  advance.

    AEC    SIDESTEPS    CONGRESSIONAL    INTENT

    The  congressional  intent  in  section  7  (b)  of  the  Atomic  Energy  Act  is  plain.
    Legislative  changes  would  be  considered  when  the  practical  value  of  atomic
    energy  had  been  demonstrated  and  its  economic  and  social  effects  more  clearly
    indicated.  The  Commission  sees  fit  to  sidestep  the  procedures  prescribed  in  this
    section  by  proposing  far-reaching  legislative  changes  far  in  advance  of  practical
    application.  Furthermore  the  proposed  new  legislation  would  repeal  the  require-
    ment that  Congress  be  permitted  to  review  the  granting  of  licenses  for  industrial
    uses  of  atomic  energy.

    No  one  will  disagree  with  the  assertion  that  nuclear-power  development  should
    be  vigorously  pushed  and  that  the  United  States  should  maintain  its  leadership
    in  this  field.  In  annoimcing  this  laudable  objective,  however,  the  Commission:
    artfully  ties  it  to  changes  in  the  law  sought  by  certain  segments  of  private
    industry.  The  erroneous  impression  is  given  that  the  present  law  is  holding  back
    this  development ;  that  United  States  leadership  will  be  lost  unless  legislative
    changes  are  made  to  give  more  incentives  to  private  entry  into  the  field  of  atomic
    power.

    The  fact  of  the  matter  is  that  the  atomic  energy  legislation  now  on  the  statute
    books  is  fully  adequate  to  promote  industrial  participation  in  atomic  power
    development.  Private  firms  can  and  do  perform  nuclear  reactor  research,
    design,  and  construction  for  the  Government  under  contract,  thereby  acquiring
    valuable  experience  and  know-how  in  atomic  technology.  They  can  undertake
    certain  atomic  activities  on  their  own,  if  licensed  by  the  Commission.  They  are
    not  required  to  have  a  license  from  the  Commission  to  carry  on  private  research
    or  development  relating  to  the  manufacture  of  atomic  equipment  or  tlie  utiliza-
    tion of  fissionable  material.

    As  the  law  now  stands,  private  firms  cannot  own  fissionable  material  or  the
    facilities — with  certain  exceptions — in  which  such  material  is  produced.  The
    Congress  decided  from  the  very  start  of  the  atomic  program  that  the  awful
    destructive  power  of  the  atom  made  exclusive  Government  ownership  and  control
    of  bomb-making  materials  and  facilities  a  necessity.  No  private  individual  or
    orrianization  could  be  allowed  to  possess  this  means  of  mass  destruction.  National
    defense  and  security  are  still  the  paramount  consideration  in  atomic  energy
    development.  Why,  then,  should  this  program  be  thrown  off  the  track?  Why
    should  atomic  progress  be  interrupted  by  tossing  a  monkey  wrench  of  drastic
    amendment  into  the  legislative  machinery?

    The  Atomic  Energy  Commission  has  been  criticized  by  some  for  not  giving
    proper  attention  to  the  industrial  possibilities  of  atomic  energy.  Whether  this
    criticism  iw  sound,  whether  the  priority  necessarily  given  to  military-defense
    requirements  left  no  alternative,  can  be  debated  at  another  time.  I  emphasize
    here  the  fact  that  the  atomic  energy  legislation  under  which  the  Commission
    operates,  sets  up  no  roadblocks  to  atomic  power  development.  No  provision  of  the
    law  bars  tJie  Connnission  from  proceeding  with  reactor  research,  design,  and
    construction,  by  contract,  with  private  firms  or  through  its  own  facilities,  look-
    ing to  the  development  of  atomic  power  for  industrial  uses.

    Indeed,  tiie  Commission  has  contracted  with  a  score  of  private  firms  on  various
    phases  of  reactor  development.  The  lessons  learned  in  this  experimental  work
    will  have  gi-eat  value  and  direct  application  in  developing  reactors  for  atomic
    powers.  When  the  atomic-powered  submarine  becomes  a  reality  in  a  few  years,
    our  .scientists  and  engineers  will  know  considerably  more  about  the  technology
    of  atomic  powerplants.  Experiments  on  atomic-powerd  aircraft  carriers  and  air-
    planes, if  not  halted  by  shoi-tsighted  budget  cuts,  likewise  will  contribute  to
    f)iogi'ess  in  the  atomic  power  field.

    In  sum,  continued  advance  in  reactor  technology  is  not  dependent  on  changes
    in  the  basic  legislation  but  in  full  and  vigorous  use  of  tlie  opportunities  created
    by  that  legislation.  Legislative  wisdom  consists  in  ready  response  to  public
    IirdblcHis  that  pi-ess  for  solution,  not  in  veering  from  the  proven  course  to  chart
    the  unknown  future.  When  atomic  power  comes  to  the  point  of  proving  its
    practical  use,  there  will  be  time  enough  to  decide  what  new  legislation  is  needed.

    ATOMIC    POWER    DEVELOPMENT  215

    AEC    DETOURS    FROM    PUBLIC    ISSUES

    In  yielding  to  the  clamor  for  legislative  amendments  at  this  time,  the  Atomic
    Energy  Commission  not  only  sidesteps  the  procedures  prescribed  in  the  Atomic
    Energy  Act  to  govern  consideraticm  of  the  industrial  uses  of  atomic  energy ;
    more  important,  it  takes  a  detour  from  crucial  issues  of  public  policy  in  atomic
    power.  If  certain  segments  of  private  industry  can  preempt  this  held  before
    the  issues  will  have  been  carefully  debated  and  resolved,  then  the  public  in-
    terest will  suffer  and  the  Atomic  Energy  Commission  will  have  done  a  disservice
    to  the  country.  Of  course  the  Congress  will  be  the  final  arbiter  of  the  need  for
    new  legislation ;  nevertheless  it  has  delegated  to  the  Commission  a  continuing
    responsibility  to  guide  atomic-energy  development  for  the  national  welfare  and
    to  recommend  legislative  changes  whenever  necessary  to  more  effectively  carry
    out  the  objectives  of  the  Atomic  Energy  Act.  The  Commission  cannot  evade  its
    responsibility  by  dumping  on  the  congressional  table  a  hasty  concoction  of
    legislative  ingredients  served  up  to  satisfy  some  of  its  clientele  in  private
    industry.

    What  are  some  of  these  issues  of  public  policy  from  which  the  Atomic  Energy
    Commission  detours?  We  start  with  the  fundamental  fact  that  the  $12  billion
    invested  to  date  in  the  atomic  program  came  entirely  from  the  Public  Treasury.
    Private  industry  along  with  all  other  groups  and  elements  comprising  the
    American  public  is  entitled  to  a  return  frcim  that  investment.  A  cardinal  prin-
    ciple of  public  investment  is  that  the  benelits  must  be  distributed  widely
    throughout  the  economy.  What  policies  shall  be  formulated  to  guarantee  an
    equitable  distribution  of  the  benefits  of  atomic  power?  The  Commission  has
    nothing  to  offer,  except  to  open  the  door  early  in  the  game  to  private  industry.

    When  the  Federal  Government  undertook  to  make  large  investments  in  multi-
    purpose projects  for  navigation,  flood  control,  land  reclamation  and  hydroelectric
    power,  the  Congress  wrote  into  various  laws  the  principle  of  wide  distribution
    of  benefits.  The  people  of  the  United  States  did  not  propose  that  there  Govern-
    ment build  great  power  dams,  for  example,  merely  to  benefit  the  managers  and
    stockholders  of  private  utilities.  They  were  interested  in  reducing  the  costs
    of  electricity  to  consumers,  in  bringing  power  to  farms  and  homes  in  rural  areas,
    in  creating  incentives  for  new  power-using  industries  to  spring  up  and  expand
    job  opportunities.  In  the  TVA  Act,  in  the  Bonneville  Act,  in  the  Flood  Control
    Act  of  ir)44  and  in  other  basic  statutes  the  Congress  formulated  policies  for  the
    wiide  distribution  of  hydroelectric  power.

    Atomic  energy  development,  also  financed  by  the  public,  has  no  such  guidelines.
    In  future  years,  when  atomic  power  becomes  a  reality  and  private  Industry  a
    factor  in  atomic  power  generation  and  distribution,  legislative  safeguards  to
    protect  the  public  interest  will  be  necessary.  Private  utilities,  which  never
    looked  kindly  on  the  development  of  public  power  resources,  doubtless  would
    prefer  to  foreclose  that  future  by  getting  control  of  atomic  povrer  still  unborn.
    In  any  event,  the  Atomic  Energy  Commission  completely  ignores  the  public
    interest  considerations  in  atomic  power  policy.  It  blithely  asks  private  indus-
    try, which  would  mean  in  practical  effect  a  few  big  corporations,  to  do  the  job.

    The  Government  now  owns  huge  and  costly  facilities  to  produce  plutoniura
    for  the  atomic  bomb  stockpile.  Under  existing  law  the  Government  could  pro-
    ceed to  develop  atomic  power  in  conjunction  with  plutonium  production.  By
    using  such  power  to  operate  atomic  installations  or  selling  it  to  industrial  users,
    the  Government  could  lower  the  heavy  costs  of  atomic  weapons  and  lessen  the
    tremendous  dr&in  of  energy  that  atomic  operations  make  on  the  economy.

    Consider  now  the  anomalous  position  whicli  the  Atomic  Energy  Commission
    takes  in  atomic  power  development.  Instead  of  moviTig  toward  the  production  of
    atomic  power  in  Government-owned  plutonium  plants,  it  proposes  to  let  private
    companies  take  over  the  manufacture  of  plutonium,  to  lie  bought  back  by  the
    Government,  in  order  that  the.se  private  companies  might  exploit  the  atomic
    power  possibilities.  Here  is  a  case  of  the  tail  wagging  the  dog,  and  to  attain
    this  peculiar  end  the  Commissicm  proposes  to  turn  the  animal  completely  around.

    The  C  mills  per  kilowatt-hour,
    wliereas  geiierally  over  the  countrj'  the  cost  for  a  new  |)lant  is  perhaps
    7  or  8  mills  per  kilowatt-hour.

    Re])resentative  Price.  I  might  say.  Dr.  Zinn,  the  answer  given  to  a
    lot  of  us  who  were  trying  to  get  a  plant  located  somewhere  else  was
    that  it  was  going  into  the  Ohio  Valle}'  because  of  clieap  power.

    Dr.  Zinn.  It  is  the  toughest  place  in  the  world  to  go  with  a  new-
    nuclear  powerplant.

    Representative  Jenkins.  I  understand  that  you  mean  it  is  tough
    from  the  standpoint  that  it  is  the  most  advantageous  place  in  the  coun-
    try to  produce  electric  power.  It  is  not  the  toughest  i)lace.  It  is
    just  the  best  place  in  the  world.    It  has  been  considered  that  that  terri-

    80740—53 16

    236  ATOMIC    POWER    DEVELOPMENT

    tory  is  the  best  territory  in  the  country  from  the  standpoint  of  the
    production  of  power.

    What  I  am  trying  to  do  is  to  find  out,  in  addition  to  this  big  atomic-
    energy  plant  located  over  at  Portsmouth,  which  is  about  halfway
    between  these  two  big  electric  plants,  since  it  is  such  a  fine  place  and
    has  such  fine  people  living  there  and  is  so  progressive.  We  can  reach
    out  and  expand  a  little  and  do  more  than  has  been  planned  now.

    Dr.  ZiNN.  It  is  very  difficult  to  compete  with  such  a  fine  place.

    Representative  Jenkins.  I  am  glad  you  appreciate  that  we  are  what
    we  are.

    Representative  Van  Zandt.  Doctor,  as  Director  of  the  AEC  at  the
    Argonne  National  Laboratory,  what  part  did  you  play  in  assisting
    these  five  industrial  study  groups  ?

    Dr.  ZiNN.  I  believe  we  had  meetings  with  each  one.  We  have  seen
    more  of  the  Detroit  group  and  the  Commonwealth  Edison  group  than
    the  others.  The  Commonwealth  Edison  group  particularly  is  near
    us,  and  we  have  seen  them  very  often,  and  some  of  their  people  have
    been  in  the  laboratory  almost  weekly,  and  daily  perhaps.  I  would
    like  to  point  out  that  of  the  types  of  reactors  which  the  industrial
    groups  chose  to  work  on  in  their  designs,  several  of  them  are  designs
    which  we  have  worked  on  also.  So  our  contact  with  them  has  been
    fairly  close.

    If  I  may,  I  would  like  to  make  a  comment  in  that  connection.  I
    think  the  best  thing  that  has  happened  to  the  atomic-energy  business
    in  the  last  2  years  is  the  appearance  of  this  rather  large  group  of  com-
    petent engineers  from  the  utility  companies  and  some  chemical  com-
    panies who  are  newly  interested  in  this  field,  and  they  have  impressed
    me  very  much  as  being  earnest  people,  capable  people,  and  fully  de-
    sirous of  advancing  this  business  for  the  national  interest,  not  just  in
    their  own  company's  interest.

    Representative  Van  Zandt.  Did  you  assist  them  in  establishing  the
    cost  estimates  that  they  are  now  using,  of  about  $60  million  for  this
    type  of  plant  ?

    Dr.  ZiNN.  Congressman  Van  Zandt,  I  will  say  that  I  have  seen
    many  difficult  problems  in  science  over  the  years,  but  none  as  knotty
    as  the  business  of  guessing  costs.  All  of  us  have  been  making  cost
    estimates  and,  frankly,  I  do  not  believe  those  cost  estimates  are  really
    very  good.

    What  happens  is  that  the  laboratory  scientist  makes  an  estimate  of
    what  some  part  will  cost  and  puts  it  in  the  report.  The  industry  man,
    not  being  in  a  position  to  know  more  about  it  than  the  laboratory
    scientist,  copies  that  over  in  his  report.  Then  we  copy  something
    from  the  industry  report,  and  I  am  afraid  these  cost  estimates  sort  of
    go  round  and  round  and  come  out  with  about  the  same  answers  all  the
    time.

    The  real  fact  is  that  we  must  get  some  experience  in  building  eco-
    nomical reactors  before  we  know  where  we  are.  The  submarine  re-
    actors had  another  purpose.  They  wanted  to  drive  a  submarine.
    Plutonium  reactors  make  plutonium,  and  lots  of  things  were  sacri-
    ficed to  get  lots  of  production  of  a  certain  kind.

    We  have  not  yet  tried  to  build  one  reactor  of  any  size  with  the  cost
    down.     I  would  be  delighted  to  have  such  an  opportunity.

    Representative  Van  Zandt.  Doctor,  have  you  made  such  a  recom-
    mendation to  the  Commission  ?

    ATOMIC    POWER    DEVELOPMENT  237

    Dr.  ZiNN.  Informally,  yes,  I  have  many  times  said,  "We  have  done
    the  submarine  job,  and  we  have  worked  on  the  Savannah  River  re-
    actors. We  would  like  very  much  to  take  a  crack  at  something  that
    tries  to  make  power  at  a  reasonable  cost."

    Representative  Van  Zandt.  Are  you  at  liberty  to  tell  us  why  they
    turned  down  your  recommendation?

    Dr.  ZiNN.  It  is  not  so  much  why.  Wlien  there  is  not  any  money,
    there  is  no  use  talking  about  it.

    Representative  Van  Zandt.  This  figure  of  $85  million  that  you
    use — ^hich  one  does  not  have  real  economic  experience  to  determine  which
    pet  is  better  than  the  other.  I  myself  am  a  homogeneous  reactor  man ;
    I  think  we  can  ultimately  make  5-mill  per  kilowatt-hour  power  with
    a  system  of  this  sort,  and  that  it  will  be  a  breeder  in  short,  that  it
    will  be  the  ultimate  method.

    But  I  by  no  means  say  that  Dr.  Zinn,  who.  by  the  way,  is  a  fast
    reactor  man — that  his  way  won't  turn  out  to  be  just  as  good.

    Representative  Van  Zandt.  Just  one  more  quastion.  Can  we  depend
    on  atomic  power  for  gaseous  diffusion  plajits  5

    Dr.  Weinberg.  One  of  the  reasons  that  I  suggest  the  possibility  of
    the  Atomic  Energy  Commission's  building  atomic  powerplants  for
    its  gaseous  diffusion  plants  is  that  at  least  at  the  beginning,  during
    the  time  when  one  cannot  de])end  on  the  atomic  power  as  a  reliable
    power  source,  one  will  have  the  enonnous  backup  in  ordinary  power
    that  is  now  available.  The  diffusion  })]ants  will  ultimately  use  some-
    thing like  10  ])ercent  of  all  the  j)ower  that  is  generated  in  this  country.
    Down  in  Oak  Ridge  we  have  a  powerplant.  The  total  power  use  down
    in  Oak  Ridge,  which  is  a  town  of  30.000,  is,  I  believe,  considerably
    larger  than  the  total  that  is  used  in  the  city  of  Detroit.  This  means
    that,  let  us  say,  if  we  back  2  million  kilowatts  of  conventional  elec-
    tricity with  100.000  kilowatts  of  atomic  electricity,  even  if  that  100,000
    kilowatts  of  atomic  electricity  proves  to  be,  shall  we  say,  cantanker-
    ous, one  is  not  in  a  very  enmarrassing  spot.  It  is  on  this  account,
    among  others,  that  I  personally,  and  many  of  the  people  I  have  talked
    to,  have  felt  that  in  spite  of  the  fact  that  the  power  cost  is  low  in
    Oak  Ridge  or  the  Ohio  River  Valley,  there  are  great  advantages  in
    pursuing  this  possibility.

    Re])resentative  HoLiriEU).  May  I  say  that  the  Atomic  Energy  Act
    specifically  provides  for  su(;h  an  eventuality  by  jiroviding  that  if
    electrical  energy  is  develoi)ed  as  a  byproduct  of  these  plants,  the
    Atomic  Energy  Commission  can  use  that  power.  It  is  written  into
    the  act,  and  was  foreseen  by  its  originators.

    248  ATOMIC    POWER    DEVELOPMENT

    Representative  Van  Zandt.  Any  further  questions?

    Thank  you,  Doctor.  You  have  made  a  great  contribution  to  the
    efforts  of  the  committee.

    For  the  benefit  of  the  record,  I  would  like  to  show  that  we  invited
    Dr.  Zinn  and  Dr.  Weinberg  here  as  individuals,  and  their  statements
    have  not  been  cleared  by  the  Atomic  Energy  Commission.  Their
    statements  represent  their  own  personal  views.

    The  next  witness  is  Dr.  Chauncey  Starr,  Director  of  the  AEC  Atomic
    Povv^er  Division  of  the  North  American  Aviation  Co.

    Dr.  Starr,  we  welcome  you.

    Representative  Holifield.  Dr.  Starr,  as  a  Calif ornian,  I  would  like
    to  welcome  you.  I  have  to  get  even  with  this  fellow  Jenkins  on  his
    Ohio  Valley  position.

    Representative  Jenkins.  You  cannot  make  atomic  energy  out  of
    climate.

    Representative  Van  Zandt.  It  is  not  unusual,  Dr.  Starr,  for  an-
    other Californian  to  welcome  you.  You  may  proceed  with  your
    statement.

    STATEMENT  OF  BE.  CK AUWCEY  STARR,  DIRECTOR,  ATOMIC  ENERGY
    RESEARCH  DEPARTMENT,  NORTH  AMERICAN  AVIATION,  INC.

    Dr.  Starr.  The  major  incentive  to  develop  industrial  atomic  power
    is  the  long-range  national  need  to  provide  an  energy  resource  which
    can  supplement  conventional  hydrocarbon  fuels — coal,  oil,  and  gas —
    when  our  reserves  of  these  fuels  are  depleted  or  become  uneconomic  to
    recover.  Atomic  power  should  be  making  a  material  contribution
    to  our  national  power  supply  within  the  next  25  years.  In  the  near
    future,  however,  there  may  be  a  modest  market  for  small  atomic
    powerplants  for  special  purpose  or  high-cost  locations.

    Although  it  is  difficult  to  estimate  the  availability  of  our  conven-
    tional hydrocarbon  fuels  in  relation  to  future  energy  requirements
    of  the  country,  it  appears  that  the  steady  increase  in  these  require-
    ments will  begin  to  deplete  our  economically  recoverable  fuel  resources
    in  perhaps  25  to  50  years.  This  situation  will  be  reflected  in  an  in-
    creasing cost  of  all  forms  of  energy  from  the  conventional  fuels  and
    an  increased  cost  of  electrical  power.  As  this  increasing  cost  of
    hydrocarbon  fuels  develops,  the  economic  incentive  for  the  develop-
    ment of  other  energy  sources — such  as  atomic  power — will  become
    more  and  more  evident.  In  fact,  at  such  a  future  time  it  will  be  es-
    sential to  the  Nation's  welfare  that  atomic  energy  undertake  a  signifi-
    cant portion  of  the  power  production  in  this  country.

    The  availability  of  atomic  power  will  be  a  major  factor  in  keep-
    ing the  cost  of  power  to  the  consumer  down  to  present  levels.  Thus
    the  continued  growth  of  the  electrical  power  capacity  of  the  country
    would  be  possible,  and  with  it  a  steady  increase  in  our  industrial
    potential  and  standard  of  living.  This,  of  course,  is  sufficiently  im-
    portant to  our  national  welfare  to  justify  a  well-planned  develop-
    ment program  toward  this  objective  at  this  time.

    Atomic  power  does  not  now  offer  cheap  electricity.  Only  a  fraction
    of  the  income  from  the  sale  of  electrical  power  by  private  utilities
    represents  the  cost  of  fuel,  roughly  one-fifth.  The  cost  of  the  atomic
    fuel  that  will  be  consumed  to  make  power  is  indeed  very  small.  How-
    ever, based  upon  present  engineering  knowledge,  the  extra  costs  asso-

    ATOMIC    POWER    DEVELOPMENT  249

    ciated  with  nuclear  reactors  and  their  operation  is  more  than  likely
    to  balance  any  saving  in  fuel  consumed.  For  these  reasons,  the  cost
    of  power  to  the  consumer  will  not  be  significantly  reduced  from  pres-
    ent costs  by  the  immediate  advent  of  atomic  power.

    Many  estimates  have  been  made  concerning  the  cost  of  electricity
    from  atomic  powerplants  that  could  be  built  today.  These  estimates
    contain  a  very  large  uncertainty,  due  to  tlie  lack  of  engineering  and
    operational  information  on  the  various  components  that  go  into  such
    plants.  It  appears  likely  that  an  atomic  energy  plant  today  would
    •probably  produce  power  twice  as  costly  as  that  from  conventional
    plants.  This  cost  differentia]  could  disappear  very  rapidly  if  a  back-
    ground of  technological  development  and  operating  experience  could
    be  accumulated  prior  to  the  construction  of  any  large-size  plants.

    The  engineering  development  of  atomic  powerplants  is  in  its  in-
    fancy. There  does  not  exist  today  any  operating  nuclear  reactor
    that  could  really  be  considered  a  pilot  plant  for  an  economic  power
    producer.  There  are  several  small-scale  experimental  reactors  inves-
    tigating bold  and  radical  technical  approaches,  which  as  yet  are  far
    i-emoved  from  full  scale  plant  engineering.

    There  are  several  technical  approaches  to  industrial  atomic  power
    plants  which  have  received  serious  consideration  by  various  AEC
    agencies.  These  include  both  fast  and  thermal  breeders ;  that  is,  de-
    vices that  utilize  our  uranium  and  thorium  resources  efficiently,  vari-
    ous tyj)es  of  engineering  configurations,  and  various  types  of  coolants
    for  removing  the  heat  from  the  nuclear  reactor.  In  particular,  major
    emphasis  has  been  given  to  both  high  pressure  water  coolant  systems
    and  liquid  metal  coolant  systems.

    The  basic  problems  in  developing  any  atomic  powerplant  are  the
    improverjient  of  tlie  power  output  and  thermal  efficiency  of  these  sys-
    tems aud  the  reduction  of  capital  and  o])erating  costs,  so  as  to  decrease
    the  cost  per  kilowatt-liour  of  electrical  energy  produced.  The  prin-
    cipal elements  of  capital  cost  include  the  reactor,  the  coolant  system,
    the  heat  exchangers  and  boilers,  turbines  and  generators,  site,  and  the
    fissionable  fuel  inventory.  Operating  costs  include  fuel  reprocessing,
    reactor  operation  and  maintenance,  and  maintenance  of  the  turbines
    and  generators.  ]\Iany  of  the  costs  associated  with  the  nuclear  re-
    actor are  uiuch  higher  today  than  would  be  expected  in  the  future  due
    to  the  conservatism  associated  with  the  present  lack  of  operational
    experience.

    North  American  Aviation,  under  contract  with  the  AEC,  has  exam-
    ined in  detail  several  of  these  proposed  systems  and  has  reconnnended
    to  the  Commission  a  development  approach  utilizing  a  liquid  metal
    coolant,  which  we  believe  offers  an  exceptionally  good  opportunity,
    and  perhaps  tlie  best,  for  achieving  economical  electrical  power.  For
    example,  in  the  liquid  metal  coolant  system  proposed,  ]30wer  costs
    Av-hich  might  be  conservatively  estimated  today  to  be  in  the  range  of
    1  to  1.2  cents  per  kilo^vatt-hour  might  be  reduced  to  0  to  7  cents
    per  kilowatt-hour  by  increasing  the  useful  electrical  power  output
    from  a  given-sized  reactor  through  a  foreseeable  process  of  devc^lop-
    ment.  An  increase  of  about  150°  F.  in  the  liquid  metal  coolant  tem-
    perature associated  with  an  increase  in  the  amount  of  coolant  pumped
    through  the  plant  can  easily  accomplisli  this.

    Sui'h.  an  increase  in  tem]ierature  results  in  not  only  an  increase
    in  power  ontput  from  a  given  plant,  but  also  in  a  considerable  in-

    250  ATOMIC    POWER    DEVELOPMENT

    crease  in  its  thermal  efficiency.  However,  this  increase  in  temperature
    could  not  today  be  taken  as  a  reliable  engineering  operating  condition
    without  an  exploratory  experimental  program  as  to  the  consequences
    of  the  increased  temperature  on  materials,  reactor  equipment,  and
    especially  on  the  fuel  elements.

    This  type  of  liquid  metal-cooled  thermal  reactor  not  only  provides
    a  good  possibility  for  producing  competitive  power  from  uranium
    fuel  but  also  would  permit  operation  as  a  self-sustaining  thorium
    breeder.  A  thorium  breeder  manufactures  the  fissionable  isotope
    uranium  283  as  a  product  in  quantities  equal  to  or  greater
    than  that  consumed  in  its  own  operation,  so  that  after  an  equilibrium
    condition  has  been  established,  only  thorium  metal  need  be  supplied
    to  keep  the  system  going.  Such  a  thorium  breeder  system  initially
    would  require  the  use  of  uranium  fuels  in  addition  to  the  thorium  but
    after  several  years  would  be  able  to  operate  on  thorium  alone,  without
    any  connection  with  the  uranium  complex  associated  with  our  present
    atomic  weapons  industry.  An  atomic  power  industry  utilizing
    thorium  breeders  would  be  completely  independent  of  the  Govern-
    ment-owned processing  plants  presently  in  use  as  part  of  our  atomic
    weapons  manufacture,  and  in  addition  w^ould  utilize  a  raw  material,
    thorium,  which  is  unsued  at  the  present  time.

    It  is  our  belief  that  a  reactor  prooTam  whicli  would  provide  pilot-
    plant  experience  would  require  approximately  5  years  and  have  a
    total  cost  of  about  $10  million,  including  the  cost  of  development.
    Following  such  a  program  it  w^ould  then  be  proper  to  consider  the
    construction  of  a  full-scale  plant  wliich  could  reasonably  be  expected
    to  compete  with  the  cost  of  power  from  conventional  plants  at  that
    time.  To  construct  and  place  in  operation  such  a  full-scale  plant
    would  require  probably  another  5  years.

    With  this  program,  an  operating  full-scale  plant,  to  serve  as  a
    proving  ground  for  competitive  atomic  power,  would  be  available  to
    the  Nation  in  about  10  years  from  noAv.  When  such  a  plant  is  eco-
    nomically successful,  it  is  clear  tliat  further  expansion  of  the  electrical
    poAver  industry  would  probably  include  an  increasing  number  of
    atomic  powerplants  and  tliese  would  have  a  justifiable  place  in  the
    Nation's  economy.

    Proposals  have  been  made  that  large  central  station  atomic  power-
    plants  be  built  with  today's  engineering  knowledge,  and  with  some
    form  of  Government  support  to  bear  the  technological  risks.  From
    a  teclmical  standpoint,  such  large  scale  plants  are  not  the  most  ex-
    peditious path  to  economic  power.

    First,  in  order  to  insure  tlieir  performance  and  protect  tlie  large
    investment  involved — $50  to  $100  million  for  a  central-station-size
    plant — they  will  be  designed  with  such  conservatism  as  to  entail  much
    higher  costs  than  might  have  been  required  if  a  pilot  plant  develop-
    ment had  preceded  them.

    Second,  engineering  devel()])ment  and  experimentation  cannot  be
    conducted  effectively  on  full-scale  production  plants,  both  because  of
    cost  and  because  of  interference  with  a  production  commitment.

    Third,  due  to  tlie  cost  of  central  station  size  plants,  it  is  unlikely  that
    any  number  Avould  be  built,  even  with  Government  support,  until  they
    become  economically  justified.

    Thus,  few  of  the  many  competing  technical  schemes  for  economic
    atomic  power  are  likely  to  be  tried  on  large-size  plants.

    ATOMIC    POWER    DEVELOPMENT  251

    What  then  is  the  proper  course  for  the  Nation  to  take  ?

    First,  the  program  should  be  in  the  hands  of  those  in  industry  and
    government  whose  primary  concern  is  atomic  power  plant  develop-
    ment and  manufacture,  with,  of  course,  the  over-the-shoulder  partici-
    pation of  the  eventual  operators.

    Second,  as  the  real  market  for  central  station-size  atomic  power
    plants  is  several  years  away,  and  their  development  is  a  national  asset,
    Government  support  of  a  technical  program  leading  toward  their
    economic  performance  would  be  justified.  Such  support  could  be
    gradually  removed  as  a  real  industry  develops.

    Third,  the  emphasis  should  be  on  small-scale  pilot  plants.  Several
    of  these  should  be  built  now  in  order  to  investigate  the  most  promising
    technical  approaches.  At  a  probable  rough  cost  of  $10  million,  or
    less,  each,  a  half  dozen  or  more  could  be  built  for  the  cost  of  one
    central  station  size  plant.

    If  dependable  pilot-plant  size  units  could  be  developed,  there  might
    be  a  small  but  real  market  for  such  plants  in  special  purpose  or  high
    cost  locations.  The  atomic  power  industry,  as  yet  unborn,  might  be
    brought  forth  in  this  manner.  When  the  technological  development
    of  atomic  power  plants  results  in  economically  competitive  power  from
    such  plants,  a  sound  basis  for  industrial  atomic  power  will  have  been
    established.

    Representative  Van  Zandt.  Thank  you.  Dr.  Starr.

    How  large  is  your  laboratory  in  terms  of  people  and  dollars?

    Dr.  Starr.  We  liave  about  300  individuals,  which  includes  engineers
    and  technicians.  Of  these  300,  roughly  150  are  professional  people.
    Of  these  150,  about  50  are  Ph.  D.  level  men.

    Representative  Van  Zandt.  What  is  the  mission  of  your  laboratory  ?

    Dr.  Starr.  We  have  been  a  prime  contractor  of  the  Atomic  Energy
    Commission  for  about  5  years  now,  working  directly  for  the  Division
    of  Reactor  Development.  We  have  worked  on  various  types  of  reactor
    problems,  materials,  reactor  design,  nuclear  experimentation  associ-
    ated with  reactors.

    Representative  Van  Zandt.  Is  there  any  private  money  in  this
    effort  ?

    Dr.  Starr.  Yes.  Our  company  has  provided  the  facilities  and
    installations  required  for  this  work.  The  experimental  equipment
    and  the  payroll  have  been  provided  by  the  Government,  by  the  Atomic
    Energy  Commission.

    Representative  Van  Zandt.  Any  questions  ?

    Representative  Price.  Doctor,  you  have  a  very  interesting  statement.
    You  have  had  considerable  experience  in  the  atomic  energy  program,
    have  you  not  ?     Were  you  not  originally  at  Oak  Ridge  ?

    Dr.  Starr.  Yes.

    Representative  Price.  How  much  experience  have  you  had  ?

    Dr.  Starr.  I  have  been  with  the  atomic  energy  program  since  1942,
    originally  with  the  Berkeley  project,  and  then  at  the  Clinton  labora-
    tories (now  the  Oak  Ridge  national  laboratory)  until  the  end  of  1946.

    Representative  Price.  I  have  been  interested  for  some  time  in  the
    otfer  of  North  American  Aviation  to  build  a  power  reactor  for  any-
    one who  wanted  one  built.  I  think  you  even  carried  a  full-page  ad
    in  the  Wall  Street  Journal.  I  have  been  curious  to  know  the  back-
    ground of  that,  how  that  transpired,  how  you  could  do  that.  Were
    you  not  a  contractor  for  the  AEC  ?

    36740—53 17

    252  ATOMIC    POWER    DEVELOPMENT

    Dr.  Starr.  Yes ;  we  were  and  still  are  a  contractor  for  the  AEC.

    Representative  Price.  Did  the  development  of  this  reactor  result
    from  that  contract  ?

    Dr.  Starr.  Yes ;  it  did.

    Representative  Price.  I  am  at  a  loss  to  understand  how  North
    American  can  offer  that,  then,  as  a  private  project  to  industry.

    Dr.  Starr.  It  was  presumed  at  the  time  that  this  ad  was  published
    that  anyone  from  private  industry  who  would  offer  to  supply  funds  for
    this  type  of  work  would  make  arrangements  with  the  Atomic  Energy
    Commission  for  the  supply  of  fissionable  material  and  for  permission
    to  build  the  plant.

    Representative  Price.  Was  this  reactor,  after  you  experimented  on
    it  for  some  time,  eventually  approved  by  the  AEC  ?

    Dr.  Starr.  I  don't  believe  I  understand  the  question.

    Representative  Price.  Was  it  an  approved  project  and  did  the  AEC
    finally  accept  this  as  being  a  type  of  reactor  that  would  lead  to  the
    development  of  industrial  power  ?

    Dr.  Starr.  The  Division  of  Reactor  Development  reviewed  this
    reactor  design  and  it  was  approved  by  the  Commission  as  a  specific
    reactor  project  for  the  development  of  industrial  power.

    Representative  Price.  Somewhere  along  the  line,  I  recall  an  objec-
    tion to  this  design.    Where  did  that  come  in?

    Dr.  Starr.  I  am  aware  of  no  rejection  of  this  design.  I  believe
    there  were  some  financial  difficulties  of  a  budgetary  nature.

    Representative  Price.  It  seems  to  me  that  the  National  Security
    Council,  or  someone  along  the  line,  passed  an  adverse  opinion  on  it.

    Dr.  Starr.  I  believe  on  the  budgetary  aspects  of  this,  rather  than
    on  the  technical  aspect.

    Representative  Price.  If  a  private  industry  accepted  your  offer,  if
    they  saw  this  ad  in  the  Wall  Street  Journal  and  entered  into  a  con-
    tract with  you  for  the  sum  of  $10  million  to  build  this  reactor,  what
    would  they  have  ?

    Dr.  Starr.  They  would  have  an  experimental  pilot  plant  on  which
    the  development,  such  as  I  have  indicated  here,  could  be  carried
    through.

    Representative  Price.  It  seems  to  me  there  is  a  great  difference  of
    opinion  among  the  scientists  as  to  the  feasibility  of  the  pilot  plant.

    Dr.  Starr.  I  believe  this  difference  of  opinion  arises  from  the  differ-
    ence of  objectives.  One  has  to  distinguish  between  an  objective  of
    demonstrating  power  today  for  reasons  other  than  economic  reasons,
    and  finding  what  I  call  in  my  prepared  statement  the  most  expeditious
    path  for  technical  development.  If  one  wishes  to  demonstrate  power
    today  on  full  scale,  then  the  question  of  economics  becomes  a  secondary
    thing.  You  build  a  plant  such  as  Dr.  Zinn,  for  example,  has  recom-
    mended for  such  a  purpose.  The  Government  shares  the  cost  or  sup-
    ports it  in  such  a  way  as  to  make  it  economical  to  operate  it,  whether
    it  be  by  the  Government  or  a  private  utility.

    The  objective  which  I  have  outlined  is  a  purely  technical  one,  and
    that  is  how  fast  can  the  country  develop,  in  the  minimum  amount  of
    time  and  minimum  amount  of  total  cost,  competitive  economic  power.
    It  is  my  belief,  and  I  think  the  belief  of  many  people  in  the  field,  that
    the  best  way  to  do  this  is  not  by  building  full-scale  plants,  of  which,
    as  I  indicated,  the  Nation  might  not  be  able  to  afford  more  than  1  or  2

    ATOMIC    POWER    DEVELOPMENT  253

    or  a  few,  but  by  putting  this  money  into  development  of  what  I  call
    pilot-plant-size  machines.

    Representative  Price.  The  thing  that  puzzles  me  about  the  North
    American  situation  is  this:  The  AEC  entered  into  an  experimental
    contract  with  North  American.     For  what  purpose?

    Dr.  Starr.  To  develop

    Representative  Price.  For  whom  ?

    Dr.  Starr.  For  the  Government.

    Representative  Price.  On  what  basis,  then,  can  North  American
    advertise  that  it  was  available  to  anyone  if  they  would  put  up  $10
    million  ?

    Dr.  Starr.  I  believe  our  advertisement  indicated  it  would  have  to
    be  with  the  collaboration  of  the  AEC.

    Representative  Price.  I  am  just  talking  about  this,  seeking  infor-
    mation. I  was  surprised  when  I  saw  the  ad  and  wondered  what  it
    was  all  about.  Did  the  AEC  pass  on  the  advertisement  before  it
    was  run  ?

    Dr.  Starr.  No.  This  was  a  responsibility  of  ours.  They  were
    aware  of  it,  however.

    I  might  point  out  that  the  position  of  our  company  is  perhaps  a  little
    different  from  those  of  the  previous  two  witnesses.  We  intend  to  be-
    come an  equipment  manufacturer  in  this  field.  We  are  happy  to  build
    this  equipment  for  the  Government  or  for  private  enterprise.

    Representative  Price.  The  point  I  am  getting  at.  Doctor,  is  this:
    You  ran  this  ad  inviting  industry  to  come  in  and  you  stated  in  the  ad
    that  you  operated  under  contract  witli  the  AEC.  To  me,  if  I  were  in
    private  industry,  that  would  give  me  the  idea  that  AEC  said,  "This  is
    it.     This  is  the  pilot  plant.     This  is  the  route  to  go."

    Dr.  Starr.  That  would  be  your  interpretation  of  the  ad.

    Representative  Price.  I  am  just  thinking  out  loud.  That  is  my  in-
    terpretation. I  do  not  really  know.  I  thought  it  was  an  unusual
    course.

    Dr.  Starr.  The  particular  purpose  of  this  course  of  action  was  to
    solicit  private  funds  to  assist  in  the  development  of  this  plant.  It
    was  our  understanding  from  the  statements  made  by  the  Commission
    and  its  representatives  publicly  that  if  such  private  funds  were  avail-
    able, some  means  would  be  worked  out  for  cooperating  with  such  pri-
    vate funds  for  getting  these  plants  built.  The  advertisement  was  run
    in  that  spirit:  nnmely,  to  solicit  private  funds  to  assist  in  the  develop-
    ment of  this  field.

    We  anticipated  no  difficulty  with  the  AEC  if  such  private  funds
    became  available,  in  working  out  suitable  arrangements.  I  would  not
    now  anticipate  such  difficulties.

    Representative  Van  Zandt.  Have  you  had  many  responses  to  that
    ad?

    Dr.  Starr.  We  have  had  responses,  but  none  of  a  nature  which
    would  indicate  that  private  funds  were  available  at  this  time  to
    develop  this  field.

    Representative  Van  Zandt.  In  any  amount  ?

    Dr.  Starr.  In  any  amount.

    Representative  Price.  That  would  have  been  my  next  question,  but
    that  is  all  right.

    Representative  Holifield.  It  is  still  a  good  question.

    254  ATOMIC    POWER    DEVELOPMENT

    Representative  Van  Zandt.  Dr.  Starr,  could  you  give  us  an  exact
    figure  of  the  amount  of  private  funds  you  had  in  mind  as  necessary  ?

    Dr.  Staer.  We  asked  for  $10  million.  We  got  no  takers,  no  offers.
    We  got  many  j^eople  interested.  Throughout  the  country  there  was
    response  from  chambers  of  commerce  who  were  interested  in  the  de-
    velopment of  their  areas.  I  think  this  was  under  some  misapprehen-
    sion that  what  atomic  energy  was  going  to  bring  them  today  was
    cheap  power.  We  made  the  point  specifically  clear  that  what  we
    were  advertising  and  asking  for  was  financial  support  for  a  develop-
    ment program.

    Representative  Price.  If  you  had  any  takers,  who  could  have  built
    it  legally  ?

    Dr.  Starr.  Legally,  if  the  Commission  had  granted  permission  to
    use  the  technical  information  which  the  Commission  had  available,
    it  is  our  interpretation  of  the  act  that  anyone  could  have  built  it.
    This  is  an  experimental  plant,  not  a  production  plant.  The  allocation
    of  fissionable  material  would  have  to  have  been  done  by  the  Commis-
    sion with  license.

    Representative  Price.  Did  the  Commission  indicate  it  was  ready
    to  allocate  fissionable  material  ?

    Dr.  Starr.  We  felt  perhaps  this  was  a  little  bit  like  the  chicken
    ?ind  the  egg  problem.  We  felt  that  if  such  private  funds  were  avail-
    able, a  proposal  would  be  made  to  the  Commission,  and  in  view  of  the
    Commission's  public  statements,  we  anticipated  no  difficulty  in  mak-
    ing arrangements.  The  Commission  has  indicated  frequently  that
    it  was  interested  in  having  private  cooperation  in  this  field.

    Representative  Van  Zandt.  Dr.  Starr,  my  congressional  district
    in  Pennsylvania  has  many  bituminous  coal  mines.  I  would  like  to
    know  whether  the  chambers  of  commerce  in  my  congressional  dis-
    trict made  inquiry?

    Dr.  Starr.  None  that  I  am  aware  of.

    Representative  Price.  One  more  question.  If  this  pilot  plant  had
    succeeded,  what  then  would  be  the  cost  of  a  full-scale  model  ?

    Dr.  Starr.  This  question  of  the  cost  of  a  full-scale  model  is  very
    uncertain,  and  I  do  not  believe  any  of  the  cost  estimates  for  full-
    scale  machines  are  valid  within  roughly  a  factor  of  50  to  100  percent.
    There  is  a  very  wide  area  of  uncertainty.

    One  of  our  great  reasons  for  feeling  this  way  is  that  you  have  to
    make  certain  assumptions  in  estimating  the  cost  of  a  full-scale  plant
    and  its  operation.  Some  of  these  include,  for  example,  the  cost  of
    the  hardware  that  goes  into  the  nuclear  reactor.  Some  of  it  includes
    the  cost  of  operation.  One  of  the  big  operating  costs  is  the  face  of
    the  maintenance.  There  isn't  large-scale  experience  on  the  mainte-
    nance of  this  type  of  plant.  Very  small  changes  in  this  can  make  a
    very  large  difference  in  the  final  cost  of  power.

    It  is  our  hope  that  out  of  the  development  program,  which  in-
    ^■()lves  the  pilot-plant  operation,  many  of  these  questions  would  have
    been  resolved  by  experience.

    I  can  give  you  certain  special  examples  which  illustrate  some  of
    the  problems.  For  example,  if  any  part  of  the  complex  in  the  nuclear
    I'eactor  becomes  contaminated  through  failure  of  the  equipment,  the
    r^eplacement  of  it  is  a  rather  expensive  maintenance  procedure  and
    might  involve  long-term  shutdowns.  The  effect  of  these  shutdowns
    on  the  cost  of  the  power,  the  manpower  required,  the  special  train-

    ATOMIC    POWER    DEVELOPMENT  255

    ing  of  the  crews — these  are  things  which  are  still  undetermined,  and
    these  are  also  things  which  are  the  subject  of  development.

    This  is  true  of  every  one  of  the  industries  that  has  been  faced  with
    this  problem.  You  can  build  something  which  will  work  the  first
    time,  but  if  you  want  to  make  it  leplaceable  or  maintenancewise,  you
    might  change  the  design.

    This  you  get  through  experience.  As  I  pointed  out  in  my  prepared
    text,  the  other  things  you  learn  are  how  to  improve  the  operating
    conditions.  The  purpose  of  a  development  program  is  very  specific.
    We  foresee  exactly  what  it  is  we  want  to  do,  developmentwise.  We
    know  what  the  possibilities  or  probabilities  are,  but  these  are  uncer-
    tain yet.  We  want  to  find  out  what  can  be  done  in  the  way  of  im-
    proving performance  characteristics,  what  can  be  done  in  the  way
    of  decreasing  construction  costs.

    Kepresentative  Price.  Doctor,  did  you  make  any  recommendation
    to  the  AEC  that  it  build  such  a  pilot  plant  ?  .  .         .

    Dr.  Starr.  Yes;  we  did.  We  recommended  this  specific  pilot  plant
    to  the  AEC.  I  believe  it  was  favorably  received.  As  I  indicated
    before,  I  believe  there  were  budgetary  problems  involved.  We  still
    hope  this  pilot  plant,  or  some  modification  of  it,  will  be  approved
    by  the  Commission.

    Representative  Price.  How  much  does  the  AEC  have  invested  in
    this  experiment  at  the  present  time?

    Dr.  Starr.  There  is  roughly  on  the  order  of  magnitude  of  $10  mil-
    lion or  so  invested  in  our  operation  and  the  background  of  develop-
    ment.    All  of  this  has  gone  into  building  up  this  type  of  experiment.

    Representative  Hoijfield.  Dr.  Starr,  I  am  veiy  favorably  im-
    pressed with  the  method  by  which  you  propose  to  enter  this  field  of
    research  and  development.  It  makes  sense  to  me  to  make  5  or  6  of
    these  pilot-plant  models  of  different  types,  selecting  the  best  from
    the  many  designs  of  reactors.

    In  view  of  the  fact  that  there  is  no  immediate  shortage  of  power  or
    immediate  urgency  to  develop  power,  it  seems  to  me  that  the  program
    that  you  have  offered  here  makes  sense;  that  we  can  make  haste  by
    going  slowly,  as  far  as  the  full-scale  reactors  are  concerned.

    Maybe  it  is  my  Scotch  blood  in  me  that  makes  me  a  little  bit  cau-
    tious, but  from  my  knowledge  of  the  lack  of  actual  experience  in
    these  large-scale  plants  and  the  lack  of  actually  having  any  of  these
    plants  in  existence,  it  seems  sensible  to  me  that  you  take  5  or  6  of
    these  models  that  have  been  decided  upon,  possibly  by  a  convention
    of  physicists,  as  being  the  most  productive  type  and  the  ones  that
    have  the  most  potentiality,  and  then  let  the  Government  pay  for  a
    pilot-plant  type  of  experimental  reactor  and  operate  them  for  a  few
    years.  Then  it  seems  to  me  that  private  industry  would  be  much
    better  informed  and  more  able  to  come  in  with  a  plan  of  proper  type
    of  amortization  and  the  proper  type  of  development.

    I  want  to  compliment  you  on  your  presentation,  not  because  you
    come  from  California  and  are  close  to  my  district,  but  because  I  be-
    lieve that  it  makes  sense.  I  have  been  hoping  someone  would  come
    forward  with  a  plan  like  that.

    That  is  all,  ]\rr.  Chairman.

    Dr.  Starr.  I  might  say.  Congressman,  that  I  believe  that  it  is  very
    necessary  to  understand  why  the  various  technical  groups  propose  or
    pick  as  their  winning  horse  in  this  race,  different  designs.    Very  rare-

    256  ATOMIC    POWER    DEVELOPMENT

    ly  is  it  because  of  the  performance  of  these  machines  today.  It  is
    always  based  upon  the  resuh,  of  a  development  program  which  they
    see  laid  out  before  them.  They  see  that  there  are  certain  technical
    hurdles  which,  if  they  overcome  them,  can  end  in  economic  power.

    Our  particular  approach  is  the  result  of  many  years  of  study,  and
    we  believe  this  particular  horse  that  we  are  trying  to  bet  on  is  the  one
    which  is  going  to  have  the  best  payoff  in  the  long  run.

    Nevertheless,  there  are  other  technical  people  who  might  have  other
    ones.  It  is  always  on  the  result  of  a  development  picture,  and  without
    that  technical  development  picture  none  of  these  things  would  be
    achieved.

    Kepresentative  Holifield.  Let  me  ask  you,  has  the  AEC  similar  re-
    search and  development  such  as  yours  ?  Are  there  other  groups  doing
    approximately  the  same  type  of  work  on  reactors?

    Dr.  Starr.  Other  than  the  National  Laboratories,  I  am  not  aware
    of  any.  I  think  we  are  in  a  peculiar  position  in  this  respect.  There
    are,  of  course,  the  General  Electric  Co.  and  the  Westinghouse  Co.,  who
    are  building  for  the  military  service.

    I^epresentative  Holifield.  But  they  are  building  a  special  type.

    Dr.  Starr.  Yes.

    Representative  Holifield.  In  your  research  and  development,  have
    you  tested  or  considered  many  different  types  of  reactors  before  you
    came  to  this  particular  type  ?

    Dr.  Starr.  We  have  considered  many  types.

    Representative  Holifield.  How  many  types  have  you  considered
    seriously  ?

    Dr.  Starr.  We  have  considered  actually  a  very  large  number.  There
    are  variations,  I  might  point  out,  to  every  one  of  the  major  types.
    We  have  considered  several  dozen  of  these.  They  fall  into  certain
    classes.

    We  have  also  considered  these  in  terms  of  a  time  scale.  Those  in
    the  very  far  distant  future  have  so  many  unknowns  about  them  that
    there  is  a  long  program  of  development  prior  to  even  the  pilot-plant
    stage.  There  are  those  where  we  feel  they  can  be  built  today,  but
    even  with  development  they  are  not  necessarily  going  to  improve  very
    much.

    We  have  considered,  we  believe,  most  of  the  major  types  that  have
    been  recommended  by  the  various  groups  working  for  the  Commission
    and  the  various  industrial  groups.  We  have  made  our  own  economic
    anlyses  of  these.    We  have  looked  at  these  in  terms  of  a  time  scale.

    Out  of  these  we  have  picked  this  one  as  being  (1)  within  a  reasonable
    time  scale  and  (2)  having  the  greatest  development  potential.

    Representative  Holifield.  Is  this  a  dual-purpose  type  of  reactor,
    or  single  purpose  ?

    Dr.  Starr.  Single  purpose.  We  believe,  with  our  other  AEC  lab-
    oratories on  this,  that  the  way  to  get  industrial  economic  power  is  to
    build  plants  for  it,  and  not  multipurpose  plants.  It  is  very  difficult,  if
    not  impossible,  to  achieve  multiple  objectives  with  one  plant.

    Representative  Holifield.  With  economy  ?

    Dr.  Starr.  With  economy.

    Representative  Holifield.  Did  any  of  these  study  groups  call  on
    your  plant  and  discuss  this  matter  with  you  ?

    Dr.  Starr.  All  the  industrial  study  groups  have  had  representatives

    ATOMIC    POWER    DEVELOPMENT  257

    out  at  our  plant,  and  have  gone  over  this  information  freely,  and  many
    of  them  have  considered  it  very  seriously.

    I  might  point  out  here  again  that  the  objectives  have  to  be  looked
    at  somewhat  differently.  They  are  ^Yell  aware  of  our  developments,
    and  also  of  our  analyses  and  our  points  of  view.  Some  of  these
    industrial  groups  have  taken  the  attitude  that  even  though  other
    plants  might  be  obsolete  eventually,  because  of  this  5-year  develop-
    ment period  which  we  honestly  feel  our  plant  requires,  they  would
    prefer  to  have  something  which  could  be  built  today,  even  though  it
    were  uneconomical  today.

    Representative  Holitield.  Why  should  they  want  something  built
    today  without  regard  to  its  economic  value  ?

    Dr.  Starr.  Because  their  objective  is  to  get  full-scale  experinece
    today.  Most  of  these  proposals  have  involved  Government  support
    of  one  sort  or  another,  so  as  to  make  the  assimilation  of  these  plants
    and  their  net  worth  an  acceptable  thing.  This  might  be  a  perfectly
    permissible  objective  and  perfectly  satisfactory  if  the  Nation  wants  it,
    if  you  want  full-scale  plants  built  now,  if  you  want  demonstrated
    power.

    Representative  Holifield.  If  you  are  willing  to  pay  for  it  with
    Government  subsidy  and  with  patent  privileges  on  gadgetry  and
    processes,  it  would  be  all  right  to  go  ahead.

    Dr.  Starr.  I  think  if  you  want  to  put  this  field  on  a  basis  that  is
    not  Government-supported,  what  is  going  to  have  to  be  demonstrated
    is  the  competitive  advantage  of  power  from  nuclear  plants.  Until
    such  demonstration  takes  place,  I  believe  Government  support  of  one
    sort  of  another  is  going  to  be  required.

    If  the  Government  wants  full-scale  plants  built,  it  is  going  to  have
    to  support  this.

    My  own  feeling  is  simply  that  the  Government  should  pay  for
    the  manufacture  of  knowledge,  but  should  not  subsidize  the  manu-
    facture of  power.  We  feel,  as  I  indicated  in  my  statement,  that
    Government  support  in  the  manufacture  of  knowledge  is  a  justified
    thing.

    Representative  Jenkins.  I  have  been  very  much  interested  in  your
    statement.  You  have  confused  me.  As  I  said  before,  I  am  the
    youngest  member  of  this  committee,  and  I  am  not  familiar  with  a
    lot  of  things  you  talk  about.

    I  get  the  impression  from  your  testimony,  it  implies  to  me,  at  least,
    that  you  look  upon  this  manufacture  of  atomic  energy  as  a  big,
    gigantic  thing  which  can  be  done  by  hardly  anybody  but  the  Govern-
    ment, and  that  when  it  is  done  it  will  be  done  on  a  big  scale  in  large
    centers  and  distributed.

    Do  I  gather  correctly  from  your  statement  that  your  theory  is  that
    eventually,  if  it  is  carried  out,  we  will  have  innumerable  places  manu-
    facturing atomic  energy.

    Dr.  Starr.  Yes,  Congressman.  My  feeling  is  that  the  field  will
    grow  of  its  own  economic  forces  simply  by  what  is  going  to  happen
    in  this  country  as  time  goes  on.  The  cost  of  power  from  conventional
    fuels  is  going  to  go  up.  This  has  been  pretty  well  agreed  upon,  I
    believe,  by  many  people  in  the  utility  business.  When  this  occurs
    and  there  are  simultaneously  economic  nuclear  plants,  there  is  not  go-
    ing to  be  any  lack  of  jDrivate  capital  to  expand  the  power  business  on
    nuclear  plants.

    258  ATOMIC    POWER    DEVELOPMENT

    I  don't  believe  there  is  any  necessity  for  the  Government — unless
    there  are  other  reasons  for  doing  this — I  do  not  believe  there  is  any
    necessity  for  the  Government's  artificially  stimulating  this  power
    business.  It  will  come  of  its  own  accord.  What  the  Government
    can  do  and  should  do  is  to  stimulate  the  development  of  these  plants
    to  the  point  where  one  can  demonstate  to  private  utilities  that  these
    plants  will  produce  economic  power.

    Representative  Jenkins.  Let  us  develop  that  a  little  further.  Now,
    for  instance,  with  the  development  of  electricity  there  are  not  very
    many  powerplants  in  the  country,  comparatively  speaking.  I  suppose
    in  the  State  of  Ohio  there  probably  are  300  or  500  places  where  they
    make  electricity,  not  more  than  that.

    So  far,  in  the  production  of  electricity  apparently  it  never  has
    seemed  advisable  for  the  little  fellow  to  try  to  get  into  that  game,
    because  it  is  an  expensive  one.

    I  judge  from  your  remarks  that  in  the  production  of  atomic  energy,
    it  is  going  to  be  more  easily  done  and  more  cheaply  done  and  conse-
    quently there  will  be  more  people  engaged  in  it  than  there  are  in  the
    production  of  electricity  now.

    Dr.  Starr.  Atomic  energy  is  a  very  young  field,  and  in  my  opinion
    it  is  going  to  be  many  years  before  it  will  be  a  big  one,  in  industrial
    atomic  power  at  least.  In  those  years,  I  believe  there  will  be  ample
    opportunity  for  the  aggressive  organizations  of  the  country  to  grow
    to  the  size  necessary  to  participate  in  it.

    We  are  very  much  in  the  state  of  what  the  automobile  industry  must
    have  been  in  1900.  We  are  talking  about  experimental  units.  We
    hardly  have  a  business  yet.  I  think  there  is  ample  time  for  us  to
    grow.

    How  many  there  will  be  in  the  field,  I  don't  know.  I  think  in  this
    country,  competition  of  this  sort  is  good.

    Representative  Jenkins.  I  am  not  an  expert  on  this  at  all,  but  it
    appears  to  me  that  we  make  electricity  out  of  nothing;  but  when  we
    come  to  make  atomic  power,  we  have  to  have  Something  to  make  it
    out  of.

    Dr.  Starr.  We  are  going  to  have  to  have  the  raw  materials.  There
    is  no  question  about  that.  I  think  here  again,  when  the  situation
    develops  that  there  is  a  legitimate  market  or  a  genuine  market  eco-
    nomically for  atomic  powerplants,  the  question  of  the  raw  material
    availability  will  have  been  decided  one  way  or  another.

    Representative  Jenkins.  That  is  all,  Mr,  Chairman.

    Representative  Price,  What  is  your  best  recollection  of  the  consid-
    eration which  the  National  Security  Council  gave  to  the  North  Amer-
    ican reactor?

    Dr.  Starr.  We  have  no  direct  access  to  the  deliberations  of  the
    National  Security  Council.  I  feel  that  either  the  Council  or  the  Atomic
    Energy  Commission  could  speak  more  authoritatively  on  that.

    Representative  Price.  Do  you  feel  this  reactor  would  promote  the
    construction  of  experimental  reactors  which  appear  to  contribute  sub-
    stantially to  the  power-reactor  art  and  constitute  a  useful  contribution
    to  the  design  of  economic  units  ?

    Dr.  Starr.  The  answer  to  that  is  "Yes."

    Representative  Price.  I  understand  that  is  the  grounds  on  which
    they  rejected  your  reactor.

    ATOMIC    POWER    DEVELOPMENT  259

    Dr.  Staek.  I  am  not  in  a  position  to  say.  I  believe  the  grounds  were
    other  than  that.

    Representative  Price.  You  feel,  through  all  your  study  and  experi-
    ment and  work  on  this  project,  that  this  reactor  would  fufill  that
    requirement  ?

    Dr.  Starr.  Yes.

    Representative  Van  Zandt.  Thank  you,  Dr.  Starr.

    Our  next  witness  is  Dr.  Karl  Cohen,  vice  president,  Walter  Kidde
    Nuclear  Laboratories,  Inc.

    You  are  welcome  here.  Doctor.    Please  proceed  with  your  statement.

    STATEMENT  OF  KARL  COHEN,  VICE  PRESIDENT,  WAITER  KIDDE
    NUCLEAR  LABORATORIES,  INC.

    Dr.  Cohen.  I  am  vice  president  and  a  director  of  Walter  Kidde
    Nuclear  Labortories,  Inc.,  which  was  founded  15  months  ago  for  the
    purpose  of  participating  in  the  development  of  commercial  nuclear
    power.  I  have  been  active  in  atomic  energy  matters  during  my  entire
    professional  career.  I  began  w^orking  full-time  in  1940  on  what  later
    became  the  Manhattan  project,  in  the  field  of  isotope  separation.  For
    the  past  9  years  I  have  been  concerned  principally  with  the  industrial
    applications  of  nuclear  power.

    My  scientific  colleagues  and  I,  who  have  been  working  together  for
    about  5  years,  and  the  Walter  Kidde  interests — they  are  probably
    best  known  to  you  as  leading  manufacturers  of  fire  extinguishers  and
    pneumatic  aircraft  equipment,  and  as  a  construction  firm  established
    for  over  50  years — founded  this  new  company  because  we  were  pro-
    foundly convinced  that  atomic  energy  can  be  made  a  commercial  source
    of  power,  that  there  is  a  definite  need  for  supplemental  power  sources
    in  the  United  States  as  throughout  the  world,  and  the  conviction  that
    Congress  would  insist  on  the  development  of  atomic  power  within  the
    framework  of  the  economic  system  which  has  made  this  the  most
    l^owerful  country  in  the  world.  We  are  presently  engaged  in  research
    and  development  work,  under  contract  from  the  AEC  and  other  Gov-
    ernment agencies,  on  various  applications  of  atomic  energy;  prin-
    cipally the  design  of  nuclear  reactors.

    As  businesses  go  in  atomic  energy,  we  are  a  small  business.  The  net
    worth  of  the  Kidde  industries  w'ith  which  w-e  are  associated  is  about
    $10  million.  The  capital  investment  so  far  in  the  Walter  Kidde
    Nuclear  Laboratories  has  been  $300,000.  The  view  of  things  from
    our  vantage  point  is  considerably  different  from  that  of  the  com-
    pletely subsidized  national  laboratories,  from  that  of  the  larger
    Atomic  Energy  contractors,  or  from  that  of  the  public  utilities.  It
    may  even  be  a  surprise  to  you,  in  an  industry  which  has  been  afflicted
    since  its  very  beginning  with  giantism,  that  we  feel  that  there  is  a
    place,  and  indeed  an  indispensible  place,  for  businesses  in  the  atomic-
    energy  field  wdiich  at  least  start  small.

    There  are  three  main  reasons  why  we  believe  that  new  businesses,
    which  will  inevitably  start  small,  have  a  si^iificant  role  in  the  develop-
    ment of  useful  atomic  power.  The  first  consideration  is  that  reactors
    Avhich  will  make  economic  power  will  not,  in  fact  cannot,  be  exorbi-
    tantly expensive.  Even  the  most  elementar}'^  economic  studies  show
    that  atomic  power  will  be  uneconomic  for  large  stationary  plants  if
    the  reactors  and  associated  auxiliary  equipment  cost  more  than  about

    260  ATOMIC    POWER    DEVELOPMENT

    $200  per  kilowatt  of  developed  electrical  power:  the  economically
    interesting  range  will  be  about  $100  per  kilowatt.

    I  might  interpose  here,  parenthetically,  to  make  sure  the  basis  for
    our  figures  coincides  with  those  which  have  been  presented  before,
    that  the  figures  just  given  refer  only  to  the  reactor  and  its  auxiliary
    equipment.  They  do  not  include  the  estimates  of  the  electrical  gener-
    ating equipment  which  have  been  in  the  figures  which  the  other  wit-
    nesses gave.

    Representative  Holifield.  Or  the  chemical  processing  ?

    Dr.  Cohen.  Or  the  chemical  processing.  Or,  for  that  matter,  the
    fuel.

    Representative  Holifield.  Yes.

    Dr.  Cohen.  This  means  that  the  goal  for  a  reactor  which  would
    furnish  the  energy  for  a  200,000-kilowatt  powerplant,  which  is  typical
    of  best  current  practice,  is  $20  million.  That  is  the  goal.  One  might
    expect  that  most  progress  would  be  made  in  the  early  stages  of  de-
    velopment of  nuclear  power  by  reactors  producing  smaller  blocks  of
    power;  that  is,  units  of  less  than  50,000  kilowatts,  and  consequently
    costing  less  than  $5  million.  We  are  thus  talking  of  sums  of  money
    for  construction  of  reactors  which  could  be  raised  by  modest  enter-
    prises.

    A  question  of  no  less  importance  than  the  cost  of  the  reactor  is  the
    cost  of  the  necessary  development  work,  and  of  the  research  facilities
    within  which  the  development  work  would  be  done.  As  the  other
    witnesses  have  told  you,  the  cost  of  the  development  work  depends
    very  strongly  on  whether  we  are  satisfied  to  produce  our  first  power-
    plants  by  relatively  minor  advances  to  present  technology,  or  whether
    we  set  ourselves  goals  which  cannot  be  reached  without  years  of  de-
    velopment. There  is  a  current  conception  that  we  should  try  now  to
    develop  reactors  to  solve  the  world's  power  problem  in  the  year  2,000.
    We  therefore  appear  to  be  led,  through  consideration  of  the  total
    power  resources  of  the  world,  to  consider  the  development  of  breeder
    reactors  of  an  advanced  type  based  on  a  technology  which  is  yet  to
    be  developed.

    However,  in  our  view  this  is  not  the  problem  facing  us  at  all.  We
    are  not  now  considering  how  to  sustain  a  stationary  power  industry  on
    uranium,  but  how  to  start  one.  There  is  no  need  for  the  nuclear  power
    industry  to  solve  its  long-range  supply  problems  until  the  industry
    begins  to  make  some  dent  in  the  uranium  supplies.  An  analogous
    situation  would  be  to  insist  on  the  development  of  a  successful  coal
    hydrogenation  process  before  using  one  drop  of  oil.

    We  believe  on  the  contrary  that  we  should  establish  a  civilian  nu-
    clear power  industry  on  the  basis  of  a  technology  not  too  far  different
    from  what  we  now  possess.  We  might  require  for  this  purpose  an
    expenditure  of  $2  million  for  development;  this  is  again  a  sum  of
    money  which  can  be  thought  of  without  having  recourse  to  the  Fed-
    eral Treasury.

    We  envisage  the  development  of  an  atomic  power  industry  by  a
    series  of  advances  to  limited  objectives.  The  first  objective  is  to
    establish  a  small  localized  industry  on  a  sound  economic  basis,  with-
    out seeking  to  furnish  all  the  electric  power  in  the  United  States,  or
    to  solve  the  uranium  supply  problem  for  100  years.  Such  an  atomic
    power  industry  would  have  the  incentive  and  the  ability  to  lower  its
    costs  which  National  Laboratories  could  not  be  expected  to  have.  Asa

    ATOMIC    POWER    DEVELOPMENT  261

    result  of  progressively  lower  costs  there  would  be  an  extension  of
    the  area  of  application.  Pressure  on  the  nuclear  fuel  supplies  would
    be  created  by  this  expansion  and  would  be  reflected  in  higher  fuel
    prices.  Higher  prices  would  require  greater  fuel  utilization.  The
    problem  of  breeding  would  then  be  presented  to  the  nuclear  power
    industry  by  normal  economic  forces,  as  the  problem  becomes  real,
    and  as  the  industry  achieves  the  economic  stature  to  solve  it.

    To  sum  up  this  first  point,  a  reasonable  present  goal  should  be  to
    produce  reactors  which  would  cost  less  than  $5  million  and  would
    require  less  than  $2  million  to  develop.  Neither  of  these  objectives
    requires  giant  enterprises  and  both  are  apt  to  be  accomplished  more
    quickly  by  the  competitive  efforts  of  small  enterprises.

    A  second  reason  why  we  believe  that  the  development  of  commercial
    atomic  power  should  be  done  by  a  multiplicity  of  businesses,  large  and
    small,  rather  than  by  a  few  large  groups,  is  that  there  is  an  enormous
    diversity  of  possible  reactor  types.  Reactors  can  be  made  out  of  a
    bewildering  variety  of  materials.  A  reactor  can  use  natural  uranium,
    pure  U-235,  plutonium,  U-23-3  which  is  made  from  thorium,  or  any
    mixture  of  these  elements  as  fuel.  The  fuel  may  be  a  metal,  oxide,
    salt,  or  alloy,  may  be  fabricated  in  the  form  of  pills,  plates,  powders,
    prisms,  rods,  or  threads,  or  may  be  liquid.  The  reactor  may  contain
    graphite,  or  water,  or  heavy  water,  or  beryllium,  or  a  number  of  other
    compounds  as  moderators  to  slow  down  the  neutrons;  or  it  can  be
    built  without  moderators  at  all.  It  will,  in  addition,  contain  jackets
    and  structures  made  of  any  isotope  of  nearly  100  elements.

    The  heat  can  be  removed  with  air,  water,  oil,  liquid  metals,  or  any-
    thing else  imaginable.  The  core  can  be  homogeneous  or  heterogeneous ;
    it  can  be  surrounded  by  a  reflector,  by  a  breeding  blanket,  by  both  or
    by  neither;  the  variety  of  each  of  these  adjuncts  is  as  great  as  that  of
    the  core.  The  reactor  core  can  be  spherical,  cylindrical,  flat,  divided,
    or  shaped  like  a  pair  of  water  wings ;  and  it  can  be  as  small  as  a  foot-
    ball or  as  large  as  a  six-room  house.  A  reactor  can  be  built  like  a
    fine  watch  and  shielded  with  rare  materials,  or  it  can  have  no  structure
    at  all  and  be  shielded  with  water  or  tamped  earth.  In  addition,  it  may
    operate  hot  or  cold,  and  at  low  or  high  pressures.

    There  is  no  programatic  way  to  determine  which  of  this  tremendous
    variety  of  reactors  is  best  for  any  power  application,  since  the  missing
    ingredient  which  makes  all  the  difference  between  a  remote  possibility
    and  a  practical  solution  is  invention ;  and  invention  cannot  be  sched-
    uled. We  believe  the  solution  for  this  problem  is  to  match  the  diversity
    of  reactor  types  with  a  diversity  of  independent  reactor  design  teams.

    To  show  the  advantage  of  diversity  in  reactor  designs,  let  me  cite
    an  example  from  our  own  experience.  When  the  Westinghouse  Corp.
    and  the  Navy  were  making  a  survey  of  reactor  types  to  determine
    which  would  be  the  most  suitable  for  the  CVR — the  powerplant  for  an
    aircraft  carrier — the  reactor  type  which  they  selected  turned  out  to
    be  one  which  had  been  advocated  and  developed  over  a  period  of  4
    years,  not  by  one  of  the  national  laboratories,  but  by  our  small  group.

    I  do  not  bring  this  forward  for  the  purpose  of  praising  our  own
    achievements,  but  ratlier  to  sliow  that  the  number  of  reactor  types  is
    so  great,  and  the  intricacy  of  reactor  design  and  reactor  economics  is
    such,  that  no  one  group  can  determine  by  orderly  procedures,  or  by
    administrative  decision,  which  is  the  most  economical  reactor.     Many

    262  ATOMIC    POWER    DEVELOPMENT

    designs  must  be  made,  many  discarded,  and  many  tried  if  we  wish  to
    progress  to  commercial  atomic  power.  This  is  the  way  American
    industry  has  always  progressed.

    On  this  same  ground  of  the  diversity  of  reactor  types,  we  are  dub-
    ious of  the  benefits  of  a  noneconomically  motivated  demonstration
    plant  for  atomic  power,  to  be  financed  or  underwritten  by  the  Fed-
    eral Government  or  some  nonprofit  foundation.  A  natural  hazard  of
    a  demonstration  plant  is  that  the  results  are  subject  to  different  eco-
    nomic interpretations  by  different  groups.  A  recent  example  is  the
    Bureau  of  Mines'  Demonstration  Plant  at  Louisiana,  Mo.,  for  the
    production  of  gasoline  by  hydrogenation  of  coal.  From  the  same
    data,  the  Bureau  of  Mines,  Ebasco  Services,  Inc.,  and  the  National
    Petroleum  Council  deduced  respectively  11,  28,  and  41  cents  a  gallon
    as  the  price  of  synthetic  gasoline.  If  we  add  to  this  confusion  that
    one  reactor  type  is  apt  to  be  very  unrepresentative  of  another  type,
    we  see  that  the  principal  value  of  a  nuclear-power  demonstration  plant
    will  be  psychological.

    To  recapitulate,  our  second  point  is  that  the  diversity  of  reactor
    types  calls  for  more  reactor  design  teams ;  and  we  believe  that  inde-
    pendence of  concept  and  originality  of  approach  are  best  nurtured
    by  independent  organizations.

    A  third  reason  that  we  believe  new  businesses  have  an  important
    function  in  the  development  of  commercial  atomic  power  is  that  their
    interest  in  atomic  power  is  central  and  not  collateral .  In  other  words,
    success  or  failure  to  achieve  competitive  power  makes  a  difference  to
    a  firm  specializing  in  atomic  energy.  The  most  efficient  way  of  de-
    veloping new  products  or  processes  is  the  free-enterprise  system,
    and  free  enterprise  is  based  on  incentive.  New  businesses  have  this
    incentive;  and,  consequently,  they  are  the  ones  who  can  be  expected
    to,  and  will,  take  calculated  risks.

    I  have  followed  the  testimony  published  recently  by  your  commit-
    tee under  the  title  "Atomic  Power  and  Private  Enterprise,"  and  I
    note  the  disappointment  which  members  of  this  committee  and  the
    public  seem  to  have  experienced  over  the  reluctance  of  public  utilities
    or  the  large  AEC  contractors  to  volunteer  important  capital  outlays
    for  power  reactors  or  power-reactor  development.  I  appreciate  the
    feeling  in  Congress  that  reopening  atomic  energy  to  private  enter-
    prise would  not  contribute  to  the  public  interest  unless  there  were
    real  prospects  for  private  investment  in  atomic  facilities.  None  of
    us  would  propose  to  reap  private  profits  from  public  investments.

    How  can  we  stimulate  the  investment  of  private  capital?  The
    return  on  investment  of  a  public-utility  companj'  is  so  regulated  by
    law  that  it  would  be  the  same  whether  electricity  were  generated  by
    fission  of  uranium  or  by  burning  peat  moss.  The  utilities,  as  Mr.
    Joslin  of  Commonwealth  Edison  Co.,  Chicago,  has  pointed  out,  have
    no  venture  capital  in  the  usual  sense  since  they  cannot  derive  addi-
    tional profits  to  counterbalance  additional  risks.  Is  it  reasonable  to
    expect  the  public  utilities  to  risk  money  in  reactor  development?

    It  is  likewise  understandable  that  established  companies,  which
    have  heavy  responsibilities  to  stockholders  for  continuing  develop-
    ment of  their  existing  lines  of  business,  do  not  wish  to  divert  their
    resources  to  less  familiar  fields.  Most  of  the  companies  which  are
    large  AEC  contractors  expect  minimal  direct  advantages  from  the
    development  of  atomic  power.    The  main  advantages  would  seem  to

    ATOMIC    POWER    DEVELOPMENT  263

    be  indirect,  as,  for  example,  through  an  expansion  of  the  general
    poAver-consumption  rate.  How  can  we  reasonably  expect  them  to  take
    much  risk  to  develop  nuclear  power  when  the  main  advantages  to
    them  would  be  only  collateral,  and  when  they  can  maintain  a  pre-
    ferred position  in  the  field  by  completely  subsidized  research?

    But  new  businesses  founded  on  atomic  energy  have  the  all-impor-
    tant economic  motivation,  and  one  can  expect  them  to  spearhead  the
    movement  of  private  funds  into  the  development  of  atomic  power.
    There  are  many  instances  in  economic  history  where  the  etl'ect  of  a
    small  company  starting  the  movement  of  capital  had  results  which
    were  out  of  proportion  to  the  means  employed.  One  may  find  recent
    examples  in  the  development  of  radio  and  television.  The  automobile
    industry  is  another  illustration.  Thus,  our  third  point  is  that  the
    investment  of  ])rivate  capital  in  atomic  energy  will  be  associated  with
    the  development  of  ncAv  businesses  even  more  than  through  the
    expansion  of  already  established  enterprises.

    It  is  at  this  point  that  we  find  ourselves  disagreeing  with  the
    Atomic  Energy  Commission's  program  for  the  development  of  com-
    mercial atomic  power.  That  is,  as  we  understand  it  from  published
    reports.  The  policy  of  the  Atomic  Energy  Commission,  based  on
    its  desire  to  take  maximum  advantage  of  existing  industrial  strength
    and  managerial  ability,  and  also  on  its  desire  to  simplify  its  own
    administrative  function,  has  been  to  concentrate  the  responsibility
    for  its  major  programs  on  a  few  large  contractors.  As  a  result,  the
    atomic-energy  industry,  althougli  one  of  the  largest  dollarwise  in  the
    country,  has  not  seen  the  development  of  new  enterprises  of  any
    appreciable  size.

    I  believe  that  this  is  unique  in  American  history,  for  each  of  our
    principal  industries,  such  as  aircraft,  automobile,  oil,  steel,  aluminum,
    radio,  rubber,  chemicals,  and  so  forth,  has  seen  the  rise  of  new  com-
    panies specializing  in  their  field.  It  would  be,  to  say  the  least,
    unprecedented  that  civilian  atomic  power  should  be  developed  in  its
    entirety  as  a  byproduct  of  already  established  enterprises.

    Yet,  if  Congress  entrusts  the  prime  responsibility  for  developing
    commercial  atomic  power  to  the  AEC,  it  is  inevitable  that  the  Com-
    mission should  follow  its  usual  jjattern  of  reliance  on  established
    companies,  even  though  in  this  case  urgent  military  necessity  no
    longer  justifies  it.  To  make  tlie  nuilter  a  little  more  graphic,  if  it
    were  1903  and  the  AEC  had  to  select  firms  to  produce  automobiles,
    it  would  choose  1  or  2  railroads  and  a  carriage-manufacturing  com-
    pany, but  it  would  never  even  consider  Henry  Ford.

    We  therefore  feel  that  if  Congress  jwstpones  granting  a  charter  to
    private  initiative  new  businesses  will  not  be  able  to  fulfill  their  tradi-
    tional role  as  j^oints  of  attraction  for  new  capital,  and  the  result  will
    be  relative  stagnation.

    I  want  to  em])hasize  that  I  am  not  raising  here  the  fundamentally
    phony  issue  of  large  versus  small  business,  but  rather  the  more  im-
    portant distinction  between  new  businesses,  regardless  of  size,  which
    concentrate  on  atomic  energy-,  and  established  firms  to  wliom  atomic
    energy  is  a  side  issue.  The  que^^tioji  is  whether  ))rogress  can  be  made
    solely  by  the  extension  of  established  large  businesses  or  whether  it
    do(>s  not  require  the  birth  of  new  ones.

    I  believe  that  if  one  looks  a  little  dee])er  it  will  be  perceived  that
    the  Conunission  could  not  choose  any  different  policy.     What  stand-

    264  ATOMIC    POWER    DEVELOPMENT

    ards  can  a  Federal  agency  use  in  choosing  a  contractor  other  than
    his  past  accomplishments?  The  obstacle  is  not  the  Commission;  it
    is  the  Atomic  Energy  Act,  which  requires  a  Federal  agency  to  develop
    a  new  industry.  The  Commission  is  doing  as  well  as  it  can  within
    the  framework  of  the  law.

    To  sum  up,  there  are  three  reasons  why  we  believe  new  businesses
    should  pay  a  major  part  in  the  development  of  civilian  atomic  power.
    The  first  is  that  reactors  are  within  the  capability  of  small  businesses.
    The  second  is  that  new  businesses  will  bring  diversity  of  technical
    approach.  The  third  is  that  the  American  pattern  for  industrial  de-
    velopment is  the  formation  of  new  businesses,  which  provide  venture
    capital.  We  therefore  recommend  a  revision  of  the  McMahon  Act
    to  encourage  the  growth  of  new  businesses.

    The  McMahon  Act  affectively  shuts  out  all  private  initiative,  and
    within  its  limitations  industrial  participation  consists  of  having  se-
    lected industrial  laboratories  work  out  pieces  of  a  master  development
    plan  established  by  the  Commission.  We  believe  that  the  clauses  of
    the  McMahon  Act  which  restrict  individual  initiative  are  not  neces-
    sary to  fulfill  the  fundamental  purposes  of  the  act,  and  they  are  not
    consonant  witht  he  American  way  of  doing  things.  We  feel  that
    commercial  atomic  power  will  always  be  5  years  away  unless  a  way
    is  found  to  bring  in  private  enterprise  on  its  own  initiative.

    We  recommend  that  the  act  be  amended  with  the  following  prin-
    ciples in  mind :

    (1)  The  legitimate  government  and  military  objectives  of  the
    Atomic  Energy  Commission  should  be  retained ;

    (2)  Broad  participation  of  industry  on  its  own  initiative  should  be
    permitted ;  and

    (3)  Changes  should  involve  the  least  possible  dislocation  of  the
    present  atomic-energy  program.

    We  believe  these  aims  are  not  contradictory ;  the  necessary  controls
    on  materials  and  knowledge  can  be  enforced  without  Government
    monopoly  or  Government  ownership.  The  specific  changes  that  we
    suggest  are  written  up  in  detail  in  the  appendix  to  this  statement,
    which  I  shall  not  read.  However,  I  would  like  to  summarize  the
    suggested  changes.

    We  propose  to  add  a  section,  which  logically  should  fit  between  the
    present  sections  6  and  7,  entitled  "Civilian  Applications  of  Atomic
    Energy."  Tliis  section  would  authorize,  under  license  by  the  Commis-
    sion, the  private  ownership  of  reactors,  processing  facilities  and  fis-
    sionable materials  for  nonmilitary  purposes.  The  section  also  defines
    standards  and  conditions  for  such  licensing,  so  that  basic  policy  is
    set  by  Congress  and  not  by  the  Commission.

    We  likewise  propose  that  section  7  (  which  is  entitled  "Utilization  of
    Atomic  Energy"  be  amended  to  conform  with  the  new  section.  In
    particular  section  7  (b),  which  requires  a  report  to  the  President  by
    the  Commission  on  the  social,  political,  economic,  and  international
    effects"  on  nonmilitary  use  of  atomic  energy,  should  be  deleted.  There
    is  ample  evidence  from  the  studies  which  have  been  made  that  there
    will  be  no  untoward  dislocation  of  thfe  American  economy  by  the  de-
    velopment of  atomic  power,  and  the  clause  as  it  now  stands  is  a  con-
    stant threat  of  excommunication  to  a  civilian  power  industry.

    Another  way  of  looking  at  it  is  this :  If  this  committee,  as  a  result
    of  its  hearings,  reports  out  legislation  encouraging  the  development  of

    ATOMIC    POWER    DEVELOPMENT  265

    commercial  atomic  power,  you  will  by  this  act  have  answered  affirma-
    tively all  the  questions  which  are  left  open  by  section  7  (b).

    We  also  propose  that  section  11  on  patents  and  inventions  be
    amended  to  permit  more  nearly  normal  patent  rights  in  the  field  of
    nonmilitary  utilization  of  atomic  energy.  As  a  matter  of  procedure,
    we  feel  that  it  is  desirable  to  permit  patents  to  be  filed  on  both  mili-
    tary and  nonmilitaiy  uses.  The  Commission  would  be  authorized
    to  requisition  or  condemn  any  inventions  in  the  fields  of  production
    of  fissionable  materials  and  weapons,  and  to  acquire  by  purchase  any
    patent  in  a  nonmilitary  field.  Holders  of  all  patents  would  be  re-
    quired to  tender  to  the  Commission  a  free  license  under  such  invention
    for  all  governmental  purposes,  and  compulsory  licensing  of  patents
    of  broad  application  is  provided  for.

    I  think  you  will  agree  with  me  that  it  is  desirable  to  have  private
    capital  invested  in  atomic  facilities  rather  than  that  they  should  be
    a  perpetual  burden  on  the  taxpayer.  However,  it  is  not  realistic  to
    expect  private  investment  unless  the  investor  has  some  protection
    against  the  Government  giving  the  fruits  of  his  venture,  free  of
    charge,  to  a  competitor.  We  believe  that  to  accomplish  this  aim  it  is
    necessary  to  revise  the  patent  clauses.

    Traditionally,  patents  are  the  means  by  which  small  companies  can
    flourish  in  the  shadow  of  their  larger  competitors.  They  are  a  stim-
    ulant to  diversity.  In  the  field  of  atomic  energy,  the  patent  problem
    seems  to  be  clouded  witli  the  question  of  the  title  to  the  vast  amount
    of  research  which  has  been  done  in  Government  laboratories  or  in
    totally  subsidized  laboratories.  I  do  not  see  why  this  problem  can-
    not be  met  very  simply  by  observing  that  all  this  material  is  in  the
    public  domain,  and  no  one  can  obtain  patent  rights.

    Before  concluding  this  testimony,  I  would  like  to  anticipate  a
    question  and  clarify  a  matter  which  was  left  hanging  earlier.
    I  stated  then  that  it  was  desirble  to  o])en  the  field  of  commercial  atomic
    power  by  the  use  of  reactors  based  on  present  technology.  I  am  sure
    that  you  will  inquire  whether  such  reactors  would  find  economic  use
    and  hence  support  a  civilian  atomic  energy  industry.  We  believe
    that  power  can  be  produced  by  such  reactors,  in  blocks  of  less  than
    50,000  kilowatts,  at  a  price  less  than  1.5  cents  per  kilowatt-hour.  We
    do  not  think  that  it  takes  much  ingenuity  to  find  places  where  there
    is  a  demand  for  power  at  this  price,  and  we  have  good  reason  to  expect
    that  we  will  be  able  to  finance  such  reactors  without  having  recoui"se
    to  newspaper  advertising.

    Representative  Van  Zaxdt,  We  will  make  a  part  of  the  record.
    Doctor,  the  remainder  of  your  statement  which  includes  a  copy  of
    the  proposed  bill.

    (The  material  referred  to  follows:)

    A.   Proposed  Bill
    A  BILL  To  amend  the  Act  entitled  "Atomic  Energy  Act  of  194G,"  approved  August  1,  1946

    Be  it  enacted  hy  the  Senate  and  House  of  Representatives  of  the  United  States
    of  America  in  Congress  asscinhled.

    Section  1.  That  a  new  section  GYo  be  added  to  such  Act  as  follows :

    "civilian  applications  of  atomic  energy

    "Sec.  61/^.  (a)  Authority. — The  Commission  is  authorized  and  directed  to
    license  any  responsible  person  applying  for  such  license  to  engage  in  research  and
    development  work  in  the  uses  of  fissionable  or  radioactive  materials  for  non-

    266  ATOMIC    POWER    DEVELOPMENT

    military  purposes  and  to  produce,  lease,  and  sell  apparatus  or  devices  for  the
    employment  of  such  materials  for  nonmilitary  purposes,  and  to  erect  suitable
    plants  to  produce  power  from  atomic  energy  and  to  use  or  sell  such  power,  subject
    to  State  or  Federal  regulation  of  such  sale.

    (b)  Licenses  under  this  section  shall  be  issued  upon  application.  Such  appli-
    cation shall  set  forth — ■

    "(1)  The  nature  of  the  operation  or  operations  for  which  license  is  sought;
    "(2)  The  financial  ability  of  the  applicant  to  conduct  such  operation  or
    operations ;

    "(3)  The  kind  and  quantity  of  fissionable  material  to  be  used  and  the  pro-
    posed source  of  supply  thereof,  whether  such  proposed  source  is  the  Com-
    mission or  otherwise ;

    "(4)  The  amount  or  rate  of  production,  if  any,  of  other  fissionable  mate-
    rials in  the  operation  and  the  proposed  disposition  of  such  materials,  whether
    they  are  to  be  consumed  in  the  operation,  delivered  to  the  Commission  or
    otherwise.
    "The  application  shall  also  contain :

    "(5)  The  promise  required  by  section  10  (5)   (B)  of  this  Act.

    "(c)  For  the  purposes  of  this  section,  security  clearance  may  be  granted  under
    the  regulations  established  by  the  Commission  for  the  issuance  of  clearance,
    upon  payment  of  a  fee  which  shall  be  fixed  from  time  to  time  by  the  Commission
    in  amount  sufiicient  to  cover  the  cost  of  investigation  and  certification.

    "(d)  The  Commission  shall  not  deny  a  license  to  an  applicant  otherwise  quali-
    fied, on  the  gTound  that  the  proposed  operation  may  be  useful  for  military  as  well
    as  civilian  purposes  unless  the  military  applications  are  of  sufficient  importance
    to  warrant  the  continuation  of  the  project  under  direct  control  of  the  Commission,
    in  which  case  the  Commission  shall,  in  denying  the  license,  tender  to  the  appli-
    cant a  contract  to  proceed  with  the  project  as  a  contractor  of  the  Commission
    under  the  usual  terms  and  conditions.

    "(e)  The  Commission  shall  either  grant  or  deny  a  license  under  this  section
    within  90  days  after  the  filing  of  the  application  therefor  or  the  clearance  of  the
    applicant,  whichever  is  later.  (If  the  applicant  is  a  corporation,  the  date  of
    clearance  of  the  president  or  chief  operating  officer  shall  be  the  date  on  which
    the  90-day  period  shall  commence.)

    "(f)  If  the  Commission  shall  deny  a  license  to  an  applicant  under  this  section,
    it  shall  furnish  the  applicant  prior  to  the  termination  of  said  90-day  period,  with
    a  copy  of  its  findings  of  fact  and  its  reasons  for  denying  the  license.  The  appli-
    cant may  then  apply  to  the  United  States  District  Court  for  the  District  of  Colum-
    bia for  a  review  of  the  Commission's  decision  and  the  court  shall  upon  the  basis
    of  the  evidence  submitted  to  the  Commission  and  any  new  evidence  which  may  be
    admitted  at  the  trial  before  it.  either  affirm  the  Commission's  decision  or  order
    the  issuance  of  the  license  applied  for.

    "(g)  Any  license  granted  under  this  section  shall  be  without  limitation  as  to
    time  and  shall  be  terminated  only  (1)  Because  of  the  completion  or  voluntary
    discontinuance  of  the  project  for  which  it  was  issued,  or  (2)  For  the  willful
    violation  of  applicable  security  provisions  by  the  licensee.  If  the  licensee  is  a
    corporation,  the  license  shall  not  be  terminated,  but  appropriate  steps  -shall  be
    taken  against  any  individual  or  individuals  responsible  for  the  violation  of
    security  provisions.

    "(h)  No  application  for  license  under  this  section  shall  be  granted  for  any
    operation  outside  the  United  States  except  upon  the  specific  authorization  of  the
    President.  Any  application  for  such  operation  must,  if  the  Commission  finds  it
    otherwise  acceptable,  be  submitted  to  the  President  with  the  Commission's  find-
    ings and  recommendation  within  120  days  of  the  filing  of  the  application,  and
    the  license  shall  be  granted  or  denied  forthwith,  upon  receipt  of  the  President's
    decision  and  in  accordance  therewith."

    Skc.  2.  That  the  following  other  amendments  should  be  made  to  the  Atomic
    Energy  Act :

    Section  4  (c)  (1),  line  6,  insert  "and  G%"  after  "section  3."  At  end  of  (1)
    add  'except  when  such  production  is  by  a  licensee  under  section  6V2."

    Section  4  (<•)  (.'{)  line  3,  insert  "or  under  section  61/^"  after  "  (1)  above."

    Section  .5  (a)  (2)  line  3,  add  at  end  of  line  "except  such  as  may  be  owned  by
    licensees  under  section  (P/2."  Next  to  last  line,  insert  "except  licensees  under
    section  (y^y  after  "no  person."

    Section  5  (a)  (3),  add  "Tliis  section  shall  not  apply  to  licensees  under  sec-
    tion eVo."

    ATOMIC    POWER    DEVELOPMENT  267

    Section  5  (a)  (4),  line  8,  insert  "section  6%"  after  "of"  at  beginning  of  line.
    Line  9,  insert  "other  than  a  licensee  under  section  61/^."  Line  12,  strike  out
    "and"  and  insert  (,)   after  "research"  and  add  "and  industrial"  at  end  of  line.

    Section  5  (b)  (5),  second  from  last  line,  insert  "or  products  of  fission"  after
    "materials."

    Section  7  (a) ,  2d  line,  insert  "or  section  6i/^"  after  "6  (a) ."

    Section  7  (b),  delete.

    Section  7  (c),  16th  line,  add  "except  that  licensees  under  section  614  shall  not
    be  required  to  divulge  any  information  which  they  deem  to  be  patentable"  after
    "as  possible."  Insert  "except  such  as  are  issued  under  section  6i/^"  after
    "license."  Twenty-first  line,  insert  after  "growth  of"  and  before  "monopoly,"
    the  word  "illegal."  TSventy-second  line,  after  "other"  insert  "unlawful."
    Twenty-ninth  line,  before  "No  license"  insert  "Except  as  provided  in  section  6%."

    Section  7  (d),  2d  line,  after  "material"  insert  "by  the  Commission."

    Sec.  3.  That  paragraphs  (1)  and  (2)  of  subsection  (a)  and  the  entire  subsec-
    tion (b)  of  section  11  of  the  act  entitled  "Atomic  Energy  Act  of  1946"  are
    repealed,  and  paragraph  (3)  of  such  subsection  (a)  is  renumbered  as  paragraph
    (1)  and  subsections  (c),  (d),  and  (e)  are  renumbered  as  (b),  (c),  and  (d),
    respectively.

    Sec.  4.  Subsection  (d)  of  section  11  of  such  act  is  amended  by  striking  from
    the  first  sentence  the  words  ",  or  to  take,  requisition  or  condemn,  and  make  just
    compensation  for,"  and  at  the  end  of  svich  first  sentence  to  insert  before  the
    period  the  following:  ";  and  to  take,  requisition,  or  condemn,  and  to  make  just
    compensation  for,  (1)  any  invention  or  discovery  which  is  useful  in  the  produc-
    tion of  fissionable  material  or  in  the  utilization  of  fissionable  material  or  atomic
    energy  for  a  juilitary  weapon  or.  (2)  any  patent  or  patent  application  covering
    any  such  invention  or  discovery."

    Sec.  5.  Subparagraph  (B)  of  paragraph  (2)  of  subsection  (e)  of  section  11
    of  such  act  is  amended  by  striking  therefrom  "subsections  (a),  (b),  or"  and
    inserting  in  lieu  thereof  "subsection  (c)."

    Sec.  6.  Subparagraph  (C)  of  paragraph  (2)  of  subsection  (e)  of  section  11
    of  such  act  is  amended  by  striking  the  words  "who  is  not  entitled  to  compensa-
    tion therefor  under  subsection  (a)  and  who  has  complied  with  subsection  (a)
    (3)  above"  and  inserting  in  lieu  thereof  the  words  "or  which  utilizes  or  is  essen-
    tial in  the  utilization  of  fissionable  material  or  atomic  energy,  who  shall  tender
    to  the  Commission  a  free  license  under  such  invention  or  discovery  for  all
    Governmental  purposes,".

    Sec.  7.  Subparagi-aph  (B)  of  paragraph  (3)  of  subsection  (e)  of  section  11
    of  such  act  is  amended  by  striking  therefrom  "(a),  (b),  or  (d)"  following  the
    word  "subsection"  and  inserting  in  lieu  thereof  "(c)."

    Sec.  8.  Paragraph  4  of  subsection  (e)  of  section  11  of  such  act  is  amende,  U.  S.  Code,  sec-
    tions 102  (1»)  or  102  (d).  where  such  application  is  filed  within  one  year  from
    the  date  of  enactment  of  the  present  section  7  of  this  Act."

    36740—53 18

    268  ATOMIC    POWER    DEVELOPMENT

    B.  Present  Section  11  as  Changed  by  the  Proposed  Bill

    PATENTS  AND  INVENTIONS

    Sec.  11.  (a)  Production  and  military  utilization.

    (1)  Any  person  who  has  made  or  hereafter  makes  any  invention  or  discovery
    useful  in  the  production  of  fissionable  material  or  in  the  utilization  of  fission-
    able material  or  atomic  energy  for  a  military  weapon  shall  file  with  the  Com-
    mission a  report  containing  a  complete  description  thereof,  unless  such  inven-
    tion or  discovery  is  described  in  an  application  for  a  patent  filed  in  the  Patent
    Oflice  by  such  person  within  the  time  required  for  the  filing  of  such  report.  The
    report  covering  any  such  invention  or  discovery  shall  be  filed  on  or  before
    whichever  of  the  following  is  the  latest:  (A)  The  sixtieth  day  after  the  date  of
    enactment  of  this  Act;  (B)  the  sixtieth  day  after  the  completion  of  such  inven-
    tion or  discovery;  or  (C)  the  sixtieth  day  after  such  person  first  discovers  or
    first  has  reason  to  believe  that  such  invention  or  discovery  is  useful  in  such
    production  or  utilization.

    (b)  Non military  utilization.

    (1)  It  shall  be  the  duty  of  the  Commission  to  declare  any  patent  to  be  af-
    fected with  the  public  interest  if  (A)  the  invention  or  discovery  covered  by  the
    patent  utilizes  or  is  essential  in  the  utilization  of  fissionable  material  or  atomic
    energy;  and  (B)  the  licensing  of  such  invention  or  discovery  under  this  sub-
    section is  necessary  to  effectuate  the  policies  and  purposes  of  this  Act.

    (2)  Whenever  any  patent  has  been  declared,  pursuant  to  paragraph  (1)  to  be
    affected  with  the  public  interest —

    (A)  The  Commission  is  hereby  licensed  to  use  the  invention  or  discovery
    covereci  by  such  patent  in  performing  any  of  its  powers  under  this  Act ;  and

    (B)  Any  person  to  whom  a  license  has  been  issued  under  section  7  is
    hereby  licensed  to  use  the  invention  or  discovery  covered  by  such  patent
    to  the  extent  such  invention  or  discovery  is  used  by  him  in  carrying  on  the
    activities  authorized  by  his  license  under  section  7.

    The  owner  of  the  patent  shall  be  entitled  to  a  reasonable  royalty  fee  for
    any  use  of  an  invention  or  discovery  licensed  by  this  subsection.  Such  royalty
    fee  may  be  agreed  upon  by  such  owner  and  the  licensee,  or  in  the  absence  of
    such  agreerrent  shall  be  detei"mined  by  the  Commission.

    (3)  No  court  shall  have  jurisdiction  or  power  to  stay,  restrain,  or  otherwise
    enjoin  the  use  of  any  invention  or  discovery  by  a  licensee,  to  the  extent  that  such
    use  is  licensed  by  paragraph  (2)  above,  on  the  ground  of  infringement  of  any
    patent.  If  in  any  action  for  infringement  against  such  licensee  the  court  shall
    determine  ""hat  the  defendant  is  exercising  such  license,  the  measure  of  damages
    shall  be  the  royalty  fee  determined  pursuant  to  this  section,  together  with  such
    costs,  interest,  and  reasonable  attorney's  fees  as  may  be  fixed  by  the  court.  If
    no  royalty  fee  has  been  determined,  the  court  shall  stay  the  proceeding  until
    the  royalty  fee  is  determined  pursuant  to  this  section.  If  any  such  licensee
    shall  fail  to  pay  such  royalty  fee,  the  patentee  may  bring  an  action  in  any
    court  of  competent  jurisdiction  for  such  royalty  fee,  together  with  such  costs,
    interest,  ind  reasonable  attorney's  fees  as  may  be  fixed  by  the  court.

    (c)  Acquisition  OF  patents.

    The  Commission  is  authorized  to  purchase  (1)  any  invention  or  discovery
    which  is  useful  in  the  production  of  fissionable  material  or  in  the  utilization  of
    fissionable  material  or  atomic  energy  for  a  military  weapon,  or  which  utilizes  or
    is  essential  in  the  utilization  of  fissionable  material  or  atomic  energy,  or  (2)  any
    patent  or  patent  application  covering  any  such  invention  or  discovery ;  and  to
    take,  requisition,  or  condemn,  and  to  make  just  compensation  for,  (1)  any  inven-
    tion or  discovery  which  is  useful  in  the  production  of  fissionable  material  or  in
    the  utilization  of  fissionable  material  or  atomic  energy  for  a  military  weapon  or
    (2)  any  patent  or  patent  application  covering  any  such  invention  or  discovery.
    The  Commissioner  of  Patents  shall  notify  the  Commission  of  all  applications  for
    patents  heretofore  or  hereafter  filed  which  in  his  opinion  discloses  such  inven-
    tion or  discoveries  and  shall  provide  the  Commission  access  to  all  such  applica-
    tions.

    (d)  Compensation  awards  and  royalties.

    (1)  Patent  compensation  board. — The  Commission  shall  designate  a  Patent
    Compensation  Board,  consisting  of  two  or  more  employees  of  the  Commission,  to
    consider  applications  under  this  subsection.

    (2)  Eligibility.

    ATOMIC    POWER    DEVELOPMENT  269

    (A)  Any  owner  of  a  patent  licensed  under  subsection  (b)  (2)  or  any  licensee
    thereunder  may  make  application  to  the  Commission  for  the  determination
    of  a  reasonable  royalty  fee  in  accordance  with  such  procedures  as  it  by  regula-
    tion may  establish.

    (B)  Any  person  seeking  to  obtain  the  just  compensation  provided  in  subsec-
    tion (c)  shall  make  application  therefor  to  the  Commission  in  accordance  with
    such  procedures  as  it  may  by  regulation  establish.

    (C)  Any  person  making  any  invention  or  discovery  useful  in  the  production
    of  fissionable  material  or  in  the  utilization  of  fissionable  material  or  atomic
    energy  for  a  military  weapon,  or  which  utilizes  or  is  essential  in  the  utilization
    of  fissionable  material  or  atomic  energy,  who  shall  tender  to  the  Commission  a
    free  license  under  such  invention  or  discovery  for  all  Governmental  purposes,  may
    make  application  to  the  Commission  for,  and  the  Commission  may  grant,  an
    award.

    (D)  Any  person  making  application  under  this  subsection  shall  have  the
    right  to  be  represented  by  counsel.

    (3)  Standards.

    (A)  In  determining  such  reasonable  royalty  fee,  the  Commission  shall  take
    into  consideration  any  defense,  general  or  special,  that  might  be  pleaded  by  a
    defendant  in  an  action  for  infringement,  the  extent  to  wliich,  if  any,  such  patent
    was  developed  through  federally  financed  research,  the  degree  of  utility,  novelty,
    and  importance  of  the  invention  or  discovery,  and  may  consider  the  cost  to  the
    owner  of  the  patent  of  developing  such  invention  or  discovery  or  acquiring  such
    patent.

    (B)  In  determining  what  constitutes  just  compensation  under  subsection  (c)
    above,  the  Commission  shall  take  into  account  the  considerations  set  forth  in
    paragraph  (A)  above,  and  the  actual  use  of  such  invention  or  discovery,  and
    may  determine  that  such  compensation  be  paid  in  periodic  payments  or  in  lump
    sum.

    (C)  In  determining  the  amount  of  any  award  under  paragraph  (2)  (C)  of
    this  subsection,  the  Commission  shall  take  into  account  the  considerations  set
    forth  in  paragraph  (A)  above,  and  the  actual  use  of  such  invention  or  discovery.
    Awards  so  made  may  be  paid  by  the  Commission  in  periodic  payments  or  in  a
    lump  sum.

    (4)  Judicial  review.— Any  person  aggrieved  by  any  determination  of  the  Com-
    mission of  an  award  or  of  a  reasonable  royalty  fee  may  obtain  a  review  of  such
    determination  in  the  United  States  District  Court  for  the  District  of  Columbia
    by  filing  in  such  court,  within  30  days  after  notice  of  such  determination,  a  written
    petition  praying  that  such  determination  be  set  aside.  A  copy  of  such  petition
    shall  be  forthwith  served  upon  the  Commission  and  thereupon  the  Commission
    shall  file  with  the  court  a  certified  transcript  of  the  entire  record  in  the  proceed-
    ing, including  the  findings  and  conclusions  upon  which  determination  was
    based.  Upon  the  filing  of  such  transcript  the  court  shall  have  exclusive  jurisdic-
    tion upon  the  record  certified  to  it  and  upon  any  further  evidence  offered  by
    any  party  to  affirm  the  determination  in  its  entirety  or  set  it  aside  and  remand  it
    to  the  Commission  for  further  proceedings.  The  findings  of  the  Commission  as
    to  the  facts,  if  supported  by  substantial  evidence,  shall  be  conclusive  except  as
    siffected  by  additional  evidence  presented  to  the  court.  The  court's  judgment
    shall  be  subject  to  review  in  accordance  with  title  28,  United  States  Code  (1948
    edition),  sections  1291,  1292,  and  1294,  upon  appeal,  by  the  Commission  or  any
    party  to  the  court  proceeding.

    Sec.  22.  (a)  Any  patent  lieretofore  revoked  in  whole  or  part  under  former
    sections  11  (a)  (1),11  (a)  (2),  or  11  (b)  of  this  act  is  hereby  reinstated,  effective
    as  of  August  1,  1946.

    (b)  Any  iiatent  ajjplication  on  which  a  patent  was  denied  by  the  United  States
    Patent  Office  under  former  sections  11  (a)  (1),  11  (a)  (2),  or  11  (b)  of  this  act
    is  hereby  reinstated  and  shall  be  deemed  to  have  been  continuously  pending  since
    its  original  filing  date.

    (c)  No  application  for  patent  on  any  invention  or  discovery  for  which  a  patent
    was  previously  barred  under  former  sections  11  (a)  (1),  11  (a)  (2),  or  11  (b)  of
    this  act  shall  be  denied  solely  because  of  title  35,  United  States  Code,  sections
    102  (b)  or  102  (d),  where  such  application  is  filed  within  1  year  from  the  date  of
    enactment  of  the  present  section  7  of  this  act.

    270  ATOMIC    POWER    DEVELOPMENT

    C.  SUMMAEY  OF  THE  GENERAL  EFFECT  OF  THE  VARIOUS  SECTIONS  AFFECTING  PATENTS

    Section  3  repeals  the  patent-revoking  and  patent-barring  provisions  of  the
    present  act.

    Section  4  limits  the  power  to  acquire  inventions  or  patents  by  taking,  requisi-
    tion, or  condemnation,  to  those  inventions  or  patents  relating  to  production  of
    fissionable  material  or  to  military  vreapons.

    Sections  5  and  7  are  editorial  changes  to  make  the  present  act  consistent  with
    section  1  of  the  proposed  bill.

    Section  6  modifies  the  award  system,  in  view  of  the  reinstatement  of  patent
    rights,  so  that  awards  are  made  for  tenders  of  free  license  on  any  atomic-energy
    inventions.  If  no  such  awards  are  considered  advisable,  section  11  (e)  (2)  (C)  of
    the  present  act  should  be  repeated  ejitirely.

    Section  8  modifies  the  judicial-review  provisions  to  permit  introduction  of  new
    evidence  before  the  United  States  district  court  as  the  reviewing  court,  and  to
    permit  regular  appeals  to  the  United  States  Court  of  Appeals.

    Section  9  adds  a  new  section  22  which  reinstates  revoked  patents  and  patent
    applications  actually  filed  but  turned  down  because  of  the  present  act,  and
    removes  a  possible  disability  in  the  filing  of  new  applications  where,  during  the
    period  when  such  patents  were  prohibited,  a  prior  publication,  public  use,  or
    foreign  patent  grant  occurred  which  might  under  present  patent  law  (35  U.  S.  C.
    102  (b)  and  (d) )  require  denial  of  the  new  application.  The  net  effect  of  this
    provision  is  as  nearly  as  possible  to  restore  the  situation  to  what  it  would  have
    been  had  there  been  no  revocation  or  barring  of  patents  in  the  present  act.

    As  an  alternative  to  subsection  (a)  or  proposed  new  section  22,  all  revoked
    patents  might  be  reinstated  as  of  the  date  of  enactment  of  the  proposed  bill,  and
    have  their  lives  extended  by  the  period  during  which  they  had  been  under  revoca-
    tion.

    D.  Discussion  of  Present  Patent  Provisions  of  the  Atomic  Energy  Act  and

    THE  Relation  Thereto  of  the  Sections  of  the  Proposed  Bill

    1.  revocation  or  barring  of  patents

    Patents  for  inventions  or  discoveries  useful  solely  in  the  production  of  fis-
    sionable material  or  in  the  utilization  of  fissionable  material  or  atomic  energy
    for  a  military  weapon  or  patent  rights  to  the  extent  that  such  inventions  or
    discoveries  are  used  in  the  conduct  of  research  or  development  activities  in  the
    fields  of  nuclear  processes,  the  theory  and  production  of  atomic  energy,  utiliza-
    tion of  fissionable  and  radioactive  materials,  and  the  protection  of  health  during
    research  and  production  activities,  may  not  be  granted  after  August  1,  1946,
    and  any  patent  rights  of  this  type  in  existence  before  August  1,  1946,  were
    revoked,  subject  to  just  compensation.

    These  provisions  should  be  eliminated,  permitting  patenting  of  all  such  inven-
    tions or  discoveries,  subject  to  the  further  provisions  of  the  act.  Furthermore,
    any  prior  revoked  patents  or  applications  for  patent  denied  because  of  the  exist-
    ing act,  should  be  reinstated,  and  imi)ediments  to  new  applications  created  by
    the  present  act  should  be  removed.  This  is  set  forth  in  sections  3  and  9  of  the
    proposed  bill,  creating  a  new  section  22  for  the  act.

    2.  reporting  of  military  atomic-energy  inventions

    All  inventions  or  discoveries  useful  In  the  production  of  fissionable  materials
    or  in  the  utilization  of  fissionable  materials  or  atomic  energy  for  military
    purposes  must  be  reported  promptly  to  the  Commission.

    This  ijrovision  is  left  unchanged.

    3.    COMPULSORY   LICENSING

    The  Commission  has  the  duty  to  declare  any  patent  to  be  affected  with  the
    public  interest  if  the  invention  or  discovery  covered  by  the  patent  utilizes  or  is
    essential  in  the  utilization  of  fissionable  material  or  atomic  energy  and  if  the
    licensing  of  such  invention  or  discovery  is  necessary  to  effectuate  the  policies
    and  pni'po.ses  of  the  act.  When  thus  declared  affected  with  the  public  interest,
    the  Commission  is  automatically  licensed  to  use  the  invention  or  discovery  and
    any  licensee  of  the  Commission  is  also  so  licensed,  the  patent  owner  being
    entitled  to  a  reasonable  royalty  fee  to  be  agreed  upon  between  the  owner  and  the
    licensee  or,  in  the  absence  of  such  an  agreement,  to  be  determined  by  the  Com-
    mission, subject  to  court  review  as  discussed  below.     Also,  the  patent  owner

    ATOMIC    POWER    DEVELOPMENT  271

    cannot  secure  an  injunction  to  I'estrain  the  use  of  sucti  invention  or  discovery
    by  a  licensee  because  of  patent  infriui^emeut.  In  any  action  for  infringement
    be  may  recover  only  the  royalty  fee,  plus  costs,  and  reasonable  attorney's  fees.
    These  provisions,  of  course,  amount  to  compulsory  licensing  in  the  entire  field
    of  atomic  energy.  However,  when  compared  with  the  general  statute  (28  U.  S.  O.
    1498),  there  is  little  difterence  in  substance.  In  both  cases,  the  Government  and
    its  contractors  (or  licensees)  are  not  subject  to  injunction.  Recovery  is  per-
    mitted in  the  one  case  of  "reasonable  compensation,"  and  in  the  otlier  of  "reason-
    able royalty  fee."  In  one  case  action  lies  in  the  Court  of  Claims,  in  the  other
    the  Commission  determines  the  reasonable  royalty,  subject  to  court  review ;
    -when  revised  as  sugested  below,  such  court  review  will  amount  to  a  new  trial
    in  the  United  States  district  court,  considered  more  advantageous  than  action
    in  the  Court  of  Claims.  The  defenses  to  a  Court  of  Claims  action,  and  the
    factors  to  be  taken  into  account  in  determining  a  reasonable  royalty  fee,  are
    nearly  the  same.  In  view  of  these  considerations,  it  is  not  believed  exjjedient
    at  this  time  to  attempt  to  modify  these  provisions  and  they  have  been  left
    unchanged.

    4.    ACQUISITION   OF   PATENTS

    Tlie  Commission  is  authorized  to  purchase,  or  to  take,  requisition,  or  condemn,
    for  just  compensation,  any  invention  or  discovery,  or  any  patent  or  patent  appli-
    cation covering  such  invention  or  discovery,  useful  in  the  production  of  fissionable
    material  or  in  the  utilization  of  fissionable  material  or  atomic  energy  for  a
    military  weapon,  or  which  utilizes  or  is  essential  in  the  utilization  for  fissionable
    material  or  atomic  energy.

    It  is  believed  that  this  power  to  forcibly  acquire  patents  of  inventions  is  too
    broad,  since  it  extends  beyond  the  production  of  fissionable  material  or  the
    utilization  of  fissionable  material  or  atomic  energy  for  a  military  weapon,  and
    includes  any  invention  which  utilizes  atomic  energy  or  fissionable  material  or
    is  required  for  the  utilization  of  atomic  energy  or  fissionable  material.  It  is
    recommended  that  this  provision  be  modified  to  limit  the  authority  to  acquire
    patents  or  inventions  by  taking,  requisition,  or  condemnation  to  those  useful
    in  the  production  of  fissionable  material  or  in  the  utilization  of  fissionable  ma-
    terial or  atomic  enei'gy  for  a  military  weapon,  leaving  broader  uses  of  atomic
    energy  subject  to  the  general  provisions  of  28  United  States  Code,  1949,  item  E
    attached,  or  to  the  general  condemnation  procedures  of  rule  71A  of  the  Federal
    Rules  of  Civil  Procedure.  These  changes  are  made  in  section  4  of  the  proposed
    bill.

    :..    UETERMINATJON   OF   JUST  COMPENSATION,   AWARDS,   AND  REASON ARLE  ROYALTY  FEE

    The  Commission  is  also  required  to  designate  a  Patent  Compensation  Board
    consisting  of  employees  of  the  Commission  to  consider  applications  for  just  com-
    pensation, awards,  and  reasonable  royalty  fees.  This  Board  is  to  determine
    the  reasonable  royalty  fees  for  compulsorily  licensed  inventions,  the  just  com-
    pensation for  requisitioned  or  condemned  inventions,  and  awards  to  i)ersons
    making  inventions  or  discoveries.  Such  awards  are  for  persons  making  inven-
    tions or  discoveries  useful  in  the  production  of  fissionable  material  or  in  the
    utilization  of  fissionable  material  or  atomic  energy  for  a  military  weapon,  who
    are  also  not  eligible  for  compensation  for  revocation  of  patent  rights  and  who
    have  properly  reported  to  the  Commission  their  inventions  or  discoveries.

    The  provisions  with  respect  to  determination  of  reasonable  royalty  fees  and
    of  just  compensation  are  left  unchanged,  except  as  to  court  review,  discussed
    below.  With  respect  to  the  determination  of  awards,  it  is  apparent  that  such
    awards  are  intended  to  be  in  lieu  of  the  granting  of  patents  and  to  stimulate
    military  inventions  in  this  field.  In  view  of  the  changes  suggested  al)ove,  elimi-
    nating the  revocation  or  the  barring  of  patents,  no  awards  of  this  tyiie  are
    necessary.  However,  it  is  suggested  tiiat  such  awards  be  continued,  limited  to
    those  persons  making  inventions  or  discoveries  of  the  instant  type  who  shall
    tender  to  the  Commission  a  free  license  on  such  invention  or  discovery.  This
    would  permit  inventors  voluntarily  to  tender  inventions  and  would  permit  the
    Commission  to  make  awards  for  such  inventions,  thereby  stimulating  the  efforts
    of  inventors  in  this  field.    This  change  is  made  in  section  6  of  the  proposed  bill.

    C.  JUDICIAL  REVIEW

    Any  persons  aggrieved  by  any  determination  of  the  Commission  of  an  award
    or  of  a  reasonable  royalty  fee  may  obtain  a  review  in  the  Court  of  Appeals  for

    272  ATOMIC    POWER    DEVELOPMENT

    the  District  of  Columbia,  solely  upon  the  record  presented  before  the  Commission,
    where  the  findings  of  the  Commission  as  to  the  facts  are  deemed  conclusive  if
    supported  by  substantial  evidence.

    Just  compensation  for  patents  (or  other  property)  taken  or  requisitioned
    are  determined  by  the  Commission ;  if  unacceptable  to  the  claimant,  the  Com-
    mission pays  50  percent  of  the  amount  determined,  and  the  claimant  may  sue
    in  the  court  of  claims  (or  the  United  States  district  court  if  for  less  than  $10,000)
    to  recover  the  balance  of  proper  just  compensation.  In  condemnation  cases,
    rule  71A  of  the  Federal  Rules  of  Civil  Procedure  applies ;  while  its  relation  to
    the  Atomic  Energy  Act  is  not  spelled  out,  it  is  believed  that  the  Commission
    would  still  find  the  amount  of  compensation  in  such  cases.

    It  is  suggested  that  the  mode  of  review  as  to  awards  or  reasonable  royalty
    fee  be  modified  to  permit  introduction  of  further  evidence  by  either  party.
    Since  the  court  of  appeals  is  not  a  trial  court,  it  is  further  suggested  that  the
    first  reviewing  court  be  the  United  States  District  Court  for  the  District  of
    Columbia,  subject  to  ordinary  appeal.  This  change  is  set  out  in  section  8  of
    the  proposed  bill.

    ITEME

    Sec.  1498.    Patent  cases.

    Whenever  an  invention  described  in  and  covered  by  a  patent  of  the  United
    States  is  used  or  manufactured  by  or  for  the  United  States  without  license  of  the
    owner  thereof  or  lawful  right  to  use  or  manufacture  the  same,  the  owner's
    remedy  shall  be  by  action  against  the  United  States  in  the  court  of  claims  for
    the  recovery  of  his  reasonable  and  entire  compensation  for  such  use  and
    manufacture.

    For  the  purposes  of  this  section,  the  use  or  manufacture  of  an  invention  de-
    scribed in  and  covered  by  a  patent  of  the  United  States  by  a  contractor,  a  sub-
    contractor, or  any  person,  firm,  or  corporation  for  the  Government  and  with
    the  authorization  or  consent  of  the  Government,  shall  be  construed  as  use  or
    manufacture  for  the  United  States.

    The  court  shall  not  award  compensation  under  this  section  if  the  claim  is
    based  on  the  use  or  manufacture  by  or  for  the  United  States  of  any  article  owned,
    leased,  used  by,  or  in  the  possession  of  the  United  States  prior  to  July  1,  1918.

    This  section  shall  not  confer  a  right  of  action  on  any  patentee  who  when
    he  makes  such  a  claim,  is  in  the  employment  or  service  of  the  United  States,
    or  any  assignee  of  such  patentee,  and  shall  not  apply  to  any  device  discovered
    or  invented  by  an  employee  during  the  time  of  such  employment  or  service  (as
    amended  October  31,  1951  (ch.  655,  sec.  50  (c),  65  Stat.  727)).

    Representative  Van  Zandt.  Will  you  please  describe  your  firm  in
    terms  of  its  age  and  number  of  employees  and  its  major  activities?

    Dr.  Cohen.  This  firm  is  15  months  old.  It  has  40  technical  em-
    ployees. Our  major  activities:  About  one-third  is  for  the  Atomic
    Energy  Commission  on  various  reactor  development  projects.  There
    is  possibly  a  third  for  the  Army  Chemical  Corps  in  a  field  related  to
    atomic  energy.  There  is  some  work  on  an  aircraft  subcontract,  and
    some  private  work.

    Representative  Van  Zandt.  To  what  extent  does  your  firm  depend
    upon  financial  assistance  from  the  Atomic  Energy  Commission,  di-
    rect or  indirect?

    Dr.  Cohen.  Our  contract  work  is  about  one-third  from  the  AEC.
    I  don't  think  it  is  fair  to  say  that  we  depend  upon  them  at  all.  They
    have  no  obligations  to  support  us  at  all.

    Representative  Van  Zandt.  Any  questions?

    Representative  Holifield.  The  rest  of  your  contracts  are  with  the
    Government,  also,  in  the  military  field,  you  say,  or  most  of  them?       ^

    Dr.  Cohen.  Most  of  them,  yes.  7

    Representative  Holifield.  Most  of  your  work  at  the  present  time
    is  dependent  upon  (Tovermnent  contracts,  that  is,  most  of  your  peo-
    ple are  engaged  on  Government  contracts?

    Dr.  Cohen.  Yes :  that  is  riffht.

    ATOMIC    POWER    DEVELOPMENT  273

    Represeiltative  Holifield.  Is  this  capital  investment  a  paid-in  capi-
    tal investment  of  $300,000?

    Dr.  Cohen.  Yes,  sir.

    That  is,  $250,000  has  already  been  paid  in  and  the  balance  has  been
    subscribed  and  is  callable  at  our  discretion.

    Representative  Hollfield.  I  notice  that  you  have  a  proposed  bill,
    and  then  I  believe  a  comment  or  summary  of  the  general  effect  of  the
    various  sections  of  the  act  affecting  patents.  I  see  you  have  gone
    rather  thoroughly  into  the  patent  problem  in  your  summary.

    Dr.  Cohen.  It  interests  us.

    Representative  HoLirmLD.  I  want  to  compliment  you  on  present-
    ing to  us  a  definite  statement  here  which  shows  a  great  deal  of  thought,
    particularly  on  the  bill,  without  commenting  on  the  merits  of  the  bill
    one  way  or  another.

    I  realize  it  is  a  very  complicated  subject,  and  I  want  to  compliment
    you  on  the  study  which  you  have  apparently  given  to  this.

    At  some  future  time,  Mr.  Chairman,  after  we  have  had  a  chance
    to  study  more  thoroughly  the  bill  and  his  summary  and  his  state-
    ment, it  might  be  desirable  to  call  this  gentleman  back  and  question
    him  further.

    At  this  time,  it  being  as  late  as  it  is,  I  will  refrain  from  asking
    questions.

    Representative  Van  Zandt.  Thank  you,  Dr.  Cohen.  We  look
    forward  to  your  return  so  we  can  question  you  further  on  your  re-
    marks.

    Dr.  Cohen.  Although  I  do  not  know  that  this  is  true,  I  believe  the
    president  of  our  company  is  scheduled  for  a  hearing  by  this  commit-
    tee, and  possibly  you  might  take  that  opportunity  to  ask  questions
    on  this  statement  then.

    Representative  Van  Zandt.  Thank  you  very  much.

    Dr.  Cohen.  Thank  you,  Mr.  Chairman.

    Representative  Van  Zandt.  Our  next  witness  is  Mr.  John  Menke,
    president  of  Nuclear  Development  Associates,  Inc.,  a  wholly  privately
    owned  corporation  engaged  in  both  AEC  and  privately  financed  work.

    We  are  glad  to  have  you  with  us  today,  Mr.  Menke.  You  may  pro-
    ceed with  your  statement.

    STATEMENT  OF  JOHN  R.  MENKE,  PRESIDENT,  NUCLEAR  DEVELOP-
    MENT ASSOCIATES,  INC.,  WHITE  PLAINS,  N.  Y.

    Mr.  Menke.  Mr.  Chairman  and  members  of  the  Joint  Committee
    on  Atomic  Energy,  I  am  honored  by  your  invitation,  and  I  appreciate
    the  opportunity  to  be  heard  in  this  high,  democratic  process.

    I  first  became  associated  in  the  nuclear  field  with  Dr.  John  Dunning
    at  Columbia  University  in  January  1942,  and  have  continued  in  it
    since  that  time.  I  am  a  professional  engineer  licensed  in  New  York
    State.  I  have  served  apprenticeships  under  Dr.  Zinn  and  Dr.  Wein-
    berg here,  to  both  of  whom,  among  many  others  in  the  field,  I  aan  very
    much  indebted.

    I  have  been  president  since  its  founding  in  1948  of  Nuclear  Develop-
    ment Associates,  Inc.,  of  White  Plains,  N.  Y.,  a  research  and  engineer-
    ing company  which  we  call  NDA.  NDA  has  been  engaged  since  1948
    in  nuclear  reactor  design  for  the  Atomic  Energy  Commission,  the  Air

    274  ATOMIC    POWER    DEVELOPMENT

    Force,  the  Navy,  and  private  enterprises.  Since  mid-1951,  it  has
    served  the  Dow-Detroit  Edison  group  as  nuclear  engineers.

    I  am  an  advocate  of  changing  the  present  law  now  and  would  sup-
    port the  Atomic  Energy  Commission  statement  of  policy  that  eco-
    nomic competitive  nuclear  power  is  a  goal  of  national  importance.  In
    the  large,  I  would  accept  their  recommendations  for  changes  in  the
    law.  Specifically,  under  4b  of  the  statement,  I  would  add  the  words
    "source  or"  in  front  of  "fissionable  materials."  This  meaning  may
    already  be  implied.

    With  respect  to  patents  on  new  developments  under  4c  of  the  state-
    ment, I  would  recommend  that  the  law  be  modified  to  restrict  only
    rights  to  patents  for  weapons  and  the  production  of  weapons.  Patents
    are  a  useful  form  of  incentive,  just  as  profits  are,  and  without  them
    American  progress  would  suffer.  A  serious  patent  problem  that  needs
    recognition  and  discussion  is  the  formidable  patent  position  achieved
    with  public  funds  and  now  held  by  the  Atomic  Energy  Commission
    for  the  Government.  Today  the  Commission  forwards  public  policy
    and  growth  in  the  industry  by  granting  royalty-free  unclassified
    licenses  to  all  who  request,  but  Avhat  policy  might  a  different  Atomic
    Energy  Commission  administration  follow?

    Generally,  I  believe  that  the  best  method  to  permit  buying,  owning,
    and  selling  facilities  and  materials  would  be  licenses  rather  than
    individually  negotiated  contracts.  Uniform  licensing  conditions
    should  be  prescribed  by  public  hearing  and  law — for  example,  the
    Administrative  Procedures  Act  of  1946.

    But  the  form  of  the  law  is  not  well  within  the  competence  of  this
    engineer.  Let  me  speak  of  the  goals  and  the  substance  which  we
    should  seek.  What  is  the  shape  of  the  world  which  the  law  should
    try  to  create  ?  I  believe  that  the  law  should  strive  for  a  dual  result :
    The  first  part,  a  strong  and  substantive  civilian  Atomic  Energy  Com-
    mission ;  and  the  second,  a  large  and  vigorous  civilian  nuclear  power
    industry.

    In  very  broad  strokes  the  Atomic  Energy  Commission  should  con-
    tinue to  have  the  major  and  satisfying  responsibilities  of :

    1.  An  arsenal  providing  for  a  safe  minimum  production  of  source
    and  fissionable  materials  for  weapons  and  all  of  the  manufacture  of
    w^eapons  themselves.

    2.  A  strong  system  of  national  laboratories — not  unlike  the  Na-
    tional Advisory  Committee  for  Aeronautics,  NACA — responsible  for
    a  sufficient  measure  of  teclmical  excellence  and  advancement.

    3.  A  supervisory  and  regulatory  body  at  least  responsible  for  secu-
    rity and  accountability  problems  and,  with  the  States,  for  health  and
    safety,  too.

    This  last  is  a  large  area  to  which  the  Commission  must  grow.  Clear-
    ly, I  do  not  mean  this  brief  list  of  responsibilities  to  be  complete,  but
    only  roughly  descriptive  of  the  present  day.

    To  this  existing  world  we  should  strive  to  add  a  strong  competitive
    civilian  nuclear  power  industry.  It  should  have  a  production  capabil-
    ity for  fissionable  materials  which  will  be  eventually  many  times,  let
    us  say  10  times,  greater  than  that  of  the  Government  arsenal  today.
    I  believe  in  dual-purpose  i)lants.  This  large  civilian  production  ca-
    pability would  traiisform  the  present  Atomic  Energy  Commission
    production  goal  from  an  upper  limit  to  the  minimum  which  it  really
    is  if  the  country's  defense  objectives  depend  upon  it.     This  large

    ATOMIC    POWER    DEVELOPMENT  275

    civilian  production  capability  would  eliminate  the  nagging  worry,
    whether  or  not  anyone  can  really  predict  a  war's  demands  for  fission-
    able material  for  nuclear  weapons  and  nuclear-powered  ships  and
    planes  and  remote  bases  and  all  the  things  that  we  haven't  thought
    of  yet.

    The  new  industry  would  provide  a  material  strength  entirely  con-
    sistent with  and  analogous  to  the  many  reserve  strengths  which  free
    enterprises  provide  for  our  country  today,  "standby"-  defense  strengths
    which  cost  the  Treasury  nothing  in  peacetime,  but  are  taxpaying,  and
    which  are  so  priceless  in  wartime.

    It  would  also  provide  that  other  strength,  the  insurance  against
    total  error,  which  comes  from  multiple  centers  of  decision  and  from
    incentives,  diiferent  in  kind.  It  would  provide  physical  dispersal  of
    plant  and  would  multiply  the  number  of  people  competent  in  the
    field.  All  of  these  advantages  would  combine  to  forward  our  defenses
    and  to  improve  our  standard  of  living.  In  this  "cold  war"  world,
    I  can't  emphasize  that  too  much.

    The  central  problem  before  this  joint  committee  is :  How  to  start
    the  ball  rolling  toward  this  goal.  In  a  small  wa}^  it  is  already  started.
    And  what  a  start.  Five  similarly  constituted  ojroups  studied  the  same
    information  and  came  up  with  five  wholly  different  technical  and  dif-
    ferent legal  plans.  They  run  the  gamut  from  conservative,  presently
    feasible  designs  to  aggressive  development  and  large  risk-taking  plans.
    I  remember  the  recommendation  made  by  this  committee — to  be  bold.
    This  is  a  more  valuable  result  even  than  could  have  been  hoped  for
    and  truly  protects  the  public  interest.  I  believe  that  the  changes  en-
    visioned in  the  law  and  those  outlined  above  will  permit  this  good  start
    to  grow  and  flourish.  The  interest  exists  now  and  the  law  needs  to  be
    changed  soon.

    I  do  not  believe  that  Government  subsidy — other  than  that  pro-
    vided by  vigorous,  healthy  national  laboratories — is  best  for  growth.
    If  Government  is  to  build  prototypes,  then  I  believe  that  the  kinds  to
    be  built  and  the  reasons  therefor  should  be  \er\  carefully  considered,
    and  the  advice  and  recommendations  of  the  national  laboratories
    sought.  The  national  prestige  does  require  speed  and  application  and
    accomplishment,  but  I  doubt  that  it  is  i-eally  served  by  a  gesture.

    If  any  member  fears  that  onl}^  big  companies  can  get  into  this  field,
    he  may  be  interested  in  the  experiences  of  NDA.

    I  deepl}^  appreciate  this  opportunity  and  thank  you.

    Representative  Van  Zandt.  Thank  you  very  much  Mr.  Menke.

    Would  you  describe  your  firm,  the  number  of  emplovees,  and  so
    forth  ?

    Mr.  Menke.  Yes.  I  would  be  very  glad  to.

    Our  firm  has  currently  about  75  employees.  It  has  been  in  business
    since  1948.  It  is  wholly  independent.  It  has  no  capital  derived  from
    any  outside  source  or  company  at  all.

    Representative  Van  Zandt.  What  is  the  mission  of  your  firm  ?

    Mr.  Menke.  We  are  in  tlie  atomic  energy  business.  If  this  business
    does  not  flourish,  we  won't  eat.  We  have  staked  our  professional  and
    economic  futures  on  its  growth  and  success.

    Representative  Van  Zandt.  Do  you  have  any  contracts  with  the
    AEG?

    Mr.  Menke.  Yes ;  we  do  have  contracts  with  the  AEC,  and  have  had
    them  on  and  off  since  1948.

    276  ATOMIC    POWER    DEVELOPMENT

    Representative  Van  Zandt.  Are  you  wholly  dependent  on  them  ?

    Mr.  Menke,  No.  Our  AEC  contracts  are  a  small  fraction  of  our
    total  business.

    Representative  Holifield.  Do  you  have  other  contracts  with  mili-
    tary departments  ?

    Mr.  Menke.  Yes ;  we  have.  As  a  matter  of  fact,  part  of  our  con-
    tracts will  soon  change.  We  are  working  for  the  Air  Forces  on  the
    development  of  a  nuclear-powered  aircraft,  and  that  will  be  spon-
    sored in  the  near  future,  I  believe,  by  the  AEC.

    Representative  Holifield.  What  is  the  total  percentage  of  your
    Government  contracts  in  relation  to  your  private  business?

    Mr.  Menke.  Approximately  75  percent  of  our  business  is  Govern-
    ment, and  25  percent  is  private.

    Representative  Holifield.  What  is  the  capitalization  of  your  com-
    pany ?

    Mr.  Menke.  I  think  you  will  be  very  much  interested  in  that.  The
    original  capitalization  of  our  company  is  $2,000.  We  are  doing  busi-
    ness nearing  a  million  dollars  this  year.  The  current  capitalization
    of  the  business  is  very  largely  composed  of  retained  earnings.

    Representative  Holifield.  You  own  your  own  plant  and  equipment,
    I  suppose.

    Mr.  Menke.  Yes,  sir.  With  very  minor  exceptions  we  own  every
    piece  of  equipment  in  our  plant.

    Representative  Holifield.  You  believe  that  small  business  can  get
    into  this  business  and  flourish?

    Mr.  Menke.  That  is  my  belief.

    Representative  Holifield.  Have  you  had  pleasant  relations  with  the
    Atomic  Energy  Commission?  Have  they  been  cooperative  in  work-
    ing with  you  ?

    Mr.  Menke.  Yes.

    Representative  Holifield.  By  that  I  mean,  they  have  not  been  dic-
    tatorial nor  tried  to  make  you  achieve  a  result  in  any  particular  way.
    They  have  left  it  up  to  your  engineers  and  your  scientists  in  their
    ingenuity  to  accomplish  the  results  which  they  wanted  ?

    Mr.  Menk.  Yes,  sir.

    Representative  Holifield.  I  believe  that  is  all,  Mr.  Chairman.

    Representative  Van  Zandt.  Thank  you  very  much,  Mr.  Menke.

    The  hearings  will  now  stand  adjourned.  The  Wednesday  meeting
    has  been  canceled  because  of  the  press  of  other  business,  and  also  to
    meet  the  convenience  of  our  witnesses.  The  next  meeting  is  scheduled
    for  2  o'clock  Thursday,  July  9,  when  the  witnesses  will  be :

    Mr.  McCune,  general  manager  of  the  nucleonics  division  of  General
    Electric;

    Mr.  Price,  president  of  Westinghouse ;

    A  representative  of  American  Machine  &  Foundry;  and

    Dr.  Eugene  Wigner,  a  reactor  specialist.

    (Whereupon,  at  5  :  20  p.  m.,  Monday,  July  6, 1953,  a  recess  was  taken
    until  2  p.  m.,  Thursday,  July  9, 1953.)

    ATOMIC  POWER  DEVELOPMENT  AND  PRIVATE
    ENTERPRISE

    THURSDAY,  JULY  9,    1953

    Congress  of  the  United  States,
    Joint  Committee  on  Atomic  Energy,

    Washington^  D.  G.

    The  joint  committee  met  at  2  p.  m.,  pursuant  to  recess,  in  room  318
    of  the  Senate  Office  Building,  Kepresentative  W.  Sterling  Cole  (chair-
    man) presiding.

    Present:  Representatives  Cole,  Van  Zandt,  Patterson,  Holifield,
    and  Price ;  and  Senator  Pastore.

    Professional  staff  members  present:  Corbin  C.  Allardice,  executive
    directors;  and  Francis  P.  Cotter,  Walter  A.  Hamilton,  J.  Kenneth
    Mansfield,  and  George  Norris,  Jr.,  of  the  professional  staff  of  the
    joint  committee.

    Chairman  Cole.  The  meeting  will  come  to  order.

    The  meeting  today  is  a  continuation  of  the  committee's  hearings  on
    the  subject  of  the  power  policy  of  the  Atomic  Energy  Commission.
    Today  we  are  to  have  as  witnesses,  representatives  of  two  corpora-
    tions which  manufacture  equipment  used  or  contemplated  to  be  used
    in  the  power  program,  and  corporations  who  are  prime  contractors  of
    the  Atomic  Energy  Commission  in  some  of  its  operations.

    We  will  also  hear  from  one  scientific  expert  on  some  of  the  problems
    incident  to  a  definition  of  Federal  policy  on  atomic  power  develop-
    ment.

    The  first  witnesses  are  representatives  of  the  Westinghouse  Electric
    Co.,  the  president,  Mr.  Gwilym  A.  Price,  and  INIr.  Weaver,  general
    manager  of  the  Westinghouse  Atomic  Power  Division.

    Westinghouse  is  one  of  the  two  largest  electric  equipment  manufac-
    turers in  the  United  States.  It  was  asked  in  1941)  to  undertake  the
    detailed  design,  development,  construction,  and  operation  of  the  first
    atomic-powered  submarine.  To  achieve  this  objective,  a  laboratory
    was  built  at  Pittsburgh  at  Government  investment  of  several  tens  of
    millions  of  dollars.  A  land-based  prototype  is  now  operating  at  the
    Idaho  testing  station,  and  construction  of  the  fi.rst  shipboard  unit  is
    under  way.  The  total  Westinghouse  submarine  program  will  cost
    about  $150  million,  including  the  U.  S.  S.  Nautilus,  which  is  being
    built  by  General  Dynamics  Corp.

    Last  year  Westinghouse  was  also  assigned  the  job  of  designing  and
    preparing  to  construct  an  atomic-power  plant  prototype  for  large
    naval  ship  propulsion.  This  project  has  recently  been  dropped  by
    the  Navy,  and  the  data  involved  are  expected  to  be  incorporated  in
    whatever  program  evolves  from  the  newly  authorized  atomic-power
    plant  project  for  advancement  of  both  civilian  power  and  ship  pro-
    pulsion technology.

    277

    278  ATOMIC    POWER    DEVELOPMENT

    Mr  .Price,  I  am  not  aware  of  just  how  or  in  what  order  you  and
    Mr.  Weaver  wish  to  appear;  whether  you,  Mr.  Price,  will  speak  for
    two  corporations  or  wliether  you  will  share  it  with  Mr.  Weaver.  We
    Avill  be  glad  to  hear  from  either  or  both  of  you.

    STATEMENTS  OF  GWILYM  A.  PRICE,  PRESIDENT,  AND  CHARLES  H.
    WEAVER,  MANAGER,  ATOMIC  POWER  DIVISION,  WESTINGHOUSE
    ELECTRIC  CORP.

    Mr.  Price.  Mr.  Chairman  and  gentlemen  of  the  committee,  Mr.
    Weaver  and  I  appreciate  very  much  your  invitation  to  appear  before
    you  today.

    It  was  about  4i/^  years  ago  when  Westinghouse  was  assigned,  with
    Argonne  Laboratory  at  that  time,  the  study  contract  for  the  STR  or
    submarine  thermal  recator  progi'am.  At  that  time  we  had  to  decide
    who  we  would  put  in  charge  of  the  project.

    The  ideal  person,  if  we  could  have  found  him  in  one  man,  was  a
    combination  of  scientist,  engineer,  administrator,  and  businessman,
    with  a  great  deal  of  aggressiveness  and  imagination.  We  combed  the
    company  over,  and  we  selected  for  this  job  a  man  who  was  not  a  great
    scientist,  who  was  not  then  engaged  in  any  basic  engineering  in  the
    company.  We  selected  a  young  man  out  of  our  sales  department,
    because  we  thought  he  had  the  qualities  of  aggressiveness,  drive  and
    administration  ability  that  we  wanted  to  head  this  project.  His  name
    is  Mr.  C.  H.  Weaver,  and  for  the  last  4i/^  years  he  has  been  living
    and  sleeping  with  this  problem.

    All  of  my  own  experience  until  1943  has  been  in  the  law  and  in
    banking.  I  have  no  technical  training.  My  knowledge  of  this  sub-
    ject is  broad  enough  and  basic  enough,  I  believe,  to  enable  me  to  make
    the  basic  decisions  which  the  corporation  is  called  upon  from  time
    to  time  to  make,  but  because  he  has  lived  with  this  problem  for  41/^
    years,  I  am  going  to  ask  Mr.  Weaver,  who  is  the  head  of  our  Atomic
    Power  Division,  to  make  the  statement  to  you.

    Chairman  Cole.  Very  well.  We  are  glad  to  see  you  and  to  hear
    from  you,  Mr.  Weaver.

    Mr.  Weaver.  Thank  you,  Mr.  Chairman.

    Mr.  Chairman  and  members  of  the  committee,  the  management  of
    Westinghouse  is  most  conscious  of  the  vital  part  which  the  Congress,
    the  Atomic  Energy  Commission,  the  Department  of  the  Navy,  and
    many  subcontracting  firms  have  played  in  carrying  out  the  assign-
    ment to  construct  an  atomic-power  plant  for  a  submarine.  We  all
    may  feel  pride  that  the  land-based  prototype  model  went  critical  last
    March  31  at  the  Idaho  test  station  and  that,  consequently,  the  world's
    first  atomic-power  plant  designed  to  produce  power  beyond  laboratory
    quantities  is  today  a  reality.  As  you  know,  this  success  means  that
    the  same  Government-industry  team  can  press  ahead  with  the  atomic-
    power  plant  which  will  actually  be  installed  in  the  submarine  Nautilus
    now  under  construction.

    No  such  pioneering  endeavor  in  the  atomic  field  could  have  gone
    forward  unless  our  Nation  met  two  requirements.  One  was  initiative
    from  the  highest  levels  of  policy,  and  this  your  committee  has  been
    at  the  forefront  in  supplying.  The  other  requirement  was,  of  course,
    teamwork ;  and  I  would  cite  as  remarkable  the  collaboration  between

    ATOMIC    POWER    DEVELOPMENT  279

    men  in  naval  uniform  and  men  in  tlie  laboratory,  and  between  men  on
    the  Government  payroll  and  men  on  industrial  payrolls.

    Our  Westinghouse  Atomic  Power  Division  feels  in  close  contact
    with  the  joint  committee,  partly  through  your  members  who  have
    personally  inspected  the  plants  we  operate  and  even  more  through
    the  sense  of  direction  and  urgency  you  have  communicated  to  us
    from  Washington.  But  this  afternoon  is  the  first  occasion  when  any
    representative  of  our  company  has  testified  before  the  committee.  In
    behalf  of  Westinghouse  we  want  to  thank  you  for  inviting  our  com-
    ment on  the  hard  and  complex  problems  you  are  now  exploring.

    Our  main  company  business  is  making  and  marketing  equipment,
    much  of  it  for  use  in  the  electric-utility  industry.  Turbines,  trans-
    formers, generators,  switchgear,  and  similar  apparatus  have  for
    decades  formed  a  central  part  of  our  production.  Seldom,  except
    as  part  of  its  production  facilities,  does  Westinghouse  itself  use  such
    equipment.  Our  business  interest  lies  in  manufacturing  and  selling
    it  at  a  profit  to  customers  who  take  over  ownership  and  operation.

    Before  the  outbreak  of  World  War  II  some  of  the  original  basic
    nuclear  fission  research,  upon  which  the  Government  later  drew,  was
    accomplished  by  Westinghouse  at  company  expense.  We  built  one
    of  the  first  particle  accelerators.  Thereafter,  we  performed  work  for
    the  Manhattan  Engineer  District.  From  the  early  days  we  have
    felt  strongly  that  atomic  energy  would  become  in  time  a  great  source
    of  power;  and  the  modern  world  has  an  almost  insatiable  power
    hunger.

    It  was  natural  for  us,  therefore,  to  be  interested  in  possibilities
    of  manufacturing  and  selling  equipment  that  would  harness  this
    new  resource  to  power  production — whether  our  customers  might
    wish  the  power  to  turn  a  ship's  propeller  or  to  drive  a  dynamo  making
    electricity.  When,  in  late  1948,  the  Atomic  Energy  Commission
    asked  us  to  build  a  power  plant  prototype  for  the  first  atomic  sub-
    marine, such  a  task  seemed  a  logical  extension  of  our  prive  activities
    in  the  past;  and  we  accepted  the  responsibility.  In  doing  so,  we
    were  calling  upon  a  reservoir  of  knowledjre  and  trained  people  built
    over  many  years  at  our  own  expense.  From  the  company's  view-
    ]wint,  and  strictly  in  business  terms,  the  Government  was  our  cus-
    tomer; and  on  its  order  we  were  developing,  building,  and  selling
    power  equipment,  just  as  has  been  our  service  for  the  Government
    and  utility  companies  since  the  turn  of  the  century.

    It  seems  clear  that  in  the  early  postwar  period  the  Government
    was  the  only  customer  financially  able  to  call  upon  us  for  this  atomic
    powerplant ;  and  Government  itself  act«d  under  the  spur  of  military
    need.  No  private-utility  management  responsible  to  its  directors
    and  stockholders  could  even  have  considered  asking  Westinghouse
    to  build  and  sell  a  similar  powerplant  for  industrial  pur])oses,  in
    view  of  the  technical  unknowns  and  unpredictable  cost.  The  exist-
    ence of  the  Government  as  a  specific  customer,  despite  these  deterrents,
    has,  of  course,  led  toward  advances  that  promise  to  conquer  the
    unknowns  and  reduce  the  cost.  When  atomic  plants  for  industry
    are  built,  our  Nation  will  see  another  example  of  the  oft-repeated
    application  of  a  military  development  to  civilian  use.  Just  as  the
    300-mile-per-hour  commercial  passenger  planes  owes  very  much  to
    the  bomber  of  a  few  years  ago,  so  the  commercial  atomic  plant  of  the
    future  will  owe  much  to  the  naval  atomic  plants  of  today.

    280  ATOMIC    POWER    DEVELOPMENT

    This  illustration,  as  a  matter  of  fact,  leads  me  to  raise  the  question
    of  whether  too  much  stress  may  not  have  been  placed  upon  the  unique
    aspects  of  atomic  power  and  too  little  upon  its  similarity  to  other  de-
    velopments. Only  a  government-industry  partnership  of  much  the
    same  kind  that  produced  the  atomic  submarine  prototype  could  have
    carried  radar  and  electronics  to  the  levels  of  prograss  attained  for
    military  purposes  during  the  late  war ;  and  yet  such  progress  lies  be-
    hind the  television  sets  which  industry,  now  without  the  assistance
    of  government,  is  bringing  to  millions  of  American  homes.  I  do  not
    know  the  private  firm,  or  combination  of  private  firms,  that  could
    afford  jet  engine  research  on  the  scale  which  industry  and  government
    are  today  jointly  conducting  for  national  defense;  but  I  have  little
    doubt  that,  given  time,  industry  alone  will  furnish  jet  engines  to  the
    commercial  airlines  tailored  to  meet  their  particular  requirements.
    In  appraising  atomic  power  we  cannot  help  but  remember  the  past
    and  ask  ourselves  whether  peacetime  uses  of  the  atom  depart  as  radi-
    cally from  earlier  patterns  as  many  have  presumed.

    We  expect  the  fundamental  business  interest  of  Westinghouse  to
    continue  the  same  as  it  was  when  we  started  the  atomic  submarine
    job  and  as  it  has  been  through  the  years.  We  will  hope  to  manufac-
    ture and  market  high-grade  power  equipment,  regardless  of  whether
    it  utilizes  atomic  energy  or  conventional  fuel,  or  both,  and  regardless
    of  whether  the  customer  is  the  Government,  a  utility,  a  manufacturer^
    or  any  other  organization.

    Thus,  as  potential  sellers  of  atomic  machinery,  our  concern  with
    possible  changes  in  the  law  to  permit  private  ownership  of  such  equip-
    ment is  less  direct  and  primary  than  that  of  purchasers  and  users.
    In  other  words,  a  utility  employing  a  nuclear  reactor  as  a  heat  source
    for  generating  electricity  OA^er  a  20-year  or  30-year  period  would  have
    a  higher  stake  than  ourselves  in  the  question  of  control  over  this  re-
    actor, even  though  Westinghouse  had  originally  constructed  and  sold
    it.  On  the  ownership  and  control  question,  we  would,  therefore,  sug-
    gest that  your  committee  give  special  weight  to  the  legislative  views
    of  companies,  such  as  utilities,  who  will  be  the  purchasers  of  atomic
    equipment.  They  are  the  ones  who  will  have  to  operate  the  equip-
    ment and  make  a  profit  from  its  use,  while  living  with  such  Govern-
    ment regulations  as  the  Congress  may  deem  to  be  necessary.

    Mr.  Chairman,  in  your  letters  inviting  representatives  of  Westing-
    house to  appear  before  the  committee,  you  express  the  thought  that
    it  may  be  possible  to  bring  out  some  of  the  more  practical  problems
    confronting  equipment  designers  and  manufacturers  in  the  field  of
    atomic  power  and  to  benefit  from  some  of  our  experience  as  designers
    and  operators  of  major  reactor  complexes.  There  is  indeed  one  over-
    riding practical  problem  which  we  should  like  to  emphasize — the
    sheer,  stubborn,  time-consuming  difficulty  of  designing  and  engineering
    in  detail  and  putting  together  any  reactor  that  will  do  what  one
    wants  it  to  do.

    Where  the  scientist  leaves  off  and  the  engineer  takes  up,  and  espe-
    cially where  their  work  overlaps,  is  the  point  at  which -problems  be-
    come intense.  Except  for  the  genius  of  the  scientist,  there  would,  of
    course,  be  no  such  thing  as  a  reactor.  But  this  very  fact  has  tended
    to  divert  from  the  painful,  creative  role  of  the  engineer  who  must,  in
    one  sense,  bring  a  scientist's  dream  down  to  earth  and  make  it  into
    a  real  structure  of  fuel  elements,  control  mechanisms,  moderator,

    ATOMIC    POWER    DEVELOPMENT  281

    shielding,  pipes,  pumps,  pressure  vessel,  heat  exchangers,  and  all  the
    specially  adapted  gear  that  comprise  an  atomic  powerplant.  Build-
    ing such  ':)  plant  on  paper  is  one  thing.  Building  it  in  fact  is  a  very
    different  matter.  As  the  only  company  that  has  actually  built  a  large
    atomic  powerplant  designed  to  produce  substantial  quantities  of
    useful  power,  we  must  state  that  developing  and  constructing  a  still
    larger  and  longer-lived  advance-design  reactor  would  remain  a  most
    arduous  tttsk,  even  given  the  type  of  complex  facilities  and  going  or-
    ganization which  have  been  built  up  over  the  past  41/2  years.  And
    certainly  we  are  far  from  being  able  to  offer  a  firm  price  bid  on  such
    a  reactor.

    Achievement  of  STR  Mark  I — that  is,  the  submarine  thermal  reac-
    tor prototype — strained  the  capabilities  of  Westinghouse.  In  fact,
    it  was  the  toughest  job  we  ever  took  on — harder  by  far  than  jet  en-
    gine research,  for  example — and  we  could  not  even  have  attempted
    to  do  it  all  by  ourselves.  The  contribution  of  subcontractors,  to  whom
    we  farmed  out  about  two-thirds  of  the  work  as  measured  in  dollars,
    was  invaluable.  We  have  concentrated  our  company  effort  upon  the
    hardest  pliase  of  the  job,  which  was  the  reactor  core ;  and  toward  this
    end  we  w^i^akened  the  technical  staffs  in  our  bread-and-butter  lines  of
    business  through  the  transfer  of  about  500  employees  to  the  Atomic
    Power  Di\ision.  Some  200  of  these  are  key  men  who  fill  75  percent
    of  the  division's  supervisory  positions  and  constitute  46  percent  of
    the  division's  engineers  and  scientists.  From  the  beginning,  our
    atomic  assignment  has  had  first  call  upon  all  company  personnel,  and
    its  problems  have  regularly  received  priority  attention  from  top
    manageir.eiit.  Considering  the  task  force  of  experts  trained  over  the
    years  that  we  could  and  did  assemble  from  Westinghouse  ranks,  I
    think  it  fair  to  say  that  if  any  company  had  credentials  to  do  this
    job  cheaply  and  effectively  for  the  Government,  it  was  our  own.

    Yet  we  went  through  a  series  of  reactor  fuel  element  troubles.  We
    were  forced  to  learn  how  to  manufacture  unprecedented  quantities
    of  the  m.etal  zirconium,  and  in  unprecedented  purity,  because  the
    unforeseen  requirements  of  our  reactor  gave  us  no  choice.  We  were
    forced  to  develop  an  entirely  new  type  of  pump,  because  leakage  of
    radioactive  liquids  into  the  hull  of  a  submarine  would  be  intolerable
    and  because  only  a  radical  pump  devolpment  could  meet  necessary
    standard^.  We  encountered  other  roadblocks  and  detours,  and  we
    suspect  these  are  inherent  in  the  still  primitive  reactor  art.

    Actual  construction  of  the  STR  plant  was  easy  and  relatively
    cheap,  measured  alongside  the  research  and  development  necessary
    to  be  done  first.  Nobody  had  ever  tried  to  cover  ground  like  this
    before.  For  several  years  we  faced  the  nightmare  of  becoming  com-
    mitted to  a  technical  concept  which,  with  experience  and  hindsight,
    would  turn  out  to  be  a  multimillion-dollar  mistake ;  and  I  do  not  mind
    saying  we  had  more  than  one  narrow  shave.  Before  we  were  ready
    to  break  ground  at  Arco,  Idaho,  and  start  building,  the  overall  re-
    search and  development  budget  had  reached  about  twice  the  size  of
    the  construction  budget.

    However,  in  spite  of  all  the  obstacles  we  reconnoitered  and  went
    around,  we  are  told  that  our  reactor  project  has  progressed  more
    smoothly  than  any  other  in  the  postwar  period.  If  this  is  so,  we
    Avould  dislike  taking  part  in  one  which  did  not  go  smoothly.

    282  ATOMIC    POWER    DEVELOPMENT

    Two  very  important  tools  provided  lis  by  the  Government  have
    been  most  significant  factors  in  the  satisfactory  progress  of  the  sub-
    marine thermal  reactor  project  and  it  appears  pertinent  to  recognize
    them  at  this  time.  One  is  the  definite  goal  we  were  given — a  reactor
    to  build  instead  of  studies.  And  the  goal  was  definite  as  to  time  also,
    with  a  working  schedule  having  been  established  early  in  1949.  The
    other  important  tool  has  been  the  centralization  of  Government  con-
    tact and  control  in  Washington  in  the  Commission's  Naval  Reactors
    Branch  and  the  resultant  direct,  effective,  and  prompt  action  which
    has  permitted  us  to  concentrate  on  our  technical  and  production  prob-
    lems. Such  a  setup  appears  to  Westinghouse  to  be  essential  to  the
    efficiency  and  effectiveness  of  our  development  program  for  the  Gov-
    ernment.

    We  hope  no  one  w411  underestimate  the  time,  skilled  manpower,
    and  money  needed  to  overcome  the  difficulties  of  developing  and  build-
    ing a  large  power  reactor.  Such  a  miscalculation  could  produce  a
    blow  to  hope  and  progress.

    I  have  borne  down  heavily  upon  this  warning  because,  in  the  inter-
    ests of  balanced  perspective,  we  think  it  a  proper  introduction  to
    telling  you  our  own  belief  in  the  promising  future  of  atomic  power.
    We  are*  in  fact  convinced  of  that  future.  Our  experience  makes  us
    sharply  aware  of  the  mass  of  problems,  but  still  firmly  optimistic.
    The  constructive  atomic  power  uses  that  everyone  wants  can  indeed
    be  realized — and  they  can  be  realized  fastest  in  full  knowledge  that
    success  is  far  from  easy.

    Guided  by  such  an  evaluation,  Westinghouse  recently  reached  a
    decision  which,  so  far  as  we  know,  commits  more  private  money  to  the
    future  of  atomic  power  than  any  other  company  has  yet  determined
    to  risk.  I  speak  of  the  new  Westinghouse  atomic-equipment  de-
    partment. We  founded  this  department  on  our  own  initiative  and
    at  our  own  expense  to  supply  specialized  equipment  for  use  in  con-
    junction with  atomic  reactors.  The  department's  work  at  the  start
    will  be  almost  entirely  nonsecret,  having  to  do  primarily  with  acces-
    sory parts  of  the  reactor.  An  86,000-square-foot  plant  is  currently
    being  built  in  Harmar  Township  on  the  Allegheny  River  above  Pitts-
    burgh and  will  be  leased  by  Westinghouse  on  a  long-term  basis.  Our
    capital  investment  in  tools  and  equipment  for  the  department  is  ap-
    proximately $2  million.

    We  feel  the  decision  to  go  ahead  with  our  new  atomic-equipment
    department  was  hardheaded  and  realistic,  and  that  it  was  an  act  of
    confidence  bespeaking,  louder  than  words,  how  we  view  the  prospects
    for  atomic  power.

    As  this  committee  knows,  we  have  been  working  for  a  year  or  more
    upon  a  powerplant  having  implications  not  only  for  the  propulsion
    of  large  naval  vessels  but  also  for  the  generation  of  central-station
    electrical  power.  The  submarine  powerplant  we  now  have  behind
    us  represents  a  striking  advance  in  undersea  propulsion  and  meets  the
    unprecedented  requirements  which  the  Navy  laid  down.  But  it  has
    two  important  limitations  from  the  viewpoint  of  uses  other  than  in  a
    submarine:  First,  it  simply  does  not  put  out  the  power  needed  to
    propel  a  big  ship  moving  on  the  surface.  Second,  it  does  not  give  the
    long  life — or  the  power — essential  for  central-station  generation  of
    electricity.

    ATOMIC    POWER    DEVELOPMENT  283

    The  problem  we  have  been  studying,  then,  is  how  to  take  a  second
    step  forward  into  power  uses,  a  step  just  as  big  or  bigger,  as  the  step
    already  taken  through  the  submarine  plant.  We  could  not  begin  to
    consider  this  second  step  without  the  benefit  of  the  experience  and
    momentum  gained  in  the  first.  The  one  follows  indispensably  from
    the  other.  But  we  have  already  learned  enough  about  atomic  power
    for  big  ships  or  big  blocks  of  electricity  to  appreciate  that  doing  such
    a  new  job  would  mean  new  headaches,  new  sobering  risks,  and  the
    same  intensive  effort  as  in  the  submarine  project.  Once  again,  we
    think,  actual  construction  of  a  prototype  would  be  the  comparatively
    easy  part.    The  hard  part  would  be  research  and  development.

    As  you  see,  despite  my  basic  optimism,  I  have  returned  to  the
    theme  that  building  a  reactor  is  no  picnic.  It  seems  to  us  that  ham-
    mering this  theme  is  the  most  useful  task  I  can  strive  to  perform
    here  today.  However,  if  there  is  a  customer — either  the  Government
    or  private  vitilities  or  a  combination  of  both — we  can  go  ahead  and
    build  a  central-station  atomic  powerplant  able  to  produce  tens  of
    thousands  of  kilowatts.  We  do  not  know^,  and  no  one  knows,  whether
    the  first  plant  could  produce  competitively  with  ordinary  plants.
    Much  would  depend  upon  conventional  power  costs  where  the  atomic
    plant  was  located.  Much  would  also  depend  upon  the  kind  of  book-
    keeping to  be  used — rates  of  amortization  and  the  like.  This  we  do
    know :  Much  could  be  learned  from  the  first  plant  that  would  fertilize
    progress.

    The  same  basic  atomic  powerplant  could,  of  course,  be  used  in  large
    naval  vessels  if  constructed  with  special  attention  to  space  and  weight
    and  the  operating  requirements  of  the  Navy.  A  land-based  prototype
    of  the  naval  version  would,  like  the  purely  civilian  version,  produce
    sizable  blocks  of  electrical  power.

    If  you  were  to  inquire  whether  Westinghouse  might  consider
    putting  up  its  own  money  to  construct  such  a  plant,  we  would  have
    to  say  "No."  The  cost  of  the  plant  would  be  a  question  mark  until
    after  we  built  it  and.  by  that  sole  means,  found  out  the  answer.
    The  time  needed  would  be  another  question  mark  until  after  we  took
    the  necessary  time — again  the  only  means  of  finding  out  the  answer.
    We  would  not  be  sure  of  successful  plant  operation  luitil  after  we
    had  done  all  the  work  and  operated  successfully.  This  is  still  a  situa-
    tion of  pyramiding  uncertainties.  The  amount  of  money  which  West-
    inghouse could  itself  appropriate  to  meet  the  situation  would  be  but  a
    trickle  compared  with  that  required.

    On  the  other  hand,  as  I  commented  earlier,  we  have  already  com-
    mitted $2  million  of  our  own  funds  to  the  future  of  atomic  power.
    We  are  going  to  commit  more  funds.  The  only  question  is  when  and
    how  much.  There  is  a  distinction  between  risk-taking  and  reckless-
    ness. We  shall  appropriate  more  and  more  Westinghouse  money  as
    and  when  such  action  ceases  to  fall  into  the  category  of  recklessness
    for  Westinghouse.

    I  judge  that  everyone  concerned  with  atomic  power  matters  wel-
    comes the  decision  of  your  committee  to  hold  hearings  and  to  con-
    sider whether  changes  in  the  law  may  be  desirable.  For  our  part
    we  think  the  present  law  deserves  solid  recognition  for  the  the  prog-
    ress already  made  under  its  provisions.  It  was  skillfully  drafted,
    with  unusual  foresight;  and  it  has  been  ably  administered.     Further-

    £6740—53 19

    284  ATOMIC    POWER    DEVELOPMENT

    more,  the  present  law  displays  the  becoming  modesty  of  stating,  in
    its  preamble,  that  any  legislation  is  temporary  and  subject  to  change
    in  so  rapidly  changing  a  field  as  atomic  energy.

    If,  this  time  last  year,  you  had  asked  us  whether  the  present  law
    is  delaying  atomic  power  development,  we  in  all  probability  would
    have  said  we  thought  not.  Today  our  view  is  changing  because  1955
    circumstances  are  different  from  1952  in  the  significant  respect  that
    STE,  the  first  nuclear  powerplant  producing  substantial  quantities
    of  useful  power,  is  actually  operating.  We  are  now  increasingly  im-
    pressed by  the  need  of  mobilizing  more  minds  and  more  resources
    for  a  broader  attack  upon  atomic  power  problems.  We  estimate
    that  qualified  technical  people  working  upon  these  problems,  outside
    Atomic  Energy  Commission  Laboratories,  are  currently  numbered
    only  in  three  figures.  Napoleon  is  once  supposed  to  have  said  that
    when  he  had  a  hard  job  to  do,  he  put  so  many  men  on  it  that  the  job
    disappeared.  The  time  may  be  ripening  when  a  similar  tactic  in  the
    atomic  power  field  could  produce  major  technical  breakthroughs.

    The  overall  industry  of  the  United  States  is  basically  the  creation
    of  private  initiative.  In  the  factories  and  production  lines  that  give
    our  country  world  leadership  is  evidence  of  what  free  enterprise  can
    accomplish.  But  under  the  present  atomic  energy  law,  enterprise  is
    not  free.  We  suggest  it  is  almost  academic  to  speculate  on  what  enter-
    prise might  undertake  if  some  of  the  curbs  were  lifted.  So  long  as
    these  remain,  enterprise  is  severely  handicapped  even  in  thinking  and
    planning.  Relax  the  curbs  and,  judging  by  past  experience,  our  eco-
    nomic system  will  find  its  own  ways  of  helping  to  bring  the  promise
    of  atomic  energy  to  fruition.

    Factors  such  as  these  indicate  that  it  is  not  too  soon  to  consider
    amending  the  law.  We  think  the  broad  policy  statement  prepared
    by  the  Atomic  Energy  Commission  and  made  public  by  your  com-
    mittee last  May  is  a  constructive  contribution.  Even  so,  time  will
    doubtless  be  needed  to  give  the  problem  the  full,  searching,  and  earnest
    thought  it  demands.  In  the  atomic  power  field,  as  in  certain  others,
    there  are  still  no  experts;  there  are  only  varying  degrees  of  ignorance.

    With  due  allowance  for  this  fact,  we  would  in  general  recommend
    that  the  Congress  move  toward  giving  free  enterprise  a  chance  to
    function  normally,  so  far  as  national  security  permits.  It  goes  with-
    out saying  that  the  defense  of  our  country  must  remain  the  paramount
    consideration.  But,  this  apart,  the  ideal  approach  would  be  for  the
    atomic  power  industrv  to  operate  much  like  any  other  industry  in
    our  economic  system.  Needless  to  say,  the  incentive  for  a  private  firm
    to  build  an  atomic  powerplant  at  its  oAvn  expense  will  grow  or  decline
    depending  upon  the  degree  of  ownership  control  that  it  could  exercise
    over  the  plant.  The  incentive  for  private  investment  must  also  suffer
    if,  after  spending  millions  for  a  plant,  the  investor  had  no  satisfactory
    assurance  of  obtaining  the  fissionable  material  essential  to  plant
    operation.

    But  the  questions  of  ownership  and  availability  of  fissionable  ma-
    terial, as  I  have  already  indicated,  mninly  affect  purchasers  and  users
    of  power  equipment.  On  the  other  hand,  the  patent  question  par-
    ticularly affects  equi]-)ment  manufacturers  such  as  AVestinghouse;
    and  here,  therefore,  I  venture  to  comment  more  specifically^

    It  is  possible  to  foresee  three  broad  cases  where  private  money  will
    bring  about  advances  in  the  art  of  producing  electricity  from  atomic

    ATOMIC    POWER    DEVELOPMENT  285

    power.  These  cases  are,  first,  an  invention  having  ahnost  exclusively
    a  weapon  application ;  second,  an  invention  having  both  military  and
    commercial  application;  and  third,  an  invention  having  only  com-
    mercial interest.  As  to  the  first,  where  the  national  defense  is  alone
    involved,  there  can  be  no  question  that  Government  should  enjoy
    complete  control.

    AVe  would  suggest,  however,  that  atomic  power  inventions  flowing
    from  private  money  and  having  only  commercial  use  should  be  pat-
    entable like  other  inventions.  As  for  cases  where  the  application
    is  both  military  and  commercial,  tlie  same  should  be  true  except  for
    the  important  qualification  that  the  Government  would  enjoy  full
    privileges  of  using  the  invention  toward  weapon  purposes.

    Although  there  have  been  one  or  two  problems  arising  with  a  few
    subcontractors,  I  would  like  to  add  that  the  patent  regulations  of  the
    present  Atomic  Energy  Act  as  administered  by  the  Commission  have
    not  retarded  the  submarine  thermal  reactor  job.

    There  is  another  area  of  special  interest  to  equipment  manufac-
    turers— the  area  of  security.  The  expense  and  delay  of  present  pro-
    cedures, formulated  at  a  time  when  experience  was  meager,  are  of
    a  high  order.  From  our  perspective,  much  can  be  said  for  legislative
    action  to  give  even  greater  protection  to  vital  secrets  and  downgrad-
    ing or  declassifying  information  that  has  little  or  no  sensitivity.  At
    the  same  time,  we  know  how  difficult  is  this  problem.  Its  difficulty
    is  not  reduced  by  the  fact  that  it  will  doubtless  have  major  bearing
    upon  the  incentive  of  equipment  manufacturers  to  risk  their  own
    money.

    This  afternoon  we  are  prepared  to  offer  no  more  than  general  com-
    ment because,  frankly,  we  have  been  preoccupied  trying  to  carry  out
    our  own  assignments.  At  such  time  as  you  may  proceed  to  consider
    a  specific  bill,  or  at  any  other  time,  we  hope  you  will  call  upon  us
    for  whatever  assistance  we  are  able  to  render.

    Chairman  Cole.  Thank  you,  Mr.  Weaver.  You  have  presented  a
    very  fine  statement,  and  I  especially  compliment  you  upon  the  em-
    phasis which  you  have  made  to  bring  out  the  fact  that  industrial
    power  from  atomic  energy  is  not  going  to  be  here  this  week  or  this
    year :  that  there  are  many,  many  rough  roads  to  travel  before  we  can
    even  hope  to  prove  that  it  is  available.

    I  do  not  know  of  any  group  or  of  any  individual  who  is  in  a  more
    qualified  position  than  you  and  your  equipment  division  to  speak
    from  experience  in  advising  us  and  in  advising  the  public  generally
    of  the  tremendous  difficulties  that  still  lie  ahead  before  proving  the
    feasibility  of  this  highly  desirable  goal.

    I  appreciate  very  much  the  fine  statement  you  have  made,  and,  in
    addition,  the  fine  work  you  have  done  peisonally  and  through  your
    division  in  the  submarine  reactor  program.

    Mr.  Weaw.r.  Thank  you,  Mr.  Cole.

    Chairman  Cole.  Are  there  questions  from  members  of  the  commit-
    tee to  Mr.  Weaver  ?

    Representative  Vax  Zandt.  I  am  glad  to  see  you  again,  Mr.  Weaver.

    Mr.  Weaver.  I  am  glad  to  see  you.  ]\Ir.  Van  Zandt.

    Representative  Van  Zaxdt.  Are  you  the  lone  contractor  in  the  con-
    struction of  this  atomic-power  reactor  for  the  submarine?

    Mr.  Weaver.  Westinghouse  has  a  direct  contract  from  the  Atomic
    Energy'  Commission  for  the  nuclear  plant,  and  another  direct  con-

    286  ATOMIC    POWER    DEVELOPMENT

    tract  from  the  Navy  Department  for  the  more  conventional  engine
    room  propulsion  equipment.

    Representative  Van  Zandt.  How  man_y  subcontractors  are  there  in-
    volved in  this  effort?

    Mr.  Weaver.  Mr.  Van  Zandt,  I  believe  that  number  is  well  up  in
    the  thousands.  I  think  at  last  count  there  were  in  the  neighborhood  of
    3,000  or  4,000  subcontractors  and  suppliers  to  the  mark  I  and  mark  II
    programs.

    Hepresentative  Van  Zandt.  The  purpose  of  asking  the  two  ques-
    tions is  to  develop  just  what  benefit  industry  in  general  has  enjoyed  as
    ii  result  of  the  construction  of  this  submarine  by  your  firm.

    Mr.  Wea's^r,  I  could  expand  on  this  point  by  emphasizing  again
    that  Westinghouse  has  concentrated  on  the  more  nuclear  aspects  of
    the  problem,  and  we  have  been  aided  by  such  concerns  as  Babcock  &
    Wilcox  in  designing  and  building  the  pressure  vessels;  by  Foster-
    Wheeler  in  designing  and  building  the  boilers,  and  so  on  up  and  down
    the  line.

    Representative  Van  Zandt.  Has  it  not  also  developed  new  tech-
    niques used  not  only  by  your  firm  but  by  others  ?

    Mr.  Weaver.  There  has  been  no  subcontracted  activity  that  I  can
    think  of  that  did  not  have  a  mass  of  problems  of  its  own  created  by
    new  requirements  and  resultant  new  techniques  in  order  to  satisfy
    them.

    Representative  Van  Zandt.  Therefore,  this  effort  has  somewhat
    educated  business  in  general  in  this  field  of  atomic  power;  has  it  not?

    Mr.  AVeaver.  It  certainly  has.

    Representative  Van  Zandt.  That  is  all,  Mr.  Chairman.

    Chairman  Cole.  Senator  Pastore?

    Senator  Pastore.  I  have  no  questions.

    Chairman  Cole.  Mr.  Holifield?

    Representative  Holifield.  Mr.  Weaver,  I  want  also  to  sa}'^  that  you
    have  given  us  a  very  valuable  statement  here,  and  I  want  to  add  my
    commendation  for  the  work  which  your  company  has  done  all  through
    the  years  on  atomic  energy  and  power  development,  reactors,  and  so
    forth.

    Mr.  Weaver.  Thank  you,  Mr.  Holifield.

    Representative  Holifield.  There  are  some  things  in  your  state-
    ment which  I  think  need  to  be  emphasized.

    On  page  6,  after  going  into  the  troubles  which  you  have  had  in
    building  reactors,  you  say  that  you  are  far  from  being  able  to  offer  a
    firm  price  bid  on  such  a  reactor.  That  statement  is  a  rather  different
    one  from  the  statement  we  have  had  from  many  who  have  not  built
    reactors,  and  this  committee  must  take  cognizance  of  the  fact  that  you
    speak  from  the  standpoint  of  experience  and  not  from  the  standpoint
    of  speculation.  I  think  that  is  a  very  important  thing  for  some  of
    these  people  who  are  dealing  in  what  I  term  to  be  overoptimistic
    speculative  plans,  without  any  real  knowledge  of  the  reality  of  the
    subject.

    It  is  something  which  is  important  to  us,  I  think,  in  our  consid-
    erations.

    On  page  9,  you  say,  again  along  the  same  line :

    We  hope  no  one  will  underestimate  the  time,  skilled  manpower,  and  money
    needed  to  overcome  the  difficulties  of  developing  and  building  a  large  power
    reactor.    Such  a  miscaluation  could  produce  a  blow  to  hope  and  progress.

    ATOMIC    POWER    DEVELOPMENT  287

    I  would  gather  from  that  that  you  are  indicating  that  there  is  still
    such  an  element  of  risk  in  this,  not  from  the  standpoint  of  building  a
    power  reactor  that  will  produce  electricity,  but  from  the  standpoint
    of  building  one  which  would  be  competitive  in  nature;  that  by  this
    statement,  you  would  encourage  such  people  who  would  plan  to  invest
    75  or  100  million  dollars  of  their  stockholders'  money  in  taking  a
    second  look  at  it  ?

    Mr.  Weaver.  I  certainly  would.

    Kepresentative  Holitield.  If  they  did  go  to  that  expense  and  there
    was  a  miscalculation  and  this  money  was  lost,  if  it  was  really  risk
    capital,  it  is  your  opinion  if  that  was  the  only  project,  it  would  be  a
    blow  to  continued  progress  in  developing  atomic-power  reactors  ?

    Mr.  Weaver.  I  believe  the  other  thing  that  I  had  in  mind  in  mak-
    ing this  statement  is  brought  out  in  a  statement  I  recall  Chairman
    Cole  having  made  at  the  opening  of  these  hearings.  It  was  that  we
    must  not  lose  the  momentum  of  our  current  development  program.  I
    believe  it  would  be  a  severe  blow  if  we  were  to  drop  of  the  type  of
    development  that  we  are  carrying  on  today  on  reactors  under  the
    assumption  that  it  can  be  picked  up  by  inadequate  facilities  and  inex-
    perienced staffs  of  people.

    Representative  Holitield.  And  private  funds  ?

    Mr.  Weaver.  That  is  implied.

    Representative  Holifield.  You  do  call  attention  in  the  first  part  of
    your  statement  to  the  successful  industry-governmental  teams  that
    have  been  in  existence  during  the  past  7  years,  and  to  the  progress
    which  they  have  made  in  this  field.

    On  page  11,  you  go  ahead  and  say :

    We  do  not  know,  and  no  one  knows,  whether  the  first  plant  could  produce
    competitively  with  oi'dinary  plants.

    That  is  a  considered  statement  on  your  part,  I  suppose  ?

    Mr.  Weaver.  Yes,  it  is,  because  of  the  developmental  unknowns,
    again  emphasizing  the  size  of  the  job  ahead.  Until  considerably  more
    work  has  been  done,  we  will  not  have  the  answer  to  the  economics  of
    this  powerplant.

    Representative  Holitield.  You  say  in  that  same  paragraph :

    Much  could  be  learned  from  the  first  plant  that  would  fertilize  progress.

    I  suppose  you  mean  by  that  that  you  do  feel  that  it  is  necessary  to
    build,  as  soon  as  possible,  a  first  plant  along  these  lines,  along  the  lines
    of  solving  the  problems  of  civilian  power  production.

    Mr.  Weaver.  I  do,  and  in  building  it  we  would  be  extending  the
    valuable  knowledge  which  has  already  been  gained  in  building  the
    submarine  thermal  reactor.  Certainly  even  in  that  plant  we  have
    learned  very  many  valuable  lessons  which  are  applicable  to  civilian
    powerplants,  but  we  still  have  a  long  way  to  go.

    Representative  Holitield.  At  the  bottom  of  page  10,  you  say :

    *  *  *  we  think,  actual  construction  of  a  prototype  would  be  the  comparatively
    easy  part.    The  hard  part  would  be  research  and  development.

    I  would  like  to  explore  that  for  just  a  moment.  We  have  had  two
    different  theories  advanced  to  this  committee.  One  theory  has  been
    advanced  by  several  people  who  say  that  now  is  the  time  to  go  aliead
    and  build  a  full-scale  prototype  plant.  Other  equally  sincere  scien-
    tists have  come  before  us  and  said  that  in  their  opinion  the  present
    development  would  be  actually  increased  and  the  time  of  achievement

    288  ATOMIC    POWER    DEVELOPMENT

    would  be  reached  quicker  if  we  would  do  research  and  development  on
    several  pilot  plants  and  get  some  operating  experience  from  those  pilot
    plants,  and  then  we  would  be  able  to  go  ahead  by  that  knowledge  and
    develop  a  full-scale  plant  much  more  surely  and  possibly  much  more
    economically.

    Would  you  give  us  your  thoughts  on  those  two  different  approaches  ?

    Mr,  Weaver.  Certainly  I  think  that  parallel  development  efforts
    are  always  valuable  to  some  extent,  but  you  must  consider  the  money
    available  and  the  resources  available  for  the  development  work  in
    determining  the  policy  of  whether  or  not  you  can  afford  to  have  more
    than  1  or  2  development  efforts  in  parallel.

    Representative  Holifield.  On  a  full  scale  ?

    Mr.  Weaver.  Yes.

    Representative  Holifield.  It  would  be  possible,  in  your  opinion,  for
    us  to  select  5  of  the  most  promising  types  of  reactors — and  I  use  the
    figure  5  loosely — with  an  expenditure  of  10  or  12  or  15  million  dollars
    apiece,  and  obtain  great  knowledge  along  that  line?

    Mr.  Weaver.  I  believe  you  are  very  optimistic  in  your  cog^  of  even
    pilot-plant  development.

    Representative  Holifield.  I  am  asking  that  question  because  one  of
    the  companies  recently  put  an  ad  in  the  papers  in  which  they  offered  to
    build  one  for  $10  million.

    I  might  explore  that  a  minute  and  ask  if  a  pilot  plant  of  that  cost
    would  be  valuable  in  research  and  development,  or  would  it,  in  your
    opinion,  cost  more  than  that  to  get  a  pilot  plant  which  would  give  you
    answers  to  questions  which  we  do  not  have  at  the  present  time?  We
    have  the  questions,  but  we  do  not  have  the  answers.

    Mr.  Weaver.  There  are  unquestionably  some  types  of  nuclear  power-
    plants  that  could  be  built  today  more  reasonably  than  other  types.  I
    do  believe  that  Government,  if  it  is  going  to  finance  the  program,  must
    consider  very  carefully  the  types  that  it  would  support.

    Representative  Holifield.  If  you  had  $100  million  to  gamble  on
    this  problem,  would  you,  as  a  private  industry,  put  that  in  1  large
    type  of  reactor,  or  would  you  put  it  in  2  or  3  or  more  pilot  plants  at
    this  stage  of  research  and  development?

    Mr.  Weaver.  I  must  speak  again  from  the  manufacturer's  view-
    point, and  knowing  again  the  difficulty  and  the  cost  of  developing
    these  plants,  I  think  that  I  would  want  one  definite  goal ;  and  I  believe
    that  definite  goal,  if  it  was  a  sizable  plant,  would  quite  effectively
    use  up  the  $100  million.

    Representative  Holifield.  In  the  construction  of  a  pilot  plant?

    Mr.  Weaver.  In  the  development  and  construction.

    Representative  Holifield.   Of  a  pilot  plant,  or  a  full-scale  plant?
    That  is  the  point  I  want  to  make.
    Mr.  We.wtsr.  a  full-scale  plant.

    Representative  Holifield.  If  that  be  the  case,  then  would  you  favor
    at  this  stage  in  this  industry's  life  going  ahead  and  building  a  full-
    scale  plant  at  this  time,  rather  than  several  prototypes,  two  or  more
    pilot  plants?

    Mr.  WEyVVER.  I  think  it  is  questionable  as  to  what  value  you  obtain
    from  a  pilot  plant,  as  such.  If  you  are  reaching  out  for  greater  powers
    and  longer  lives  in  your  reactors,  I  doubt  if  you  are  going  to  prove
    your  point  through  a  pilot  plant.  I  think  you  are  going  to  have  to
    develop  and  build  what  you  want.     And  this,  of  course,  is  the  ap-

    ATOMIC    POWER    DEVELOPMENT  289

    proach  that  we  were  in  solid  agreement  with  the  Government  on  in
    tackling  the  aircraft  carrier  reactor,  the  CVK.  program.

    Here  there  was  a  definite  reqnirement  for  a  given  block  of  power  to
    do  a  specific  job.  This  is  still  the  way  Westinghouse  would  like  to
    tackle  any  nuclear  plant  development.

    Representative  Holifield,  You  would  like  to  tackle  that  on  the
    basis  of  the  Government-industry  partnership  that  has  obtained  in  the
    past  ?

    Mr.  WEA^^ER.  We  believe  it  essential  to  maintaining  a  virile  reactor
    development  program  which  is  going  to  keep  the  country  ahead  in
    nuclear  power.

    Representative  Holifield.  I  think  most  of  the  committee  believe
    that,  too,  but  I  want  to  be  specific  that  you  believe  that  that  objective
    of  obtaining  that  successful  reactor  would  be  by  continuing  the  pres-
    ent arrangement,  in  which  the  Government  finances  and  in  which
    private  industry  contracts,  and  puts  its  best  brains  and  initiative  for-
    ward to  obtain  the  results,

    Mr.  Weaver.  I  do.

    Representative  Holifield.  I  notice  that  you  say  on  page  11,  the  last
    paragraph :

    If  you  were  to  inquire  whether  Westinghouse  might  consider  putting  up  its
    own  money  to  construct  such  a  plant,  we  would  have  to  say  "No."

    That  is  the  same  as  you  have  answered  to  the  previous  question.

    You  bring  up  the  point  later  on  that  free  private  enterprise  should
    be  given  a  chance  to  function  normally  as  far  as  national  security
    permits.  I  think  we  are  all  in  accord  with  that,  but  we  have  a  partic-
    ular responsibility  in  the  security  field  which  is  going  to  put  the
    brakes  on  us  a  litttle  bit,  like  obtaining  private  risk  capital  puts  a
    brake  on  private  industry.

    You  have  given  us  three  cases  here  in  discussing  the  patent  problem.

    First,  an  invention  having  almost  exclusively  a  weapon  application.
    Of  course,  there  is  no  controversy  on  that,  as  far  as  I  know.

    Second,  an  invention  having  both  military  and  commercial  appli-
    cation.

    Third,  an  invention  having  only  commercial  interest.

    On  the  second  type  of  invention,  having  both  military  and  com-
    mercial application,  we  are  faced  with  a  peculiar  problem  in  making
    that  available  to  industiy  if,  in  making  the  commercial  application
    available  to  industry  we  thereby  reveal  some  of  the  military  appli-
    cation.

    So  that  is  a  very  questionable  area  there  as  far  as  legislative  re-
    laxation is  concerned.

    The  third  field,  an  invention  having  only  commercial  interest.  I
    believe  under  the  present  Atomic  Energy  Act,  such  inventions  can
    be  declassified  and  used  on  a  wide  basis,  can  they  not?

    Mr.  Weaver.  That  is  right,  and  I  believe  we  have  records  of  such
    cases  in  our  own  experience.

    Representative  Holifield,  Who  would  decide  what  would  consti-
    tute a  weapon  applicable  development?  In  other  words,  who  would
    draw  the  line  between  strict  weapon  application  and  commercial  appli-
    cation?

    Mr,  WEA^^ER.  I  believe  that  the  Government  would  have  to  do  that.

    Representative  Holifield.  The  Atomic  Energy  Commission,  which

    290  ATOMIC    POWER    DEVELOPMENT

    is  now  charged  with  that  responsibility  as  far  as  declassiiScation  is
    concerned,  would  have  to  function  there,  would  it  not  ?

    Mr.  Weaver.  Yes.

    Representative  Holifield.  In  the  latter  part  of  your  statement  you
    say  that  when  a  specific  bill  is  considered  you  would  be  glad  to  give
    us  additional  cooperation.  I  think  when  the  time  comes  that  we  can
    draw  up  a  draft  of  legislation,  your  company  will  certainly  be  one
    that  we  will  want  to  consult,  because  of  your  peculiar  and  almost  sole
    interest  and  experience  along  certain  lines.

    Mr.  Weaver.  I  also  had  in  mind  that  there  are  some  men  in  the
    company  who  are  expert  in  the  fields  that  I  certainly  do  not  feel
    qualified  to  speak  of  today,  the  field  of  patents  broadly,  for  instance,
    and  they  may  be  of  help  to  the  committee.

    Representative  Holifield.  The  present  patent  program  as  outlined
    in  the  act,  and  as  administered  by  the  Atomic  Energy  Commission,
    has  been  in  your  experience  a  completely  workable  program,  has  it
    not?

    Mr.  Weaver.  For  the  job  that  we  have  been  doing  with  Govern-
    ment funds,  yes.

    Representative  Holifield.  Thank  you  for  your  answers.

    Chairman  Cole.  Mr.  Price  ?

    Representative  Price.  Mr.  Weaver,  first  I  want  to  pay  tribute  for  the
    remarkable  job  I  know  you  have  done  in  your  participation  in  reactor
    development.

    I  had  the  pleasure  of  visiting  your  installation  in  Pittsburgh,  and
    I  have  been  out  to  the  Idaho  Testing  Station,  so  I  speak  with  authority
    in  saying  that  you  have  done  a  remarkable  job  and  have  contributed
    much  toward  this  program.

    Mr.  Weaver.  Thank  you,  Mr.  Price.

    Representative  Price.  Regarding  the  design  and  construction  of
    the  submarine  reactor,  the  STR,  what  is  the  relationship  between  your
    work  and  the  Navy  ?    How  do  you  operate  ?    How  do  you  function  ?

    Mr.  Weaver.  We  function  entirely,  as  I  have  pointed  out  in  one
    portion  of  the  statement,  through  the  Naval  Reactor  Branch  of  the
    Atomic  Energy  Commission.  They  are  our  point  of  contact  and  the
    point  of  Government  control.

    Both  the  Atomic  Energy  Commission  contract  for  nuclear  parts
    of  the  plant  and  the  Navy  contract  for  the  engineroom  equipment  are
    administered  by  that  group.

    Representative  Price.  How  has  that  relationship  worked  out  ?

    Mr.  Weaver.  Very  fine.

    Representative  Price.  You  think  it  has  been  a  good  setup  ?  Would
    you  see  any  difference  in  your  program  if  you  had  not  had  a  setup  of
    that  nature  ?

    Mr.  Weaver.  I  think  that  the  best  thing  I  can  say  there  is  that  the
    job  has  been  tough  enough  back  in  Pittsburgh  and  out  in  Idaho  with-
    out having  to  worry  about  all  the  multitude  of  contacts  and  problems
    that  we  might  encounter  in  dealing  with  the  Government  unless  there
    was  one  such  centralized  and  aggressive  setup.

    Representative  Price.  That  particular  phase  in  which  Captain
    Rickover  has  done  such  a  marvelous  job  ?

    Mr.  Weaver.  Yes.    HeisChief  of  the  Naval  Reactor  Branch.

    Representative  Price.  It  is  also  tied  in,  of  course,  with  the  AEC.  It
    has  all  the  tie-ins  there.     It  is  a  sort  of  tied-down  directorship,  placed

    ATOMIC    POWER    DEVELOPMENT  291

    in  such  a  way  that  the  head  of  that  group  can  really  act  and  get
    things  done ;  is  that  right  ?

    Mr.  Weaver.  He  pulls  together  all  of  the  ends  over  in  the  Bureau  of
    Ships  in  the  Navy  Department,  and  at  the  same  time  functions  for
    the  Atomic  Energy  Commission.

    Representative  Price.  Have  you  been  able  to  utilize  the  ingenuity
    of  your  company  freely  in  this  work  ?

    Mr.  Weaver.  As  I  have  indicated  in  the  statement  that  I  read,  1
    believe  that  we  have  used  to  the  nth  degree  the  facilities  of  the  com-
    pany to  the  point  that  it  has  really  hurt  and  left  many  of  our  normal
    operations  bleeding.  We  have  pulled  out  some  of  the  best  men
    throughout  the  company  to  come  in  and  fill  our  key  jobs.

    Representative  Price.  You  have  already  answered  in  your  prepared
    statement  the  question  that  I  was  going  to  ask  you,  so  I  can  read  your
    answer  to  that.  I  was  going  to  ask  you  about  the  different  types  of
    participation,  the  AEC,  Navy,  and  industry ;  and  you  have  said  that
    it  was  a  question  of  teamwork,  and  you  have  cited  the  remarkable  col-
    laboration between  men  in  naval  uniform  and  men  in  the  laboratory
    and  between  men  on  Government  payroll  and  men  on  industrial
    payroll.

    It  has  been  a  very  successful  operation  in  that  regard  ?

    Mr.  Weaver.  It  certainly  has,  sir.

    Representative  Price.  What  is  your  position  on  the  CVR  project?

    Mr.  Weaver.  At  the  present  time  we  are  awaiting  action  of  the
    Government.

    Representative  Price.  How  do  you  feel  about  it  ?  It  was  just  about
    a  year  ago  that  you  were  given  a  contract,  that  you  entered  into  con-
    tractual relations  on  the  CVR;  is  that  correct?

    Mr.  Weaver.  It  was  in  July  of  1952  that  the  Commission  put  us
    to  work  on  the  CVR.  We  were  just  getting  a  good  start  on  it  when
    the  current  discussion  arose.

    Representative  Price.  A  moment  ago,  in  reply  to  a  question  from
    my  colleague,  Mr.  Holifield,  you  referred  to  the  loss  of  momentum.
    Was  something  like  that  in  your  mind  ?

    Mr.  Weaver.  It  certainly  must  be,  sir.

    Representative  Price.  You  said  very  wisely  that  if  you  lose  momen-
    tum in  this  game  you  never  regain  it.

    Personally,  I  felt  it  criminal  on  the  part  of  the  Navy  to  yield  to
    economic  pressure  and  to  agree  to  any  relaxation  and  delay  in  the
    reactor  development  program.

    My  colleague  suggests  I  should  not  use  the  word  "criminal,"  but  I
    feel  pretty  strongly  about  it,  so  I  will  say  "very  unwise."

    Certainly  this  relaxation  amounts  to  loss  of  momentum.  Do  you
    not  agree  with  that?

    Mr.  Weaver.  I  do  not  believe  that  we  have  lost  momentum  yet,
    because  we  have  had  a  great  deal  of  effort  that  has  been  necessary  to
    put  into  the  submarine  job  currently,  and  because  the  very  major
    part  of  the  work  done  to  date  on  the  CVR  is  equally  applicable  to
    any  type  of  large  plant.

    Representative  Price,  Would  jou  not  like  to  get  going  on  this
    project?

    Mr.  Wea\t:r.  Just  as  I  said  before,  there  is  nothing  that  Westing-
    house  wants  more  than  a  definite  goal.  Certainly,  however,  I  am
    sure  that  Mr,  Price  would  want  to  say  also  that  we  cannot  and  do

    292  ATOMIC    POWER    DEVELOPMENT

    not  want  to  be  in  the  position  of  indicating  what  the  Government
    should  do,  what  your  reactor  program  should  be.

    We  stand  ready  to  pitch  in  and  continue  the  CVR  job,  or  a  similar
    plan.

    Eepresentative  Price.  The  earlier  you  get  started  on  such  a  pro-
    gram, though,  would  contribute  to  the  development  of  industrial
    power  that  much  quicker,  would  it  not  ?

    Mr.  Weaver.  Yes.

    Representative  Price.  That  is  all.

    Chairman  Cole.  Mr.  Patterson  ?

    Representative  Patterson.  No  questions.

    Chairman  Cole.  Mr.  Van  Zandt  ?

    Representative  Van  Zandt.  Mr.  Weaver,  in  regard  to  the  new  plant
    you  are  building  at  Harmar  Township  on  the  Allegheny  River  above
    Pittsburgh,  I  notice  it  is  being  constructed  for  the  purpose  of  supply-
    ing specialized  equipment  for  use  in  conjunction  with  atomic  reactors.

    Have  you  had  actual  inquiries  from  concerns  who  are  interested
    in  building  reactors  ?

    Mr.  Weaver.  Our  inquiries  to  date  have  been  limited  to  the  items
    that  we  have  identified  for  engineering  and  construction  by  this
    department,  particularly  the  canned-motor  pump  that  was  developed
    for  the  submarine  thermal  reactor.  This  has  been  an  item  that  has
    always  found  considerable  usage  in  the  laboratories,  as  well  as  in
    other  reactor-development  projects.

    Representative  Van  Zandt.  When  will  the  reactor  be  a  reality;
    that  is,  actually  producing  power  for  domestic  use?

    Mr.  Weaver.  For  domestic  uses  ?

    Representative  Van  Zandt.  Yes ;  for  domestic  uses.

    Mr.  Weaver.  It  certainly  depends  upon  the  aggressiveness  with
    which  we  all  tackle  the  problem,  and  I  can  hardly  say  more  than  I
    did  in  the  prepared  statement,  which  is  that  we  won't  really  know
    the  time  until  we  get  into  the  problem.

    Representative  Van  Zandt.  Can  you  give  us  an  estimate  of  time
    on  the  pilot  plant  ?

    Mr.  Weaver.  We  know  that  the  Mark  I  submarine  thermal  reactor
    is  in  operation  now.  The  job  was  started  from  scratch  without  any
    facilities  to  work  in  or  an  organization  to  work  with,  in  December
    of  1948.

    A  larger  reactor  for  the  production  of  electrical  energy  certainly
    is  a  tougher  job,  as  I  have  stated.

    Mr.  Price.  May  I  interject  a  remark  there,  Mr.  Van  Zandt?  Per-
    haps it  has  something  to  do  with  Mr.  Holifield's  question  about  pilot
    plants  or  one  large  plant.

    Looking  back  on  this  thing,  on  the  last  41/^  years,  it  seems  to  me
    that  the  most  important  decision  made,  which  contributed  to  the
    success  of  the  project,  was  a  decision  early  in  1949,  I  believe  it  was,
    to  lay  down  a  definite  timetable  for  every  component  that  entered  into
    the  submarine  project.

    By  a  certain  date  the  decision  would  have  to  be  made  on  the  develop-
    ment side,  which  road  they  were  going  to  take.  They  would  discard
    some  possibilities  and  pick  up  the  road  they  were  going  to  take.

    That  followed  for  every  important  component  that  went  into  the
    reactor.  That  was  early  in  1949.

    ATOMIC    POWER    DEVELOPMENT  293

    They  didn't  by  any  means  keep  the  schedule  that  they  drew  up
    then,  but  the  mere  fact  that  they  always  had  a  schedule  and  that  they
    were  always  working  to  a  time  schedule  made  the  thing  possible  in  the
    time  in  which  it  was  accomplished.

    I  think  that  bears  on  the  question  of  whether  you  get  more  out  of
    3  or  4  or  5  pilot  plants,  or  1  good  sized  plant  that  could  be  useful,

    Mr.  Weaver  says  about  two-thirds  of  the  cost  here  is  within  the
    research  and  development  part,  as  against  the  construction  cost.  If
    you  built  one  real  plant,  certainly  other  better  roads  of  building  the
    next  one  would  be  opened.

    I  do  not  know  the  answers.  I  am  not  a  scientist  or  an  engineer.  But
    I  think  more  would  be  gained  out  of  one  real  plant  than  wasting  time
    with  too  many  pilot  plants.

    Mr.  Weaver.  I  agree  with  that.

    Representative  Price.  I  think  you  can  say,  from  what  you  already
    know  about  the  submarine  reactor,  that  the  manner  by  which  you
    approached  that  has  been  a  very  successful  approach.

    Mr.  Weaver.  A  very  desirable  and  successful  approach.

    Representative  Van  Zandt.  As  I  was  going  to  say,  your  statement
    is  based  upon  experience  in  the  development  of  the  submarine  power
    plant.

    Representative  Holifield.  Would  jow  care  to  comment  at  this  time
    as  to  whether,  if  you  were  given  the  opportunity  to  build  a  full-scale
    plant  by  Government  financing  at  this  time,  you  would  know  the  type
    of  reactor  that  you  would  want  to  build  ?  Could  you  select  the  type
    of  reactor  at  this  time,  the  type  of  coolant,  design,  and  so  forth,  at  the
    present  time  ?

    Mr.  Wea\ter.  Yes,  sir.

    Representative  Holifield.  You  have  pretty  definite  ideas  as  to  the
    desirability  of  a  particular  type  ?

    Mr.  Weaver.  This  is  based  on  our  experience,  both  in  the  submarine
    thermal  reactor  and  studies  which  went  ahead  after  the  CVR  contract
    was  awarded  to  us  last  year.

    Representative  Holifield.  Would  that  indicate  that  you  would  go
    along  in  building  a  reactor  along  that  same  line  of  scientific  theory,
    or  would  it  mean  that  from  that  you  have  learned  how  to  go  ahead
    on  a  different  type,  or  do  you  want  to  answer  a  question  like  that  ?

    Mr.  Wea^^r.  I  believe  I  should  not  answer  that  question,  sir.

    Representative  Holifield.  I  withdraw  it.

    Chairman  Cole.  Why  not  ?    Security  ?

    Mr.  Weaver.  Yes.

    Chairman  Cole.  Dr.  Beckerley.

    Dr.  Beckerley.  I  am  not  sure  what  he  has  in  mind.

    Representative  Holifield.  It  might  be  an  unfair  question,  I  might
    say  to  the  chairman,  to  ask  one  business  firm  to  reveal

    Chairman  Cole,  I  know,  but  we  have  already  asked  other  business
    concerns  to  reveal  what  their  selection  is.  It  seems  to  me  it  would  be
    entirely  unfair  to  allow  a  different  concern  to  withhold  the  informa-
    tion.

    Representative  Holifield.  They  raised  no  objection,  however.

    Chairman  Cole.  That  is  why  I  raised  the  question  whether  this  had
    security  aspects  or  industrial  trade-secret  aspects.

    294  ATOMIC    POWER    DEVELOPMENT

    Mr.  Weaver.  Specifically,  Mr.  Chairman,  the  Commission,  as  far  as
    I  know,  has  never  stated  publicly  the  type  of  reactor  which  was
    planned  for  CVR.

    Chairman  Cole.  That  is  not  what  Mr.  Holifield  asked  you.

    Representative  Price.  What  he  did  ask  him  ties  in  with  the  STR,
    and  that  brings  it  under  security.

    Representative  Holifield.  I  have  doubts  as  to  whether  my  question
    should  be  answered.    I  withdraw  the  question.

    Chairmaa  Cole.  Let  me  be  assured  that  the  hesitancy  of  Mr.
    Weaver  to  respond  was  not  because  of  any  company  concern.

    Mr.  Weaver.  Very  definitely  not,  sir.

    Chairman  Cole.  But  it  was  because  of  security  ?

    Mr.  Weaver.  That  is  right.

    Representative  Van  Zandt.  One  more  question,  Mr.  Chairman.

    Mr.  Weaver,  during  the  course  of  your  statement,  you  stated  it
    was  necessary  from  time  to  time  to  bleed  other  projects  in  order  to
    continue  your  program  in  the  construction  of  this  submarine  atomic-
    power  plant.  Could  you  tell  us  in  round  figures  what  Westinghouse
    has  spent  in  dollars  and  cents  above  and  beyond  what  you  have  re-
    ceived from  any  Government  source,  in  the  construction  of  the
    submarine  plant  ?

    Mr.  Weaver.  Mr.  Van  Zandt,  that  is  a  difficult  question  to  answer.
    Where  Westinghouse  divisions  or  departments,  other  than  the  atomic-
    power  division,  have  done  work  for  the  atomic-power  division,  they
    have  been  reimbursed  for  the  cost  of  such  work.  I  would  say  that  the
    only  cost  that  is  difficult  to  measure  is  the  value  of  the  men  who  have
    been  assigned  to  the  project,  the  value  of  the  management  effort  that
    has  been  placed  on  the  project.

    Representative  Van  Zandt.  Is  it  proper  to  say  that  the  Westing-
    house Co.  has  actually  sacrificed  to  reach  the  point  where  they  are
    today  in  the  construction  of  the  submarine  atomic  engine  i

    Mr.  Weaver.  I  believe  Mr.  Price  could  answer  that  question.

    Mr.  Price.  I  would  answer  it  this  way :  We  are  not  by  any  manner
    of  means  where  we  would  like  to  be  in  our  development  of  jet  engines.
    We  are  behind  in  one  very  important  program  for  the  Navy.

    If  we  cruld  have  had  just  one-third  of  the  men  on  this  job  within
    our  aviation-turbine  division,  I  am  certain  we  would  be  on  schedule.

    So  goes  it  with  many  of  the  important  commercial  activities  of  the
    company.

    Chairman  Cole.  You  feel  that  has  been  a  sacrifice?

    Mr.  Price.  Yes,  sir,  definitely.

    Chairmnn  Cole.  In  spite  of  that  fact,  while  you  may  be  behind  in
    jet-propelled  engines,  you  are  away,  'way  out  in  front  in  atomic
    engines.

    Mr.  Price.  Looking  down  the  future,  the  sacrifices  are  well  made,
    but  at  the  moment  they  hurt.    At  the  moment  they  hurt.

    Represeiitative  Van  Zandt.  The  purpose  of  the  question  was  to
    develop  the  fact  that  free  enterprise  in  this  country  has  made  a  con-
    tribution to  the  construction  of  this  atomic  powerhouse  for  the
    submarine.

    Chairman  Cole.  From  what  you  know  of  the  CVR  proposed  pro-
    gram, can  you  evaluate  percentagewise  as  to  whether  the  lessons  that
    might  be  learned  from  it  predominate  in  the  electric-power  field  or  in
    the  propulsion  field?

    ATOMIC    POWER    DEVELOPMENT  295

    Mr,  Weaver,  The  reactor  problems  are  going  to  be  essentially  the
    same  regardless  of  which  application  the  reactor  is  directed  toward.
    It  will  he  more  the  plant  arrangement,  its  size,  its  weight,  the  rugged-
    ness,  the  type  of  steam  equipment  which  utilizes  the  steam  from  it,
    that  will  be  affected  by  the  application.

    Chairman  Cole.  So  that  if  we  continue  with  the  dual  function  of
    the  CVR  program,  which  is  electric  power  and  ship  propulsion,  we
    will  learn  nearly  as  much  for  the  purposes  of  electric  power  as  we
    would  have  learned  then,  had  there  been  no  ship-propulsion  factor
    involved.

    Mr.  Weaver.  Yes.

    Chairman  Cole.  You  indicated  that  there  were  fewer  than  a  thou-
    sand scientists  in  this  country  knowledgable  in  the  atomic  field  who
    were  not  already  engaged  in  the  program,  is  that  correct?

    Mr.  Weaver.  That  is  correct.

    Chairman  Cole.  That  made  me  wonder  how  apt  your  Napoleon's
    illustration  was  when  you  said  by  applying  tremendous  numbers  of
    men  the  j.roblem  disappeared.  If  you  do  not  have  very  many  men
    to  Avork  on  the  problem,  you  are  not  going  to  be  able  to  vaporize  the
    problem.

    Mr.  Weaver.  I  believe  the  statement  indicates  that  the  men  who
    number  in  three  figures  are  the  ones  who  are  working  on  atomic-
    power  problems  outside  of  the  Government-supported  programs.  In
    other  words,  that  there  is  a  considerable  resource  of  men  available.

    Chairman  Cole.  By  that,  then,  you  feel  that  1,000  scientists,  not
    presently  engaged  in  the  Government  phase  of  the  work,  is  a  large
    number  to  apply  to  this  new  program  ?

    Mr.  Weaver.  No  ;  I  believe  that  the  statement  was  that  those  now
    engaged  in  atomic-energy  work  outside  of  the  Government  program
    were  numbered  in  three  figures.  In  other  words,  implying  that  there
    are  not  enough  people  at  work.

    Chairman  Cole.  That  is  what  I  thought  j^ou  meant.

    Mr.  Weaver.  Yes.

    Chairman  Cole.  Even  those  approximately  1,000  might  be  made
    available  rogress,  we  think  there  is  a  possibility  that  we  can  move  into  the
    area.

    ATOMIC    POWER    DEVELOPMENT  339

    Senator  Hickexlooper.  I  tliink  that  is  what  troubles  a  great  many
    people  now  about  this  matter.  To  merely  open  up  this  law — and  of
    course  it  will  have  to  be  opened  up ;  there  is  no  private  capital  group,
    no  private  company,  that  is  warranted  in  spending  anything  except
    just  a  little  venture  money  to  open  the  gate  a  little  bit  to  be  in  shape
    ito  go  ahead  if  things  do  permit  them  to.  But  there  is  no  particular
    object  in  making  a  major  change  in  the  structure  of  this  basic  law
    unless  some  very  substantial  results  by  way  of  improvements  and  new
    developments  can  be  expected.

    The  security  features  of  the  law  alone  are  enough  to  make  us  go
    cautiously,  I  think.  We  still  have  the,  at  least  to  me,  paramount  duty
    of  protecting  the  security  of  this  country,  until  the  atmosphere  in
    the  world  is  just  a  little  bit  more  cordial  than  it  is  now,  and  until  we
    can  probably,  I  hope,  take  some  steps  that  will  give  us  more  assur-
    ance against  the  use  of  atomic  weapons  for  destruction.  Whether
    that  time  will  ever  come  or  not,  I  don't  know,  but  I  think  it  is  a  worthy
    objective.

    But  meanwhile  it  is  entirely  possible  we  could  take  the  genie  out  of
    the  bottle,  and  then  could  not  put  it  back  in  again.  It  would  be
    gone,  and  we  would  lose  it.  There  are  calculated  risks  that  would  have
    to  be  taken.  I  think  if  we  could  be  sure,  of  course,  that  great  results
    would  come  from  this,  that  would  be  one  thing.  If  we  could  reason-
    ably be  sure,  that  might  be  an  inducement  to  change  this  law.  But
    as  I  say,  if  it  is  only  going  to  be  a  license  for  somebody  to  go  out  and
    tinker  with  it  and  see  what  they  might  be  able  to  do  with  it  in  the
    future,  that  is  a  different  thing.  I  think  that  is  what  the  committee
    is  searching  for,  and  we  are  trying  to  see  what  the  balance  of  his
    situation  is.  It  is  a  great  field.  Its  possibilities  are  unlimited.  But
    whether  we  are  now  at  the  point  where  we  ought  to  be  unshackling
    this  thing  to  the  extent  wliich  private  enterprise  has  got  to  have,
    if  it  is  to  have  any  chance  for  success  with  its  own  venture,  I  think
    is  a  big  question  in  the  minds  of  most  of  us.  Because  we  will  agree
    that  you  cannot  expect  private  individuals  to  carry  on  a  more  or  less
    aimless  experiment,  or  experiments  that  have  a  highly  speculative  or
    questionable  success  even  at  the  very  end  of  the  road.

    Mr.  Ste^tjnson.  You  can't  even  expect  anybody  to  do  that,  can
    you  ?

    Senator  Hickenlooper.  Well,  then,  that  gets  down  to  this  point:
    as  to  whether  or  not  the  responsibility  of  the  Government  at  the
    moment,  in  the  public  interest,  in  the  overall  public  interest,  might
    not  be  to  continue  a  little  longer  with  certain  basic  experiments  in
    connection  with  or  in  cooperation  with  its  contractors  as  a  Govern-
    ment operation  until  we  can  see  a  bit  further  into  the  future  in  this
    thing,  and  then  say,  "We  will  turn  it  loose  now  for  people  to  go  as  far
    as  they  can  with  it."

    Mr.  Stevenson.  I  agree  that  that  is  the  problem.

    Senator  Hickenlooper.  We  have  a  very  nice  statement  on  the  prob-
    lems here.  I  guess  no  one  can  give  the  minute  answers  to  it  at  this
    moment.

    That  is  all,  Mr.  Chairman.

    Representative  Price.  Mr.  Stevenson,  your  company  has  done  con-
    siderable work  in  this  program  ever  since  the  Manhattan  District
    days ;  is  that  right  ?

    Mr.  STE^^ENS0N.  Yes,  sir.

    340  ATOMIC    POWER    DEVELOPMENT

    Representative  Price.  Has  most  of  your  work  been  done  witli  the
    prime  contractor,  rather  than  directly  with  the  Commission?

    Mr.  Stevenson.  Yes,  Mr.  Price,  it  was.  Being  machinery  manu-
    facturers, our  work  was  the  development  and  refinement  and  adjust-
    ment of  machines  to  do  the  production  job.

    Representative  Price.  You  found  it  necessary  to  come  up  with  a
    lot  of  new  machines  and  new  equipment  meeting  the  demands  of  the
    contractors  that  were  building  the  different  installations  ?

    Mr.  Stevenson.  Yes.  They  in  most  cases  came  through  refining
    a  piece  of  apparatus  that  we  were  already  working  on.  And  we
    finally  ended  up  with  a  new  one ;  there  is  no  doubt  about  that.

    Representative  Price.  Your  interest  in  the  prior  development  pro-
    gram has  been  more  or  less  as  equipment  manufacturers?

    Mr.  Stevenson.  That  is  our  business ;  yes,  sir.

    Representative  Price.  Are  there  many  of  the  other  large  equipment
    manufacturers  that  are  connected  in  any  way  with  these  other  study
    groups  that  you  know  of  ?

    Mr.  Stevenson.  I  don't  know  the  content,  Mr.  Price,  of  the  other
    groups.    I  don't  know  whether  there  are  or  not.

    Chairman  Cole.  I  was  very  much  interested  in  your  opening  refer-
    ence, Mr.  Stevenson,  to  the  fact  that  your  company  was  organized
    originally,  a  hundred  years  ago,  for  the  purpose  of  going  into  the
    business  of  making  millstones  to  grind  wheat,  and  that  within  10  years
    after  that  you  had  found  other  methods  of  milling  wheat  that  made
    your  grindstones  obsolescent — which  I  think  is  a  very  apt  illustration
    for  us  to  bear  in  mind  as  we  try  to  look  into  the  future,  which  is
    behind  a  very  dark  curtain.  The  only  thing  we  have  to  tell  us  what  is
    behind  that  curtain  is  what  we  can  see  back  over  our  shoulder  of  what
    has  occurred  in  the  past.

    And  I  judge  that  it  is  your  feeling  that  we  should  try  to  pierce  that
    curtain  of  the  future  as  soon  as  possible  in  order  to  learn  what  might
    be  behind  it.

    Mr.  Stevenson.  Yes,  sir.

    Chairman  Cole.  And  as  you  have  emphasized  a  number  of  times,
    always  holding  primarily  to  the  basic  requirement  of  our  national
    security.

    Mr.  Stevenson.  Right,  sir.

    Chairman  Cole.  As  well  as  the  safety  of  the  people  who  might  be
    engaged  in  the  program.

    Mr.  Stevenson.  That  is  right.

    Chairman  Cole.  I  am  curious  to  know  what  your  experience  was  in
    the  work  that  you  did  with  the  Manhattan  District  and  later  with  the
    Commission  on  the  point  of  the  extent  that  you  were  held  back  or
    circumscribed  by  Government  requirements,  by  directives  of  the  Com-
    mission.

    Did  the  Commission  give  you  a  job  to  do  and  let  you  be  free  to  do  it
    in  your  own  way,  as  you  thought  best,  or  was  the  Commission  con-
    stantly, in  an  effort  to  help,  of  course,  trying  to  tell  you  how  to  do  it,
    circumscribing  your  latitude  of  operation  ?

    Mr.  Si'E\'ENSoN.  I  could  say  that  we  had  quite  wide  latitude  in  the
    matter.  Of  course,  our  particular  portion  had  to  fit  into  the  entire
    project.  But  I  feel  that  we  had  no  more  complaints  than  the  situation
    at  the  time  would  have  brought  up.

    ATOMIC    POWER    DEVELOPMENT  341

    Chairman  Cole.  Your  company  lias  no  interest  in  building  reactors,
    as  such,  I  judge,  but  primarily  has  an  interest  in  making  the  various
    types  of  gadgets  that  go  to  make  up  the  reactor  ?

    Mr.  Stevenson.  Yes.  I  wouldn't  know,  as  of  right  now,  that  we
    would  be  interested  in  building  a  complete  reactor.  Naturally,  think-
    ing ahead  in  the  future,  we  hope  to  participate  in  these  progi'ams  by
    providing  the  type  of  equipment  that  we  have  this  so-called  skill  to
    provide,  and  that  could  later,  Mr.  Cole,  go  into  building  a  complete
    reactor.    But  we  are  not  proposing  that  at  the  moment.

    Chairman  Cole.  Since  your  company  is  generally  known,  as  one
    primarily  engaged  in  the  manufacture  of  farm  equipment,  including
    tractors,  I  will  ask  you  a  question  on  behalf  of  the  farming  element  in
    the  country.  Does  your  present  interest  in  power  from  fissionable
    materials  lead  you  to  believe  that  you  might  harness  that  power  to  the
    point  that  it  could  be  used  to  run  a  tractor  ?  I  am  not  talking  about
    electrical  energy.    I  am  talking  about  direct  application  of  the  power.

    Mr.  Stevenson.  There  are  so  many  limitations  on  the  weight  of  a
    farm  machine,  which  must  go  over  the  ground,  of  course,  that  as  of  this
    moment  anything  we  know  about  shielding  and  the  actual  building  of
    an  atomic  machine  would  be  probably  above  the  weight  factor  that
    could  be  efficient  in  farming  as  we  know  it  now.  Weight  is,  of  course,
    only  one  factor  in  a  tractor.

    Chairman  Cole.  It  would  rule  out  the  consideration  of  an  atomic
    reactor,  as  it  is  now  known,  to  be  applied  to  a  tractor  ?

    Mr.  Stevenson.  As  it  is  now  known ;  yes,  sir.

    Chairman  Cole.  And  the  important  factor  in  that  is  the  degree
    of  shielding  that  is  necessary  ?

    Mr.  Stevenson.  Yes,  sir ;  that  would  be  one  of  the  factors.

    Chairman  Cole.  Now,  if  the  time  comes  when  they  can  find  some
    type  of  shielding  which  is  less  bulky  and  weighty  and  less  difficult  to
    handle,  then  you  think  that  it  might  be  applied  to  motive  power  com-
    parable to  the  gasoline  engine?

    Mr.  Stevenson.  I  have  seen  dreams.  I  would  say,  almost,  that  this
    type  of  power  could  be  packaged  in  that  kind  of  a  quantity.

    Chairman  Cole.  Of  course,  you  were  not  present  at  the  time,  but
    would  you  be  willing  to  agree  that  the  portable  milling  machines  that
    your  company  made  10  years  after  it  went  into  existence  were  dreams
    at  the  time  your  company  started  ?

    Mr.  Stevenson.  ^Ir.  Cole,  there  are  a  lot  of  dreams  in  the  history
    of  a  company  like  this  and  a  Nation  like  this.     That  is  right.

    Chairman  Cole.  Do  you  have  any  more  questions,  Mr.  Price?

    Representative  Price.  Yes.

    Mr.  Stevenson,  your  company  has  been  in  the  business  of  supplying
    equipment  and  diiferent  materials  to  the  atomic-energy  program  al-
    most since  its  inception.  I  know,  I  have  seen  a  lot  of  your  handiwork
    in  the  installations  of  the  facility.  Do  you  have  a  separate  division
    handling  your  atomic-energy  business?

    Mr.  Stevenson.  We  have  what  we  call  a  section.  We  have  an
    atomic-power  section,  of  which  Mr.  Braun  is  manager,  and  it,  Mr.
    Price,  is  a  part  of  what  we  call  our  power  department,  which  is  a  very
    much  larger  department,  but  which  allows  the  atomic-energy  group
    to  draw  various  skills  and  abilities  which  can  be  available  to  it  on
    call.  So  we  feel  that  it  magnifies  the  possibilities  of  the  group  that
    are  working  in  the  atomic-energy  projects.

    342  ATOMIC    POWER    DEVELOPMENT

    Representative  Price.  What  percentage  would  you  say  of  the  work
    of  Allis-Chalmers  at  this  time  is  devoted  to  atomic-energy  activities?

    Mr.  Stevenson.  I  am  sorry.     I  can't  answer  that,  Mr.  Price.

    Representative  Price.  Is  it  large  now,  or  small  ?

    Mr.  Stevenson.  No ;  it  is  not  a  great  amount  in  dollar  volume.  We
    are  working  on  a  contract,  the  one  I  mentioned  in  my  prepared  state-
    ment, which  runs  up  to  1956,  which  is  a  fairly  large  total,  but  it  strings
    out  over  about  a  3-year  period.

    Chairman  Cole.  Mr.  Braun,  do  you  have  anything  you  care  to  add
    to  what  Mr.  Stevenson  has  said?

    Mr.  Braun.  I  might  mention  this,  Mr.  Cole,  in  elaborating  just  a
    little  bit  on  the  organization,  that  I  believe  Mr.  Price  raised  a  ques-
    tion on.  In  this  power  development,  we  have  a  number  of  groups,
    each  of  which  have  specialized  personnel,  engineers,  with  research
    and  engineering  development  facilities,  for  the  particular  product
    or  the  particular  part  of  the  power  equipment,  such  as  the  steam  tur-
    bine. And  in  the  activities  of  the  atomic  section,  if  a  problem  comes
    up  on  the  steam  turbine,  for  example,  or  a  pump,  a  special  pump,  or  a
    special  heat  exchanger,  or  any  special  equipment  that  we  feel  we  need
    assistance  on,  we  call  in  these  people  and  get  their  advice.  And  that
    can  be  carried  on  to  any  extent  that  is  necessary  on  the  particular
    project  that  we  are  involved  in.

    Chairman  Cole.  Hqw  many  people  do  you  have  engaged  in  nuclear
    work  ?

    Mr.  Bratjn.  We  have  approximately  40  directly  engaged,  and  in
    tlie  power  department  I  think  there  are  probably  some  1,500  engineers
    and  technicians  and  a  corresponding  number  of  draftsmen,  and  so
    forth,  that  we  cooperate  with.

    Chairman  Cole.  Can  you  tell  me  what  your  arrangements  are  with
    the  Commission  concerning  patents  that  may  result  from  your  con-
    tract with  the  Commission?

    Mr.  Braun.  They  belong  to  the  Government.

    Chairman  Cole.  Irrespective  of  the  nature  of  the  gadget?

    Mr.  Braun.  Yes.  On  any  work  that  we  do  under  contract  with
    the  Commission,  under  a  development  contract  with  the  Commission,
    the  patents  belong  to  the  Government.

    Chairman  Cole.  If  in  that  developmental  work  you  should  learn
    that  a  5-pronged  handle  of  a  valve  was  preferable  to  a  4-pronged  han-
    dle, that  idea  would  belong  to  the  Commission?

    Mr.  Braun.  That  is  my  understanding;  yes,  sir.

    Chairman  Cole.  Have  there  been  actual  applications  of  that  pro-
    vision of  your  contract?

    Mr.  Braun.  I  can't  answer  that,  sir.  I  can  probably  clarify  your
    question  by  saying  one  patent  was  issued  to  us  in  connection  with
    atomic-energy  work,  and  it  is  assigned  to  the  Government  in  accord-
    ance with  our  contract.  Further,  we  are  now  processing  some  ideas
    into  a  position  where  patents  will  probably  be  applied  for,  with  the
    full  understanding  that  those  patents,  if  obtained,  will  be  assigned
    to  the  Government,  iniless  the  Government  chooses  to  waive  its  rights.

    Cliairman  Cole.  Well,  that  does  not  mean  that  you  have  not  learned
    anything  in  the  course  of  your  experiments  about  it,  that  you  have
    not  developed  any  new  ideas,  does  it?

    Mr.  Braun.  Oh,  we  have  a  number  of  things  that  have  come  up
    that  will  eventually,  we  feel,  if  they  are  pursued,  involve  other  parts

    ATOMIC    POWER    DEVELOPMENT  343

    of  a  power  plant.  I  can  cite  special  pumps  to  handle  fluid  metals
    as  one  example  of  the  experience  that  we  have  gained  in  our  work
    in  atomic  energy.

    We  are  pursuing  at  our  own  expense  other  developments  which  we
    feel  have  application  in  industry  and  in  the  utility  field.

    Mr.  Stevenson.  Mr.  Cole,  I  think  that  that  gets  back  to  what  I
    mentioned  here  a  little  while  ago :  that  a  lot  of  these  things  that  you
    do  are  refinements  of  what  you  were  doing  already.  You  need  a
    pump.  You  knew  how  to  build  a  pump.  But  suddenly  you  had  to
    build  a  pump  that  would  be  so  completely  leakproof  under  certain
    conditions  that  no  radioactive  material  could  get  out.  So  then  you
    designed  that  pump  with  that  sort  of  a  seal  in  it,  which  wouldn't  allow
    this  radioactive  fluid  to  get  out.  And  that  is  a  variation  of  a  type
    of  pump  you  always  have  been  building.  A  great  amount  of  our
    work,  Mr.  Cole,  is  that  sort  of  thing.  It  is  like  your  allusion  to
    millstones.

    Representative  Price.  Would  the  ideas,  though,  involve  new  pat-
    ents, separate  patents  ?

    Mr.  Stevenson.  In  this  case  that  idea  wasn't  patented,  was  it?

    Mr.  Braun.  I  don't  believe  it  was.    We  are  still  investigating  it.

    Chairman  Cole.  Thank  you  very  much,  gentlemen,  for  taking  the
    time  to  come  down.

    That  completes  the  schedule  of  the  rather  light  program  for  today.

    The  next  meeting  will  be  on  Wednesday  at  the  same  hour,  when
    we  will  hear  witnesses  from  the  Kaiser  Engineering  Co.,  the  National
    Rural  Electric  Cooperative  Association,  and  Dr.  George  Weil,  who
    was  formerly  Deputy  Director  of  the  Reactor  Division  of  the  AEC
    and  is  now  a  consultant  nuclear  physicist.

    The  meeting  will  adjourn.

    (Whereupon,  at  3 :  30  p.  m.,  Monday,  July  13, 1953,  the  hearing  was
    adjourned  until  2  p.  m.,  Wednesday,  July  15, 1953.)

    ATOMIC  POWER  DEVELOPMENT  AND  PEIYATE
    ENTERPRISE

    WEDNESDAY,   JULY    15,    1953

    Congress  of  the  United  States,
    Joint  Commiitee  on  Atomic  Enekgt,

    Washington^  D.  C.

    The  joint  committee  met  at  2  p.  m.,  pursuant  to  recess,  in  room  318
    of  the  Senate  Office  Building,  Representative  W.  Sterling  Cole  (chair-
    man), presiding.

    Present :  Representative  Cole,  Senators  Hickenlooper  and  Pastore,
    Representatives  Van  Zandt  and  Holifield.

    Professional  staff  members  present :  Corbin  C.  Allardice,  executive
    director;  and  Walter  A.  Hamilton,  Francis  P.  Cotter,  and  George
    Norris,  Jr.,  of  the  professional  staff  of  the  joint  committee.

    Chairman  Cole.  The  meeting  will  come  to  order.

    It  had  been  scheduled  today  that  we  would  hear  from  the  represent-
    ative of  the  Kaiser  Engineers.  Today  we  have  received  a  letter  from
    that  organization,  indicating  their  reasons  for  not  being  able  to  appear.
    1  will  not  include  the  letter  in  the  body  of  the  record  but  will  include
    it  in  the  appendix.

    I  also  have  a  letter  from  E.  I.  du  Pont  de  Nemours  &  Co.,  of  the
    same  nature,  explaining  the  reasons  for  their  nonappearance.

    (The  letter  referred  to  will  be  found  in  the  appendix,  p.  599.)

    And  I  have  a  letter  from  David  E.  Lilienthal,  former  Chairman  of
    the  Commission,  who  had  been  invited  to  give  the  committee  the  bene-
    fit of  his  views.  His  letter  indicates  that  at  the  time  when  the  com-
    mittee will  be  having  these  sessions,  Mr.  Lilienthal  will  not  be  available.

    (The  letter  referred  to  will  be  found  in  the  appendix,  p.  G03).

    I  also  have  a  letter  from  Carbide  &  Carbon  Chemicals  Co.,  explain-
    ing their  nonappearance  at  the  hearings.

    (The  letter  referred  to  will  be  found  in  the  ai)pendix,  p.  590).

    The  first  witness  this  afternoon  is  Dr.  George  Weil,  former  Deputy
    Director  of  the  Reactor  Division  of  the  xVtomic  Energy  Commission.

    Dr.  Weil.  Well,  there  was  one  that  I  recall  and  that  is  pertinent
    ent  atomic  power  experts  in  the  country.  He  began  his  work  at
    Columbia  University  in  1939  with  Dr.  Enrico  Fermi  and  the  team
    which  conducted  the  first  experiments  on  sustained  nuclear  fission.
    Dr.  Weil  worked  at  Argonne  and  Oak  Ridge  during  most  of  the
    Manhattan  Engineer  District  days.  He  became  the  Acting  Director
    of  the  Reactor  Development  Division  of  the  AEC  when  it  was  set  up
    in  1948  and  was  its  Assistant  Director  under  Dr.  Hafstad  from  1949
    until  early  1952.

    He  is  now  an  atomic  power  consultant  without  special  attachment
    to  either  the  AEC  or  any  single  industry  group.     His  proposal  for  a

    345

    346  ATOMIC    POWER    DEVELOPMENT

    single  purpose  experimental  reactor  of  pilot  plant  size  was  published
    in  the  Joint  Committee  Power  Print  Report  last  December.

    Dr.  Weil,  I  asume  you  have  a  statement.  If  so,  you  may  proceed.
    We  are  happy  to  have  you  here  this  afternoon.

    STATEMENT  OF  DR.  GEOEGE  L.  WEIL,  FORMEE  ASSISTANT  DIEEC-
    TOE,  EEACTOE  DEVELOPMENT  DIVISION,  ATOMIC  ENEEGY
    COMMISSION

    Dr.  Weil.  Thank  you.

    Mr.  Chairman  and  members  of  the  Joint  Committee  on  Atomic
    Energy,  I  appreciate  this  opportunity  to  present  to  you  my  views
    with  regard  to  the  important  questions  of  public  policy  with  which
    the  committee  is  now  concerned.

    I  have  had  the  privilege  of  appearing  before  this  committee  on  a
    number  of  occasions  in  the  past  while  I  was  associated  with  the  Atomic
    Energy  Commission  as  Assistant  Director  of  the  Division  of  Reactor
    Development.  Since  my  resignation  about  a  year  ago,  I  have  been
    engaged  in  practice  as  a  consultant  to  the  Commission  and  other  organ-
    izations in  the  field  of  reactor  development  and  nuclear  power,  and
    have  been  actively  interested  in  furthering  the  development  of  eco-
    nomic nuclear  power.  My  interest  and  activities  in  the  field  of  atomic
    energy  have  been  continuous  since  1940.

    The  basic  question  confronting  this  committee  is.  Should  the  Atomic
    Energy  Act  be  revised  at  this  time,  specifically  with  regard  to  certain
    provisions  affecting  ownership  of  fissionable  materials,  ownership  of
    plants  that  produce  them,  and  the  right  to  establish  patents  in  the
    field  of  atomic  energy?  It  is  generally  understood  that  the  purpose
    of  such  changes  would  be  to  establish  legislative  conditions  in  the  field
    of  nuclear  power  development  which  are  normal  practice  in  other
    fields  of  technological  development.  It  is  clear  that  legislative  action
    to  achieve  this  specific  purpose  would  involve  numerous  major  policy
    decisions  affecting  the  national  interest,  and  the  formulation  of  spe-
    cific legislative  provisions  would  not  be  an  easy  or  a  short-term  task.
    My  view  is  that  the  act  should  be  amended  only  if  specific  develop-
    ments are  in  mind  and  only  in  relation  to  those  anticipated  develop-
    ments.

    It  appears  to  me  that  the  answer  to  the  question  whether  legislative
    action  should  now  be  taken  must  depend  upon :

    First,  a  clear  definition  of  our  immediate  national  interests  in  the
    development  of  nuclear  power ;

    Second,  the  formulation  of  a  specific  technical  program  consistent
    with  those  interests,  and

    Third,  the  selection  of  those  arrangements  for  financing  and  execut-
    ing the  program  which  will  provide  the  greatest  assurance  that  the
    goals  will  be  achieved  at  the  earliest  possible  time.

    Before  discussing  these  questions  I  should  like  to  state  my  position
    on  certain  matters  which  will  provide  background.

    First,  there  is  no  question  concerning  the  technical  feasibility  of
    producing  useful  power  from  nuclear-fueled  plants.

    Second,  the  unsubsidized  cost  of  power  produced  by  nuclear  plants
    designed  to  operate  on  the  basis  of  the  most  advanced  demonstrated
    technology  available  today  would  be  considerably  higher,  perhaps  by
    a  factor  of  2  or  3,  than  the  current  average  cost  of  power  from

    ATOMIC    POWER    DEVELOPMENT  347

    conventional  plants  in  this  country.  However,  the  relative  competi-
    tive position  would  be  much  more  favorable  in  many  foreign  areas.

    Third,  there  is  every  reason  to  believe  that  further  engineering  and
    technological  development  of  nuclear  powerplants  can  at  some  time
    in  the  future  make  the  cost  of  nuclear  power  competitive  with  that  of
    conventional  power  in  this  country.

    Fourth,  there  is  today  a  significant  lack  of  realistic  information  on
    the  economics  of  nuclear  power — the  type  of  information  that  is  most
    needed  to  allow  wise  national  planning  and  sound  decisions  affecting
    public  policy.  This  information  can  be  obtained  only  by  designing,
    constructing,  and  operating  power-onlv  nuclear  plants.

    With  this  as  a  starting  point  then,  What  are  the  national  interests
    in  the  development  of  economc  nuclear  power  that  would  justify  the
    effort  required  to  carry  out  even  a  minimum  program  of  designing
    and  constructing  a  single  power-only  nuclear  plant?  If  an  adequate
    program  to  meet  short-term  national  goals  is  to  be  established  and
    maintained,  then  financial  support  must  come  from  those  groups  that
    have  the  greatest  interests  and  strongest  incentives  in  achieving  the
    short-term  goals.

    I  believe  that  the  urgency  to  develop  nuclear  power  at  this  time
    derives  from  such  considerations  as  national  prestige;  establishing
    leadership  in  the  field  of  atomic-energy  development;  availing  our-
    selves of  the  opportunity  of  counteracting  adverse  propaganda  by
    positive  means,  advancing  our  abilities  to  promote  the  strength  of
    the  free  world  by  offering  technological  aid  to  our  allies  who  may  have
    more  immediate  economic  interest  in  nuclear  power  and  assisting  in
    raising  the  standards  of  living  in  underdeveloped  areas;  and  finally
    by  improving  our  ability  to  develop  new  sources  of  vital  raw  materials
    and  making  it  possible  to  use  more  effectively  the  natural  resources
    available  to  us  and  the  free  world.  These,  I  believe,  are  the  immediate
    goals  that  would  justify  this  country's  engaging  in  a  substantial  and
    expensive  nuclear-power-development  program  at  this  time.

    It  is  hardly  necessary  to  point  out  that  the  short-term  goals  I  have
    just  listed  do  not  include  the  development  of  nuclear  power  for  in-
    dustrial use  in  this  country.  In  view  of  the  present  estimated  differ-
    ential in  cost  of  nuclear  power  and  conventional  power  and  our  very
    fortunate  position  with  regard  to  availability  of  resources  of  fossil
    fuels,  it  is  difficult  to  see  the  requirement  for  a  substantial  program  at
    this  time  or  the  incentives  to  expend  large  sums  of  money,  either  public
    or  private,  for  this  purpose  alone.

    If  these  are  our  national  goals,  then  what  should  be  the  technical
    program?  In  my  opinion,  a  determined  effort  to  develop  central-
    station  nuclear  power  should  involve  as  the  next  phase  the  design  and
    construction  of  one  or  more  proto-type  nuclear  poAverplants.  The
    selection  of  the  power-generating  capacities  of  these  plants  would
    depend  upon  a  number  of  considerations  which  I  will  not  discuss  here.
    However,  I  would  like  to  point  out,  parenthetically,  that  a  10,000  or
    50,000  kilowatt  plant  is  as  full  scale  for  certain  installations  as  a
    150,000  kilowatt  i^lant  is  for  others.  Once  the  production  capacities
    have  been  selected  every  effort  should  be  made  in  designing  the  plants
    to  make  the  power  costs  as  low  as  possible.  This  can  be  achieved  only
    if  the  effort  is  undiverted  by  dual  purposes  or  dual  objectives.  The
    value  of  the  information,  in  evaluating  and  planning  a  future  pro-
    gram and  upon  which  major  policy  decisions  will  be  made,  that  can

    36740r— 53 23

    348  ATOMIC    POWER    DEVELOPMENT

    be  derived  by  building  and  operating  plants,  will  be  almost  com-
    pletely vitiated  if  there  is  any  suggestion  that  design  compromises  to
    satisfy  secondary  objectives  have  been  made.  My  views  on  this  sub-
    ject are  expanded  in  a  prospectus  which  is  appended  to  the  print
    Atomic  Power  and  Private  Enterprise  prepared  by  this  committee's
    staff  last  December.

    I  turn  now  to  the  question  of  how  a  nuclear-power-development
    program  can  be  established  which  will  achieve  our  immediate  national
    goals.  Such  a  program,  if  it  is  to  be  effective,  must  be  supported  by  a
    group  or  groups  that  have  strong  interests  in  the  achievement  of
    these  goals  and  correspondingly  strong  incentives  to  provide  the  funds
    during  the  period  necessary  to  complete  the  program.  Essentially
    three  approaches  have  been  suggested  at  these  hearings.  A  program
    supported  entirely  by  private  industry,  entirely  by  public  funds,  and
    cooperative  support  by  Government  and  private  industry  whereby
    public  funds,  by  one  mechanism  or  another,  would  assume  all  financial
    risks.

    Assuming,  and  I  believe  this  is  true,  that  the  nuclear-power  industry
    in  this  country  should  in  the  long  run  be  developed  by  private  enter-
    prise, can  we  expect  that  by  turning  the  responsibility  over  to  this
    group  now,  private-risk  capital  will  support  the  aggressive  construc-
    tion program  that  should  be  undertaken  ?  In  my  opinion  the  answer
    is  "No."  Even  if  the  most  favorable  legislative  provisions  were  to  be
    enacted,  the  economic  incentives  to  private  risk  capital  to  invest  in
    a  nuclear  powerplant  development  program  are  not  compatible  with
    either  the  magnitude  of  the  financial  risks  or  the  extent  of  the  effort
    required  to  meet  the  schedule  of  our  short-term  national  goals.

    Is  the  solution,  then,  for  the  Government  to  undertake  the  imme-
    diate program  with  public  funds?  I  believe  that,  in  principle,  this
    would  be  the  most  desirable  way  to  proceed  at  this  time.  However,  I
    can  foresee  difficulties  in  this  approach,  also.  To  attract  financial  sup-
    port from  private  industrial  sources  a  project  must  have  sound  eco-
    nomic goals.  To  obtain  and  retain  financial  support  from  public
    sources  now  and  in  the  foreseeable  future  a  project  must  have  either
    a  high  military  priority  or  at  least  uncontroversial  goals  in  the  na-
    tional interest.  A  project  to  construct  a  single-purpose  nuclear  power-
    plant  has  neither  of  these  advantages.  It  has  certainly  a  low  military
    priority  and,  I  believe,  many  people  question  its  importance  to  our
    national  interests  at  this  time.  This  committee,  I  know,  is  aware
    of  reactor-development  projects  that  have  been  eliminated  for  lack
    of  sufficiently  widespread  support  in  the  executive  or  legislative
    branches,  or  have  had  their  objectives  shifted  in  order  to  improve
    their  position  in  competition  for  funds.  It  is  not  difficult  for  me  to
    imagine  that  a  Government  project  initiated  today  with  the  single
    objective  of  producing  power  for  civilian  or  industrial  use  would
    have  its  objective  changed  to  provide  power  for  an  aircraft  carrier  at
    some  later  stage  in  its  development.  We  have  already  witnessed  a
    shift  in  one  direction — the  process  is  far  from  being  irreversible,  It
    is  my  conviction  that  such  a  project  would  have  small  chance  of  sur-
    vival during  the  next  4  or  5  years  required  for  its  completion,  if  the
    major  fraction  or  all  of  its  financial  support  derived  from  public
    funds.

    What  about  cooperative  efforts  between  Government  and  private
    industry?     In  my  opinion  these  approaches  would  suffer  from  one

    ATOMIC   POWER    DEVELOPMENT  349

    or  more  of  the  difficulties  associated  with  either  all  f)ublic  or  all  pri-
    vate financing  and,  in  addition,  raise  new  problems  of  public  policy
    and  of  an  administrative  nature.  I  believe  sucli  a  partnership  ap-
    proach offers  one  advantage  over  going  it  alone  by  Government  and
    that  is  that  a  program  would  have  somewhat  more  stability  with  re-
    gard to  both  its  objectives  and  continuity  of  financial  support.  How-
    ever, if  a  major  portion  of  the  financing  were  to  be  provided  by  pub-
    lic funds,  then  the  improvement  in  stability  would  be  of  relatively
    minor  significance.

    Believing  as  I  do  that  the  early  demonstration  of  at  least  one  proto-
    type single-purpose  nuclear  powerplant  is  an  important  national
    goal,  and  the  formulation  and  financing  of  a  sound  development  pro-
    gram our  most  j^ressing  problem  at  this  time,  I  have  searched  for  a
    possible  solution  to  the  problem.  I  believe  that  there  may  be  a  solu-
    tion, namely,  enlisting  the  interest  and  financial  support  of  private
    nonprofit  organizations.  The  active  participation  at  this  time  of
    nonprofit  organizations  would  remove  difficulties  that  are  associated
    with  other  approaches.

    First,  if  a  major  fraction  of  the  required  funds  were  derived  from
    nonprofit  organizations,  the  continuity  of  financial  support  and  pro-
    gram objectives  would  be  far  better  assured  than  if  derived  from
    public  funds.

    Second,  since  the  motivations  of  nonprofit  organizations  correspond
    closely  with  those  of  public  agencies,  the  legislative  conditions  re-
    quired for  enlisting  their  financial  support  would  in  all  probability
    not  involve  major  decisions  affecting  public  policy.

    Although  nuclear-power  development  is  an  area  quite  foreign  to
    the  usual  activities  of  nonprofit  organizations,  there  are  two  major
    reasons  why  it  is  not  unreasonable  to  be  hopeful  that  their  interest
    might  be  aroused.  First,  operating  principles  of  foundations  have
    considered  it  appropriate  to  make  expenditures  in  areas  where  other
    private  or  public  funds  do  not  appear  to  be  available.  Second,  the
    short-term  goals  including  aid  to  underdeveloped  areas  and  conser-
    vation and  effective  utilization  of  natural  resources  are  in  the  general
    areas  of  activity  now  supported  by  a  number  of  large  foundations.

    The  private  nonprofit  approach  would  provide  a  means  of  accom-
    plishing the  next  important  stage  in  the  development  of  nuclear
    power  while  preserving  the  public's  interests  in  the  field.  It  would
    provide  a  means  of  achieving  the  Nation's  goals  in  strengtliening  the
    free  world.  It  would  at  the  same  time  provide  the  factual  informa-
    tion on  the  economics  of  nuclear  power  which  is  of  major  interest
    to  industry  and  is  a  prerequisite  to  the  intelligent  planning  and  tlie
    making  of  decisions  affecting  public  policy  in  this  field.

    I  have  been  actively  engaged  in  soliciting  the  interest  of  non-
    profit organizations  in  a  program  of  nuclear-power  development.
    Unfortunately  it  has  as  yet  not  been  possible  to  develop  a  specific
    proposal.  However,  I  respectfully  wish  to  call  to  the  attention  of
    the  committee  the  potentialities  along  these  lines  in  the  event  that
    other  approaches  prove  abortive  for  one  reason  or  another.

    In  concluding  I  should  like  to  summarize  briefly  my  views:

    1.  An  immediate  pro^jram  to  design  and  build  one  or  more  single-
    purpose  nuclear  powerplants  has  a  high  degree  of  national  importance.

    2.  The  problem  today  should  be  phrased  how  we  can  get  such  a

    350  ATOMIC    POWER    DEVELOPMENT

    program  underway  as  soon  as  possible  and  what  revisions  of  the
    Atomic  Energy  Act  are  required  to  accomplish  this  purpose.

    3.  I  believe  that  it  is  extremely  unlikely  that  private  industry  will
    finance  such  a  program.  Therefore,  the  question  whether  to  revise
    the  act  to  encourage  participation  of  private  enterprise  is  unrelated
    to  the  immediate  problem  and  can  be  considered  separately  and  at
    leisure.

    4.  I  believe  that  a  program  supported  entirely  or  largely  by  public
    funds  would  be  subject  to  many  pressures  to  change  its  objectives
    and/or  reduce  or  eliminate  its  appropriations.  To  that  extent  its
    initiation  on  a  vigorous  basis  would  be  uncertain  and  its  future
    doubtful.

    5.  I  believe  that  if  substantial  financial  support  can  be  obtained
    from  private  nonprofit  sources,  a  new  element  of  flexibility  will  have
    been  introduced  and  the  chances  improved  for  arriving  at  an  adequate
    nuclear-power  development  program.  Although  a  private  nonprofit
    approach  may  require  some  legislative  changes,  it  oft'ers  the  possi-
    bility of  avoiding  the  major  issues  of  revising  patent  policies.

    Changes  in  the  act  designed  to  encourage  participation  of  private
    enterprise  and  without  subsequent  substantial  and  adequate  activity
    on  the  part  of  private  enterprise,  might  have  the  effect  only  of  mak-
    ing the  availability  of  funds  from  other  sources  more  difficult.  This
    might  well  result  in  a  period  of  relatively  little  activity  on  the  part
    of  all  groups  at  the  expense  of  the  national  interest.  I  have  only
    one  general  recommendation  which  I  respectfully  submit,  namely,
    that  the  Atomic  Energy  Act  be  revised  only  after  conviction  that
    changes  are  necessary  to  proceed  with  a  program  and  that  an  ade-
    quate program  in  the  national  interest  would  proceed  if  and  when
    the  revisions  are  made.

    Chairman  Cole.  Dr.  'Weil,  that  is  a  very  fine  statement.

    Dr.  Weil.  Thank  you.

    Chairman  Cole.  Containing  a  great  deal  of  good  advice,  and  a
    realistic  conception  of  the  problem,  in  my  opinion.

    Are  there  questions  which  the  members  desire  to  ask  of  Dr.  Weil  ?

    Representative  Holifield.  Dr.  Weil,  I  wish  to  commend  you  for
    this  very  fine  statement,  sir.  It  is  so  plain  and  answers  so  many  of
    the  questions  which  I  usually  ask  that  I  do  not  believe  at  this  time  I
    will  have  any  questions  to  ask  you.

    Chairman  Cole.  Mr,  Van  Zandt  ?

    Representative  Van  Zandt.  Doctor,  you  have  mentioned  the  part
    which  nonprofit  organizations  can  play  in  this  effort.

    Dr.  Weil.  Yes,  sir.

    Representative  Van  Zandt.  In  your  of)inion,  do  these  nonprofit
    organizations  have  the  necessary  capital  to  tackle  such  a  problem  ?

    Dr.  Weil.  Well,  Mr.  Van  Zandt,  I  believe  that  all  of  the  founda-
    tions or  nonprofit  organizations  in  this  country  have  capital  assets
    well  over  a  billion  dollars,  with  annual  grants  well  over  $50  million.
    What  I  have  in  mind  would  be  a  joint  enterprise  involving  a  large
    fraction  of  supj^ort  from  the  nonprofit  organizations  and  at  the  same
    time  su])port  from  private  and  public  agencies  to  the  extent  that  they
    are  willing  to  participate.  1  think  a  cooperative  effort  has  many
    advantages,  and  from  my  conversations  with  nonprofit  agencies  I
    believe  this  is  how  they  would  like  to  have  it  also.

    ATOMIC    POWER    DEVELOPMENT  351

    Representative  Van  Zandt.  Then  what  you  actually  are  advocat-
    inf^  is  a  3-way  effort  ?

    Dr.  Weil.  Exactly.

    Representative  Van  Zandt.  Thank  you.

    Chairman  Cole.  Dr.  Weil,  I  wish  you  would  amplify  your  thought
    that  by  using  the  nonprofit  sponsorsliip  approach  you  would  thereby
    avoid  the  major  issue  of  revising  the  patent  policies.  Does  that  mean
    that  nonprofit  organizations  would  not  make  claims  for  patents  that
    might  ensue  from  the  project?

    Dr.  Weil.  Let  me  say  this,  Mr.  Cole.  If  they  don't,  then  I  don't
    think  there  is  much  difference  between  this  approach  and  a  purely
    private-enterprise  approach.

    Chairman  Cole.  If  they  don't  what?

    Dr.  Weil.  If  they  do  request  revisions  in  the  patent  policies,  then
    I  think  the  approach  is  comparable  to  the  private-enterprise  ap-
    proach. My  only  reason  for  believing  that  this  might  not  be  true  is
    that  their  position  does  not  depend  or  their  incentives  do  not  depend,
    on  the  monetary  value  of  patent  rights.  Now,  it  is  true  that  certain
    nonprofit  organizations  do  obtain  some  of  their  operating  funds
    from  patents  which  they  own,  and  in  those  cases  possibly  patent  rights
    might  be  a  requirement.  However,  many  of  the  foundations  do  not
    have  such  an  interest,  and  their  incentives  are  purely  the  incentives  of
    being  active  in  fields  related  to  the  general  welfare  of  the  country.

    Chairman  Cole.  Except  is  it  not  true  that  these  nonprofit  organiza-
    tions do  have  the  incentive  of  maintaining  intact  if  not  adding  to  the
    corpus  of  their  trust  fund,  rather  than  to  dissipate  it?  And  to  that
    extent  they  would  have  an  interest  in  capitalizing  on  any  lesson  that
    may  flow  from  the  venture.

    Would  you  concur  in  that,  or  not?

    Dr.  Weil.  I  believe  there  have  been  some  instances  where  a  non-
    profit organization  has  expended  its  capital.  An  example  is  the  Mel-
    lon trust,  which  provided  the  funds  for  the  National  Gallery  here  in
    Washington.

    I  might  add,  as  a  general  statement,  that  I  realize  that  there  are
    many  problems  in  working  out  such  an  arrangement,  and  I  certainly
    can't  speak  for  any  foundation.  However,  I  have  suggested  this  as  a
    possible  way.  If  it  does  not  provide  a  program  in  the  most  rapid  pos-
    sible way,  then  it  has  no  value.

    Chairman  Cole.  But  the  Mellon  fund  could  hardly  be  used  as  an
    apt  illustration,  because  there  was  no  risk  in  that  involved  whatever.
    The  sponsors  knew  it  was  going  to  be  a  success  once  they  decided  to
    undertake  it.

    Dj-.  Weil.  I  merely  use  that  as  an  illustration  of  a  nonprofit  organi-
    zation dispensing  some  of  its  capital  funds.  Now,  I  would  not  expect
    that  a  nonprofit  organization  would  go  into  such  a  venture  with  the
    expectation  that  it  would  make  money.  I  believe  it  would  be  done
    solely  with  the  high  purpose  of  doing  something  in  the  national
    interest.

    Cluiirman  Cole.  Yes,  but  on  the  other  hand,  would  you  not  expect
    that  a  determining  factor  in  the  decision  on  the  part  of  the  nonprofit
    organization  would  be  not  to  lose  money,  thereby  not  dissipating  and
    exhausting  its  funds?

    Dr.  Weil.  I  think  it  may  be.

    352  ATOMIC    POWER    DEVELOPMENT

    Chairman  Cole.  ^'V^iat  lias  been  tlie  result  of  your  discussions  with
    nonprofit  organizations  in  this  connection  ?

    Dr.  Weil.  They  have  expressed  an  interest  at  this  time.  The  prin-
    cipal obstacle  is  the  uncertainty  as  to  what  the  Government's  program,
    or  a  program  by  private  enterprise,  will  be.  At  the  moment,  I  have
    not  felt  that  it  is  an  appropriate  time  to  press  the  issue  with  nonprofit
    organizations.  I  think  their  interest  can  only  be  obtained  if  it  be-
    comes obvious  that  other  ways  of  raising  the  funds  are  not  successful.

    Chairman  Cole.  When  you  speak  of  prototype  and  pilot  plants,
    what  do  you  have  in  mind  ?

    In  order  that  when  we  use  certain  terminology  we  may  have  an
    understanding  of  what  we  are  talking  about,  can  you  draw  a  distinc-
    tion? Is  there  any  acceptable  distinction  in  tlie  scientific  world
    between  a  pilot  plant  and  a  prototype  plant  ?

    If  there  is  a  distinction,  what  is  the  distinction  ?

    Dr.  Weil.  I  can  only  give  you  my  own  distinction;  whether  it  is
    acceptable  to  others  I  can't  say.  To  my  mind,  a  pilot  plant  is  one  that
    tests  many  of  the  features,  the  engineering  features  and  overall  opera-
    tion, of  a  full-scale  plant  or  a  prototype  plant;  whereas  a  prototype
    plant  to  me  means  one  that  copies  exactly  the  type  of  plant  which
    one  would  build  at  a  particular  location.  The  pilot  plant  is  more  of  a
    test  plant.  The  prototype  plant  is  one  which  you  actually  copy,  if
    you  want  to  build  one  and  use  it  for  industry.

    Chairman  Cole.  Then  the  pilot  plant  would  be  one  that  might
    probably  be  built  in  connection  with  some  laboratory,  and  the  proto-
    type is  the  full,  land-based,  real,  completed,  functioning  thing?

    Dr.  Weil.  Yes,  sir,  except  that  it  might  not  have  a  particular  eco-
    nomic application  at  the  moment.  I  believe  that  the  only  way  we
    are  going  to  get  economical  nuclear  power  is  by  hitting  hard  the
    problems  of  cheap  construction  and  cheap  fuel,  and  I  believe  that  you
    have  to  prove  that  you  can  do  these  things,  and  I  don't  think  that
    a  pilot  plant  would  prove  that.  You  can  only  prove  it  when  you  show
    somebody  that  you  have  a  plant  that  costs  so  much  money  and  is  pro-
    ducing power  at  so  much  per  kilowatt-hour.

    Chairman  Cole.  Are  you  at  liberty  to  tell  us  the  considerations
    involved  in  your  leaving  the  Commission  ?

    Dr.  Weil.  Well,  they  are  rather  varied,  Mr.  Cole.

    Chairman  Cole.   First,  you  severed  your  connections  voluntarily?

    Dr.  Weil.  That  is  right.

    Chairman  Cole.  Now  can  you  tell  us  the  considerations  which
    prompted  you  to  leave  the  Commission  ?

    Dr.  Weil.  One  of  them  has  been,  or  was,  my  interest  in  the  nuclear
    power  development  program.  And  some  thought  along  the  lines  I
    have  proposed  had  occurred  to  me  while  I  was  with  the  Commission.
    I  had  been  conscious  of  the  difficulties  involved  in  a  Government-sup-
    ported project.  I  discussed  my  thoughts  with  Mr.  Dean  and  others
    on  the  Commission  at  the  time.  For  a  number  of  reasons  it  seemed
    advisable  to  pursue  my  interests  as  an  individual.  I  had  been  with
    the  Commission  for  5  years,  and  this  seemed  like  a  very  interesting
    field  to  engage  in.

    Chairman  Cole.  Your  decision  to  leave  the  Commission  because  of
    your  interest  and  desire  in  contributing  to  the  progress  of  the  develop-
    ment of  power  reactors  could  stem  from  either  of  two  factors,  or  per-
    haps both :  One,  that  you  felt  a  bit  impatient  with  the  degree  of  prog-
    ress made  under  the  Commission's  auspices  and  that  you  felt  you

    ATOMIC    POWER    DEVELOPMENT  353

    might  hasten  the  progress  by  being  out  on  your  own,  and  the  other
    one,  that  you  felt  it  might  be  to  your  financial  advantage  to  work
    independently.  Now,  either  of  those  objectives  is  entirely  laudable.
    I  am  not  for  the  moment  criticizing  either  approach.  But  I  am
    curious  to  know  if  either  or  both  of  those  considerations  were  in-
    volved ;  and  if  one  of  the  two  outweighs  the  other.

    Dr.  Weil.  I  would  say  the  first  one  is  the  real  reason,  sir.

    Chairman  Cole.  Your  impatience  with  the  pace  that  had  been  set
    up  until  the  time  you  left,  and  the  apparent  unlikely  prospects  of  an
    acceleration  of  the  pace ;  and  your  feeling  that  it  was  important  that
    greater  progress  be  made,  and  through  a  degree  of  self-confidence  that
    you  might  contribute  to  that  accelerated  pace.     Is  that  correct  ?

    Dr.  Weil.  That  is  correct.  I  felt  that  there  was  a  job  that  could
    be  done  outside  of  the  Commission  in  promoting  this  type  of  a  devel-
    opment program.  I  felt  that  there  was  a  good  deal  of  misinformation
    among  people  who  were  not  connected  with  Government  programs  in
    one  way  or  another.  I  felt  that  this  was  an  area  of  activity  that
    would  interest  me,  and  in  which  I  had  some  confidence,  that  I  might  be
    effective.

    Chairman  Cole.  Then  apparently  it  is  your  feeling  that  the  time
    has  arrived  when  we,  as  a  country,  should  take  positive  steps  toward
    using  nuclear  energj^  for  industrial  purposes?

    Dr.  Weil.  No,  sir ;  I  wouldn't  say  that  the  time  has  come  to  use  it
    for  industrial  purposes.

    Chairman  Cole.  I  said  that  the  time  has  come  when  we  should  take
    positive  steps  toward  using  nuclear  power  for  industrial  purposes.

    Dr.  Weil.  Well,  if  I  may  rephrase  my  answer

    Chairman  Cole.  Of  course,  you  may.

    Dr.  Weil.  I  believe  the  time  has  come  for  this  country  to  find  out
    what  nuclear  power  is  and  how  much  it  costs.  I  think  that  when  we
    have  determined  this  then  we  may  then  decide  that  we  should  let  this
    thing  sit  for  10  or  15  years.  Or  we  may  determine  that  there  is  a  local
    national  goal  that  should  be  served  and  nuclear  power  should  be  de-
    veloped for  that  purpose,  or  that  there  are  goals  or  applications  out-
    side of  this  country  for  which  it  is  to  this  country's  interest  to  provide
    help.  But  I  don't  believe  that  we  can  make  any  decisions  until  we  have
    what  I  call  good  engineering  economic  information  on  the  subject.

    Chairman  Cole.  The  phases  of  the  problem  which  you  have  in-
    dicated were  the  steps,  the  progressive  steps,  which  I  had  in  mind;
    not  that  the  time  has  arrived  when  we  are  justified  in  opening  the
    doors  wide  to  the  use  of  nuclear  energy  for  industrial  purposes,  be-
    cause, in  the  first  place,  we  just  do  not  know  whether  it  can  be  used,
    and  to  what  extent.

    Now,  5'ou  are  familiar  with  the  original  program  of  the  Commission
    identified  as  the  CVR?

    Dr.  Weil.  Yes,  sir.

    Chairman  Cole.  Are  you  familiar  with  its  present  status?

    Dr.  Weil.  Only  through  the  press,  Mr.  Cole,  and  through  copies
    of  Commission  statements  and  appropriation  bills.

    Chairman  Cole.  What  is  your  feeling  about  the  CVR  program  as
    it  is  curently  scheduled,  with  respect  to  the  value  of  any  contributions
    that  program  may  make  toward  learning  these  factors  about  the
    economic  as  well  as  the  technological  aspects  of  industrial  j)ower?
    Will  it  be  a  really  worthwhile  program,  or  do  you  fear  that  it  may
    be  so  diluted  with  military  considerations,  principally  in  connection

    354  ATOMIC    POWER    DEVELOPMENT

    with  ship  propulsion,  that  the  primary  objective  of  obtaining  lessons
    related  to  industrial  power  will  be  lost  ?

    Dr.  Weil.  As  I  understand  the  program,  it  has  the  dual  objective
    of  being  a  land-based  nuclear  powerplant  which  could  be  adapted  for
    propulsion  of  an  aircraft  carrier.  I  think  that  such  a  program  suf-
    fers from  two  disadvantages.

    First,  it  will  not  give  the  information  which  is  most  needed  at  this
    time  with  regard  to  the  economics  of  nuclear  power;  and,  second,  it
    starts  out  with  two  strikes  against  it,  namely,  that  the  interest  of  the
    military  in  such  a  program  might  be  changed  next  year  or  the  year
    after  for  one  reason  or  another,  in  which  case  its  objectives  could
    easily  be  transferred  back  purely  to  an  aircraft  carrier.

    I  would  have  no  hope  that  such  a  program  would  either  provide
    the  unequivocal  economic  information  that  we  need,  or  that  if  it  were
    initiated  according  to  the  present  objectives  it  would  not  be  changed
    to  a  strictly  military  objective  at  a  later  date.

    Chairman  Cole.  What  is  your  feeling  as  to  the  result  of  a  decision
    to  proceed  with  the  CVR  project  for  the  primary  and  sole  purpose  of
    determining  its  potential  in  the  industrial  power  field?  If  that  is
    done,  would  it  not  be  still  possible  for  such  a  project  to  provide  les-
    sons of  great  value  on  the  military  applications  of  that  reactor  in  ship
    propulsion  ?  Or  is  it  necessary,  in  order  to  learn  anything  of  reason-
    able value  regarding  ship  propulsion,  that  that  consideration  be  in
    mind  as  the  project  is  established  and  carried  out?

    Dr.  Weil.  I  believe  if  such  a  project  were  established  with  the
    sort  of  provision  that  its  use  as  an  aircraft  carrier  propulsive  unit
    should  be  kept  in  mind,  there  would  be  serious  question  when  the
    project  were  finished  whether  its  design  had  not  been  compromised  in
    one  way  or  another.

    I  think  it  is  fortunate  that  for  economic  nuclear  power  there  are  a
    number  of  different  basic  designs  that  are  potentially  adaptable,  so
    that  even  if  one  selected  for  the  project  one  particular  type,  it
    wouldn't  necessarily  compromise  the  development  of  economic  nuclear
    power.

    But  depending  upon  who  executed  the  project,  and  what  their  in-
    terests were,  and  so  on,  I  think  it  is  questionable  that  it  would  serve
    a  useful  purpose  in  the  area  of  developing  economic  nuclear  power,
    or  at  least  as  useful  a  purpose  as  if  it  did  not  have  the  tinge  of  mili-
    tary interest  attached  to  it.

    Chairman  Cole.  Now  respond  to  the  converse  of  that:  a  decision
    to  concentrate  solely  and  exclusively  on  the  objective  of  industrial
    poM^er.  Would  such  a  project,  upon  completion,  provide  valuable
    lessons  in  connection  with  the  problem  of  ship  propulsion?

    Dr.  Weil.  I  believe  it  would.

    Chairman  Cole.  Of  course,  whatever  you  learn  has  some  value,
    even  the  negative  information.

    Can  you  indicate  the  degree  of  benefit  that  might  come  from  such
    a  decision,  the  degree  of  benefit  and  learning  in  the  field  of  ship  pro-
    pulsion ?

    Would  you  say  it  would  be  minor,  moderate,  substantial,  great,  or
    can't  it  be  characterized  in  that  general  fashion?

    Dr.  Weil.  I  don't  believe  I  can  give  a  specific  answer.

    I  can  say  that  there  would  naturally  be  a  possibility  that  whoever
    selected  the  design  of  this  plant  for  central-station  power  might  pick

    ATOMIC    POWER    DEVELOPMENT  355

    one  that  is  completely  inapplicable  to  putting  in  a  ship.     I  don't
    know.

    On  the  other  hand,  I  think  yon  might  have  a  design  in  which  pumps
    and  fuel  elements  and  other  components  would  have  very  direct
    bearing  on  an  aircraft-carrier  propulsion  plant.

    But  I  would  doubt  that  any  organization  that  might  later  be  re-
    quired to  build  an  aircraft-carrier  plant  would  be  able  to  do  so  by
    adopting  directly  a  central-station  plant  to  a  floating  vessel.

    Chairman  Cole.  Then  it  is  conceivable  that  having  completed  the
    single  purpose,  the  single  objective,  of  industrial  power,  in  order  to
    prove  out  nuclear  power  for  ship  propulsion,  they  would  have  to
    start  all  over  again  ?

    Dr.  Weil,  That  is  what  I  have  said,  and  I  would  like  to  qualify
    it  by  saying  I  think  you  can  only  answer  the  question  concretely  once
    you  have  seen  a  project.

    Chairman  Cole.  Would  you  mind  indicating  why  you  feel  that
    it  is  better  to  concentrate  on  a  single-purpose  rather  than  a  dual-pur-
    pose reactor  ?  And  I  am  not  speaking  of  ship  versus  industrial  when
    I  refer  to  dual  purpose.  I  am  referring  to  power  and  fissionable
    material.

    Dr.  Weil.  Well,  I  believe  that  ultimately,  if  we  are  going  to  have
    a  nuclear-power  industry  in  this  countiy,  it  will  be  based  on  single-
    purpose  plants.  And  when  I  say  "single  purpose,"  I  include  breeders.
    Whether  a  plant  is  single  or  dual  purpose  is  defined  by  the  value  that
    is  attached  to  the  plutonium  or  any  other  fissionable  material  that
    may  be  produced.  If  its  value  is  taken  as  a  fuel,  then  it  is  single
    purpose.  If  its  value  is  taken  as  a  military  material,  then  it  is  a  dual
    purpose.

    Keeping  this  in  mind,  then,  that  ultimately  the  single-purpose  re-
    actor is  the  one  we  are  shooting  for,  I  think  that  the  next  step  is  one
    that  should  tell  us  how  much  that  single-purpose  reactor  will  cost
    for  how  much  it  will  produce  power.  I  believe  that  a  dual-purpose
    reactor  project  would  have  the  same  objection  that  an  aircraft  car-
    rier dual  objective  reactor  project  has,  namely,  that  it  would  take  the
    engineers'  and  designers'  minds  off  the  principal  product.  And  cer-
    tainly asking  it  to  do  2  things  will  make  the  machine  more  com-
    plicated than  if  it  has  only  1  thing  to  do,  particularly  when  that
    so-called  byproduct — plutonium — is  worth  several  times  the  power —
    the  primary  product  of  interest — that  could  be  obtained  for  the  same
    amount  of  fuel  burned.

    So  the  dual-purpose  approach,  I  think,  might  be  a  very  good  one
    for  the  Government  to  proceed  with  if  it  wants  to  produce  plutonium
    more  cheaply,  although  I  don't  think  that  it  is  even  proved  that  this
    is  the  case.

    However,  as  a  step  in  the  development  of  economic  power,  I  don't
    think  that  it  would  provide  the  information  that  is  needed.

    Chairman  Cole.  While  you  were  with  the  Commission,  did  you
    have  any  opinions  or  viewpoints  and  recommendations  which  the
    Commission  did  not  accept?    Perhaps  I  had  better  rephrase  it.

    In  what  way  were  you  impatient  with  the  Commission's  attitude
    on  the  power  aspects  of  nuclear  energy?

    Dr.  Weil.  Well,  Mr.  Cole,  I  wouldn't  confine  it  to  the  Commission.
    I  think  the  Commission  was  and  is  faced  with  difficulties  outside  of
    itself  in  going  ahead  with  any  program.

    356  ATOMIC    POWER    DEVELOPMENT

    At  the  time  that  I  was  with  the  Commission,  it  was  principally  a
    matter  of  appropriations,  and  a  single-purpose  or  power-only  plant
    has  a  low  priority,  as  I  mentioned  in  my  statement.  If  there  is  a
    necessity  to  trim  budgets  and  programs,  then  the  lowest  priority
    projects  are  the  ones  that  suffer  first.  I  think  this  is  still  the  case,  and
    that  is  why  I  have  doubts  as  to  whether  such  a  program  can  be  sup-
    ported only  by  Government  funds.

    Chairman  Cole.  But  there  was  no  specific  recommendation  or  posi-
    tion which  you  had  while  in  the  Commission  which  was  not  adopted
    by  the  Commission?

    Dr.  Weil.  Oh,  I  think  the  answer  to  that  is  that  there  were.  In
    5  years  there  were  a  number  of  such  occasions.

    Chairman  Cole.  Were  they  in  your  mind  of  sufficient  importance
    for  you  to  indicate  them  to  us?  Or  were  they  the  normal  disagree-
    ments that  any  two  people  might  have,  no  matter  what  the  subject  is?

    Dr.  Weil.  Well,  there  was  one  that  I  recall  and  that  is  pertinent
    here.  I  did  have  a  proposal  for  the  Commission  to  build  an  experi-
    mental powerplant  only  several  years  ago.  As  I  recall,  this  proposal
    was  not  acted  upon  for  budgetary  reasons.

    Chairman  Cole.  And  that  is  the  only  reason  it  was  not  acted  on,  so
    far  as  you  know?

    Dr.  Weil.  So  far  as  I  know ;  yes.

    Chairman  Cole.  It  was  not  from  the  standpoint  of  lack  of  feas-
    ibility, lack  of  need  to  learn  the  information  that  such  a  program
    would  provide,  but  rather  that  there  was  not  enough  money  to  do
    everything  that  the  Commission  felt  needed  to  be  done  ?

    Dr.  Weil.  Well,  it  is  hard  to  say.  I  think  that  if  there  is  a  strong
    interest  within  an  organization  to  do  something,  a  fight  can  always
    be  put  up  to  see  that  it  gets  done.  Priority  is  set  not  only  by  the
    external  circumstances  but  to  some  extent  by  the  Commission  itself.

    Chairman  Cole.  By  the  pressures  from  within  as  well  as  the  pres-
    sures from  without.  Then  apparently  the  pressures  from  within  were
    not  as  great  as  you  felt  they  should  have  been.

    Dr.  Weil.  Of  course,  I  am  not  so  familiar  with  the  pressures  from
    without,  so  I  wouldn't  judge.

    Chairman  Cole.  When  I  speak  of  the  pressures  from  without,  I
    have  in  mind  the  resistance  of  the  Congress  to  making  available  money
    that  is  not  absolutely  necessary  for  the  proper  functioning  of  Gov-
    ernment.   That  is  the  type  of  pressure  that  I  have  in  mind.

    In  your  present  work  as  consultant,  how  do  you  arrange  for  your
    access  to  restricted  data?

    Dr.  Weil.  I  have  a  consultant  agreement  with  the  Atomic  Energy
    Commission,  which  gives  me  access  to  the  restricted  data.  I  have  an
    Atomic  Energy  Commission  clearance.

    Chairman  Cole.  Is  that  a  contract  making  information  accessible  to
    you  only  when  you  are  acting  as  a  consultant  to  the  Commission,  or
    is  it  a  continuing  general  permission?

    Dr.  Wkil.  It  is  a  continuing  general  permission.  I  have  access  to
    the  restricted  documents  and  others.  I  don't  have  access  to  Commis-
    sion internal  documents.

    Chairman  Cole.  Then  it  would  be  possible,  it  must  be  possible,  for
    you  as  a  consultant  to  a  private  corporation  to  have  access  to  the
    restricted  data  which  you  feel  you  must  have  in  order  to  perform
    your  responsibility  to  your  employer?

    ATOMIC    POWER    DEVELOPMENT  357

    -  Dr.  Weil,  That  is  correct.

    Chairman  Cole.  Are  there  any  other  questions  from  the  members
    of  the  committee  of  Dr.  Weil  ?

    If  not,  Doctor,  thank  you  again  for  having  given  what  I  regard  as
    a  very  helpful  contribution  to  the  committee's  deliberations.

    Dr.  Weil.  Thank  you,  Mr.  Chairman.

    Chairman  Cole.  Mr.  Holifield?

    Representative  Holifield.  Mr.  Chairman,  I  received  through  the
    mafl  today  a  statement  on  our  subject  from  former  Congressman  Jerry
    Voorhis,  who  is  now  executive  director  of  the  Cooperative  League  of
    the  United  States,  and  he  asks  that  that  statement  be  included  in  our
    record  of  presentations.

    I  ask  unanimous  consent  that  it  follow  Mr.  Ellis'  testimony.

    Chairman  Cole.  Without  objection,  it  is  so  ordered.

    But  let  me  inquire :  Does  that  mean  that  Mr.  Voorhis  will  not
    appear  in  person  ?

    Representative  Holifield.  That  is  my  understanding;  because  of
    the  pressure  of  time  in  our  hearings,  he  has  accommodated  himself
    to  the  request  of  the  committee  and  has  presented  it  in  written  form.

    Chairman  Cole.  We  have  had  some  correspondence  with  him,  and
    it  is  my  recollection  that  at  one  time  he  indicated  a  desire  to  appear
    personally.

    But  if  you  have  heard  from  him  since,  and  if  this  statement  will
    suiEce,  we  need  not  be  concerned  about  his  later  personal  appearance.

    If  Mr.  Ellis  is  ready  and  will  come  up  to  the  table —

    Mr.  Clyde  Ellis  is  the  representative  of  the  National  Rural  Electric
    Cooperative  Association.  His  association  has  indicated  to  the  Atomic
    Energy  Commission  that  some  of  its  members  are  concerned  about
    protection  of  the  rights  of  cooperatives  to  develop  or  own  atomic
    powerplants  in  parallel  with  private  companies.  Their  concern  stems
    from  the  possibility  that  large  private  utility  companies  might  in
    some  way  gain  a  competitive  advantage  to  the  detriment  of  the  inter-
    ests of  the  cooperatives.

    Mr.  Ellis  has  been  invited  to  express  the  views  of  the  association
    on  problems  involved  in  formulation  of  policy  towards  atomic  power
    development.

    Mr.  Ellis,  as  a  former  colleague  and  an  associate  of  the  House  mem-
    bers of  this  committee,  we  welcome  you  here  this  afternoon.  We  will
    be  glad  to  have  your  statement.

    STATEMENT  OF  CLYDE  T.  ELLIS,  EXECUTIVE  MANAGER,  NATIONAL
    RUEAL  ELECTRIC  COOPERATIVE  ASSOCIATION

    Mr.  Ellis.  Thank  you,  Mr.  Chairman  and  gentlemen  of  the  com-
    mittee.

    My  name  is  Clyde  T.  Ellis.  I  am  executive  manager  of  the  Na-
    tional Rural  Electric  Cooperative  Association,  the  national  service
    organization  of  over  90  percent  of  the  rural  electric  systems  in  the
    country.  Our  organization  represents  9;)6  rural  electric  systems  serv-
    ing 3,450,744  consumer  families  and  rural  establishments.

    We,  of  course,  are  vitally  interested  in  any  proposed  amendments
    to  the  Atomic  Energy  Act  which  would  affect  the  fuel  or  energy  sup-
    ply of  our  country.  The  REA-financed  systems,  cooperatives  and
    power  districts,  have  borrowed  from  the  Government  and  invested
    over  $21/^  billion  in  46  States  and  Alaska.     For  the  fiscal  year  ending

    358

    ATOMIC    POWER    DEVELOPMENT

    June  30,  1952,  these  systems  purchased  10,764,660,930  kilowatt-hours
    of  electricity.  For  this  power,  wholesale,  the  rural  electrics  paid  a
    total  of  $85,569,592.  We  paid  more  than  half  of  that,  or  $49,311,076,  to
    the  commercial  power  companies.

    Every  year  our  sj^stems'  demands  for  electric  energy  are  growing
    rapidly  and  there  are  no  signs  of  them  leveling  off.  I  have  two  charts
    which  show  this  better  than  I  can  state  it.

    Chairman  Cole.  Mr.  Ellis,  may  we  have  reprints  of  those  charts
    for  reproduction  in  the  record  ?

    Mr.  Ellis.  Yes,  sir;  we  will  be  happy  to  supply  them.  May  we
    have  a  day  or  two  to  supply  them  ?

    Chairman  Cole.  Oh,  surely.

    Mr.  Ellis.  Thank  you.

    (The  charts  referred  to  follow:)

    BILLIONS
    OFKWH

    000

    1          1          1          1          1

    TOTAL  U.  S.

    900

    «

    ELECTRICAL

    %1

    800

    PRODUCTION
    1923  —  1963

    4

    700

    —     (ESTIMATED  1952-1963)     — #*

    *

    600

    i

    •
    •
    •

    •

    500

    •

    /

    400

    /

    /

    300
    200

    ^

    A

    /

    100
    0

    ^

    r

    1923   1926  1933    1938    1943    1948  1953  1958   1963

    ATOAHC    POWER    DEVELOPMENT

    359

    BILLIONS
    OFKWH

    40
    36
    32

    ENERGY  REQUIREMENTS
    OF  REA  BORROWERS
    1936  —  1963

    Our  American  levels  of  living,  growing  out  of  the  high  productivity
    of  modern  industrial  society,  are  the  result  of  harnessing  inanimate
    energy  to  machines.  Between  1850  and  1944  energy  generated  from
    the  mineral  fuels,  coal,  oil  and  gas,  increased  500  times.  Today  94
    percent  of  all  work  in  the  United  States  is  done  by  the  mineral  fuels
    plus  hydropower.  Men  and  animals  now  produce  only  (5  percent  of
    the  energy.  This  is  not  true  yet  of  the  farms,  of  course.  It  is  esti-
    mated that  by  19G0  lunnan  beings  will  account  for  less  than  2  percent
    of  the  total  energy  going  into  production  in  this  country.  Farmers
    may  require  much  longer  to  approach  that  figure.

    The  farmer  was  a  latecomer  in  the  use  of  machines  and  inanimate
    energj'  to  run  them.  The  widespread  use  of  the  tractor  and  other  ma-
    chines is  onlj'  a  little  over  a  generation  old.  Electricity,  the  most
    flexible  and  economic  of  all  energy  sources,  came  to  agriculture  when

    360  ATOMIC    POWER    DEVELOPMENT

    the  cooperative  and  rural  power  districts  put  it  there,  or  caused  it  to
    be  put  there.  Farmers  were  waiting  for  it  and  hastened  to  use  it  to
    the  extent  they  could  afford  the  instruments  and  to  the  extent  electrical
    contrivances  had  been  adapted  to  farm  use.  First  they  hastened  to
    install  the  things  that  lightened  the  drudgery  of  the  home  and  made
    for  decent  living:  lights,  refrigeration,  irons,  radios,  and  so  forth.
    Then  they  began  to  utilize  electricity  in  the  well,  the  brooder,  and  the
    barn.  Now  it  is  beginning  to  work  its  way  out  into  the  field.  It  is
    truly  a  rural  power  revolution.

    The  energy  requirements  of  the  private  electric  utility  industry  are
    doubling  every  7  to  10  years  while  those  of  the  rural  electric  systems
    are  increasing  at  an  even  faster  rate.  They  are  doubling  every  4
    years.  This  means  that  new  additional  sources  of  power  supply  must
    be  found  constantly.

    We  are  heartened  by  the  statement  of  the  Atomic  Energy  Commis-
    sion that  "atomic  power  is  technically  feasible  and  (that)  there  is
    widespread  confidence  as  to  its  ultimate  commercial  practicability."
    We  agree  with  the  Commission  that  the  attainment  of  economically
    competitive  nuclear  power  is  a  goal  of  national  importance.  It  is  our
    desire  to  do  as  much  as  possible  to  cooperate  in  the  furthering  of  that
    goal  so  that  our  rural  electric  systems  will  be  assured  of  adequate,
    dependable  sources  of  wholesale  power  at  prices  the  farmers  can  afford
    to  pay.

    Senator  Hickenlooper.  I  think,  Mr.  Ellis,  that  we  could  state  it  a
    little  more  strongly  than  the  term  "feasible,"  because  certainly  we
    know  that  heat  can  be  produced,  and  that  the  power  can  be  produced
    at  a  tremendous  cost  at  this  moment.  So  it  is  not  only  possible,  but  it
    is  being  produced.  It  is  a  question  of  the  economically  competitive
    rate.  In  other  words,  I  take  the  position  that  there  is  no  question  but
    what  we  can  produce  this,  but  it  is  a  question  of  the  competitive  rate
    in  the  economy.

    Mr.  Ellis.  Thank  you.  Senator.   That  is  the  big  problem,  I  am  sure.

    Senator  Hickenlooper.  I  think  that  is  probably  the  main  concern
    at  the  moment,  as  to  whether  or  not  the  costs  can  be  brought  within
    some  kind  of  a  range  for  use  in  the  economy  of  the  country.

    Mr.  Ellis.  Yes,  sir.

    At  the  present  time,  our  systems  are  faced  with  power-supply  prob-
    lems which  cause  them  to  look  with  hope  on  the  development  of  atomic
    power.  Each  year  NRECA  conducts  a  survey  of  the  rural  electric
    systems.  Our  January  1,  1953,  annual  survey  indicates  that  over  28
    percent  of  our  systems  do  not  have  enough  power  in  sight  for  future
    growth,  and  13  percent  are  handicapped  by  a  present  shortage  of
    wholesale  power.  Over  26  percent  of  our  rural  electric  systems  have
    unsatisfactory  voltage  regulation  at  their  substations.  All  of  these
    power-supply  problems  are  serious  matters.  I'm  sure  that  some  of  our
    systems  experiencing  these  wholesale  power  problems  would  welcome
    the  opportunity  to  have  their  areas  selected  as  sites  for  Atomic  Energy
    Commission-sponsored  pilot  nuclear  powerplants.  It  is  our  under-
    standing that  because  of  the  costs  involved  it  may  actually  be  desirable
    to  proceed  at  first  with  the  development  of  such  small  pilot  plants.
    In  that  regard,  we  have  noted  that  George  Weil,  former  Chief  of  the
    Keactor  Branch  of  the  Atomic  Energy  Commission,  recommends,  in
    an  article  in  the  June  1943  issue  of  the  Bulletin  of  the  Atomic  Scien-

    ATOMIC    POWER    DEVELOPMENT

    361

    tists,  that  consideration  be  given  to  the  construction  of  a  nonprofit
    10,000-  to  50,000-kilowatt  nuclear  powerplant.

    Many  of  our  systems  are  also  experiencing  high  wholesale  power
    costs.    Here  is  a  table  which  brings  this  out.

    Average  cost  per  kilowatt-hour  of  energy  purcliased  "by  RE  A  borrowers  from  all
    suppliers,  by  States,  fiscal  year  ended  June  30, 1952

    [In  cents]

    United  States  average 0.  79

    Colorado 0.  86

    Illinois .  85

    Kansas .  85

    Kentucky ,  79

    Wyoming .  79

    North   Carolina .  77

    Virginia .  74

    California .  71

    New  Mexico .  70

    South   Carolina .  GS

    Arizona .  66

    Georgia .  64

    Oklahoma .60

    Arkansas .  58

    Texas .  58

    Louisiana .  57

    Alabama .  56

    Mississippi .  54

    Montana .  50

    Tennessee .  48

    Idaho .  45

    Nevada .  45

    Oregon .  38

    Washington .  32

    Alaska 2.  96

    Maine 1.  51

    Minnesota 1.  39

    New  Jersey 1.  37

    Wisconsin 1.  36

    Utah 1.  32

    North  Dakota 1.  29

    Iowa 1.  28

    South  Dakota 1.  28

    Michigan 1.  27

    Vermont 1.  26

    Delaware 1. 19

    New  Hampshire 1. 14

    New  York 1.12

    Pennsylvania 1. 10

    Maryland 1.  00

    Florida .  97

    Missouri .  96

    Ohio .  91

    West   Virginia .  90

    Nebraska .  89

    Indiana .  87

    You  will  note  on  the  attached  chart  that  for  the  fiscal  year  ending
    June  30,  1952,  our  systems'  paid  an  average  of  0.79  cent  for  wholesale
    power,  but  in  24  States  the  cost  was  higher  than  this.  In  fact,  the
    cost  was  higher  tlian  this.  In  fact,  the  cost  was  2.96  cents  in  Alaska,
    1.51  cents  in  Maine,  1.26  cents  in  Vermont,  1.36  cents  in  Wisconsin,
    1.29  cents  in  North  Dakota,  1.28  cents  in  South  Dakota,  1.27  cents  in
    Michigan,  and  so  forth.  Most  of  these  areas  where  wholesale  power
    costs  are  so  high  are  also  areas  of  high  fuel  costs.

    Therefore,  we  are  most  interested  in  the  possibilities  of  nuclear
    power  for  those  areas.  Lawrence  R.  Hafstad,  director  of  the  Division
    of  Eeactor  Development,  Atomic  Energy  Commission,  states  in  an
    article  in  the  September  15,  1952,  issue  of  Chemical  and  Engineering
    News:

    *  *  *  Since  electricity  is,  or  would  be,  high  in  areas  isolated  from  conven-
    tional fuel,  such  locations  are  attractive  for  electricity  from  nuclear  energy.

    Gordon  Dean,  former  Chairman  of  the  Atomic  Energy  Commission,
    stated  in  a  speech  before  the  Edison  Electric  Institute  on  June  4, 1953 :

    We  need  atomic  power  because  atomic  fuels  are  virtually  weightless  fuels.
    They  can  be  taken  anywhere  in  the  world — to  the  source  of' the  raw  materials
    upon  which  industries  are  based — to   deserts,  to  mountains,   and  to   islands.

    To  us  this  offers  great  hope  that  in  those  rural  areas  with  high-cost
    power,  nuclear  power  may  be  feasibly  developed  to  overcome  the
    problems  of  high  fuel  costs,  high  transportation  costs,  and  so  forth.
    This  may  enable  the  farmer  to  more  fully  utilize  electric  power  to
    increase  his  production  and  make  farm  living  a  little  easier.

    362  ATOMIC    POWER    DEVELOPMENT

    Also,  we  are  interested  in  the  nuclear-power  program  for  still
    another  reason.  Our  cooperatives  for  the  year  ending  June  30,  1952,
    generated  themselves  13.6  percent,  or  1,550,030,708  kilowatt-hours  of
    their  total  energy  requirements.  Thousands  of  farm  consumers  are
    dependent  on  these  generation  and  transmission  cooperatives  for  their
    power  needs.  Many  of  these  generation  and  transmission  coopera-
    tives are  operating  under  unfavorable  conditions  because  of  high  fuel
    costs  and  low  load  factors.  It  has  been  stated  that  energy  from  1
    pound  of  fissionable  material  is  equal  to  2,600,000  pounds  of  coal.
    Such  concentrated  energy  should  aid  in  overcoming  the  high  fuel
    costs  of  some  of  these  generation  and  transmission  cooperatives.  Some
    of  these  generation  and  transmission  co-ops  look  forward  to  the  op-
    portunity of  being  able  to  participate  in  the  Atomic  Energy  Commis-
    sion's nuclear-power  program.  I  have  personally  accompanied  the
    manager  of  our  largest  generating  co-op,  Dairjdand,  to  discuss  the
    possibilities  with  Atomic  Energy  Commission  officials.  Therefore,
    it  is  obvious  why  we  are  so  vitally  interested  in  any  amendments  to
    the  Atomic  Energy  Act.

    We  wish  to  comment  on  proposed  change  to  the  Atomic  Energy
    Act  in  the  following  context.  We  understand  the  Government  has
    already  invested  more  than  $10  billion  in  the  atomic-energy  program.
    This,  of  course,  represents  a  great  investment  by  the  people  and  one
    which  must  be  protected.  Also,  it  is  our  understanding  that  some  12
    teams  composed  of  various  private  utilities  and  industrial  firms  are
    now  participating  in  nuclear-power  research  and  development  with
    the  Atomic  Energy  Commission.  Some  of  these  teams  have  been
    participating  since  1950  and  as  a  result  have  acquired  considerable
    technical  knowledge  and  experience  in  nuclear  power.  It  is  also  our
    understanding  that  most  of  this  research  has  been  carried  on  at  public
    expense.  In  fact,  we  read  that  in  April  1952  the  Commission  ap-
    proved a  Dow  Chemical-Detroit  Edison  project  which  was  to  cost
    $1  million  and  to  be  financed  one-quarter  by  these  companies  and
    three-quarters  by  public  funds.  With  such  a  large  initial  and  con-
    tinuing investment  of  public  funds,  it  seems  of  paramount  importance
    that  the  public  interest  be  fully  protected.

    It  would  seem  to  use  very  harsh,  then,  to  permit,  out  of  that  kind
    of  arrangement,  patents  or  exclusive  rights,  which  would  lead  to
    monopolies,  and  would  tend  to  cut  off  the  smaller  industries  and  utili-
    ties including  the  electric  co-ops.     That  is  what  we  fear,  at  least.

    Chairman  Cole.  But  it  would  provide  you  with  the  electrical  energy
    you  have  indicated  you  sorely  need.

    Mr.  Ellis.  Yes,  sir ;  and  if  that  kind  of  arrangement  would  step  up
    the  production  of  electrical  energy,  there  would  be  that  benefit.  Cer-
    tainly there  would.  We  have  a  verv  strong  feeling  that  the  whole
    economy  of  this  country  is  being  held  back  by  the  lack  of  adequate
    electric  power.

    Now,  here  is  how  we  feel.  Take  last  year  in  the  case  of  the  Bull
    Shoals  Dam,  which  was  being  completed  in  north  Arkansas.

    The  rural  electric  systems  had  contracted  for  all  of  the  firm  power
    in  that  dam,  150,000  kilowatts.  The  defense  officials  came  to  us  and
    said,  "We  have  got  to  build  another  aluminum  plant  somewhere  in
    this  country.  We  have  explored  every  possibility.  In  the  Northwest
    there  is  no  power.  In  the  TVA  area  there  is  no  ]jower.  In  the
    Southeast  there  is  no  power.     In  the  areas  of  the  greatest  Federal

    ATOMIC    POWER    DEVELOPMENT  363

    development  of  hydro-multi])urpose  projects  there  are  no  available
    large  blocs  of  power.  Here  is  tlie  only  chance  we  have,  that  we  can
    find,  of  putting  in  this  new  aluminum  plant,  and  that  would  be  to  take
    your  power.  We  are  asking  you  to  give  up  that  150,000  kilowatts  of
    power."

    The  rural  electric  co-ops  agreed  to  it,  with  the  understanding  on
    the  part  of  the  Corps  of  Engineers,  the  President,  defense  officials,
    and  several  Senate  and  House  Members,  that  they  would  immediately
    start  Table  Rock  Dam  above  Bull  Shoals  Dam  on  the  White  Eiver
    and  accelerate  it  to  completion.  The  Congressmen  and  the  Senators
    and  the  Defense  officials  and  the  President  all  kept  their  word,  and
    it  was  started.

    But  we  saw  there  what  happened  when  defense  needs  power.  It
    is  going  to  take  it.  It  must  take  it.  And  Vv^e  may  suffer.  We  did
    suffer  in  that  case.  There  will  be  a  considerable  lag,  during  which
    time  we  won't  have  enough  i)ower  in  that  area.

    It  is  our  understanding  that  nuclear  power  development  is  still  in
    the  development  stage.  In  fact  Gordon  Dean  told  the  Edison  Electric
    Institute  that —

    the  next  5  years  are  development  years — years  in  which  we  will  be  worlving
    toward  the  realization  of  economiealy  feasible  atomic  power,  not  enjoying  its
    fruits.

    Therefore,  it  appears  tliat  as  yet  we  do  not  know  the  full  economic,
    social,  and  political  implications  of  nuclear  power.  Our  people  as
    yet  have  had  neither  sufficient  facts  nor  sufficient  time  to  develop  a
    policy  with  regard  to  atomic  energy.  In  view  of  this,  it  seems  even
    more  imperative  that  the  public  interest  be  safeguarded  and  that  no
    changes  be  made  in  the  act  at  this  stage.

    It  also  is  our  impression  that  the  present  atomic-energy  law  was
    enacted  to  provide  for  the  full  development  of  nuclear  power  with
    both  private  and  public  participation  and  also  to  provide  for  final
    deteimination  by  the  Congress  of  any  legislative  changes  when  it
    received  a  full  report  of  the  implications  of  the  successful  development
    of  nuclear  power.  In  particular,  I  refer  to  sections  7  (a),  (b),  and
    (c)  of  the  Atomic  Energy  Act  of  1946,  as  amended.

    Section  7  (a)  provides  that :

    It  shall  be  unlawful  *  *  *  for  any  person  to  manufacture,  produce,  or  export
    any  equipment  or  device  utilizing  fissionable  material  or  atomic  energy  or  to
    utilize  fissionable  material  or  atomic  energy  with  or  without  such  equipment  or
    device,  except  under  and  in  accordance  w^ith  a  license  issued  by  the  Commission
    authorizing  such  manufacture,  production,  export,  or  utilization.  No  license
    may  permit  any  such  activity  if  fissional  material  is  pro(hiced  incident  to  such
    activity,  except  as  provided  in  sections  3  and  4  *  *  *

    It  seems  to  us  that  on  this  point  this  safeguards  the  public  interest
    by  permitting  the  Atomic  Energy  Commission  to  license  such  activitj'
    utilizing  fissionable  matei-ial  or  atomic  energy.  It  is  more  in  the  sense
    of  a  regulatory  activity  rather  than  an  actual  hindrance  to  private
    participation  in  nuclear  powei-  development.  The  Atomic  Energy
    Commission  certainly  is  the  only  agency  which  is  competent  to  license
    such  activity  in  the  public  interest.

    Section  7  (b)  significantly  states :

    Whenever  in  its  opinion  any  industrial,  commercial,  or  other  nonmilitary  use  of
    fissionable  material  or  atomic  energy  has  been  suflSciently  developed  to  be  of
    practical  value,  the  Commission  shall  prepare  a  report  to  the  President  stating

    86740—53 24

    364  ATOMIC    POWER    DEVELOPMENT

    all  the  facts  with  respect  to  such  use,  the  Commission's  estimate  of  the  social,
    political,  economic,  and  international  effects  of  such  use  and  the  Commission's
    recommendations  for  necessary  or  desirable  supplemental  legislation.  The  Pres-
    ident shall  then  transmit  this  report  to  the  Congress  together  with  his  recom-
    mendations. No  license  for  any  manufacture,  production,  export,  or  use  shall  be
    issued  by  the  Commission  under  this  section  until  after  (1)  a  report  with  respect
    to  such  manufacture,  production,  export,  or  use  has  been  filed  with  the  Congress ;
    and  (2)  a  period  of  90  days  in  which  the  Congress  was  in  session  has  elapsed
    after  the  report  has  been  so  filed  *  *  *

    We  feel  that  this  matter  is  so  important  and  has  such  wide  ramifica-
    tions that  this  procedure  should  be  followed.  To  do  less  would  seem
    to  bypass  and  short  circuit  not  only  the  people,  but  most  industry,
    except  for  a  few  corporate  giants.  Even  Congress  would  be  bypassed.
    The  Congress  should  not  be  asked  to  take  the  momentous  step  of
    amending  the  act  until  it  has  a  comprehensive  report  of  the  social,
    political,  and  economic  implications  of  the  successful,  practical  devel-
    opment of  nuclear  power.  But  the  Commission  is  unable  to  make
    any  such  report.  At  the  same  time  it  is  proposing  changes  in  the  law.
    It  seems  that  such  proposals  are  premature  and  circumvent  the  intent
    of  Congress  to  fully  examine  the  implications  of  such  atomic  power
    development  once  it  is  out  of  the  development  stage  and  into  a  practical
    operating  stage.

    We  think  it  is  hasty,  it  is  too  soon,  to  be  changing  a  law  as  basic,
    jis  vital,  as  this,  that  perhaps  aifects  the  life  of  every  person  on  this
    earth.

    Our  rural  electric  systems  have  been  interested  in  this  atomic  prob-
    lem for  quite  a  while.  On  our  national  programs  we  have  had  Dr.
    Joe  Szilard,  who,  I  believe,  carried  the  first  message  to  the  President
    at  the  time  he  decided  to  launch  the  atomic-energy  program.  Szilard
    was  then  at  Chicago  University.  We  have  had  Dr.  Pauling  of  Cali-
    fornia Tech.  We  have  had  Dr.  Smedley  of  your  own  Iowa  Tech,  Mr.
    Hickenlooper.  Our  people  are  interested.  But  we  don't  have  policy
    cFtablished.  I  am  here  today  for  the  first  time,  I  think,  appearing
    before  a  congressional  committee  without  the  policy  of  our  organiza-
    tion established  on  the  thing  that  I  am  talking  about.  I  know  how
    our  people  feel  on  power,  and  this  is  power,  but  they  just  haven't
    studied  the  atomic  situation  as  such  yet  and  developed  a  policj^  on  it.

    We  would  like  to  have  time  at  least  for  our  people  to  study  it  before
    we  enter  into  any  agreement  to  change  the  law.

    Section  7  (c)  states:

    After  such  ninety-day  period,  unless  hereafter  prohibited  by  law,  the  Com-
    mission may  license  such  manufacture,  production,  export,  or  use  in  accordance
    with  such  procedures  and  subject  to  such  conditions  as  it  may  by  regulation
    establish  to  effectuate  the  provisions  of  this  Act.  The  Commision  is  authorized
    and  directed  to  isue  licenses  on  a  nonexclusive  basis  and  to  supply  to  the  extent
    available  appropriate  quantities  of  fissionable  material  to  licensees  (1)  whose
    proposed  activities  will  serve  some  useful  purpose  proportionate  to  the  quantities
    of  fissionable  material  to  be  consumed;  (2)  who  are  equipped  to  observe  such
    safety  standards  to  protect  health  and  to  minimize  danger  from  explosion  or
    other  hazard  to  life  or  property  as  the  Commission  may  establish;  and  (3)  who
    agree  to  make  available  to  the  Commission  such  technical  information  and  data
    concerning  their  activities  pursuant  to  such  licenses  as  the  Commission  may
    determine  necessary  to  encourage  similar  activities  by  as  many  licensees  as
    possible.  Each  such  license  shall  be  isued  for  a  specified  period,  shall  be  re-
    vocable at  any  time  by  the  Commission  in  accordance  with  such  procedures  as
    the  Commission  may  establish,  and  may  be  renewed  upon  the  expiration  of  such
    period.  Where  activities  under  any  license  might  serve  to  maintain  or  to  foster
    the  growth  of  monopoly,  restraint  or  trade,  unlawful  competition,  or  other  trade

    ATOMIC    POWER    DEVELOPMENT  365

    position  inimical  to  the  entry  of  new,  freely  competitive  enterprises  in  the  field,
    the  Commission  is  authorized  and  directed  to  refuse  to  issue  such  license  or  to
    establish  such  conditions  to  prevent  these  results  as  the  Commission,  in  consulta-
    tion with  the  Attorney  General,  may  determine.  *  *  •

    It  seems  to  us  that  tlie  intent  of  this  section  in  requiring  licensing
    by  the  Commission  once  the  Congress  has  had  an  opportunity  to  fully
    consider  the  implications  of  practical  atomic  power  development,  is
    in  the  public  interest.  Such  licensing  certainly  should  not  restrict
    private  development  of  this  resource.  To  say  this  would  be  similar
    to  stating  that  licensing  of  hydro  sites  by  the  Federal  Power  Com-
    mission has  prevented  private  development.  In  fact  if  anything,  it
    has  encouraged  extensive  private  development  of  our  hydro  sites.
    Also  further,  it  seems  to  us  that  the  intent  of  this  section  is  to  per-
    mit the  fullest  possible  development  of  atomic  power  and  not  to  permit
    monopolistic  development.  This,  we  believe,  affords  a  degree  of  pro-
    tection to  the  ultimate  consumber  by  ensuring  that  atomic  power
    will  be  fully  and  competitively  developed.  It  will  mean  that  the  rural
    electric  systems  will  be  able  to  avail  themselves  of  this  atomic  power
    technology  and  apply  for  a  license  if  they  desire.  Without  such  op-
    portunities atomic  power  development  would  offer  little  possibility
    of  lower  cost  power  for  them.

    In  this  context  of  the  large  public  investment,  the  progi-ess  already
    made  and  still  to  be  made  under  the  present  law,  I  wish  to  comment
    on  several  of  the  proposed  changes  to  the  Atomic  Energy  Act.

    The  Atomic  Energy  Commission  has  made  two  recommendations
    which,  at  the  present  stage  of  atomic  power  development,  certainly
    have  serious  implications.  They  recommend  (1)  interim  legislation
    to  permit  ownership  and  operation  of  nuclear  power  facilities  by
    groups  other  than  the  Commission;  and  (2)  interim  legislation  to
    permit  lease  or  sale  of  fissionable  material  under  adequate  security
    safeguards.  We  believe  such  legislative  changes  are  undesirable.
    Since  no  one  fully  knowns  the  social,  economic,  and  political  implica-
    tion of  this  energy  source,  how  can  one  advocate  private  ownership
    of  something  that  is  not  understood  ?

    Such  recommendations  must  be  considered  in  light  of  the  tremen-
    dous existing  public  investment — which  is  most  of  the  total  invest-
    ment to  date  and  which  must  be  considered  as  an  extension  of  the
    public  domain.  Also  in  the  future  there  will  probably  have  to  be
    an  annual  large  Government  investment  in  the  development  of  an
    atomic  powerplant.  The  Congress  onh''  recently  passed  an  appro-
    priation of  $7  million  to  begin  construction  of  such  plants.  We  whole-
    heartedly endorse  the  vision  of  the  Congress  in  appropriating  such
    a  sum  and  we  firmly  believe  the  results  of  this  investment  must  be
    fully  protected  in  the  public  interest.

    It  becomes  even  more  important  that  at  this  stage  of  atomic  power
    development,  private  ownership  of  atomic  plants  be  prohibited  be-
    cause by  some  means,  direct  or  indirect,  the  public  will  probably  be
    paying  the  cost  of  such  plants.  The  Wall  Street  Journal  on  June
    8,  1953,  states  that  "Monsanto  and  Union  Electric  Co.,  of  INIissouri,
    recently  proposed  to  the  Atomic  Energy  Commission  construction  of
    a  $6  million  commercial-scale  energy  power  plant."  But  the  article
    continues,  "the  two  firms  would  finance  the  project,  but  most  of  the
    cost  would  be  charged  to  plutonium,  which  would  be  sold  to  the  Gov-
    ernment."    Should  atomic  powerplants  under  such  conditions  be  pri-

    366  ATOMIC    POWER    DEVELOPMENT

    vately  owned  ?  Also  wouldn't  it  be  more  desirable  at  this  early  stage
    of  atomic  power  development  to  make  the  technology  and  experience
    of  constructing  such  plants  available  to  all  ?

    The  Government  would  underwrite  the  risk  in  this  case.  The
    Government  would  not  own  the  plant.

    Senator  Hickenloopkr.  How  do  you  mean  the  Government  would
    underwrite  the  risk  in  that  case  ?

    Mr.  Ellis.  They  say  it  can  be  done,  as  I  understand,  only  by  the
    Government  buying  the  plutonium  and  buying  it  at  a  price  which  will
    pull  down  the  cost  of  power  production  salable  to  what  they  call  a
    feasible  figure.

    Chairman  Cole,  But  that  does  not  necessarily  underwrite  the  cost
    of  the  entire  project.

    Mr.  Ellis.  No,  not  of  the  entire  project,  but  of  course,  if  the  Gov-
    ernment assumes  the  risk  in  that  way,  then  there  is  no  hazard  to  them,
    and  they  will  get  the  power  at,  let  us  say,  the  same  price  they  would
    get  it  at  if  they  produced  it  with  coal,  maybe  more,  maybe  less,  but  in
    any  case  the  Government  assumes  the  risk,  as  we  see  it.

    Senator  Hickenlooper.  I  do  not  quite  follow  you  there.  If  the
    Government  needs  the  plutonium,  and  if  it  can  buy  it  at  a  price  which
    is  competitive  with  what  they  can  make  it  at  themselves,  I  do  not  see
    that  they  are  underwriting  it.  They  are  bujdng  a  product  which  they
    would  need,  if  they  decide  they  need  it,  and  they  are  getting  it  at  a
    fair  price.

    Mr.  Ellis.  I  would  agree  with  you,  Senator  Hickenlooper.  This  is
    a  pretty  fine  point,  but  I  believe  that  the  presumption  is  that  the  price
    of  plut(mium  would  have  to  be  fixed  in  order  to  make  up  this  differ-
    ence. Now,  if  in  so  doing  it  is  found  that  it  is  less  than  or  equal  to,
    not  in  excess  of,  what  the  Government  could  produce  it  for  otherwise,
    that  would  be  right.

    Senator  Hickenlooper.  I  would  doubt  a  contract  of  that  kind
    would  last  very  long  once  it  was  found  that  the  Government  was  pay-
    ing a  subsidized  price  for  plutonium.  It  probably  could  be  justified  if
    they  were  paying  a  competitive  price  for  it.

    Mr.  Ellis.  Of  course,  there  are  many  ways  in  which  it  could  be
    figured,  and  I  don't  know  if  there  is  any  practice  or  experience  or
    yardstick  as  yet  by  which  the  price  of  it  could  be  figured.

    We  strongly  support  ownership  and  construction  of  a  pilot  atomic
    power  plant  by  the  Atomic  Energy  Commission.  We  hope  that  co-
    operatives and  public  power  systems  will  be  invited  to  participate  in
    such  development  and  that  the  results  will  be  made  available  to  them.

    Finally,  tliere  are  the  practical  factors  of  national  security  and
    safety  which  must  be  considered  in  any  proposed  private  ownership  of
    atomic  power  plants.  It  is  our  belief  that  the  national  security  can
    only  be  protected  by  the  strict  supervision  and  licensing  of  atomic
    power  developments  by  the  Atomic  Energy  Commission,  We  believe
    that  this  is  adequately  covered  in  sections  7  (b)  and  (c)  of  the  present
    act.

    In  regard  to  the  safety  requirements  of  ])rivate  oAvnership  of  atomic
    power  plants,  we  agree  Avith  the  Atomic  Energy  Commission  that  con-
    sideration must  lie  given  to  a  "progressively  adjusted  code  for  safety
    and  exclusion  area  requirements."  AVithout  a  fairly  definitive  safety
    code  we  believe  the  private  ownership  of  atomic  power  plants  may  en-
    danger human  life  and  safety.    Such  a  definitive  safety  code  certainly

    ATOMIC    POWER    DEVELOPMENT  367

    is  not  now  available  or  are  there  signs  that  it  will  be  available  in  the
    near  future.  We  are  only  too  well  aware  of  the  years  of  painstaking
    research  and  experience  that  have  gone  into  our  present  National  Elec-
    tric Safety  Code.

    Another  recommendation  of  the  Atomic  Energy  Commission  is  that
    "such  research  and  development  work  (be  carried  out)  in  Commission
    laboratories  on  specific  power  projects  deemed  warranted  in  the  na-
    tional interest.''  We  wholeheartedly  endorse  this  proposal.  We  are
    also  heartened  that  the  Congress  has  evidenced  interest  in  this  by  ap-
    propriating $T  million  for  the  beginning  of  construction  of  pilot
    atomic  power  plants.  In  all  such  activities  we  hope  that  the  Atomic
    Energy  Commission  will  make  everj^  effort  to  invite  and  encourage  the
    participation  of  cooperatives  and  public  electric  systems.  We  believe
    these  systems  feel  tliat  their  contribution  is  being  made  b}'^  the  Federal
    Government  in  its  tremendous  investment  in  atomic  power  research
    and  development.  Further,  we  believe  such  research  carried  out  pri-
    marily with  public  funds  is  a  part  of  the  public  domain  and  should  be
    available  to  all.

    We  are  certain  that  at  the  same  time  private  companies  will  continue
    to  participate  in  atomic  research  as  the  12  teams  now  are  doing.  We
    believe  the  technical  knowledge  and  experience  they  are  acquiring
    is  invaluable ;  that  it  will  pay  them  substantial  dividends.  The  com-
    mercial power  companies,  of  course,  should  benefit  from  atomic  power
    when  it  arrives,  but  they  should  not  be  granted  monopolies.  They
    must  realize  they  should  not  have  sole  right  to  the  results  of  such
    research,  but  it  must  be  made  available  to  all  within  the  limits  of
    security  requirements.

    In  connection  with  research,  we  feel  some  thought  should  be  given
    to  the  Atomic  Energy  Commission's  developing  the  pilot  atomic  power
    plant  in  conjunction  with  one  of  its  present  atomic  weapons  plants.
    If  successful,  the  Atomic  Energy  Commission  could  economically  util-
    ize the  electric  energy  for  its  own  requirements  and  also  the  plutonium
    for  its  weapons  needs.  At  the  same  time  this  would  release  vast  quan-
    tities of  public,  and  in  some  cases  private,  power  for  civilian  needs
    where  it  can  be  readily  utilized.  If  this  were  successful  for  instance  at
    Oak  Ridge,  Tenn.,  the  whole  TV  A  area  would  be  assured  of  needed
    power  not  now  in  sight.  The  situation  there  is  that  by  the  end  of  1955,
    when  the  steam  plants  under  construction  are  completed  and  in  serv-
    ice, TVA  will  be  selling  the  Atomic  Energy  Commission  alone  more
    kilowatt  hours  than  could  be  produced  by  all  the  dams  in  the  TVA
    system,  including  the  output  of  the  dams  owned  by  the  Aluminum
    Company  of  America,  which  are  operated  as  a  part  of  the  TVA  sys-
    tem, and  those  in  the  Cumberland  Valley  built  by  the  Corps  of  Engi-
    neers. Why  not  build  one  of  these  atomic-power  plants  alongside  one
    of  these  atomic-energy  plants,  as  an  expei-imental  job,  and  let  it  help
    relieve  the  situation  generally  in  power  supply  in  the  area?

    Representative  Holifield.  Mr.  Ellis,  I  think  your  suggestion  is
    timely.  It  is  also  in  accord  with  the  written  language  in  the  present
    Atomic  Energy  Act.  I  point  out  that  just  recently  in  the  Portsmouth
    and  Savannali  area  the  Government  negotiated  a  contract  which  will
    involve  an  investment  of  a  billion  dollars  on  the  part  of  private  util-
    ities, and  before  the  private  utilities  would  go  into  that  type  of  a
    contract  they  insisted  on  some  very  high  cancellation  bonuses  in  case
    the  Government  did  cancel  the  contract  before  a  30-year  period.

    368  ATOMIC    POWER    DEVELOPMENT

    Am  I  right  on  that,  Mr.  Hamilton  ?    Thirty  years  ?

    Mr.  Hamilton.  Twenty-five,  sir.

    Representative  Holifleld.  It  is  a  25-year  contract.

    Mr.  Ellis.  Thank  you,  Mr.  Holifield.  We  just  think  it  makes  good
    sense.

    Chairman  Cole.  I  think  in  fairness,  on  the  questions  of  the  can-
    cellation of  those  contracts,  it  should  be  pointed  out  that  the  rates
    which  those  private  companies  are  to  charge  the  Commission  for  the
    energy  they  produce  are  absurdly  low.  So  that  while  the  Govern-
    ment does  run  the  risk  of  having  to  pay  out  in  case  it  cancels  at  some
    time  in  the  future,  until  that  time  arrives  it  has  the  benefit  of  the  use
    of  electrical  energy  at  a  very,  very  low  rate.

    Representative  Holifield.  I  believe  the  figure  involved  is  3.8  mills.
    But  I  do  not  believe  the  contract  specifies  that  that  is  a  firm  and  rigid
    price.  It  provides  for  acceleration  of  the  kilowatt-hour  cost  under
    certain  conditions.  So  that  is  an  additional  protection  to  the  plants.
    And  I  think  they  should  have  it,  because  if  wages  or  fuel  costs  go  up,
    I  think  they  will  have  to  raise  their  price.  I  see  nothing  unjust  about
    it.    I  am  just  calling  attention  to  the  facts  of  that  negotiation.

    Now,  in  my  opinion  that  is  probably  a  lot  cheaper  than  they  would
    get  with  a  prototype  atomic  plant.  The  cost  of  production  would
    undoubtedly  be  higher  than  by  conventional  fuel,  and  part  of  that
    would  undoubtedly  have  to  be  charged  off  to  research  and  development.

    Mr.  Ellis.  Right.

    Representative  Holifield.  But  we  would  be  gaining  valuable  expe-
    rience, which  could  be  in  turn  given  to  the  whole  economic  setup  of
    America,  private  and  public.

    Mr.  Ellis.  And  you  would  be  providing  a  yardstick  there  by  which
    you  could  determine  what  the  real  costs  were.

    Furthermore,  if  you  built  a  plant  any  place  else  than  near  some
    Govei'nment  installation  that  could  use  the  powder,  and  if  the  plant  is
    subsidized,  and  if  somebody  else  purchases  the  power,  the  howl  will
    immediately  go  up  that  somebody  is  buying  subsidized  power.  Here
    you  would  have,  all  within  a  vertical  operation,  the  total  factors  by
    which  you  could  measure  what  the  costs  really  are.

    Representative  Holifield.  If  that  yardstick  plant  was  built,  it
    would  give  us  costs,  which  we  do  not  as  yet  have.  And  I  point  out
    that  if  the  Government  goes  into  private  contracts  for  atomic-energy
    plant  development,  it  must  go  into  it  blindly,  because  it  cannot  go  into
    it  on  the  basis  of  knowledge  of  costs  of  atomic  energy  electrical  power
    production  at  this  time.

    Mr.  Ellis.  Right,  sir.

    Senator  Hickenlooper.  Tliat  is  nothing  unique  about  the  atomic-
    energy  project.  It  has  been  on  the  blind  side  all  the  way  up.  It  has
    been  a  pioneering  operation.  There  have  been  no  cost  yardsticks  on  it,
    generally  speaking,  except  some  routine  construction.

    Representative  Holifield.  That  is  right.  I  agree.  But  my  point
    in  calling  attention  to  the  fact  is  that  the  Government  cannot  at  this
    time  negotiate  with  private  industry  on  the  basis  of  adequate  knowl-
    edge to  protect  the  interests  of  the  Government  or  to  protect  the
    interests  of  private  industry  in  an  equitable  way,  it  seems  to  me.

    In  other  words,  it  is  premature.  We  are  not  to  the  point  yet  where
    we  can  deal  on  the  table  with  known  facts,  as  we  are  in  the  electrical

    ATOMIC    POWER    DEVELOPMENT  369

    industry,  where  today  we  do  have  yardsticks,  do  have  cost  figures,
    and  we  are  able  to  negotiate  equitable  contracts.

    Mr.  Ellis.  And  3^ou  mentioned  the  cancellation  clause  in  the  Ohio
    case.  Evidently  somebody  thought  some  day  the  Government  may
    withdraw  and  not  be  producing  on  as  grand  a  scale  as  it  is  at  the
    moment,  and  even  may  close  that  plant  down.

    Senator  Hickenlooper.  Well,  the  Government  itself  specified  that,
    that  the  Atomic  Energy  Commission  would  not  enter  a  firm  contract
    for  this  power  except  with  the  privilege  of  canceling  at  any  time,  even
    before  they  took  a  kilowatt  of  the  power.

    Mr.  Ellis.  Right.

    Senator  Hickenlooper.  And  the  AEC  would  not  go  into  the  situa-
    tion without  that  cancellation  clause.

    Now,  there  are  3  outfits  in  this,  2  private  utilities  and  TVA.  They
    have  all  gone  together  to  produce  the  necessary  plants,  costing  about
    a  billion  dollars.  There  is  not  the  demand  for  the  electricity  in  that
    area  at  this  time  for  those  plants.  They  are  being  built  especially
    for  the  atomic- energy  plants.  And  in  view  of  the  cancellation  re-
    quirements of  the  Commission,  the  TVA  and  the  other  two  said,  "We
    just  cannot  put  the  money  in  here  and  build  billion-dollar  installa-
    tions, where  the  AEC  may  say  to  us,  and  demand  the  right  to  say  to  us,
    the  day  they  are  finished,  'No,  we  do  not  want  any  more  electricity.
    We  are  going  to  use  something  else'."  Maybe  by  that  time  they  may
    have  their  own  atomic  powerplant  or  something  of  that  sort.  So  the
    cancellation  figures,  on  a  graduated  scale  downward,  were  arrived  at
    by  mutual  agreement  as  to  what  would  be  an  equitable  damage  settle-
    mnet,  in  view  of  the  lack  of  customers  for  that  power  except  the
    atomic  energy  plant.  And  that  is  the  way  it  was  arrived  at — full
    participation  by  the  Federal  Power  Commission,  and  everybody  else
    had  a  finger  in  the  pie  in  examining  these  plants  and  arriving  at  the
    yardstick  for  equitable  damage  under  certain  circumstances  in  the
    ensuing  years  on  a  diminishing  scale,  until  finally  it  carries  no  damage
    if  the  contract  is  canceled.

    Mr.  Ellis.  Suppose  a  Govennnent  nuclear  power])lant  were  estab-
    lished alongside  the  plant  in  Oliio,  likewise  in  any  other  of  the  areas,
    and  the  (lovernment  then  should  cease  producing  at  that  plant,  or
    should  cease  needing,  let  us  say,  the  power  from  that  plant.  The
    Government  might  have  on  its  hands  a  generating  plant  for  which  it
    would  not  have  immediate  sales  of  power  as  the  power  companies
    might  have.

    In  connection  with  such  power  development  at  an  atomic  plant,  we
    believe  consideration  should  be  given  to  a  method  of  distributing  the
    surplus  atomic  power,  if  any.  In  particular  we  would  like  the  Con-
    gress to  consider  the  Federal  preference  laws  as  applying  to  tlic  mar-
    keting of  atomic  power  developed  with  public  fund?.  We  feel  this
    has  worked  equitably  in  the  development  of  Federal  hydro]Dower.
    In  fact,  in  the  fiscal  year  1952  the  cooperatives  purchased  only  5.9
    percent  of  all  Federal  hydropower,  the  municipals  26.8  percent,  while
    the  private  utilities  purchased  20.7  percent  and  private  industry  24.3
    percent.  We  recommend  this  model  for  the  marketing  of  atomic
    power  developed  with  public  funds.  It  will  ensure  the  fact  that  the
    benefits  from  this  power  accrue  to  the  ultimate  consumer.

    Senator  Hickenlooper.  Mr.  Ellis,  let  me  ask  you  this.  It  is  a  little
    collateral  to  what  we  are  talking  about.

    370  ATOMIC    POWER    DEVELOPMENT

    What  percentage  of  the  rural  popuhition  of  this  country  do  you
    estimate  does  not  have  access  to  REA  or  to  power  ?

    Mr.  Ellis.  The  best  figures  we  have  indicate  that  it  is  around
    600,000  farms,  Senator  Hickenlooper.     It  is  very  small  now.

    Senator  Hickenlooper.  By  "access"  I  mean  that  there  is  power
    available  in  the  vicinity.  Sometimes  they  are  not  hooked  up,  or  they
    have  not  run  the  lines  out  to  them  yet.

    Mr.  Ellis.  Our  systems  have  made  various  checks  on  that.  In  your
    State  of  Iowa,  the  number  of  farms  not  served  is  practically  nil  now.

    Senator  HicitENLOOPER.  I  know  it  is  a  hundred  percent,  to  all  in-
    tents and  purposes.

    Mr.  Ellis.  There  are  very  few  farms  now,  even  very  few  shacks
    anymore,  that  are  lived  in  by  people,  that  do  not  want  electricity.
    They  just  do.  They  didn't  when  the  program  started.  There  were
    many  who  didn't  take  it.  But  now  they  do  take  it,  and  they  take  it
    from  the  commercial  companies  as  well  as  the  electric  co-ops.

    Senator  Hickenlooper.  On  your  increased  use  of  electricity,  what
    factors  make  up  that  increase  ?  Is  it  increased  accessibility  ?  I  mean,
    new  farms  being  hooked  up  ?  Or  is  it  the  fact  that  once  a  fellow  gets
    electricity  in  the  farm  he  thinks  he  will  just  use  it  for  1  or  2  things,
    and  then  in  a  couple  of  years  he  is  using  it  for  15  or  20  things?

    Mr.  Ellis.  Yes,  that  is  right.  The  uses  are  now  up  to  400  known
    uses.  I  just  was  reading  last  night  in  my  home  paper  about  some
    of  the  farmers  down  in  my  home  State  of  Arkansas  suing  some  farm-
    ers upstream  for  pumping  all  the  water  out  of  the  stream  for  irriga-
    tion purposes.  Now,  you  never  think  of  irrigation  in  Arkansas.  I
    never  heard  of  a  lawsuit  over  the  water  in  the  streams  before.  But
    you  can  now  look  out  of  the  airplanes  as  you  fly  over  this  country
    and  you  can  see  these  sprinkler  irrigation  systems  all  over  the  East,  all
    over  the  West.  You  can  drive  down  the  roads  and  see  them.  That  is
    one  new  use.  And  those  electric  pumps  pumping  that  water  out  of
    the  wells  and  the  streams  and  the  ponds  run  around  the  clock.  It  is  a
    worthwhile  use  of  electricity.

    Senator  Hickenlooper.  Yes.  The  projected  need  for  kilowatt-
    hours  on  the  farm  that  you  have  shown  in  this  chart  is  very  interest-
    ing, and  I  am  wondering  what  factors  will  contribute  to  that  increase
    now.  Because  in  the  farm  areas  they  are  almost  all  accessible  to  elec-
    tric power  at  the  present  time.  Will  there  be  mutliple  uses  of  elec-
    tricity? Will  they  keep  on  developing  new  means  to  use  it,  or  new
    tools  to  use  electricity  for  ?

    Mr.  Ellis.  Yes,  Senator  Hickenlooper.     We  think  so.

    Right  now,  this  year,  many  air-conditioners  are  being  installed  in
    the  homes,  in  the  rural  homes  throughout  the  country.  There  are
    known  uses  which  will  be  continued.  There  are  many  new  uses,  which
    are  just,  we  feel,  around  the  corner.

    We  have  advocated  for  several  years  the  farm  electrification  re-
    search in  the  Agricultural  Research  Administration  at  Beltsville.
    Their  experiments  now  indicate  that  they  are  practically  to  the  point
    of  being  able  to  kill  the  weevil  in  grain  with  the  use  of  supersonics.
    The  experiments  show  they  do  it.  You  can  have  them  bring  them
    in  and  show  them  to  you  in  your  office.  Tliey  would  be  glad  to  do  it  if
    you  would  like  to  see  them,  the  different  samples  of  the  grain  on  which
    they  have  applied  these  supersonic  treatments.  No  weevil.  And
    eaten  up  where  it  has  not  been  used.

    ATOMIC    POWER    DEVELOPMENT  371

    There  are  so  many  other  things  that  are  just  around  the  corner:
    Automatic  controls  in  the  barns,  in  the  chicken  brooders,  the  pig
    brooders.    They  just  seem  to  be  endless.

    Of  course,  television  is  just  coming  to  the  rural  areas.  We  do  not
    know  how  much  that  will  add,  however,  to  the  use  of  electricity.  They
    turn  their  lights  off  when  they  see  the  television,  it  seems.  That  hurts
    as  well  as  helps.

    The  Atomic  Energy  Commission  further  recommends  more  liberal
    patent  rights  as  may  seem  appropriate  to  the  Commission  and  con-
    sistent with  existing  law.  We  oppose  any  liberalizing  of  patent  rights
    and  instead  believe  that  the  Commission  should  continue  to  strictly
    interpret  section  11  of  the  Atomic  Energy  Act.

    Section  11  (a)  (1)  of  the  Atomic  Energy  Act  states :

    No  patent  shall  hereafter  be  granted  for  any  invention  or  discovery  which  is
    useful  solely  in  the  production  of  fissionable  material  or  in  the  utilization  of
    fissionable  material  or  atomic  energy  for  a  military  weapon  *  *  *.

    We  believe  the  Atomic  Energy  Commission  should  continue  to
    strictly  interpret  this  section.
    Section  11  (d)  of  the  Atomic  Energy  Act  states :

    The  Commission  is  authorized  to  purchase,  or  to  take,  requisition,  or  condemn,
    and  make  just  compensation  for  (1)  any  invention  or  discovery  which  is  useful
    in  the  production  of  fissionable  material  or  in  the  utilization  of  fissionable  mate-
    rial or  atomic  energy  for  a  military  weapon,  or  which  utilizes  or  is  essential  in
    the  utilization  of  fissionable  material  or  atomic  energy,  or  (2)  any  patent  or
    patent  application  covering  any  such  invention  or  discovery.  *  *  *

    We  believe  this  section  protects  the  public  interest  because  it  makes
    available  to  the  Commission  any  patents  or  inventions  or  discoveries
    covered  in  the  above  section  11  (d)  (1)  and  (2).  This  section  should
    be  continued  to  be  strictly  interpreted  so  as  to  full}''  protect  the  public
    interest.

    The  Atomic  Energy  Act  especially  in  section  7  (c)  is  written  so  as
    to  prevent  the  monopolistic  development  of  atomic  power  and  make
    all  technical  information  and  data  available  to  "as  many  licensees  as
    possible."  The  intent  of  this  section  of  the  act  would,  of  course,  be
    destroyed  by  the  granting  of  private  patents  for  atomic  power
    development.

    Asking  the  Congress  to  permit  such  private  patents  is  like  the  Con-
    gress telling  the  private  power  companies  years  ago  when  the  possi-
    bilities of  falling  water  for  electric  power  were  first  considered,  but
    not  foreseen,  that  they  could  go  out  and  dam  any  stream  and  thus  for-
    ever prevent  the  full  utilization  of  these  streams.  Before  the  Congress
    is  asked  to  take  such  a  step,  it  seems  at  the  very  least  they  should  be
    furnished  with  the  comprehensive  report  required  by  section  7  (b)  of
    the  act  and  they  should  thoroughly  consider  the  social,  political,  and
    economic  consequences  of  such  a  report.  But  due  to  the  early  stage
    of  atomic-power  development,  the  Atomic  Energy  Commission  is  un-
    able to  furnish  such  a  report.  How  can  the  Congress  possibly  author-
    ize more  liberal  patents  when  they  are  uninformed  of  the  implications
    of  such  action  or  even  what  may  be  patented  ?

    This  is  aside  from  consideration  of  the  tremendous  investment  al-
    ready made  by  the  Government  and  the  fact  that  the  Government
    will  still  have  to  invest  large  sums  in  atomic  power  research  and  de-
    velopment. Also  just  consider  the  advantage  of  such  action  to  the  12
    teams  now  participating  in  atomic  power  research.     They  already

    372  ATOMIC    POWER    DEVELOPMENT

    have  a  considerable  amount  of  knowledge  and  know-how  not  avail-
    able to  other  groups.  Should  they  be  permitted  to  apply  for  exclusive
    patents  and  perhaps  forever  deny  to  others  the  results  of  this  research
    carried  out  with  public  funds?  It  appears  to  us  that  the  age  of
    atomic  power  can  be  hastened  if  the  results  of  atomic  power  research
    are  made  available  to  all.

    Since  1942  when  the  successful  operations  of  a  nuclear  chain  reactor
    first  occurred,  we  have  made  tremendous  progress  in  nuclear  power
    development.  This  progress  has  been  achieved  by  the  Government
    and  the  industrial  teams  working  together.  In  the  future,  we  hope
    there  will  be  more  participation  by  the  consumer-owned  electric  sys-
    tems. But  this  rapid  progress  was  made  and  will  continue  to  be  made
    by  strict  interpretation  of  the  patent  provisions  of  the  present  Atomic
    Energy  Act.

    Finally,  the  Atomic  Energy  Commission  recommends  a  "progres-
    sively liberalized  information  policy  in  the  power  reactor  field."  We
    endorse  this  recommendation  and  believe  it  is  consistent  with  the
    intent  of  the  Atomic  Energy  Act.  Again,  we  believe  it  is  most  im-
    portant that  as  much  information  as  possible  concerning  atomic  power
    developments  be  made  available  to  the  widest  number  of  people  pos-
    sible. In  this  connection  we  also  wish  to  recommend  that  the  Com-
    mission more  fully  publicize  the  present  availability  of  information
    on  atomic  power  development.  We,  ourselves,  were  surprised  to
    learn  of  the  considerable  amount  of  information  now  available.  We
    believe  that  we  have  a  responsibility  to  make  this  information  avail-
    able to  our  member  systems  so  they  can  become  aware  of  the  future
    potentialities  of  nuclear  power  development.

    Again  we  wish  to  express  our  faith  in  the  future  offered  by  this
    great  new  energy  resource.  Also  we  are  confident  that  this  committee
    and  the  Congress  will  give  the  most  thorough  consideration  to  any
    proposed  changes  in  the  Atomic  Energy  Act  so  as  to  fully  protect
    the  public  interest  and  continue  the  widest  possible  participation  in
    the  development  of  this  new  energy  resource.

    Chairman  Cole.  Thank  you  very  much,  Mr.  Ellis.

    Earlier  in  your  statement  you  referred  to  an  article  written  by  Mr.
    Weil,  whom  I  assume  you  do  not  know,  since  you  referred  to  him  as
    Dr.  "Weel."  I  think  you  also  do  not  know  that  Dr.  Weil  appeared  as
    a  witness  immediately  ahead  of  you  this  afternoon.

    Mr.  Ellis.  No,  sir ;  I  did  not  know  that.

    Chairman  Cole.  And  further  that  Dr.  Weil  is  one  of  the  outstand-
    ing nuclear  physicists  in  the  countr}^,  who  has  no  contractual  connec-
    tions which  limit  his  activities;  that  Dr.  Weil's  viewpoint  is  that  it
    would  be  preferable  if  nonprofit  organizations  become  actively  inter-
    ested in  this  program  of  generating  power  from  atomic  fuels.

    Since  your  organizations  qualify  from  that  standpoint,  as  being  non-
    profit, and  since  you  have  indicated  your  organizations  even  presently
    need  more  electrical  energy  than  they  have  available,  and  anticipate
    even  a  greater  need  than  it  is  expected  will  be  available,  and  since
    Dr.  Weil  is  still  in  the  room  right  behind  you,  I  suggest  that  in  view
    of  the  very  happy  attitudes  and  conditions  of  your  organizations  and
    Dr.  Weil,  you  might  get  acquainted  with  him  before  you  leave.

    Mr.  Ellls.  Will  you  introduce  me?    T  would  like  to  meet  him.

    Chairman  Cole.  He  is  sitting  right  behind  you.

    We  will  insert  a  statement  by  Mr.  Jerry  Voorhis  at  this  point.

    ATOMIC    POWER    DEVELOPMENT  373

    (The  statement  is  as  follows :)

    t^TATEMENT  OF  JEKBY  VoORHIS,  EXECUTIVE  DIRECTOR  OF  THE   COOPERATIVE  LEAGUE

    OF  THE  U.  S.  A.

    Mr.  Chairman  and  gentlemen  of  the  committee,  my  name  is  Jerry  Voorhis,
    I  am  executive  director  of  the  Cooperative  League  of  the  U.  S.  A.,  with  head-
    quarters at  343  S.  Dearborn  Street,  Chicago,  111.  The  league  is  a  business  associa-
    tion and  educational  agency  for  cooperatives  and  mutual-type  businesses  in  the
    United  States.  Our  membership  includes  regional  wholesale  farm  supply  and
    consumer  cooperatives,  mutual  insurance  companies,  and  national  associations
    of  credit  unions  and  rural  electric  cooperatives.  Excluding  the  national  associa-
    tions our  membership  would  be  about  2  million  families.  The  2  national  associa-
    tions have  together  nearly  10  million  member  families,  but  there  is  of  course
    some  duplication  in  these  figures ;  that  is,  some  families  are  member-owners  of
    both  a  farm  supply  and  a  rural  electric  cooperative  or  a  city  consumer  coop-
    erative and  a  credit  union  and  so  on.  Almost  three-fourths  of  the  league's
    membership  is  farm  and  rural  people,  about  one-fourth  city  people.

    The  American  taxpayers — that  is  all  the  people — have  spent  somewhere  in
    the  neighborhood  $12  billion  on  the  development  of  atomic  energy.  By  every
    standard  of  right  and  decency  the  basic  entitlement  to  such  benefits  as  may
    accrue  from  this  development  belong  to  all  the  people  of  the  United  States.

    Whatever  peacetime  or  constructive  benefits  may  in  the  future  flow  from
    atomic  energy  are  at  present  virtually  eclipsed  by  the  danger  to  the  very  life  of
    mankind  in  this  and  other  nations  which  it  represents.  And  no  decision  regard-
    ing its  further  uses  can  conscientiously  be  made  without  primary  consideration
    of  this  central  fact.  We  have  to  learn  to  live  with  this  engine.  We  have  to
    attempt  to  use  it  to  promote  and  protect  peace  if  that  is  in  any  manner  possible.
    Otherwise  it  will  someday  spell  the  death  of  probably  half  the  human  race  in
    this  country  as  well  as  others.

    I  am  neither  scientist  nor  technician,  but  even  I  can  see  that  unless  the  central
    control  of  this  new  energy  continues  to  vest  in  the  whole  America  people — who
    incidentally  have  paid  for  it — the  chance  to  employ  atomic  energy  as  a  force  or
    leverage  for  a  firm,  enforceable  peace  will  be  gone.  And  I  do  not  believe  that
    such  central  control  in  the  people's  interest  need  be  inconsistent  with  an  ever
    broader  use  of  peacetime  applications  of  atomic  energy  by  private  industry  than
    would  be  possible  under  any  other  circumstances.

    Furthermore  we  have  visited  upon  this  and  future  generations  enough  misery
    of  soul  with  this  discovery  so  that  we  ought  not  to  compound  that  distress.  We
    could  easily  do  exactly  that.  Already  the  American  economy  is  in  grave  danger
    of  loss  of  its  dynamic  element  which  is  effective  competition.  Already,  according
    to  the  Twentieth  Century  Fund,  1  percent  of  the  private  corporations  hold  74
    percent  of  all  industrial  assets,  carry  on  more  than  50  percent  of  all  business,
    and  collect  60  percent  of  the  net  profits,  thus  continually  adding  to  the  relative
    strength  of  their  capital  position.  These  huge  companies  are  beyond  the  reach
    of  failure.  They  are  already  in  control  of  so  much  capital  and  in  so  strong  a
    position  that  they  are  immune  to  the  mortality  which  so  regularly  afflicts  all
    their  smaller  competitors,  if  indeed  such  exist.

    It  appears  that  at  present  adaptation  of  atomic  energy  to  peaceful  uses  will
    be  very  costly  and  require  very  large  capital  investment.  At  public  expense  a
    great  deal  of  work  is  constantly  going  on,  but  to  date  no  proposal  has  been  made
    by  private  companies  which  does  not  involve  continuance  of  very  substantial
    public  subsidy.  Another  fact  is  that  there  are  a  handful  (if  ccmipanies  which  have
    had  all  the  advantages  of  participation  in  this  atomic-energy  development  and  are
    therefore  in  position  of  being  already  halfway  around  the  track  in  any  race  for
    exclusive  patent  rights  or  other  opportunities  for  private  exploitation,  should
    such  a  race  be  started.  And  these  are,  necessarily,  of  course,  among  the  com-
    panies which  are  now  in  the  select  powerful  group.  So  the  more  expensive  the
    process  the  more  certain  would  it  be  that  control  would  rest  exclusively  with
    those  companies.

    Whatever  the  present  situation,  certain  it  is  that  atomic  energy  has  a  potential
    of  becoming  an  all-powerful  factor  in  our  economic  life.  All  that  would  be  needed
    under  such  circumstances  to  pronounce  the  final  death  knell  over  economic  free-
    dom in  the  United  States  would  be  for  Congress  to  commit  the  unpardonable
    breach  of  public  trust  of  giving  to  some  of  tlie  companies  which  are  already  in
    the  driver's  seat  a  key  to  an  advantage  which  might  prove  unchallengeable.

    I  do  not  believe  we  can  treat  atomic  enerpy  in  the  same  light  as  economic
    factors  have  been  treated  in  the  past.    Here  is  power  capable  in  future  of  either

    374  ATOMIC    POWER    DEVELOPMENT

    transforming  the  economic  life  of  man,  or  else  destroying  it.  Is  not  a  new  type
    of  institution  called  for  to  meet  this  unique  situation?  May  Congress  not  have
    wisely  taken  first  steps  toward  creation  of  such  an  institution  when  it  passed  the
    Atomic  Energy  Act?  I  believe  it  did  exactly  that,  and  I  had  the  honor  to  be  a
    Member  of  Congress  at  that  time.  I  do  not  believe  the  basic  provisions  of  that
    act  should  be  lightly  changed.

    Everything  we  do  with  respect  to  this  awesome  new  resource  should  be  done
    with  the  protection  of  the  welfare  of  future  generations  in  mind.  This  requires
    three  basic  considerations.  The  first  is  the  national  security.  Whatever  other
    arguments  there  might  be  for  farming  out  to  private  enterprises  the  manufacture
    of  Plutonium  or  other  essential  elements  of  atomic  weapons,  or  permitting  private
    ownership  of  fissionable  materials,  it  is  surely  evident  that  this  would  involve
    an  inevitable  weakening  of  national  security  measures.  Therefore  it  is  clear  that
    no  such  steps  should  be  taken  unless  the  most  compelling  reasons  existed  for
    such  action.

    Some  compelling  reasons  certainly  do  not  exist.  On  the  contrary,  development
    of  atomic  energy  for  peacetime  purpose — or  any  other  purposes  for  that  matter —
    must,  by  all  the  testimony,  be  dependent  upon  very  substantial  subsidy  of  the
    Government  from  the  tax  funds  of  all  the  people.  Already  the  people  as  a  whole
    have  invested  $12  billion  in  this  atomic  enterprise — more  than  the  combined  in-
    vestment of  General  Motors  and  United  States  Steel  put  together.  Again  the
    new  institution  in  the  form  of  the  Atomic  Energy  Commission  seems  to  the
    average  citizens  for  some  of  whom  I  speak  to  have  made  about  as  rapid  progress
    as  was  possible  up  to  this  point.  Furthermore,  have  not  the  new  relationships
    developed  between  the  Commission  and  private  companies  proven  on  the  whole
    quite  satisfactory  and  may  we  not  be  in  process  of  developing  relationships  which
    can  stand  us  in  very  good  stead  as  we  attempt  to  deal  with  this  brand  new  and
    potentially  very  dangerous  power?  For  one  can  see  little  possibility  of  a  change
    in  the  situation  where  tremendous  financial  resources  are  going  to  be  required
    for  continued  development  of  atomic  energy.  We  come,  therefore,  to  the  con-
    clusion that  it  would  be  both  unjust  and  very  dangerous  to  our  American-type
    economy  to  grant  the  right  to  any  sort  of  exclusive  patents  to  private  interests
    in  this  atomic  field.  To  do  so  would  confer  on  those  few  large  companies  already
    having  the  tremendous  advantage  of  participation  in  this  great  enterprise  an
    heretofore  unheard-of  competitive  advantage.  And  this  would  be  conferred  on
    companies  already  in  positions  of  near-monopolistic  power.  What  would  happen
    to  our  economy  under  such  circumstances  I  leave  to  the  committee  to  judge.  I
    would  only  add  that  such  results  would  fiow  from  the  giving  away  of  a  resource
    for  which  the  American  people  as  a  whole  have  paid  and  paid  heavily.  Central
    control  over  and  basic  benefits  from  this  atomic  energy  sliould  remain  the  in-
    alienable possession  of  the  American  people  as  a  whole.  Nor  is  it  possible  for  me
    to  see  why  this  should  stand  in  the  way  at  all  of  such  peacetime  development  as
    may  be  possible.  But  that  development  should  take  place  imder  circumstances
    which  will  protect  the  opportunities  of  all  business — large  and  small — to  have  a
    part  in  it.  It  should  not  flow  from  any  exclusive  patent  rights.  And  it  should
    take  place  under  such  licensing  provisions  as  will  protect  the  right  of  the  whole
    people  to  royalties  or  licensing  fees  which  one  day  might  be  a  means  of  balancing
    our  budget  under  almost  any  circumstances.

    The  third  basic  consideration  which  should  guide  our  action  in  attempting  to
    protect  future  generations  is  the  hope  of  using  atomic  energy  as  a  means  of  build-
    ing a  firm  peace  in  the  woi'ld  instead  of  a  world  of  terror.  It  will  lead  to  one  or
    the  otlier  of  these  results.  The  chance  of  its  becoming  a  factor  in  building  a  firm
    peace  will  depend  directly  upon  our  ability  to  employ  it  as  an  instrument  of  Gov-
    ernment policy  to  that  end.  I  will  not  attempt  to  outline  the  many  ways  in  which
    this  could  conceivably  be  done.  The  committee  will  have  considered  them,  I  am
    sure,  even  more  carefully  than  any  of  the  rest  of  us.  But  it  is  obvious  that
    unless  bnsic  rights  and  bnsic  conti-ols  remain  in  the  bands  of  the  Government
    as  custodian  of  the  people's  interests,  it  will  cease  to  be  possible  to  employ  atomic
    energy  in  this  maimer  as  an  instrument  of  national  policy.

    And  so  from  every  point  of  view — from  the  viewpoint  of  present  national
    security,  from  the  viewpoint  of  preserving  economic  freedom,  and  from  the  view-
    point of  the  hope  of  establishing  peace  in  the  world,  it  is  most  fervently  to  be
    hoped  that  the  basic  provisions  of  the  Atomic  Energy  Act  will  not  be  changed.

    ATOMIC    POWER    DEVELOPMENT  375

    Chairman  Cole.  Our  next  meeting  will  be  tomorrow,  when  we  will
    hear  the  president  of  the  Babcock  &  Wilcox  Co.,  Mr.  Iddles,  and  Mr.
    Rowley,  production  manager  of  the  National  Lead  Co.

    With  that,  the  meeting  will  adjourn.

    (Whereupon,  at  3 :  50  p.  m.,  Wednesday,  July  15,  1953,  the  hearing
    was  recessed  until  2  p.  m.,  Thursday,  July  16, 1953.)

    ATOMIC  POWEE  DEVELOPMENT  AND  PRIVATE
    ENTERPEISE

    THURSDAY,   JULY   16,    1953

    Congress  of  the  United  States,
    Joint  Committee  on  Atomic  Energy,

    W asking  ton,  D.  C.

    The  joint  committee  met  at  2  p.  m.,  pursuant  to  recess,  in  the  Old
    Supreme  Court  room,  the  Capitol,  Representative  W.  Sterling  Cole
    (chairman)  presiding.

    Present:  Representative  Cole,  Senator  Pastore;  Representatives
    Van  Zandt,  Patterson,  Holifield,  and  Price.

    Professional  staff  members  present:  Corbin  C.  Allardice,  executive
    director;  and  Wayne  P.  Brobeck,  Walter  A.  Hamilton,  and  J.  Ken-
    neth Mansfield,  of  the  professional  staff  of  the  joint  committee.

    Chairman  Cole.  The  meeting  Avill  come  to  order.

    The  first  witness  this  afternoon  is  the  president  of  the  Babcock  &
    Wilcox  Co.,  Mr.  Alfred  Iddles.

    Babcock  &  Wilcox  is  one  of  the  largest  manufacturers  of  heat  ex-
    changers, pressure  vessels,  and  other  heavy  equipment  in  the  world.
    The  company  has  played  a  significant  role  in  the  development  and
    manufacture  of  a  great  many  pieces  of  equipment  for  atomic-energy
    plants  during  and  since  the  war.  This  company  has  been  an  associate
    of  the  Dow-Detroit  Edison  atomic-study  project  since  its  inception
    over  a  year  and  a  half  ago.  In  recent  months,  Babcock  &  Wilcox  has
    indicated  an  increasing  interest  in  the  atomic-power  business  by
    establishing  a  separate  division  within  its  organization  devoted  to
    atomic  power.  Construction  of  the  heat-producing  end  of  the  atomic
    power  plants — the  reactors  themselves — is  quite  in  line  with  the  estab-
    lished activities  of  the  company.

    Mr.  Iddles,  we  welcome  you  here  this  afternoon,  and  we  will  be
    happy  to  hear  you  in  any  statement  you  might  have  to  make.

    STATEMENT  OF  ALFRED  IDDLES,  PRESIDENT,   THE  BABCOCK  &

    WILCOX  CO.

    Mr.  Iddles.  ]\fr.  Chairman  and  members  of  the  committee,  we  appre-
    ciate the  invitation  to  appear  and  will  be  glad  to  be  of  wliatever  help
    we  can  and  to  answer  any  questions  that  are  ajipropriate.

    The  Babcock  &  Wilcox  Co.  has  been  in  the  business  of  manufactur-
    ing equipment  for  the  generation  of  heat  from  fuels,  and  the  utiliza-
    tion of  such  heat  for  power  and  industrial  purposes,  during  the  past  86
    years.  Throughout  this  period  the  company  has  been  faced  with
    many  changes  in  available  fuels.  In  the  early  days  it  was  coal  alone,
    and  later  oil  and  natural  gas  as  well  as  waste  materials  from  industrial

    377

    378  ATOMIC    POWER    DEVELOPMENT

    processes  were  added.  There  were  not  only  changes  in  the  quality  of
    the  fuels  available  but  also  in  the  economics  dictating  their  use.
    Throughout  this  time  the  company,  in  a  highly  competitive  industry,
    has  striven  to  improve  the  methods  and  apparatus  employed  for  the
    utilization  of  these  fuels  and  the  efficiency  of  their  use.  Due  in  largo
    measure  to  the  competitive  situation,  significant  contributions  to  this
    art  have  been,  and  still  are  being,  made,  all  leading  to  a  progressively
    decreasing  cost  of  power  per  unit  of  fuel  consumed.

    The  most  recent  addition  to  the  fuels  available  is  nuclear  energy.
    In  view  of  our  background  of  constant  search  for  cheaper  and  better
    ways  to  produce  power,  we  are  naturally  interested  in  exploring  the
    jjossibilities  of  this  new  source  of  heat  along  with  our  work  with  other
    fuels,  with  the  object  of  being  able  to  supply  equipment  for  its  utiliza-
    tion to  any  and  all  customers,  whether  tliey  be  the  Government,  public
    utilities,  or  industrial  organizations  in  general.

    The  Babcock  &  Wilcox  Co.  has  participated  in  nuclear  energy
    projects  to  an  increasing  extent  since  the  days  of  the  Manhattan  Engi-
    neering District  project.  At  the  request  of  the  AEC  and/or  its  con-
    tractors, and  the  United  States  Navy,  we  made  available  a  number
    of  highly  trained  and  qualified  engineers  to  serve  as  consultants,  and
    others  to  serve  as  full-time  designing  engineers  on  nuclear  projects.
    This  work,  incidentally,  was  done  during  a  period  when  such  engi-
    neering manpower  was  badly  needed  by  the  company  for  its  normal
    business  activities.  In  addition,  we  have  cooperated  by  designing  and
    constructing  equipment  for  AEC  and  Navy  contractors  such  as  West-
    inghouse  Electric  Corp.  on  the  STR  development,  and  General  Electric
    Co.  on  the  SIR  development.  In  view  of  these  activities  we  have
    recognized  the  possibilities  of  the  utilization  of  nuclear  fission  as  a
    new  source  of  heat  for  power  generation  in  our  field  of  business,  and
    have  recently  established  an  atomic  energy  division  in  our  company
    to  handle  such  AEC  and  Navy  work  now  under  contract,  and  to  pur-
    sue all  possible  avenues  of  investigation  and  design  for  the  industrial
    use  of  atomic  energy,  including  the  large-scale  development  of  power.
    We  are  now,  in  one  such  case,  furnishing  technical  assistance  to  the
    Dow-Detroit  project  in  the  AEC  industrial  j)articipation  program.

    We  believe  that  the  utilization  of  nuclear  fuel  for  power  purposes
    can  be  more  rapidly  developed  to  the  greatest  advantage  of  the  people
    of  the  United  States  by  permitting  it  to  grow  in  an  atmosphere  of
    free  enterprise,  just  as  other  industries  have  developed,  such  as  the
    electric  power,  automobile,  and  airplane  industries  and,  more  recently,
    television,  jet  engines,  and  the  like.

    The  generation  of  power  by  the  recovery  of  heat  released  from
    nuclear  fission  has  been  demonstrated,  and  it  is  now  the  economics,
    involving  specific  reactor  design  and  similar  problems,  which  remain
    to  be  established.  Industry,  by  fully  and  freely  participating  in  the
    development  at  its  present  stage,  could  bring  into  play  its  tremendous
    accumulated  experience  in  related  lields  of  heat  transfer  and  utiliza-
    tion. Industry,  however,  cannot  afford  to  undertake  such  work  to
    this  extent  unless  it  be  given  the  privilege  of  legally  protecting  the
    improvements  which  it  may  make  and  the  normal  way  in  which  this
    could  be  done  would  be  under  the  patent  laws  of  the  United  States.
    The  Atomic  Energy  Act  of  1946  does  not,  however,  now  permit  this
    to  be  done,  and  an  appropriate  modification  of  this  act  is  desirable.

    ATOMIC    POWER    DEVELOPMENT  379

    Basic  changes  in  the  Atomic  Energy  Act  will  be  essential  to  permit
    ownership  of  fissionable  materials  and  the  facilities  for  producing  or
    utilizing  fissionable  materials,  which  would  include  such  nuclear
    powerplants.  Private  capital  would  be  reluctant  to  invest  in  such
    undertakings  without  assurance  of  having  the  necessary  amount  of
    control  of  such  facilities  to  insure  continuity  of  operations.

    It  is  our  opinion  that  changes  to  the  act  to  accomplish  these  objects
    can  be  made  without  impairing  national  security,  health,  and  safety.
    In  the  event  of  a  national  emergency,  all  patents,  know-how,  and
    techniques  of  private  industry  would  be  available  to  the  Government
    for  its  use.

    The  argument  has  been  made  that  the  United  States  taxpayers,  who
    have  paid  the  bill  to  the  extent  of  some  $10  billion  to  date  in  the  de-
    velopment of  atomic  energy,  will  not  receive  any  return  on  their
    investment  if  the  law  is  modified  to  permit  private  industry  to  utilize
    the  accumulated  knowledge,  and  that  only  a  relatively  few  industrial
    Companies  will  benefit.  We  believe  that  the  taxpayers'  expenditure
    has  been  primarily  a  military  investment  and,  as  such,  we  have  already
    received  the  benefit  in  terms  of  national  security  at  a  critical  period
    when  equal  security  was  unobtainable  by  other  than  atomic  weapons.
    In  the  development  of  atomic  power,  we  believe  that  the  taxpayers'
    best  interests  lie  in  the  direction  of  minimum  power  costs.  We  con-
    fidently believe  that  costs  will  be  less  if  industry  is  allowed  to  par-
    ticipate on  a  competitive  basis  and,  furthermore,  this  will  undoubtedly
    result  in  many  new  jobs  being  made  available.  We  further  believe
    that  the  development  of  atomic  energy  for  power  and  other  purposes
    will  result  in  improvements  not  now  fully  conceivable  and  will  be  of
    such  benefit  to  the  people  of  the  United  States  as  to  ultimately  make
    the  Government  expenditure  to  date  minor  by  comparison.

    A  powerplant  utilizing  conventional  fuels  represents  the  collective
    work  of  a  large  number  of  equipment  manufacturers.  No  reason  is
    known  why  nuclear  powerplants  would  not  be  constructed  on  a  sim-
    ilar basis.  The  possibility  of  any  commercial  monopoly  in  such  work
    by  a  relatively  few  companies  is,  therefore,  remote,  and  in  any  event
    would  be  subject  to  the  existing  antimonopoly  laws.

    There  have  been  some  fears  expressed  that  by  liberalizing  the  exist-
    ing patent  restrictions  in  the  Atomic  Energy  Act  of  1046  there  would
    be  danger  of  individual  companies  or  groups  of  companies  obtaining
    a  patent  monopoly  in  the  atomic  energy  power  field.  The  reverse  is
    probably  more  nearly  the  truth  as  the  fundamentals  upon  which
    nuclear  power  developments  will  be  predicated  are  already  known
    and,  where  patentable,  are  presumably  now  covered  by  patent  appli-
    cations owned  or  controlled  by  the  Atomic  Energy  Commission.  It
    would  be  expected  that  the  Commission  would  grant  only  iionexclusive
    licenses  to  responsible  companies  or  groups  of  companies  which  might
    wish  to  work  in  this  field,  and  the  patents  that  will  undoubtedly  be
    sought  by  such  companies  on  inventions  resulting  from  their  subse-
    quent efforts  will,  in  all  probability,  be  of  a  secondary  or  improvement
    nature  rather  than  of  a  fundamental  character.  This  is  a  similar
    situation  to  that  which  exists  in  practically  every  other  basic  industry
    in  the  country  today.

    The  Atomic  Energy  Act  of  1946  states  that  the  problem  should  be —

    subject  at  all  times  to  the  paramount  objective  of  assuring  the  common  defense
    and  security,  the  development  and  utilization  of  atomic  energy  shall  so  far  as

    36740—53^—25

    380  ATOMIC    POWER    DEVELOPMENT

    practicable  be  directed  toward  improving  the  public  welfare,  increasing  the
    standard  of  living,  strengthening  free  competition  and  private  enterprise,  and
    promoting  world  peace.

    In  conclusion,  therefore,  we  believe  that  the  intent  of  Congress
    as  expressed  in  that  act  can  best  be  carried  out  by  modifying  the
    l^resent  act  so  that  industry  will  be  free  to  devote  its  efforts  to  de-
    veloping its  own  designs  of  nuclear  powerplants  utilizing  fundamental
    information  received  from  the  AEC.  The  important  changes  in  the
    act  from  the  viewpoint  of  equipment  manufacturers  would  be  those
    concerned  with  the  right  to  obtain  presently  classified  information  to
    enable  industry  to  do  design  and  equipment  research  independent  of
    the  Government,  and  to  obtain  patents  on  inventions  resulting  there-
    from. The  present  status  of  the  art  is  such  that  we  believe  the  inter-
    ests of  all,  including  the  Government,  industry,  and  the  people  of  the
    United  States,  can  best  be  served  by  these  changes  being  made  to  the
    act  in  the  very  near  future.  We  are  of  the  opinion  that  this  can  be
    accomplished  without  in  any  way  impairing  the  necessary  provisions
    for  the  maintenance  of  national  security,  health,  and  safety.

    Chairman  Cole.  Thank  you,  Mr.  Iddles.

    Mr.  Holifield,  any  questions  ?

    Representative  Holifield.  Mr.  Iddles,  I  would  like  to  ask  you  a
    few  questions.

    On  page  5,  at  the  bottom  of  the  page,  you  say :

    It  would  be  expected  that  the  Commission  would  grant  only  nonexclusive
    licenses  to  responsible  companies  or  groups  of  companies  which  might  wish  to
    work  in  this  field  *  *  *

    You  mean  by  that,  of  course,  that  anyone  that  is  qualified  can  have
    access  to  licenses,  providing  they  will  fulfill  the  requirements  of  the
    Commission  regarding  security  and  financing,  and  so  forth  ?

    Mr.  Iddles.  I  would  think  so.  I  would  think  if  the  Government
    wishes  to  have  industry  assist  in  developing,  then  of  course  they  would
    have  to  give  those  rights,  and  with  proper  supervision.

    Representative  Holifield.  Then  you  would  not  be  in  favor  of  grant-
    ing licenses  only  to,  let  us  say,  those  who  have  participated  in  the
    development  of  this  great  project.  You  would  be  willing  for  all  of
    American  industry  to  have  a  chance  to  participate?

    Mr.  Iddles.  I  would  think  so,  sir.    That  is  what  made  America.

    Representative  Holifield.  Now,  you  bring  out  the  point  that  any
    j;^  atents  that  might  be  obtained  would  be  of  a  secondary  or  improve-
    ment nature  rather  than  of  a  fundamental  character.

    By  that  I  imagine  you  mean  that  designs  of  machinery  and  pro-
    cesses, chemical  processes,  and  so  forth,  which  would  further  the  art
    of  reactor  development  above  that  which  is  now  obtained  would  be
    in  the  nature  of  a  patent  claim,  rather  than  evolving  a  completely  new
    theory  or  new  device  in  the  way  of  producing?

    Mr.  Iddles.  That  is  right,  sir.  If  someone  should  be  able  to  invent
    an  absolutely  new  physics  principle,  presumably  the  Government
    would  have  a  paramount  interest  on  account  of  defense.  But  it  is  a
    bit  like  steam  power.  All  of  the  fundamentals  of  steam  and  thermo-
    dynamics have  been  available  to  the  world  for  years.

    Representative  Holifield.  They  are  known,  and  nonpatentable.

    Mr.  Iddles.  Yes.  And  now  we  have  the  odd  circumstance  of  the
    Government  being  in  possession  of  very  rapidly  accumulated  funda-
    mental information  which,  in  normal  events,  would  have  been  ac-

    ATOMIC    POWER    DEVELOPMENT  381

    cumulated  over  a  hundred  years.  And  the  Government,  I  would
    think,  would  be  justified  in  giving  that  to  industry,  under  proper
    safeguards.

    Representative  Holifield.  For  security  of  the  Nation,  of  course.

    Mr.  Iddles.  That  is  right.

    Representative  Holifield.  I  agree  with  you  on  that.  In  view  of
    the  fact  that  this  is  a  unique  situation,  and  that  this  great  fund  of
    information,  as  3^011  say,  has  been  accumulated  within  a  period  of
    7  or  8  years,  as  far  as  its  application  to  fission  is  concerned — of  course,
    we  know  that  the  principles  of  physics  have  been  in  existence  much
    longer — it  does  put  this  industry  in  a  little  bit  different  situation  than
    the  other  industries  which  you  call  attention  to,  such  as  the  auto-
    mobile and  others,  because  they  were  developed  over  a  period  of
    many  years,  mostly  by  private  investment,  private  capital,  and  so
    forth ;  and  we  come  to  this  industry  at  a  time  when  it  has  achieved
    a  position  of  advanced  development  strictly  on  the  basis  of  Govern-
    ment investment.  And  therefore  there  is  a  difference  there,  and  we
    must  look  at  it  from  that  standpoint  and  therefore  try  to  protect  those
    who  have  the  present  equities  in  it.

    Mr.  Iddles.  That  is  correct,  sir.

    Representative  Holifield.  Now,  you  in  your  statement  on  the  objec-
    tives of  the  act,  on  the  last  page,  indicate  that  one  of  the  principles
    is  strengthening  free  competition  and  private  enterprise.  Would  you
    say  that  the  granting  of  restrictive  patents  on  machinery  designs,  for
    instance,  would  be  a  detriment?  Or  would  it  be  an  added  advantage
    in  bringing  to  the  people  the  benefits  of  civilian  power  development  ?

    Mr.  Iddles.  Well,  in  the  overall  it  would  be  of  benefit.

    I  think  Ave  must  look  at  it  from  the  standpoint  that  to  get  those
    improvements  there  must  be  incentive  to  put  effort  to  get  them.  And
    the  pay  for  that  is  in  the  form  of  some  restriction  in  their  use,  as  the
    patent  principles  in  the  United  States  have  set  forth  for  a  long  time.

    And  I  don't  fear  its  monopolistic  implications,  because  we  are  in
    competition  constantly,  and  other  people  are  just  as  smart  as  we  are,
    and  they  will  do  something  a  different  way  and  obtain  a  patent  on  it.
    And  in  the  long  run  the  public  uses  that  equipment.

    Representative  Holifield.  I  certainly  agree  that  if  a  company,
    through  its  own  ingenuity  and  investment,  produces  a  new  and  patent-
    able improvement,  they  should  be  compensated.  I  wonder  if  you
    would  subscribe  to  the  theory  that  because  of  the  basic  knowledge
    which  has  been  accumulated  at  public  expense,  the  type  of  patent
    granted  should  be  one  which  would  recompense  to  the  inventor  finan-
    cially for  his  investment,  but  it  would  also  be  written  into  the  law
    that  these  patents  should  be  made  available  to  all  of  the  American
    economy  on  a  nonrestrictive  basis ;  in  other  words,  compulsory,  as  far
    as  licensing  is  concerned.

    Would  you  carry  your  thoughts  that  far?  Or  would  you  stand  on
    the  normal  patent  provisions,  which  allow  you,  for  a  certain  number
    of  years  of  restrictive  right,  to  grant  to  others  the  use  of  that
    equipment  ?

    Mr.  Iddles.  I  should  say,  sir,  that  the  latter  thought  is  the  basic
    conception  that  we  have,  because  that  is  our  history  in  this  country.
    It  is  conceivable  that  a  sufliciently  important  invention  might  be  made
    by  some  person,  that  it  might  not  be  in  the  public  interest  to  let  tliat
    person  keep  it  for  17  years,  and  it  might  be  a  reason  for  saying  that

    382  ATOMIC    POWER    DEVELOPMENT

    similar  rights  should  be  licensed  to  other  makers.  But  that  is  not  the
    history  of  the  art  of  making  manufactured  equipment.  Seldom  does
    that  happen.

    Representative  Holifield.  That  is  true.  But  I  believe  that  we  have
    established  that  the  development  of  this  new  science  has  been  unique
    in  that  it  has  been  wholly  financed  by  the  Government,  and  it  appears
    to  me  that  because  of  that  tremendous  investment,  the  benefits  should
    be  widespread,  without  penalizing  the  companies  from  the  standpoint
    of  royalty  return  on  it.

    It  seems  to  me  that  if  we  are  going  to  strengthen  free  enterprise,  then
    these  patent  rights  should  be  made  available  throughout  the  Nation,
    both  to  private  and  public  bodies,  so  that  the  widespread  benefit  of  it
    could  be  brought  as  quickly  as  possible  to  the  public,  at  the  same  time
    preserving  the  right  of  industry  to  an  adequate  return  on  its  invest-
    ment and  discovery  rights.

    Mr.  Iddles.  I  don't  think  I  can  disagree  with  your  philosophy  at
    all.  In  any  instance,  you  immediately  have  a  question  of  degree.  And
    if  it  were  a  tremendously  important  and  fundamental  patent,  probably
    a  manufacturer  would  be  willing  to  sublicense  it.

    Representative  Holifield.  You  see,  we  of  this  committee  do  have
    that  responsibility  to  the  people  of  the  United  States,  as  well  as  to  the
    perpetuation  of  free  enterprise,  and  sometimes  modifications  of  law
    seem  to  be  in  the  public  interest,  as  have  occurred  many,  many  times.

    Mr.  Iddles.  That  is  quite  so,  but  on  the  other  hand,  of  course  you
    have  to  supply  sufficient  incentive  to  arrive  at  that  invention.

    Representative  Holifield.  That  is  true.  Now,  are  you  of  the  opin-
    ion that  in  this  interim  period  of  further  development,  to  the  point
    where  this  power  would  be  of  practical  value,  American  industry  can
    at  this  point  come  forward  and  finance  the  development  that  is  needed,
    and  can  they  finance  it  as  fast  as  if  we  proceeded  as  we  have  proceeded
    in  the  last  few  years  ?  At  some  period  in  the  future,  say  3  to  5  years
    from  now,  the  Government  could  make  available  to  all  of  American
    industry  the  impending  developments  which  we  anticipate.

    Mr.  Iddles.  Well,  it  appears  clear  to  me  that  the  continued  govern-
    mental research  might  well  be  continued.

    Representative  Holifield.  In  cooperation  with  industry?

    Mr.  Iddles.  In  cooperation  with  industry;  but  that  industry  must
    be  free  to  go  its  own  way,  subject  to  security  restrictions,  to  use  its
    ingenuity  without  the  holdback  of  the  conservatism  that  is  inevitable
    in  Government  work.

    I  think  there  is  a  feasible  combination,  which  is  workable.  And  for
    instance,  we  are  working  now  on  AEC-authorized  programs,  develop-
    ing pieces  of  equipment  which  require  methods  of  making  that  have
    never  been  used  before.

    Now,  at  the  moment  we  are,  of  necessity,  giving  that  information  to
    AEC.  .  ^'S       -

    Representative  Holifield.  Well,  of  course,  on  the  other  side  of  that
    point,  you  are  being  paid  for  it  by  Government  funds.

    Mr.  Iddles.  To  an  appreciable  extent,  but  not  entirely.  We  do  not
    get  paid  for  all  of  our  overhead  and  night  work.

    Representative  Holifield.  Well,  neither  does  the  Congressman.

    Mr.  Iddles.  No ;  that  is  right.

    Representative  Holifield.  I  have  not  heard  of  any  time  and  a  half
    being  proposed.

    ATOMIC    POWER    DEVELOPMENT  383

    Well,  I  do  not  want  to  depreciate  the  tremendous  contribution  which
    private  industry  has  made  to  this  art,  because  without  it  we  could  not
    have  had  it.     I  realize  that.

    Mr.  Iddles.  And  you  see,  industry  necessarily  has  that  dollar  idea,
    the  dollar  viewpoint;  and  the  Government  unfortunately  does  not
    always  have  a  dollar  viewpoint.  It  sometimes  should  not  have,  and
    sometimes  it  does  not  have  when  perhaps  it  ought  to — I  mean  the
    individual  in  Government  work.

    Representative  Holitield.  Well,  thank  you  for  your  answers,  sir.
    That  is  all.

    Chairman  Cole.  Mr.  Van  Zandt?

    Representative  Van  Zaxdt.  What  is  the  proportion  of  your  effort
    in  this  field  of  atomic  energy,  as  measured  in  dollare  and  manpower?

    Mr.  Iddles.  At  present  we  are  operating  with  a  budget  of  between
    four  and  five  hundred  thousand  dollars  of  our  own  money  in  wages,
    salaries,  travel  expense,  office  expense,  and  so  forth,  and  in  addition
    we  have  been  recently  and  are  now  engaged  in  between  five  and  six
    million  dollars'  worth  of  equipment  making  under  contract,  for  Gov-
    ernment projects.  Our  budget  is  a  good-sized  contribution  from  the
    standpoint  of  our  net  profits.  We  are  doing  it  on  the  long-range  basis
    that  it  is  another  fuel.     Our  business  is  fuel  and  its  use.

    Representative  Van  Zandt.  Wliat  part  of  your  contracts  are  with
    theAEC?

    Mr.  Iddles.  Directly  ?

    Representative  Van  Zandt.  Yes.

    Mr.  Iddles.  Not  a  great  deal  now.  We  did  a  considerable  amount
    of  research  work  directly  for  the  Atomic  Energy  Commission  in  our
    research  laboratories.  But  the  fabrication  of  equipment  is  now  being
    done  under  the  STR  and  the  SIR  projects  for  the  submarines  largely,
    and  studies,  recently  stopped,  for  the  aircraft-carrier  atomic-energy
    power  situation.  And,  of  course,  Dow-Detroit,  which  is  a  utility  in-
    dustry proposition,  to  which  we  are  supplying  engineering  talent.

    Representative  Van  Zandt.  Is  there  a  current  demand  for  this
    particular  type  of  equipment  you  are  manufacturing  in  the  domestic
    field?

    Mr.  Iddles.  No.

    Representative  Van  Zandt.  Do  you  anticipate  such  a  demand  in
    the  near  future  ?

    Mr.  Iddles.  I  do.  And  if  I  may,  I  would  like  to  explain  that  just
    a  little.

    When  I  was  very  much  younger  than  now,  I  polished  the  brass  on
    the  No.  3  Westinghouse  turbine.  That  was  a  long  time  ago.  And  the
    old  chief  engineer  who  was  then  my  tutor  said,  "Boy,  don't  pay  any
    attention  to  that.  It  is  no  good.  Look  up  there."  And  "up  there"
    was  a  45-foot  reciprocating  steam  engine.  He  said,  "That  is  the  way
    to  make  power,  boy."  If  I  had  paid  attention  to  that  and  forgotten
    the  possibilities  in  the  steam  turbine,  I  wouldn't  have  been  a  partici-
    pant in  the  progress  that  has  been  made  since  then,  which  presently
    results  in  our  working  on  a  250,000-kilowatt  turbine,  which  is  quite  a
    development  over  the  1,500-kilowatt  unit  on  which  I  started.

    Now,  I  can  conceive  of  that  happening  in  the  atomic-energy  field.
    I  don't  know  when  or  exactly  how  it  will  occur.  You  just  can't  foresee
    such  situations.  And  with  our  increasing  use  of  power  and  fuel,  there
    will  come  a  time  when  we  will  be  anxious  to  use  other  kinds  of  fuel

    384  ATOMIC    POWER    DEVELOPMENT

    than  coal  and  oil,  which  will  then  be  less  available.  There  is  a  tre-
    mendous amount  of  atomic-energy  fuel  available  in  the  world,  if  we
    can  find  out  how  to  use  it.  And  we  may  be  able  to  afford  to  pay  more
    for  it  20  3^ears  from  now  than  we  are  able  to  pay  now.

    Representative  Van  Zandt.  Have  you  any  former  AEC  engineers
    with  your  company  ?

    Mr.  Iddles.  That  were  directly  employed  by  the  Atomic  Energy
    Commission  ?

    Representative  Van  Zandt.  Yes,  sir.

    Mr,  Iddles.  May  I  ask  my  associates,  Mr.  Wilcoxson,  who  is  head
    of  our  research,  and  Mr.  Gay,  who  is  head  of  atomic  energy?

    "Not  engineers,"  I  am  told.

    Representative  Van  Zandt.  Would  that  also  apply  to  scientists?

    Mr.  Iddles.  Yes.

    Representative  Van  Zandt.  So  you  are  really  training  your  own
    personnel  in  this  field.

    Mr.  Iddles.  By  and  with  the  assistance  of  the  Atomic  Energy  Com-
    mission. Because  we  have  been  permitted,  since  1946,  to  be  on  the
    inside  of  the  information  that  they  have.

    I  personally  went  down  to  Oak  Ridge  in  1946  and  began  to  dig
    into  this  question.  And  we  have  been  assisted  materially.  But,  Mr.
    Van  Zandt,  we  have  brought  to  bear  upon  it  what  we  learned  from
    them  plus  what  we  learned  from  commercial  business  and  engineering
    experience.

    Representative  Van  Zandt.  In  other  words,  your  company  is  keep-
    ing abreast  of  the  developments  in  the  field  of  atomic  energy  for  the
    purpose  of  being  in  a  position  someday  to  supply  equipment  to  those
    who  would  use  it  ?

    Mr.  Iddles.  Yes,  sir.  That  is  our  business.  And  if  I  don't  help  pre-
    serve the  company  along  that  line,  I  will  probably  be  fired.

    Representative  Van  Zandt.  Have  you  any  idea  in  your  own  mind
    when  we  might  have  a  reactor  actually  in  operation  that  will  produce
    this  power  that  we  are  talking  about?

    Mr.  Iddles.  Well,  I  think  you  could  make  one  in  2  or  3  years  if  you
    wanted  to.  In  fact,  I  am  sure  you  can.  But  as  I  said  in  here,  it  is  a
    question  of  economics,  and  a  matter  of  great  consideration,  to  try  to
    find  out  how  to  build  one  that  would  be  economically  justifiable,  either
    for  the  Government  or  for  industry.  You  can't  afford  to  make  power
    for  3  cents  a  kilowatt  when  you  can  make  it  for  4  mills  with  the  pres-
    ent equipment.  But  it  is  quite  probable  that  it  can  be  made  for  a
    reasonable  price  and  in  a  reasonable  length  of  time,  5  or  10  years;
    and  the  quicker  we  get  at  it,  the  quicker  we  are  going  to  arrive  at  that
    answer.

    Representative  Van  Zandt.  Have  you  any  idea  as  to  the  cost  of  the
    reactor  ?

    Mr.  Iddles.  Well,  I  would  go  at  it  backward.  You  can  afford  to
    pay  for  a  reactor  only  that  which  will  be  justified  by  the  saving  in
    coal  that  you  do  not  have  to  burn;  plus,  momentarily,  some  extra
    expense,  perhaps,  chargeable  to  finding  out  how  to  do  the  next  one.
    But,  by  and  large,  that  is  what  the  problem  is,  and  the  answer  would
    be  substantially  different  in  Ohio  than  it  would  be  in  Portland,  Maine,
    or  in  the  desert  somewhere.

    Representative  Holifleld.  Mr.  Chairman,  will  you  indulge  me  in
    one  more  question  ?

    ATOMIC    POWER    DEVELOPMENT  385

    On  page  4,  Mr.  Iddles,  you  say  as  follows :

    The  argument  has  been  made  that  the  United  States  taxpayers,  who  have  paid
    the  bill  to  the  extent  of  some  $10  billion  to  date  in  the  development  of  atomic
    energy,  will  not  receive  any  return  on  their  investment  if  the  law  is  modified  to
    permit  private  industry  to  utilize  the  accumulated  knowledge,  and  that  only  a
    relatively  few  industrial  companies  will  benefit.

    I  would  say  that  I  am  unaware  of  that  type  of  an  argument.  I
    certainly  do  not  subscribe  to  it.  I  would  like  to  modify  that  by  say-
    ing that  I  would  like  to  see  more  than  a  relatively  few  industrial  com-
    panies benefit.  I  would  not  want  to  see  it  restricted  by  restrictive
    licensing  to  a  few.  I  would  want  to  be  sure  that  it  was  extended  to
    all  industrial  companies.

    And  then  as  to  the  balance  of  your  statement  there,  where  you  say
    that:

    We  believe  that  the  taxpayers'  expenditure  has  been  primarily  a  military
    investment  and,  as  such,  we  have  already  received  the  benefit  in  terms  of  national
    security  at  a  critical  period  when  equal  security  was  unobtainable  by  other  than
    atomic  weapons.

    Now,  I  certainly  agree  with  you  that  it  has  been  a  military  objective
    and  goal,  and  that  the  money  that  has  been  expended  in  my  opinion
    has  given  more  protection  to  the  free  world  than  any  money  we  have
    spent  for  armament  of  any  other  kind.  However,  I  would  not  use
    that  as  an  argument  to  say  that  if  correlative  peacetime  benefits,  prin-
    ciples, whether  it  be  in  the  medical,  biological,  or  industrial  field,
    have  been  developed,  that  therefore  we  should  ignore  the  right  of
    the  people  to  have  access  to  those  benefits  the  same  as  to  the  military
    benefits.

    Mr.  Iddles.  Oh,  you  are  quite  right.  I  want  those  benefits  to  accrue
    to  the  public  through  the  efforts  of  what  has  already  been  done  by  the
    Government  and  the  efforts  of  industry,  which  has  the  competence  to
    help  carry  on.

    Representative  Holifield.  That  is  all,  Mr.  Chairman.

    Chairman  Cole.  Mr.  Iddles,  there  is  an  aspect  of  this  problem  re-
    lated to  the  patent  situation  which  has  occurred  to  me  as  I  have  been
    sitting  here  and  listening  to  your  statement  and  your  discussion,
    which  I  have  not  yet  heard  brought  into  the  discussion.  I  am  not
    certain  of  my  knowledge  of  the  history  of  patent  law,  but  I  daresay
    the  fact  is  that  originally  the  patent  was  a  property  right  which  the
    inventor  owned  indefinitely.

    Mr.  Iddles.  For  a  limited  period  of  time.

    Chairman  Cole.  No  ;  I  mean  at  the  very  beginning  a  patent  right
    was  permanent.

    Mr.  Iddles.  That  is  right.

    Chairman  Cole.  That  right  gave  to  the  inventor  the  right  to  have
    the  exchisive  use  of  that  idea  perpetually.  As  time  progressed  gov-
    ernments, people,  realized  that  that  was  not  in  the  best  public  interest,
    because  it  discouraged  use  of  those  inventions.  It  discouraged  new
    inquiries  for  improvements  on  those  inventions.  So  that  eventually
    governments  passed  haws  which  said  that  tlie  inventor  could  not  have
    an  exclusive  right  for  a  longer  period  than  a  maximum  number  of
    years,  and  that  thereafter  the  public  generally  would  have  the  right
    to  use  tliat  idea  without  having  to  pay  any  royalty  or  a  fee  of  any
    kind  to  the  inventor.

    Mr.  Iddles.  That  is  so.

    386  ATOMIC    POWER    DEVELOPMENT

    Chairman  Cole,  The  goal  was  to  bring  into  free  and  open  public
    use  as  quickly  as  the  incentive  of  private  profit  would  allow  public  use
    of  inventions.

    Mr.  Iddles.  Right.

    Chairman  Cole.  Now,  bringing  that  thought  down  to  application
    with  these  new  lessons  in  the  atomic  field,  these  patents  that  have  been
    developed  in  the  last  decade  on  nuclear  energy,  at  Government  ex-
    pense, under  Government  ownership,  we  have  achieved  the  historic
    goal  of  public  use  or  availability  of  the  patents.  And  to  say  that  by
    releasing  them  to  public  use  now  we  are  giving  preference  to  certain
    individual  groups  or  certain  large  companies  is  no  more  true  than
    at  the  end  of  a  17-year  period  on  any  patent,  which  might  become
    available  to  anyone  who  might  want  to  use  it,  large  or  small.

    So  much  for  that.  I  do  not  need  necessarily  to  ask  your  comment
    on  it,  unless  you  may  want  to  comment.

    Mr.  Iddles.  I  understand  that  the  earliest  records  of  patent  grants
    in  the  Middle  Ages  were  all  restricted  to  a  period  of  enjoyment  on  the
    order  of  10  to  20  years.  There  is  always  the  balance  between  the
    amount  of  incentive  that  is  needed  and  how  to  arrive  at  that.  And
    human  beings  do  work  for  private  advantage,  harder  depending  upon
    the  bigger  the  advantage,  usually.  On  the  other  hand,  it  is  certainly
    true  that  as  our  civilization  has  progressed  we  all  recognize  the  in-
    creasing importance  of  benefits  to  the  public.

    Chairman  Cole.  Now,  the  thing  that  you  are  concerned  about  in
    the  patent  field  is  not  that  you  should  have  the  free  use  of  existing
    patents  on  the  subject,  but  that  any  improvements  on  those  patents,
    any  refinements  of  them,  that  may  be  developed  in  the  course  of  your
    studies  and  your  research  will  be  retained  by  you  for  a  period  of  time
    under  the  patent  laws  as  payment  for  your  expenditure,  your  initia-
    tive, your  zeal.

    Mr.  Iddles.  That  is  exactly  right.

    Chairman  Cole.  And  it  is  only  through  refinements  of  existing
    patents  in  the  nuclear  field  that  you  seek  to  have  patent  protection.

    Mr.  Iddles.  That  is  correct.  And  as  I  think  I  said  to  Mr.  Holi-
    field,  if,  by  some  long  chance,  we  should  discover  a  fundamental
    patent,  the  Government  might  very  well  say,  "Well,  that  has  to  do
    with  the  defense,  and  in  any  event  it  is  secret,  because  we  do  not  want
    a  foreign  power  to  have  it."  The  right  to  deny  us  the  use  of  that
    would  be  paramount,  I  should  think.    But  that  is  not  likely.

    Chairman  Cole.  Not  likely  ?

    Mr.  Iddles.  It  is  not  likely  that  we  will  make  a  fundamental  in-
    vention on  this  situation.

    Chairman  Cole.  Well,  if  I  were  in  your  position  I  would  not  admit
    that  my  company  is  not  likely  to  invent  an  improvement  of  great
    value.

    Mr.  Iddles.  Thanks  for  the  compliment,  sir.  But  the  Lord  made
    most  of  this  physics,  you  know,  and  we  aren't  going  to  change  it  very
    much.

    Chairman  Cole.  In  your  statement  you  said  that  the  important
    changes  in  the  act  from  the  viewpoint  of  equipment  manufacturers
    are  those  concerned  with  the  right  to  obtain  present  classified  informa-
    tion to  enable  industry  to  do  design  and  equipment  research  independ-
    ent of  Government.

    ATOMIC    POWER    DEVELOPMENT  387

    Well,  as  I  understand  the  law,  no  change  is  needed  for  that  to  be
    made  possible,  because  you  now  have  the  right  to  go  to  the  Commis-
    sion and,  after  disclosing  to  them  what  your  purposes  are,  to  ask
    them  for  classified  information.  If  they  are  impressed,  convinced
    of  your  reliability,  they  will  give  that  information  to  you,  and  you
    can  take  it  back  in  your  own  laboratories,  work  on  it,  and  make  new
    devices,  which  may  be  patented.  But  you  cannot  disseminate  the  in-
    formation if  it  is  of  a  certain  category.

    Mr.  Iddles.  Well,  we  must  give  all  of  the  information  to  the  Atomic
    Energy  Commission  in  return  for  that  right,  and  presumably  they
    then  will  dispense  that  to  the  public,  or  to  our  competitors,  or  to  who-
    not.  And  only  by  the  sufferance,  albeit  very  graciously  offered,  of  the
    Atomic  Energy  Commission,  are  we  permitted  to  own  material  or
    to  do  that  research  work.  We  are  not  permitted  to  own  material  or  to
    do  that  research  work  on  our  own,  absolutely  independently.

    Chairman  Cole.  I  am  not  talking  about  owning  material.  I  am
    talking  about  having  access  to  classified  information,  ii^nd  then  you
    take  that  information  back  in  your  own  laboratory  and,  at  your  own
    expense,  make  these  laboratory  studies.

    Do  you  mean,  under  present  practices,  the  Commission,  just  for  hav-
    ing given  you  access  to  information,  requires  of  you  that  anything
    you  learn  on  your  own,  independent  of  Government,  must  be  reported
    to  the  Commission?

    Mr.  Iddles.  I  believe  so.     Would  you  interpret  it  otherwise?

    Chairman  Cole.  That  is  not  entirely  in  conformity  with  the  law,
    which  says  that  the  Commission  may  make  arrangements  for  private
    research,  but  that  those  arrangements,  those  conditions,  those  con-
    tracts, shall  not  contain  any  provision  or  condition  which  prevents  the
    dissemination  of  scientific  or  technical  infoniiation  except  to  the
    extent  such  dissemination  is  prohibited  by  law ;  that  is,  if  it  is  of  a  vital
    classified  nature.

    Mr.  Iddles.  For  security  reasons.

    Chairman  Cole.  But  you  do  have,  at  present,  do  you  not,  some
    degree  of  latitude  of  operation  in  the  research  area  of  atomic  energy  ?

    Mr.  Iddles.  We  have  some ;  yes.  We  believe  that  it  would  be  feasi-
    ble to  have  more,  which  would  provide  more  incentive  to  a  manu-
    facturer and  still  not  damage  the  Government  or  its  security.

    Chairman  Cole.  Is  your  company  now  engaged  in  any  nuclear  re-
    search on  your  own,  independent  of  any  Commission  arrangements
    you  may  have  ?

    Mr.  Iddles.  Only  as  part  of  the  AEC  projects  that  have  been  author-
    ized by  them,  and  we  have  been  authorized  to  participate  in  them.

    Chairman  Cole.  Then  the  only  research  that  your  company  does  is
    that  which  is  covered  by  a  contract  with  the  AEC  ?

    Mr.  Iddles.  Yes,  up  to  the  present  time.

    Chairman  Cole.  Or  which  you  do  for  the  AEC  ?

    Mr.  Iddles.  Either  or  both,  or  as  a  subcontractor  to  an  atomic  energy
    program  of  some  kind.  But  we  have  understood  that  the  results  of
    any  such  studies  and  research  automatically  come  under  the  control
    of  the  Atomic  Energy  Commission.

    Chairman  Cole.  Now,  directing  your  thought'!  to  your  position  in
    the  study  group  of  the  Dow-Detroit  Edison  gi'oup,  what  is  the  status
    of  that  so  far  as  requiring  changes  in  the  act  is  concerned  ?

    388  ATOMIC    POWER    DEVELOPMENT

    Mr.  Iddles.  Well,  I  don't  know  that  any  immediate  need  for  a
    change  in  the  act  exists,  because  there  we  and  they  and  many  others
    are  proceeding  to  make  the  studies.  But  there  will  shortly  come  a
    time  when  they  will  need  to  own  materials  and  perhaps  to  have  the
    permission  to  use  them,  which  is  now  contrary  to  the  law,  to  carry  out
    the  next  step.

    Chairman  Cole.  When  you  say  there  shortl}^  will  come  a  time  when
    you  will  have  to  own  this  stuff,  does  that  mean  that  there  will  shortly
    come  a  time  when  your  group  will  make  a  concrete  proposition  to  the
    Atomic  Energy  Commission  to  permit  you  to  go  ahead  and  build  one
    of  these  things,  in  which  is  involved  the  necessity  to  own  and  use  this
    stuff?

    Mr.  Iddles.  I  can't  speak  for  the  group,  Mr.  Cole,  because  we  are
    only  supplying  our  somewhat  limited  field  of  engineering  information.
    But  I  will  give  you  an  example.  We  have  recently  wished  to  take
    some  uranium  and  work  with  it,  and  we  went  through  quite  an  ex-
    perience to  obtain  permission  to  have  a  little  bit.

    Now,  that  is  all  right  under  presently  existing  conditions.  But  we
    can't  play  with  this  material  unless  we  can  have  some  of  it,  legally.

    Chairman  Cole.  Did  you  get  any  of  it?

    Mr.  Iddles.  We  got  a  very  small  amount.

    Chairman  Cole.  Did  you  get  all  you  needed  for  the  purpose?

    Mr.  Iddles.  For  the  moment,  and  perhaps  we  will  get  more  when
    we  do  need  it.  I  am  not  complaining.  I  am  just  saying  it  is  a  re-
    stricted situation.

    Chairman  Cole.  From  your  knowledge  of  the  status  of  this  program
    in  your  group,  and  without  making  any  commitment  either  on  your
    own  part,  or  committing  your  group  to  anything,  is  there  a  reasonable
    prospect  that  in  the  fairly  near  future  your  group  will  be  in  a  position
    to  make  a  definite  proposal  to  the  Commission  ?

    Mr.  Iddles,  I  think  so.  That  is  certainly  the  definite  intention,  to
    arrive  at  that  as  soon  as  ingenuity  will  permit.

    Chairman  Cole.  How  important  do  you  feel  it  is,  Mr.  Iddles,  that
    your  group  or  anybody  embarking  in  this  field  should  have  a  right  to
    own  the  fissionable  material?

    As  I  understand,  there  must  be  the  right  to  build  and  own  the  facil-
    ity. But  how  important  is  it  that  you  own  the  material,  as  against
    having  the  right  to  use  it,  under  a  leasing  or  licensing  arrangement,
    rather  than  ownership?

    Mr.  Iddles.  Well,  theoretically,  I  guess,  they  are  the  same.  If  we
    can  use  it,  and  lose  it,  by  accident  or  by  consumption  because  of  the
    experiments  we  run,  without  being  called  to  undue  account  for  having
    lost  it,  then  that  is  all  right.

    Representative  Holifield.  Well,  now,  Mr.  Chairman,  if  you  will
    yield  at  that  point.

    Of  course,  in  the  statement  you  have  made,  that  you  would  have  the
    right  to  lose  it,  there  is  something,  of  course,  that  enters  into  the  whole
    security  problem.  Because  assuming  that  material  is  given  to  you
    in  quantities  sufficient  to  make  a  bomb,  we  are  not  going  to  want  you
    to  lose  it.  That  is  one  of  our  responsibilities.  That  is  one  of  our
    security  problems.    I  am  sure  you  did  not  mean  that.

    Mr.  Iddles.  You  are  quite  correct,  sir.  You  cannot  work  with  mate-
    rials without  wearing  them  away,  or  having  parts  of  them  wear  away

    ATOMIC    POWER    DEVELOPMENT  389

    because  of  what  you  do  to  them.  I  did  not  mean  losing  it  in  a  manner
    which  would  not  be  subject  to  some  check  and  accountability,  of  course.
    Because  always  the  Government's  interest  in  the  use  of  this  material
    for  defense  purposes  is  paramount.

    Representative  Holifield.  Because  of  its  double  purpose,  defense
    and  civilian.

    Mr.  Iddles.  Quite  so.  And  if  we  should  discover  some  process  that
    would  materially  improve  the  ability  of  the  Government  to  make
    defense  material,  we  would  not  want  that  to  be  disseminated  publicly.
    We  would  not  want  Russia  to  know  how  to  vastly  improve  the  making
    of  a  bomb  material  by  some  discovery  that  we  would  make.  So  there
    is  an  area  of  overlap  between  what  private  companies  can  own  and
    patent  and  what  the  Government  must  control.  All  the  way  through,
    I  would  think  that  the  new  law  might  very  appropriately  put  regu-
    latory powers  in  the  hands  of  the  Atomic  Energy  Commission,  of
    course.

    Representative  Holifield.  It  seems  to  me  that  ownership  in  fee,  as
    we  ordinarily  consider  the  word  "ownership,"  is  not  a  necessary  requi-
    site to  further  development.  And  if  it  turns  out — and  I  am  not  saying
    that  it  will,  but  it  appears  to  me  possible — that  it  may  be  easier  for
    the  Government  to  retain  its  accountability  insurance  or  safety  by
    leasing  certain  quantities  to  people  to  use,  under  a  charge,  of  course,
    which  would  be  fair  to  the  company — if  it  does  turn  out  that  way,
    I  cannot  see  where  actual  ownership  of  the  material  itself  would  be
    a  primary  factor  in  further  development,

    Mr.  Iddles,  No  ;  the  fundamental  is  the  right  to  use  it  up  for  useful
    purposes.

    Representative  Holifield.  That  is  right.  Now,  one  further  ques-
    tion. You  have  studied  section  11  of  the  Atomic  Energy  Act,  which
    is  the  patent  and  invention  section,  and  which  sets  up  a  board  which
    has  the  right  to  issue  patents  or  to  restrict  the  use  of  patents  if  they
    are  against  the  national  interest.  It  also  sets  up  a  Patent  Compensa-
    tion Board.  It  sets  up  standards  by  which  these  patents  shall  be
    granted,  or  withheld  in  case  it  is  against  the  public  interest.  It  also
    provides  for  judicial  review  as  to  the  justice  of  their  actions.  I
    suppose  you  have  studied  that?

    Mr.  Iddles.  Yes.  Not  as  a  lawyer  but  from  a  business  stand-
    point; yes.

    Representative  Holifield,  This  is  a  very  important  section,  and
    I  would  suggest  that  your  expert  advisers  consider  this  and  submit  to
    us  changes  that  you  feel  will  be  necessary  in  that  section,  specific
    changes  addressed  to  the  language  of  the  act,  and  giving  us  reasons
    why  those  changes  are  necessary.

    ]Mr.  Iddles.  Very  well,  sir.

    Representative  Holifield.  At  some  time  in  the  future.  There  is
    no  immediate  urgency  so  far  as  I  am  concerned,

    Mr,  Iddles.  Yes.    Thank  you.

    Chairman  Cole.  Are  there  any  other  questions  ?

    Thank  you  very  much  for  coming  down,  sir.

    Mr.  Iddles.  Again  I  express  my  appreciation  for  the  invitation,
    sir.    Thank  you.

    Chairman  Cole.  The  next  witness  this  afternoon  is  a  representative
    of  the  National  Lead  Co,,  Mr,  Rowley.

    390  ATOMIC    POWER    DEVELOPMENT

    The  National  Lead  Co.  is  the  operator  of  the  new  Fernald  Feed
    Materials  Center  north  of  Cincinnati,  Ohio.  This  plant  is  the  first
    fully  integrated  feed-processing  plant  in  the  atomic  energy  program.
    As  the  operators  of  this  plant  this  company  has  been  called  upon  to  do
    considerable  thinking  about  the  organization  of  uranium  fuel  prepa-
    ration, the  economics  of  plant  design,  and  the  piospects  for  long-term
    use  of  the  facilities.  It  is  entirely  possible  that  this  plant  would
    have  to  compete  with  privately  owned  plants  in  preparation  of
    uranium  for  commercial  atomic  power  plants.

    Mr.  Rowley,  would  you  give  us  your  full  name,  please  ?

    STATEMENT   OF  EDWAED   E.   ROWLEY,  PRODUCTION  MANAGER,

    NATIONAL  LEAD  CO.

    Mr.  EowLEY.  I  am  Edward  R.  Rowley,  production  manager  of  the
    National  Lead  Co.  Mr.  Martino,  our  president,  regrets  being  unable
    to  be  here  and  asked  me  to  take  his  place.

    Chairman  Cole.  We  will  be  very  happy  to  hear  you.

    Mr.  Rowley.  Perhaps  a  little  background  on  National  Lead  Co.
    might  be  helpful.  We  are  manufacturers  of  a  number  of  chemicals
    and  pigments  made  from  lead,  barium,  titanium,  zirconium.  We
    produce  paint  and  allied  products.  We  are  fabricators  and  producers
    of  nonferrous  metals,  a  number  of  them,  and  manufacturers  of  die
    castings.

    Tlie  National  Lead  Co.  directly  entered  the  atomic  energy  field  in
    1951  when  it  took  over  the  operation  of  a  source  material  sampling
    and  storage  depot  at  Middlesex,  N.  J.  On  May  1,  1951,  it  was  chosen
    contract  operator  for  the  Fernald,  Ohio,  Feed  Material  Production
    Center,  then  just  under  construction.  This  plant  processes  source
    materials  to  reactor  fuel  elements.

    The  authors  of  the  Atomic  Energy  Act  of  1946  wisely  recognized
    that  the  time  would  come  when  peacetime  uses  of  atomic  energy  would
    require  changes  in  the  act.  It  appears  that  the  time  for  such  changes
    is  nearing  if  we  desire  to  take  advantage  of  the  act  of  fission  in  pro-
    viding a  more  abundant  peacetime  economy.

    Power  from  fission  is  the  most  likely  immediate  benefit  to  be  ex-
    pected. The  full  weight  of  American  industrial  ability  should  be
    applied  against  this  challenge.  Several  major  changes  in  the  act  ap-
    pear desirable  to  provide  incentives  sufficient  to  secure  adequate  effort
    to  bring  about  an  early  solution  to  economic  power  from  the  atom.
    In  addition  to  power,  other  benefits  may  well  be  realized  also.

    First,  the  act  should  be  amended  to  allow  the  ownership  of  source
    and  fissionable  material,  under  proper  regulation,  by  private  enter-
    prises. Without  denying  to  Government  the  right  to  serve  and  pro-
    tect the  public  interest,  it  appears  that  the  necessity  of  securing  af-
    firmative Government  approval  for  each  use  of  such  material  restricts
    the  play  of  initiative  and  energy  of  industry.

    Second,  the  private  ownership  of  production  facilities  for  fissionable
    material  should  be  permitted.  Rapid  development  of  atomic  energy,
    under  our  American  system,  should  follow  the  investment  in  facili-
    ties conceived  to  return  a  profit  to  their  owners,  as  it  has  in  other
    industries.

    Third,  the  patent  provisions  of  the  act  should  be  changed  to  make
    them  conform  to  the  principles  of  the  American  industrial  incentive

    ATOMIC    POWER    DEVELOPMENT  391

    system.  In  general,  discoveries  and  inventions  dealing  with  fission-
    able materials  are  not  patentable.  To  the  extent  that  they  do  not
    involve  military  weapons,  there  should  be  recognition  of  private
    patent  rights  in  the  atomic-energy  field.

    Although  brief,  the  above-suggested  changes  in  the  act  should  go
    far  toward  providing  the  proper  climate  for  energetic  development  of
    power  from  the  atom.

    Chairman  Cole.  Thank  you,  Mr.  Rowley.

    Senator  Pastore,  do  you  have  any  questions  ?

    Senator  Pastore.  The  question  I  should  like  to  ask  you,  sir,  is  this.
    About  the  timing:  When  do  you  think  we  ought  to  proceed  with  the
    changing  of  the  atomic-energy  law,  with  relation  to  when  a  greater
    effort  will  be  demonstrated  by  private  industry  to  explore  the  possi-
    bilities of  atomic  energy  for  industrial  power  ?

    Mr.  Rowley.  I  would  think  now  now ;  the  sooner,  the  better.

    Senator  Pastore.  And  do  you  feel  that  the  changing  of  the  law
    will  have  a  great  deal  to  do  with  a  renewed  initiative  on  the  part  of
    private  enterprise  ?  Or  does  this  thing  boil  down  to  what  the  return
    will  be  from  these  experiments  and  research?

    Mr.  Rowley.  That  would  be  the  uUimate  answer,  I  believe.  But
    providing  the  incentive  to  do  it  would  start  the  ball  rolling.

    Senator  Pastore.  You  mean  to  infer  from  that  that  the  law  is  not
    rolling  because  the  law  has  not  been  changed  ^

    Mr.  Rowley.  No;  the  ball  is  rolling,  and  the  Atomic  Energy  Com-
    mission is  doing  a  great  deal  along  those  lines.  More  people  thinking
    about  it  would  make  it  roll  faster.

    Senator  Pastore.  Well,  it  appears  to  me  that  somehow  this  whole
    business  of  amending  the  law  is  being  used  more  or  less  as  an  excuse
    or  a  means  of  excuse,  really,  to  delay  this  development,  more  than
    anj^thing  else.  Because  at  one  time  you  argue  that  industry  does
    not  seem  to  be  too  much  interested  in  these  patent  rights,  but  merely
    wants  them  for  protection,  as  that  protection  may  develop,  and  then
    in  the  next  breath  you  say  that  the  ball  is  not  rolling  because  the  act
    is  not  being  changed.

    JMr.  Rowley.  IPerhaps  I  used  the  wrong  words.  I  did  not  say  the
    ball  was  not  rolling,  but  I  mean  that  a  ball,  under  private  incentive,
    would  start  to  roll.  One  is  now  rolling — a  different  ball,  aimed  at
    perhaps  different  things,  aimed  at  military  uses  of  atomic  energy.

    Senator  Pastore.  I  do  not  mean  to  confuse,  but  I  have  listened  now
    for  several  weeks  to  various  witnesses,  who  have  all  testified  more  or
    less  along  the  same  line.  And  I  am  a  little  confused  as  to  exactly  in
    what  way  industry  expects  us  to  amend  the  law.  I  am  a  little  bit
    confused  as  to  when  they  expect  us  to  amend  the  law.  And  I  am  a
    little  bit  confused  as  to  just  when  they  are  going  to  invest  all  this
    money  that  they  think  should  be  invested,  in  order  to  develop  energy'
    for  industrial  purposes.

    Mr.  Rowley.  I  think  the  matter  of  timing  will  he  one  that  will  come
    along  and  develop.  I  think  as  Mr.  Iddles  has  said,  the  steam-turbine
    generator  took  a  number  of  years  from  a  1,500-kilowatt  unit  to  the
    250,000-kilowatt  one.  This,  1  think,  would  follow  the  same  path,  over
    a  long  period  of  time.  There  is  effort  being  applied  against  it  now.
    This  thinking  is  going  on,  I  think,  in  most  companies.

    Senator  Pastore.  We  heard  a  witness  yesterday  who  said  he  did
    not  think  Government  will  ever  do  it,  that  is,  build  the  first  plant.

    392  ATOMIC    POWER    DEVELOPMENT

    He  does  not  think  private  industry  will  ever  do  it,  because  conventional
    fuels  are  cheaper.  And  his  only  solution  or  suggestion  was  that  these
    nonprofit  organizations  ought  to  do  it.  It  strikes  me  that  the  more  we
    listen  to  this,  the  more  we  get  confused  as  to  how  this  should  be  done.
    Do  you  think  that  private  industry  is  in  a  position  to  undertake  this
    task  if  Government  would  amend  the  law  ?

    Mr.  Rowley.  I  have  heard  it  said  that  one  group  is  willing  to  do  it,
    one  of  these  power  study  groups.  We  are  not  in  that  position,  in  the
    the  power  field,  now.  We  produce  for  the  Atomic  Energy  Commis-
    sion as  a  contract  operator  which  makes  reactor  fuel  elements.  We
    are  not  in  the  power  end  of  the  business.  Nor  do  we  produce  anything
    as  a  commercial  company  directly  entering  the  power  field.

    Senator  Pastore.  Do  you  feel  if  the  law  were  amended  you  would
    invest  more  money  in  these  experiments  ?

    Mr.  Rowley.  When  the  right  opportunity  arose ;  yes.

    Senator  Pastoke.  What  do  you  mean  by  "the  right  opportunity"?
    I  mean,  I  would  like  to  get  something  concrete.  We  seem  to  be  talking
    here  in  generalities  and  platitudes,  and  we  do  not  get  a  definite,  clear-
    cut  answer  to  the  many  questions  that  are  in  the  minds  of  the  men  who
    have  the  responsibility  of  amending  this  law.

    Mr.  Rowley.  I  think  if  the  National  Lead  Co.  felt  that  there  were
    a  profitable  enterprise  having  to  do  with  the  manufacture  of  fuel
    elements,  and  we  were  allowed  to  gain  patent  rights  from  some  of  our
    developments,  those  that  come  after  the  work  we  are  doing  now,  those
    that  we  are  doing  now  are  for  the  benefit  of  the  Atomic  Energy  Com-
    mission, and  we  could  supply  to  someoiie  interested  in  manufacturing
    power  a  reactor  fuel  element  at  a  lower  cost  to  them,  at  greater  advan-
    tage to  them,  then  we  would  be  willing  to  invest  money  in  such  an
    enterprise.

    Senator  Pastore.  And  whether  or  not  you  will  do  that  depends,  you
    think,  greatly  upon  whether  or  not  the  law  is  amended?

    Mr.  Rowley.  I  think  so ;  yes.

    Senator  Pastore,  All  right.

    Chairman  Cole.  Mr.  Holifield?

    Representative  Hollfield.  Mr.  Rowley,  you  have  studied  section  11
    of  the  Atomic  Energy  Act,  titled  "Patents  and  Inventions,"  have  you?

    Mr.  Rowley.  I  am  roughly  familiar  with  it ;  yes.

    Representative  Holifield.  You  are  familiar  with  it?

    Mr.  Rowley.  Yes.

    Representative  Holifield.  You  know  that  it  provides  methods  for
    filing  for  patents.  It  provides  a  method  of  compensation  on  a  royalty
    basis.  It  also  provides  a  Commission  that  sits  in  judgment  on
    whether  it  is  of  national  interest  to  make  it  public.  The  writers  of
    this  act  realized  that  we  were  not  dealing  with  a  normal  substance
    which  could  be  given  the  publicity  that  is  ordinarily  given  to  the  filing
    of  patent  applications  and  the  making  available  of  information  con-
    cerned with  ingenious  devices  and  secret  processes,  and  therefore  they
    found  it  necessary  to  set  up  a  particular  way  of  handling  these  patents.

    Now,  we  have  been  repeatedly  asked  to  change  the  patent  laws  so
    that  they  will  conform  to  the  normal  American  industrial  patenting
    processes.  And  yet  we  have  never  had  specific  suggestions  that  will
    take  into  account  this  problem  which  the  committee  has,  of  security,
    that  is  involved  in  normal  patent  applications,  and  the  publicity
    attendant  thereto,  giving  us  a  solution  to  it  where  we  can  do  the  job

    ATOMIC    POWER    DEVELOPMENT  393

    that  you  are  asking  us  to  do.  Therefore  it  seems  incumbent  upon
    those  who  advocate  the  change  of  the  act  to  go  through  the  patent
    provisions  very  carefully,  keeping  in  mind  the  national  security  factor,
    and  make  specific  recommendations  to  us  as  to  how  we  can  change  the
    patent  section  of  this  act  and  yet  maintain  primary  interest  in  the
    national  security.  And  it  would  seem  to  me  that  it  is  incumbent  upon
    you  gentlemen  from  the  industrial  world  who  come  before  us  asking
    for  these  changes,  that  you  address  yourself  specifically  to  the  act  and
    give  us  exactly  the  changes  you  want,  and  also  help  us  to  assume  the
    responsibility  of  maintaining  security.

    Mr.  Rowley.  We  would  be  happy  to  supply  such  a  specific
    proposal

    Representative  Holifield.  I  believe  you  would  be  doing  something
    of  real  value  to  the  committee  if  in  place  of  telling  us  to  change  the
    act,  tell  us  how  to  change  it,  j^ou  put  yourself  in  our  shoes  for  a  moment
    with  our  responsibilities  to  the  public.

    That  is  all,  Mr.  Chairman.

    Chairman  Cole.  Mr.  Van  Zandt  ?  Are  there  any  further  questions
    from  the  committee  ?

    Representative  Price.  Mr.  Chairman,  I  would  like  to  ask  one.

    Chairman  Cole.  Mr.  Price?

    Representative  Price.  Mr.  Rowley,  the  National  Lead  Co.  came  into
    this  program,  you  said,  in  1951  ?

    Mr.  Rowley.  Yes.

    Representative  Price.  In  addition  to  that  obtained  at  the  Middlesex,
    N.  J.,  plant  when  you  took  over  the  operation,  has  your  company
    developed  any  know-how  in  this  field  on  its  own,  or  just  through  oper-
    ation of  plants  for  the  Atomic  Energy  Commission?

    Mr.  Rowley.  No,  we  have  done  no  private  work  in  atomic  energy.
    We  have  applied  our  history  and  background  of  information  toward
    atomic  energy  problems,  but  we  do  not  carry  on  any  atomic  energy
    work  on  our  own.

    Representative  Price.  You  made  the  statement  that  the  National
    Lead  Co.  was  ready,  if  there  was  a  proper  incentive  on  patent  rights,
    to  develop  different  ideas  in  this  field,  indicating  that  if  there  were
    proper  changes  in  the  act  that  would  be  favorable  to  your  operation,
    you  are  ready  to  go  into  it  on  a  full  scale  basis.  To  what  extent?
    Would  you  build  a  plant  of  your  own,  along  the  line  of  Fernald  ?  Or
    what  would  you  do  ?

    Mr.  Rowley.  I  think  I  said  we  would  consider  such  a  thing  if  we
    would  be  able  to  come  up  with  some  manner  by  which  we  could  then
    produce  a  fuel  element  which  would  be  economically  advantageous
    to  someone  else.

    I  do  not  say  that  we  have  such  ability  to  do  that  now,  or  the  ideas  to
    do  it  now.     We  are  rather  new  in  this  program.

    Representative  Price.  Since  you  have  been  in  the  program,  have
    you  had  ideas  of  some  things  which  you  could  do  if  you  were  on  your
    own  and  operating  on  your  own,  that  you  do  not  do  now  as  a  con-
    tractor for  the  AEC?

    Mr.  Rowley.  We  would  be  very  derelict  in  our  duties.  We  are
    paid  a  fee  to  operate  the  feed  materials  production  center.  Any  ideas
    which  we  have  now  are  going  into  the  improvement  of  the  process
    out  there.

    394  ATOMIC    POWER    DEVELOPMENT

    Representative  Price.  I  think  tliat  your  line  of  work  for  the  AEC
    is  a  pretty  limited  type  of  operation.  There  have  not  been  very  many
    contractors  that  have  had  the  same  type  of  work  that  you  have  had.
    Is  that  not  correct  ?

    Mr.  Rowley.  That  is  correct ;  yes.

    Representative  Price.  Would  you  feel,  then,  that  your  company
    has  a  particular  advantage  in  this  field,  having  been  selected  as  a
    contractor  by  AEC,  that  it  would  give  you  a  tremendous  advantage
    over  any  other  corporation  or  company  of  a  comparable  nature  ?

    Mr.  Rowley.  We  do  have  an  advantage  in  that  we  are  now  oper-
    ating and  others  are  not.

    Representative  Price.  You  have  a  considerable  advantage.

    Mr.  Rowley.  There  are  a  number  of  other  contractors  who  know
    all  about  what  we  are  doing,  but  they  are  present  contractors  of  the
    Commission.

    Representative  Price.  You  understand,  I  am  just  thinking  out  loud.
    And  if  you  did  develop  a  patent,  for  instance,  it  would  be  of  great
    value  to  your  company  and,  of  course,  to  the  development  of  the  pro-
    gram. And  most  of  that  would  have  been  on  the  basis  of  know-how
    that  you  got  through  being  a  contractor  with  the  AEC.  Do  you  then
    feel  that  that  patent  should  be  an  exclusive  patent  to  the  elimination
    of  the  other  companies  ?

    Mr.  Rowley.  No;  if  we  develop  patentable  information  out  at
    Fernald  now,  it  must  belong  to  the  Commission.

    Representative  Price.  I  am  not  talking  about  Fernald  now.  I  am
    talking  about  if  you  went  into  it  on  your  own,  and  the  National  Lead
    Co.  fully  financed  a  project,  and  then  if  you  came  up  with  a  new  idea.
    Do  you  think  it  should  be  to  the  exclusion  of  all  other  companies?

    Mr.  Rowley.  That  would  be  a  difficult  one  to  decide.  I  would  say
    it  would  be  difficult  to  tell  where  our  own  know-how  came  in  and  where
    what  we  learned  from  the  Commission  came  in.

    Representative  Price.  That  would  be  one  of  the  difficulties  that
    we  face.

    Mr.  Rowley.  Yes,  it  is  one  of  your  major  problems.

    Representative  Holifield.  Mr.  Rowley,  is  it  not  true  that  the  con-
    cept of  use  of  patents  in  the  last  few  years  has  been  undergoing  a
    gradual  change?  There  was  a  time  when  individuals  received  pat-
    ents, and  they  were  more  restrictive  in  granting  licenses  to  other  people
    to  use  them,  and  they  kept  their  royalties  high.  And  we  have  had
    testimony  even  to  this  effect  before  the  committee,  that  wide  licensing
    at  low  royalties  is  gradually  becoming  an  accepted  factor  in  private
    industry,  that  they  actually — by  getting  a  wider  use  of  it  through
    cross-licensing — obtain  more  royalties  in  the  end  than  if  they  had  a
    restricted  use  and  had  high  royalties.  And  I  ask  you :  What  do  you
    think  about  this  theory,  which  I  understand  is  being  accepted  quit^
    widely  in  industry?  It  would  be,  as  I  would  call  it,  a  cross-licensing
    theory,  of  getting  the  patent  used  by  as  many  people  as  possible,  main-
    taining their  royalty  rights,  but  furthering  the  development  and
    public  use.

    Mr.  Rowley.  I  think  the  courts  have  pretty  well  placed  interpre-
    tations which  make  it  very  difficult  for  anyone  to  hold  a  patent  and
    restrict  it  to  such  an  extent;  the  antitrust  agency  would  come  into
    play  at  that  point.

    ATOMIC    POWER    DEVELOPMENT  395

    Kepresentative  Holifield.  And  gradually  a  great  many  people  have
    come  to  the  conclusion  that  the  public  gets  a  wider  benefit  out  of  the
    patent  and  they  get  a  wider  increase  in  royalties  than  if  they  kept
    it  off  the  market  or  restricted  it  to  the  market  with  higher  royalties.

    Mr.  Rowley.  I  would  not  think  one  could  live  on  patents,  attempt
    to  stay  alive  just  by  patents.

    Representative  Patterson.  I  w^as  just  wondering  what  steps  your
    organization  has  taken  in  preparing  yourself  for  a  step  into  the  pri-
    vate field  of  atomic  energy  at  the  conclusion  of  your  Government
    contract  with  AEC.

    Mr.  Rowley.  We  are  taking  none.  We  are  relatively  new  in  this.
    Our  plant  is  not  yet  in  full  operation.  We  find  that  we  can  use  all
    our  energies  in  getting  this  plant  running  and  running  properly.

    Representative  Patterson.  If  your  Government  contracts  were  can-
    celed, would  you  then  continue  on  in  the  study  groups  or  anything
    like  that  toward  atomic  energy  uses  ?

    Mr.  Rowley.  Our  conclusions  have  not  been  firmed  up  yet.  I  would
    think  we  would.  We  think  atomic  energy  is  going  to  be  a  large  com-
    mercial enterprise  some  day.  We  would  like  to  participate  in  the
    commercial  enterprise,  where  one  can  make  an  honest  dollar.  This
    should  be  a  big  enterprise.  We  would  like  to  play  some  part  in  it.
    Those  are  only  generalities.

    Representative  Patterson.  You  have  no  plans  at  all  for  the  future  ?

    Mr.  Rowley.  No  plans  for  anything  directly  now.

    Representative  Patterson.  At  the  present  time,  if  the  opportunity
    presented  itself,  would  your  organization  be  prepared  to  finance  such
    an  operation  ?

    Mr.  Rowley.  Yes,  sir.

    Representative  Patterson.  Is  yours  an  oldtime  plant,  or  relatively
    new  ?

    Mr.  Rowley.  The  National  Lead  Co.?  National  Lead  operates
    ninety-some  plants.     We  have  been  in  business  since  1892.

    Representative  Patterson.  Then  it  is  a  separate  corporation?

    Mr.  Rowley.  These  are  separate  corporations.  We  are  contract
    operators  on  cost  plus  a  fixed  fee  at  both  of  these  plants,  to  the  Com-
    mission.

    Representative  Patterson.  Financed  solely  by  the  Government  ?

    Mr.  Rowley.  Financed  solely  by  the  Government.

    Representative  Patt^erson.  Therefore,  you  are  solely  dependent  on
    Government  operations  ?

    Mr.  Rowley.  That  is  right.

    Representative  Patterson.  If  anything  happened  to  the  Govern-
    ment contract,  you  would  be  practically  out  of  business?

    Mr.  Rowley.  We  would  be  out  of  this  business,  not  out  of  business.

    Representative  Patterson.  How  would  any  change  in  the  present
    day  law  help  you  fellows,  then  ?  You  are  operating  now  solely  at  the
    dictate  of  the  Government.

    Mr.  Rowley.  This  statement  was  not  written  to  say  what  we,  as
    the  National  Lead  Co.,  think  would  help  National  Lead  Co.  specifi-
    cally. This  was  written  as  we  understood  our  request  to  be,  to  sug-
    gest changes  in  the  Atomic  Energy  Act  which  we  feel  would  be  ad-
    vantageous to  the  future  development  of  atomic  energy.

    36740—53 26

    396  ATOMIC    POWER    DEVELOPMENT

    Representative  Patterson.  That  is  working  on  the  supposition
    that  you  people  will  be  placed  in  a  category  where  you  are  self-reliant,
    after  the  conclusion  of  your  Government  contract  ?

    Mr.  RowLET.  We  are  self-reliant  now.  This  is  not  a  moneymaker
    for  us.

    Representative  Patterson.  Not  this  corporation,  which  is  dealing
    solely  with  atomic  energy  at  the  present  time.

    Mr.  Rowley.  No.  That  one  would  have  nothing  more  to  do.  We
    lare  large  users  of  power  in  this  country.  It  is  to  our  advantage  to
    have  more  economic  power,  cheaper  power.  As  such,  we  would  bene-
    £t  by  that  directly,  if  the  introduction  of  economic  power  by  atomic
    energy  comes  soon.

    Representative  Patterson.  But  your  corporation  is  not  willing  to
    advance  any  of  its  risk  capital  at  the  present  time  ?

    Mr.  Rowley.  I  did  not  say  that.     No.     I  am  sorry.

    Representative  Patterson.  Then  I  misunderstood  you.

    Representative  Price.  I  do  not  think  you  are  a  member  of  any  of
    the  study  groups,  are  you  ?

    Mr.  Rowley.  No  ;  we  are  not  a  member  of  any  of  the  study  groups.

    Representative  Patterson.  Do  you  anticipate  becoming  a  member?

    Mr.  Rowley.  No  ;  not  at  the  moment.

    Representative  Patterson.  I  wish  to  ask  you  this,  then.  Is  Na-
    tional Lead  anticipating  a  role  as  a  feeder,  supplier,  or  processor
    for  privately  owned  atomic-power  interests?

    Mr.  Rowley.  Not  under  the  present  circumstances.  We  would  like
    to  be,  because,  in  our  peacetime  operations,  we  do  deal  in  the  chemical
    and  metallurgical  operations  similar  to  those  which  we  are  carrying
    on  at  Fernald.

    Representative  Patterson.  But  you  are  not  making  any  provisions
    -toward  that  particular  time  when  you  will  be  able  to  step  out?

    Mr.  Rowley.  We  are  learning  the  business.

    Representative  Patterson.  And  that  is  all  ?

    Mr.  Rowley.  Yes.

    Representative  Patterson.  That  is  all,  Mr.  Chairman.

    Chairman  Cole.  Mr.  Rowley,  it  occurs  to  me  that  your  activity
    in  this  field  is  one  that  is  not  so  colored  with  military  considerations
    as  other  aspects  of  the  nuclear  program.  You  are  concerned  and
    actively  engaged  only  in  the  refinement  of  the  raw  uranium  ore  into
    a  refined  uranium  metal.  And  to  that  extent,  it  has  no  greater  mili-
    tary interest  or  implication  than  the  refinement  of  aluminum  or  steel
    or  any  other  metal.     Is  that  not  correct?

    Mr.  Rowley.  That  is  correct.

    Chairman  Cole.  From  what  you  know  of  your  phase  of  the  opera-
    tion in  the  overall  nuclear-energy  program,  do  you  see  any  necessity
    for  imposing  the  rigid  restrictions  in  the  refinement  field  of  uranium
    ore  that  are  properly  imposed  in  the  use  of  the  uranium  after  it  has
    been  refined?

    Mr.  Rowley.  No.  I  think  the  restrictions  should  be  a  great  deal
    less,  up  through  the  point  at  which  we  operate,  than  they  are  beyond
    that  into  the  weapons  field.

    Cliairman  Cole.  And  your  feeling  that  the  restriction  should  be
    relaxed  is  not  so  much  that  you  feel  it  would  give  you  a  greater
    degree  of  latitude  of  operations,  as  that  there  is  no  real  justification
    for  continuing  these  rigid  restrictions  in  the  refinement  of  uranium.

    ATOMIC    POWER    DEVELOPMENT  397

    Mr.  B.OWLET.  Only  seeing  one  part  of  the  operation  as  we  do —
    we  have  some  familiarity  with  the  other — it  is  difficult  for  us  to
    place  proper  values  on  that.  We  do  know  that  it  might  be  helpful
    to  someone  to  know  how  much  uranium  passes  through  our  plant.
    We  feel  that  there  should  be  a  restriction  on  that  information.  How
    much  reliance  one  wants  to  place  on  the  know-how  which  we  develop
    in  a  plant  such  as  ours,  which  might  be  helpful  to  someone  else,  is
    difficult  to  decide.  On  one  hand,  it  would  be  very  helpful  to  have  re-
    strictions relieved  so  that  we  could  talk  freely  to  our  suppliers  of  ma-
    terials, so  that  we  could  pass  ideas  back  and  forth  between  various
    people  in  our  company  who  are  not  cleared,  so  that  we  could  try  out
    our  thinking.  Many  an  idea  comes  a  little  bit  from  rubbing  off  one
    fellow  and  a  little  more  rubbing  off  another.  Put  together  it  means
    something.  But  if  there  is  not  the  free  chance  to  talk  to  those  peo-
    ple, we  may  never  reach  a  conclusion  which  is  helpful.  That  is  re-
    strictive in  our  operation.

    Other  people  feel  that  the  lead  we  have  on  the  Russians  is  our
    process  and  project  engineering  know-how-  rather  than  our  science.
    They  know  scientifically  what  we  are  doing,  but  do  not  know  just
    how  we  are  doing  it.  And  if  we  can  keep  that  information  from  them,
    we  will  get  a  lead,  maintain  a  lead,  or  make  them  work  harder  or  ex-
    pend more  effort  in  order  to  keep  up.  That  is  the  point  where  the
    security  restrictions  may  be  helpful.

    Security  is  a  restriction  on  the  development,  and  this  has  nothing  to
    do  with  whether  it  is  privately  or  publicly  owned.  Security  does
    have  a  restrictive  influence  on  the  advancement  of  any  technical
    operation.

    Chairman  Cole.  I  see.  Uranium  has  been  referred  to  as  a  weight-
    less fuel,  and  when  we  are  told  that  a  pound  of  uranium  has  the  heat
    equivalent  to  21/2  million  pounds  of  coal,  it  is  understandable  that
    people  would  get  the  conception  that  it  is  weightless.  But  that  should
    not  carry  with  it  the  implication  that  it  is  therefore  costless,  should  it?

    Mr.  Rowley.  No.

    Chairman  Cole.  Dr.  Backerley,  may  I  inquire  of  Mr.  Rowley  the
    approximate  cost  of  the  refinement  of  a  pound  of  uranium  \

    Dr.  Beckerley.  I  don't  believe  there  have  been  any  public  state-
    ments on  that.  There  have  been  statements  comparing  it  to  silver
    refining.  In  fact,  a  factor  of  10  times  the  raw  material  costs  is  a  rea-
    sonable approximation  of  a  refinery  cost.  But  there  have  been  no
    releases  of  the  dollar  values  in  the  source  material  field,  other  than
    the  ore  itself.

    Mr.  Rowley.  Our  budget  is  restricted  information.

    Representative  Price.  One  of  the  scientists  testified  that  it  took
    $10  worth  of  uranium  as  against  $10,000  worth  of  coal.

    Chairman  Cole.  That  was  assuming  a  cost  of  $10.  That  was  not
    an  affirmation  of  fact.

    If  it  is  a  subject  we  should  not  delve  into,  we  will  pass  it  up.

    Dr.  Beckerley  ?

    Dr.  Beckerley.  I  might  just  say  for  the  record  that  as  to  the  sen-
    sitivity of  some  of  the  previous  testimony,  our  concern  is  that  the
    unit  cost,  when  coupled  with  more  or  less  publicity  available  data  on
    total  cost,  will  reveal  the  amount  of  materials  put  through  the  feed
    materials  plants.  It  is  on  tliat  account  that  we  are  a  little  bit  re-
    strictive on  the  economic  data.

    398  ATOMIC    POWER    DEVELOPMENT

    Chairman  Cole.  I  do  not  expect  you  to  justify  the  decision  with
    respect  to  classification,  Dr.  Beckerley.  If  you  advise  us  it  is  classi-
    fied, that  is  enough  for  us  at  the  moment.

    It  might  be  of  interest  to  the  committee,  Mr.  Rowley,  for  you  to
    tell  the  committee  just  what  you  do  at  Fernald.  I  do  not  mean  you
    personally,  but  what  your  process  is.

    Mr.  Rowley.  We  receive  uranium-bearing  materials  from  a  variety
    of  sources,  sample  them  so  that  we  may  get  proper  assays  to  pay  the
    vendor.  We  extract  that  uranium  chemically  from  its  concentrated
    ores.  We  purify  through  chemical  operations.  The  flow  has  been
    published,  I  believe,  from  uranyl  nitrate  through  oxide  to  UF  4.
    The  metal  is  rolled  and  machined  into  reactor  fuel  elements  of  various
    sizes  and  shapes.

    Chairman  Cole.  Do  you  carry  the  process  to  the  point  of  making
    the  uranium  rods?

    Mr.  Rowley.  Yes,  beyond  that  point.

    Chairman  Cole.  Into  the  uranium  slugs?

    Mr.  Rowley.  Yes,  sir.

    Representative  Holefield.  May  I  ask  this  question,  Mr.  Chairman :

    Has  your  plant  had  any  experience  at  all  in  the  purifying  of  con-
    taminated material  ?

    Mr.  Rowley.  No,  sir.

    Chairman  Cole.  Any  further  questions?

    Mr.  Rowley.  I  might  add  that  the  Fernald  plant  is  not  fully  in
    operation,  so  some  of  these  things  we  talk  about  we  have  done  on
    pilot  plant  and  smaller  scale ;  we  do  not  have  all  of  the  plant  to  speak
    from  first  hand.

    Representative  Holifield.  Are  you  familiar  with  the  Redox  proc-
    ess ?  Would  your  company  normally  be  interested  in  that  type  of  a
    processing  service  ?

    Mr.  Rowley.  Yes.

    Chairman  Cole.  If  there  are  no  further  questions,  thank  you  very
    much,  Mr.  Rowley,  for  appearing  this  afternoon.

    The  next  meeting  of  the  committee  on  this  subject  will  be  Monday
    afternoon  at  2  o'clock,  and  we  will  not  know  until  1 :  30  of  that  day
    where  the  meeting  is  to  be.

    We  will  hear  witnesses  from  the  Edison  Electric  Institute,  Bendix
    Aviation,  American  Public  Power  Association,  and  the  New  England
    Council.

    I  should  also  call  to  the  attention  of  the  members  of  the  committee
    that  Senator  Hickenlooper  is  calling  a  meeting  of  the  Senate  mem-
    bers of  this  committee  at  4  o'clock  Monday  afternoon  in  the  District
    room  in  the  Capitol  for  the  purpose  of  considering  the  nomination
    of  Mr.  Joseph  Campbell  as  a  member  of  the  Commission.  Senator
    Hickenlooper  asked  me  to  extend  an  invitation  to  the  House  mem-
    bers of  this  committee  to  attend  and  participate  as  they  may  wish.

    The  meeting  is  adjourned.

    (Whereupon,  at  3 :  30  p.  m.,  Thursday,  July  16, 1953,  the  hearing  was
    recessed,  to  reconvene  at  2  p.  m.,  Monday,  July  20,  1953.)

    ATOMIC  POWER  DEVELOPMENT  AND  PEIYATE
    ENTERPRISE

    MONDAY,   JULY   20,    1953

    Congress  of  the  United  States,
    Joint  Comittee  on  Atomic  Energy,

    Washington^  D.  C.

    The  joint  committee  met  at  2  p.  m.,  pursuant  to  recess,  in  room
    318,  Senate  Office  Building,  Representative  W.  Sterling  Cole  (chair-
    man) presiding.

    Present:  Representative  Cole,  Senator  Pastore,  and  Representa-
    tives Patterson,  Holifield,  and  Price.

    Professional  staff  members  present :  Corbin  C.  Allardice,  executive
    director;  and  Walter  A.  Hamilton  of  the  professional  staff  of  the
    joint  committee.

    Chairman  Cole.  The  committee  will  come  to  order.

    The  first  witness  we  are  to  hear  this  afternoon  is  the  representative
    of  the  Bendix  Aviation  Corp.,  Mr.  Malcom  P.  Ferguson,  president.

    The  Bendix  Aviation  Corp.  operates  a  classified  plant  at  Kansas
    City,  Mo.,  for  the  Atomic  Energy  Commission.  It  has  also  conducted
    studies  of  special-purpose  reactor  systems,  such  as  might  be  used  in
    isolated  military  stations.

    Bendix  officials  have  indicated  an  intention  of  getting  into  the  busi-
    ness of  building  atomic  powerplants  eventually.  The  company  al-
    ready has  a  very  widely  diversified  line  of  products,  ranging  from  air-
    craft to  household  products.

    Mr.  Ferguson,  I  extend  to  you  a  very  special  and  personal  welcome
    this  afternoon  in  view  of  the  fact  that  both  you  and  I  originated  in
    the  same  part  of  the  country.  The  only  difference  between  us  is  that
    I  stayed  there  and  you  moved  out.

    In  addition  to  that  fact  of  our  personal  equation  is  the  fact  that
    your  company  has  one  of  its  main  activities  in  my  congressional  dis-
    trict at  Elmira,  N.  Y.

    I  judge  it  is  Mr.  Hyland  who  is  with  you.

    Mr.  Ferguson.  Yes.  I  would  like  to  present  Mr.  Hyland,  who  is
    vice  president  of  our  corporation  in  charge  of  engineering.

    Chairman  Cole.  We  are  very  glad  to  have  you  here,  and  we  will  be
    very  glad  to  have  your  statement,  Mr.  Ferguson.

    STATEMENTS  OF  MALCOM  P.  FERGUSON,  PRESIDENT,  AND  L.  A.
    HYLAND,  VICE  PRESIDENT  (ENGINEERING),  BENDIX  AVIATION
    CORP.,  DETROIT,  MICH.

    Mr.  Ferguson.  Thank  you.  Congressman  Cole.  I  will  proceed
    with  my  paper.

    The  Bendix  Aviation  Corp  is  very  appreciate  of  the  invitation  ex-
    tended by  your  chairman  to  testify  before  the  joint  committee  regard-

    399

    400  ATOMIC    POWER    DEVELOPMENT

    inutile  further  development  of  atomic  energy  for  peacetime  purposes.

    Because  our  corporation  is  fundamentally  an  equipment  maker  in
    the  automotive,  aircraft,  and  communications  industries,  it  has
    acquired  considerable  experience  in  the  planning  and  operations  nec-
    essary to  bring  along  the  new  products  and  processes.  Among  our  im-
    portant product  lines  are  instruments  and  controls  of  all  kinds,  and
    we  know  that  to  properly  measure,  control,  and  navigate,  it  is  neces-
    sary that  we  ourselves  have  first-hand  knowledge  of  the  primary  func-
    tions and  products  with  which  we  are  dealing.

    Hence,  as  atomic  energy  and  its  power  and  other  applications  ap-
    peared on  the  horizon,  we  began  to  direct  our  efforts  toward  acquiring
    knowledge,  organization,  and  facilities  which  would  justify  our  par-
    ticipation in  this  new  field.  We  have  developed  a  small  manufactur-
    ing division  which  specializes  in  radiation  instrumentation.  We
    have  had  for  some  time  a  nuclear  department  at  our  research  labora-
    tory where  we  have  a  balanced  staff  of  nuclear  engineers,  physicists,
    and  technicians.

    We  have  made,  largely  at  our  own  expense,  four  studies  of  power
    reactors  for  the  Commission,  have  just  completed  a  fifth  for  our
    own  purposes,  and  are  about  to  release  to  the  Commission  a  detailed
    study  of  isotope  reactors  and  markets.  We  have  operated  for  the  AEC
    since  1949  a  substantial  facility  at  Kansas  City  devoted  to  the  manu-
    facture of  electronic  and  mechanical  devices  of  various  types,  and
    several  of  the  divisions  of  Bendix  are  presently  producing  components
    and  functional  devices  associated  with  the  military  atomic  energy
    program.

    We  are,  of  course,  well  aware  of  many  of  the  problems  faced  by
    your  committee  and  of  the  political  and  security  considerations  which
    are  an  important  part  of  the  discussions  and  the  actions.  We  feel
    that  our  remarks,  however,  should  largely  be  confined  to  those  areas
    where  we  have  first-hand  experience  and  association.  We  should  like
    to  have  our  comments  interpreted  as  applying  generally  to  the  policies
    and  means  for  continuing  the  development  of  atomic  energy  for  peace-
    ful purposes,  including  power,  chemistry,  and  radiation.

    All  of  our  relations  with  the  AEC  have  confirmed  our  belief  that
    its  administration  has  been  characterized  by  high  purpose,  devotion
    to  its  responsibilities,  and  outstanding  competence.

    We  believe  that  the  Atomic  Energy  Commission  and  your  commit-
    tee have  properly  taken  the  course  of  restrictive  interpretation  of  the
    present  Atomic  Energy  Act  until  a  period  of  experience  had  been  ob-
    tained. We  believe,  too,  that  the  state  of  knowledge,  technology,  and
    military  necessity  have  heretofore  required  an  almost  complete  con-
    centration on  the  weapons  program.

    We  would  like  to  state  for  the  committee  two  broad  conclusions  to
    which  we  have  come  after  thoughtful  consideration  of  the  factors
    that  are  involved.

    It  is  our  first  basic  conclusion  that  with  the  experience  in  hand
    and  with  the  weapons  program  well  advanced,  the  time  has  now  come
    for  a  more  liberal  interpretation  of  the  present  act  and  a  stronger
    support  in  the  field  of  the  peaceful  arts.

    One  of  the  important  factors  in  any  research  and  development  oper-
    ation is  the  timeliness  of  the  decision.  Does  the  progress  warrant
    strong  support?  Should  it  be  expanded?  Should  more  people  be
    employed?     Are  the  potentials  being  developed?     We  believe  that

    ATOMIC    POWER    DEVELOPMENT  401

    tlie  committee  is  holding  its  deliberations  at  a  very  important  time  in
    the  development  of  atomic  energy,  for  we  believe  that  the  time  is  ripe
    for  a  review  of  the  progress  we  have  made  and  a  determination  of
    how  best  to  extend  our  nuclear  knowledge  into  peaceful  fields.  Some
    of  the  reasons  underlying  this  timeliness  are  the  following :

    One,  the  basic  information  for  the  design  of  thermal  reactors  for
    the  production  of  power  is  available,  although  many  difficult  develop-
    ment and  engineering  problems,  such  as  are  common  to  any  new  field,
    are  foreseen.

    Two,  the  technical  soundness  of  the  fissionable-material  breeding
    process  has  been  confirmed  by  the  Commission.  Large  power  reactors
    can  also  be  primary  emergency  sources  of  fissionable  material  of
    weapon  grade.

    Three,  the  present  active  construction  in  England  of  a  nuclear  power
    reactor  is  independent  confirmation  of  the  timeliness  of  our  own  con-
    siderations and  should  encourage  us  to  maintain  our  existing  leader-
    ship in  the  atomic-energy  field.

    Four,  the  maintenance  of  a  healthy  and  expanding  nuclear  tech-
    nology depends  upon  the  industrial  application  of  the  nuclear  arts.

    Five,  the  success  factor  of  the  activities  heretofore  undertaken  is
    astonishingly  good.

    Six,  the  minimum  time  required  to  put  a  commercial  power  reactor
    "on  the  line"  is  probably  4  or  5  years  after  authorization.  This  time
    probably  cannot  be  reduced  by  new  discoveries,  hence  delays  now  will
    put  reactor  power  correspondingly  further  into  the  future.

    The  first  three  reasons  have  been  amply  covered  in  the  previous
    testimony.    We  shall  comment  briefly  only  on  the  last  three.

    As  to  (4)  any  healthy  and  expanding  technology  requires  the  steady
    influx  of  new  people  and  the  constant  broadening  of  uses  for  its  knowl-
    edge. This  we  now  find  restrained  in  the  atomic-energy  field.  The
    ■weapons  program  is  substantial  and  rapidly  improving,  but  the  rate
    of  progress  in  peaceful  applications  under  present  law  and  policy  is
    comparatively  slow.  If  we  are  to  interest  new  people  and  find  new
    uses,  we  must  have  a  breakthrough  from  present  programs  and  re-
    straints into  the  broader  industrial  markets.  What  may  be  the  great-
    est of  all  teclinological  fields  warrants  the  widest  possible  participation
    of  industry.

    With  respect  to  (5),  the  percentage  of  successful  accomplishment
    in  the  work  of  the  Manhattan  District  and  Atomic  Energy  Commis-
    sion is  extremely  high.  This  should  give  us  confidence  in  the  judg-
    ment of  the  scientific  and  technical  people,  within  the  scope  of  tlieir
    experience,  as  they  approach  industrial  use,  and  suggests  a  readiness
    to  begin  more  extended  applications.

    Regarding  reason  (6)  on  tlie  matter  of  lead  time,  which  we  view  as
    most  important,  the  consensus  of  nuclear  engineers,  with  especial  sup-
    port from  those  who  have  built  successful  reactors,  is  that  the  time
    needed  for  critical  experiments,  final  thermodynamic  studies,  detail
    reactor  design,  site  selection,  engineering  and  architectural  designs,
    construction  and  testing  is  not  less  than  5  years  for  a  tliermal  neutron
    reactor.  It  may  be  as  much  as  10  years  for  a  fast  neutron  reactor
    where  much  research  yet  remains  to  be  done.

    Many  of  the  technical  areas  above  have  been  studied  and  restudied
    to  the  point  where  the  next  steps  can  be  taken  only  after  a  firm  na-
    tional policy  for  power  development  has  been  pronounced  by  Congress

    402  ATOMIC    POWER    DEVELOPMENT

    and  by  the  Commission,  and  the  necessary  legislative  and  regulatory
    changes  made  to  encourage  wider  industrial  participation.  Until
    such  a  policy  is  decided  upon  each  passing  day  is  a  day  added  to  the
    years  before  atomic  power  can  be  "on  the  line."

    Our  second  conclusion  is  that  broad  progress  of  atomic  development
    should  not  be  confined  to  any  single  concept ;  nor  should  it  be  chan-
    nelized in  any  one  direction.  Greater  private  participation  may  take
    many  forms,  determined  by  the  specific  needs  and  opportunities  of
    particular  projects  and  the  appropriate  contributions  by  both  the
    Govermnent  and  private  industry.  What  the  Government  has  to  ^ive
    is  a  fund  of  information  and  experience  already  acquired,  a  continu-
    ing requirement  for  further  developments  applicable  to  military  needs,
    and  invaluable  support  growing  out  of  its  interest  in  the  public  welfare.

    What  industry  has  to  give  is  the  dynamic  energy  that  derives  from
    commercial  incentive,  the  selective  judgment  required  for  profit,  the
    cost  control  resulting  from  competition,  and  the  diversity  of  applica-
    tion that  is  born  of  the  sheer  numbers.

    The  specific  combination  of  the  capabilities  and  participation  of
    Government  and  industry  should  vary  with  the  requirements  of  each
    particular  project.  We  bespeak  broad  purpose  and  administrative
    latitude  for  the  Commission  as  the  best  means  to  arrive  at  the  most
    effective  combinations.

    In  reaching  these  conclusions  several  considerations  have  seemed
    to  us  to  have  great  significance.    I  will  discuss  them  briefly.

    Private  industry  is  now  evidencing  in  a  conspicuous  way  both  enthu-
    siasm and  hesitancy  toward  the  potentialities  which  lie  in  the  field  of
    nuclear  development.  Whenever  organizations  such  as  the  National
    Industrial  Conference  Board,  the  NAM,  and  others  have  scheduled
    conferences  on  private  industry's  interest  in  this  field,  the  meetings
    have  been  extremely  well  attended.  Interest  is  undoubtedly  high,
    but  the  unique  legislative  and  administrative  restrictions  hedging  this
    new  frontier  unquestionably  are  retarding  what  otherwise  might  be
    progress  on  a  broad  and  diversified  front.

    The  hard  business  view  about  the  peaceful  applications  of  atomic
    energy  is  that  development  has  not  yet  proceeded  to  the  point  where
    large  commercial  markets  or  opportunities  are  likely  to  be  profitable
    in  the  near  future.  With  respect  to  power,  we  know  that  it  is  possible
    to  generate  heat  by  nuclear  processes  and  that  from  this  heat,  power
    for  the  propulsion  of  certain  naval  vessels  can  be  obtained  where
    performance  and  other  factors  are  more  important  than  cost.

    There  is  as  yet,  in  our  opinion,  no  clear  evidence  that  power  can
    be  generated  at  a  cost  which  can  successfully  compete  with  hydraulic,
    steam,  and  diesel  equipment  in  the  commercial  market.  We  do  not
    regard  this  circumstance,  which  has  been  supported  by  expert  testi-
    mony, as  either  confusing  or  disheartening  but  rather  as  evidence  of
    the  lack  of  sufficient  facts  and  experience  upon  which  to  base  a  sound
    investment.  When  facts  are  lacking,  opinions  do  vary.  The  remedy
    is  to  do  whatever  additional  research  and  development  are  required
    to  provide  those  facts.

    The  development  of  any  new  energy  principle  always  has  been  a
    painful  process.  Steam,  gas  engines,  and  diesels  all  had  their  problems
    and  in  their  original  concepts  were  not  economically  competitive  with
    the  then  existing  prime  movers.    As  a  matter  of  fact,  they  are  today

    ATOMIC    POWER    DEVELOPMENT  403

    competitive  with  each  other  only  in  certain  overlapping  areas  and
    each  has  found  a  particular  place  in  our  industrial  system,  arrived  at
    only  after  extensive  experiment,  trial  and  error,  improvement,  adap-
    tation, and  free  selection.

    To  confine  the  development  of  power  reactors  to  units  of  100,000
    kilowatts  or  larger  would  prejudge  a  potential  usefulness  before  most
    of  the  facts  had  been  determined.  There  is  frequently  a  tendency
    in  undertaking  a  new  enterprise  where  the  facts  are  limited,  to  shoot
    for  goals  that  are  too  high.  This  might  be  likely  in  the  atomic-power
    program  whereby  the  very  nature  of  the  materials  and  our  experiences
    to  date  lead  us  to  talk  about  huge  amounts  of  energy  and  tremendous
    installations.

    In  our  opinion  there  should  also  be  separate  developments  of  powers
    of  10,000  kilowatts,  100,000  kilowatts,  100  kilowatts,  and  perhaps  even
    of  10  kilowatts  in  order  that  both  technical  and  economic  information
    shall  be  ascertained  over  the  whole  range  of  this  potential  energy
    source.  Furthermore,  it  is  not  unlikely  that  these  smaller  power  units
    may  very  well  provide  useful  pilot  plant  information  leading  to  the
    more  effective  development  of  the  long-term,  large-scale  units.

    It  is  well  to  bear  in  mind  that  there  is  50  times  as  much  engine
    power  used  from  small  units  in  this  country  as  is  generated  by  the
    facilities  of  the  utility  industry.

    With  respect  to  the  chemistry  and  radiation  fields,  the  situation
    is  somewhat  different.  No  large  specific  applications  such  as  weapons
    or  power  have  yet  emerged  to  focus  development  in  these  fields  upon
    promising  commercial  areas.  Our  studies  in  these  fields,  however,
    have  led  to  the  same  conclusions  reached  as  to  power;  for  example,
    that  the  development  as  yet  has  not  proceeded  to  the  point  where
    major  commercial  opportunities  can  now  be  profitably  undertaken.
    That  is,  however,  a  normal  state  of  affairs  in  any  new  art  and  is  a
    problem  faced  by  managers  within  Government  and  industry  almost
    daily.  Because  atomic  energy  is  such  a  tremendous  force,  the  facts
    to  be  faced  have  big  dollars  attached  to  them,  but  their  basic  signifi-
    cance is  no  different  from  those  frequently  met  within  other  research
    activities.

    Our  studies  of  isotope  and  radiation  potentialities  indicate  to  us
    the  need  for  a  reactor  having  a  high  neutron  flux  whose  exclusive  pur-
    pose might  be  the  production  of  isotopes.  Encouraging  progress  has
    been  made  by  the  use  of  several  Commission  facilities  to  provide  a
    fair  range  of  research  and  production  isotopes.  This  has  been  accom-
    plished, however,  by  the  sometimes  inefficient  use  of  research  reactors
    designed  for  other  purposes  or  by  occasional  liel]>  from  reactors  en-
    gaged in  the  primary  production  of  military  plutoniuni.

    We  want  to  emphasize  the  potential  importance  of  nuclear  chem-
    istry and  radiation.  In  our  opinion,  they  may  ultimately  prove  to  be  as
    valuable  as  power  in  the  industrial  world ;  or,  as  byproducts  resulting
    from  or  combined  with  prime  uses,  tliey  may  assure  an  overall  success-
    ful venture.     More  study  and  more  support  is  needed  in  this  area.

    The  pattern  of  other  great  national  laboratories  may  very  well  be
    a  helpful  guidepost  during  the  transition  of  atomic  energy  from  mili-
    tary to  peaceful  uses.  The  National  Advisory  Committee  on  Aero-
    nautics is  a  fine  example  of  a  Government  institution  which  provides
    basic  data  Avith  special  facilities  and  personnel  which  are  normally

    404  ATOMIC    POWER    DEVELOPMENT

    directed  to  the  general  advancement  of  the  aviation  art  but  which  in
    time  of  necessity  direct  their  efforts  particuLarly  to  the  solution  of
    military  problems.

    The  free  flow  of  basic  information  from  the  NACA  has  provided
    a  valuable  foundation  stone  in  the  present  aviation  structure  of  the
    country,  both  military  and  civil.  It  is  noteworthy  that  NACA  gen-
    erally limits  its  activities  to  research  and  that  industry  with  militarj''
    and  civilian  requirements  and  specifications  accomplishes  the  engi-
    neering and  designs  of  the  planes,  the  engines,  and  the  components
    that  are  in  military  and  civil  use  today.  A  cooperative  program
    utilizing  industry  and  free  enterprise  to  its  fullest  has  been  developed
    over  years  of  progress,  and  while  atomic  energy  may  not  be  so  simply
    viewed,  the  broad  principles  of  such  an  apploach  are  before  us.

    We  believe  it  is  generally  realized  that  new  ground  must  be  broken
    in  working  out  policies  and  procedures  tliat  open  the  atomic-energy
    field  to  private  competitive  enterprise.  For  perhaps  the  first  time  a
    huge  industry,  based  upon  a  new  technology,  has  come  into  being
    almost  as  a  Government  monopoly.  The  familiar  pattern  whereby
    private  industry  has  pioneered  the  use  of  new  technologies  for  the
    greater  well-being  of  the  people  is  not  fully  applicable.  That  past
    industrial  pattern  has  involved  private  investment  with  the  use  of
    judgment  in  appraising  risks  and  possibilities  of  profit  in  a  market  in
    which  the  Government  did  not  have  any  such  original  position,  or
    where  considerations  such  as  the  continuing  military  role  of  atomic
    energy  did  not  have  to  be  taken  into  account.

    We  do  have,  however,  such  precedents  as  aircraft,  radar,  and  guided
    missiles  to  point  to  as  evidence  that  private  industry  can  shoulder,
    in  the  competitive  market,  more  and  more  of  the  responsibility  for
    developing  such  new  industrial  lines,  while  preserving  the  Govern-
    ment's interest  in  their  military  applications.

    We  feel  that  the  attitude  toward  security  requires  thoughtful  re-
    study  in  the  light  of  the  opportunities  that  wider  understanding  of
    nuclear  developments  hold  for  the  Nation.  We,  in  the  Bendix  Avia-
    tion Corp.,  have  operated  in  policy  and  technical-security  areas  in
    association  with  the  military  departments  for  many  years.  We  speak
    from  much  experience  and  conviction  with  respect  to  security.

    Presently  there  is  little  distinction  in  the  atomic-energy  field  be-
    tween the  security  of  ATea]ions  and  the  security  of  matters  relating  to
    industrial  uses.  We  believe  that  there  should  be  degrees  of  security,
    as  in  the  military  services,  with  weapons  and  military  power  as  top
    security  and  lower  or  no  security  classification  for  other  matters.  We
    also  advocate  the  policy  of  security  by  progress  rather  than  security
    by  pi'ohibition.  We  believe  that  we  have  more  to  gain  in  the  stimu-
    lation of  new  ideas  by  the  judicious  exchange  of  information  in  this
    area  than  we  would  lose  to  any  enemy  by  removal  of  the  virtually  com-
    plete exclusions  now  in  being.

    We  further  believe  that  such  a  plan  of  security  gradation  can  be
    effectively  and  efficiently  applied  by  industry  participating  in  the
    commercial  phases.

    We  are  sure  that  other  factors,  in  addition  to  rigid  security,  which
    may  be  exerting  a  retarding  influence,  can  be  dealt  with  effectively.
    For  example,  we  favor  safety  mea'sures  to  protect  life  and  property,
    but  it  is  well  to  bear  in  mind  that  potential  hazards  are  present  in  a
    wide  variety  of  activities.    Many  industries  experience  potential  haz-

    ATOMIC    POWER    DEVELOPMENT  405

    ards,  and,  in  fact,  accidents  have  caused  considerable  loss  of  life  and
    property.  However,  we  still  have  large  oil  refineries  reasonably  close
    to  populated  areas  and  antiaircraft  ammunition  dumps  near  our  large
    cities.  We  would  like  to  enter  the  plea  that  atomic-energy  hazards  be
    treated  in  the  same  manner  as  other  industrial  hazards  with  due  re-
    gard to  favorable  experience  and  industry's  ability  and  Imowledge  to
    handle  them  under  certain  regulatory  requirements.

    It  is  our  opinion  that  the  subject  of  patent  policy  should  also  be
    faced  constructively.  The  American  patent  system  has  succeeded  in
    giving  strong  incentive  to  invention.  Inventive  stimulation  under
    this  system  is  as  great  for  detailed  improvements  as  it  is  for  broad
    basic  invention,  so  that  individuals  and  companies  are  encouraged  to
    promote  technological  progress  within  their  own  fields  and  to  the
    extent  of  their  individual  capabilities.

    We  are  particularly  familiar  with  the  borders  of  invention  which
    may  surround  any  prime  device  or  process,  for  much  of  our  business
    has  to  do  with  the  instruments  and  controls  which  are  accessory  or
    component  devices.  In  many  cases  the  prime  device  could  not  func-
    tion without  the  specialized  assistance  of  the  component  which,  though
    created  for  one  field,  may  be  found  to  apply  to  many  other  purposes.

    The  far-reaching  development  and  continuations  from  a  basic  con-
    cept are  beyond  the  scope  of  any  imagination.  As  an  example,  vehicle
    brakes  have  been  known  for  a  thousand  years,  yet  recent  develop-
    ments in  plastics,  ceramics,  mechanics,  hydraulics,  electricity,  and
    magnetism  are  all  employed  in  current  improved  brake  devices.  Could
    anyone  have  foreseen  this?  Many  of  us  sometimes  little  realize  the
    diverse  and  detailed  scrutiny  to  which  every  new  bit  of  information  is
    subjected  by  the  technical,  sales,  procurement,  and  production  people
    in  industry.  In  our  opinion  a  too  restrictive  policy  applied  to  a  basic
    concept  such  as  atomic  energy  may  stifle  needed  and  important  inven-
    tion not  only  in  its  own  field  but  in  many  contemporary  arts.  We
    therefore  recommend  application  of  the  benefits  of  the  normal  Ameri-
    can patent  system  to  atomic  energy  to  the  fullest  extent  consistent
    with  the  national  security.

    A  similar  situation  is  found  in  the  Department  of  Defense  where
    the  considerations  of  Government  interest,  patent  incentive,  and
    secrecy  have  required  resolution.  The  present  military  procurement
    policy  which  qualifies  patent  rights  in  accordance  with  the  individual
    contract  circumstances  is  a  workable  arrangement  w^hich  is  in  the
    interest  of  both  Government  and  industry.  Our  present-day  aircraft
    testify  to  the  benefits  of  incentive  at  work  in  a  growing  industry.

    Complexity,  cost,  and  sheer  magnitude  are  unique  factors  in  atomic-
    power  development  which  must  always  be  borne  in  mind.  If  we
    examine  almost  any  other  technical  development,  it  has  always  been
    true  that  1  or  2  men  with  limited  resources  could  undertake  the  de-
    velopment job,  produce,  and  demonstrate  an  operative  device.  Ex-
    amples of  these,  of  course,  are  the  Wright  brothers,  Henry  Ford,
    Alexander  Graham  Bell.  Edison,  and  uncounted  thousands  of  others
    who  have  taken  a  great  faith  and  backed  it  with  their  untiring  efforts
    to  produce  a  new  and  useful  device.

    Pei-haps  it  is  indicative  of  the  revolution  to  be  brought  about  by
    the  atomic  age  that  no  such  singlehanded  and  simple  approach  is
    possible  for  the  development  of  atomic  power;  that  this  great  new
    force  can  only  be  promoted  by  the  application  of  manj^  diverse  skills,

    406  ATOMIC    POWER    DEVELOPMENT

    with  support  from  industries,  both  large  and  small,  with  attention
    to  the  national  security,  and  with  the  blessing  of  the  whole  people^
    Thus,  it  devolves  upon  the  Congress,  as  represented  by  your  com-
    mittee, and  upon  the  Commission  to  act  as  a  body  with  the  inspiration^
    the  courage,  and  the  energy  which  have  been  typified  by  our  great
    American  inventors  and  to  overcome  the  obstacles  that  presently  re-
    tard the  broad  development  of  atomic  power.

    Industry  has  already  recognized  the  breadth  and  complexity  of  the
    approach  to  the  development  of  industrial  power.  For  example,  the
    Detroit  Edison-Dow  Chemical  group  with  which  we  hope  to  work  is
    actively  studying  and  organizing  to  play  the  industrial  part  in  the
    cooperative  effort  which  must  be  made.  Other  groups — note  the  group
    approach — are  similarly  engaged,  many  of  them  in  combination  with
    university  research  institutions  or  advisers.  Small  and  large  indus-
    tries are  teaming  up  together.  The  future  potential  of  these  many
    and  different  group  approaches  is  tremendous.

    This  diversified  attack  on  a  new  industrial  opportunity  is  a  char-
    acteristic of  the  competitive  system  and  should  have  legislative  and
    administrative  encouragement.  The  testimony  already  before  your
    committee  and  the  recommendations  from  the  Commission  itself  have
    suggested  many  of  the  areas  for  legislative  change.

    In  conclusion,  we  of  the  Bendix  Aviation  Corp.  would  sum  up  our
    views  in  four  points,  which  we  believe  merit  emphasis  in  the  delibera-
    tions of  your  committee :

    One,  that  both  political  and  technical  developments  show  that  the
    time  for  industrial  atomic-energy  development  has  arrived.

    Two,  that  this  great  new  force  must  be  developed  by  and  with  the
    mutual  support  of  governments,  industry,  and  science.

    Three,  that  we  should  interpret  the  present  law  in  a  broad  rather
    than  a  restrictive  sense,  implement  its  purposes  to  the  maximum,  and
    adopt  a  clear  policy  for  development  of  atomic  energy  for  peaceful
    purposes.

    Four,  that  new  legislation  should  permit  broad  latitude  in  the  admin-
    istration of  the  law  to  the  end  that  sound  industrial  development
    shall  be  fostered,  that  the  necessary  flow  of  knowledge  shall  be  en-
    couraged, and  that  the  Nation  shall  be  adequately  secured  against  the
    improper  use  of  this  tremendous  energy.

    Chairman  Cole.  Thank  you,  Mr.  Ferguson.  You  have  given  us  a
    very  thoughtful  statement,  well  expressed  and  very  well  delivered.

    On  the  question  of  patents,  as  you  no  doubt  know,  there  is  a  resist-
    ance in  some  quarters  to  allowing  private  capital  to  take  advantage  of
    patents  that  might  be  obtained  on  improvements  in  the  present  knowl-
    edge of  the  art,  since  the  present  state  of  the  art  has  been  reached
    through  Federal  funds.  You  have  indicated  that  it  is  your  belief  that
    the  patent  restrictions  should  be  relaxed  so  as  to  bring  into  play  the
    normal  influences  which  would  cause  private  enterprise,  industry,  and
    ingenuity  to  become  active  in  the  field,  with  the  hope  of  being  rewarded
    for  the  success  of  their  activities.

    I  would  like  to  have  your  thought  on  the  effect  of  relaxing  the
    patent  provisions  to  the  extent  of  permitting  an  inventor  to  have  the
    exclusive  right  to  his  invention  for  any  purposes  in  this  country,  but
    requiring  of  him  that  he  release  to  the  Government  the  ownership  of
    that  patent  so  far  as  its  uses  in  foreign  countries  are  concerned.

    ATOMIC    POWER    DEVELOPMENT  407

    I  suggest  that  thought  out  of  two  considerations.  One  is  that  if  the
    Oovernment  retains  the  foreign  rights  to  any  patent  devolved  from
    the  knowledge  gained  through  the  expenditure  of  public  funds  up  to
    this  time,  that  investment  might  be  partially  recaptured  through  con-
    trol of  foreign  use;  and  also  because  of  the  part  which  this  country
    as  a  government  must  necessarily  play  in  a  large  measure  in  the  atomic
    field  in  dealing  with  foreign  countries.  Then  there  are  other  aspects,
    such  as  the  raw  material  sources,  the  announced  Government  policy
    of  helping  underprovided  and  distress  areas  of  the  world,  and  the
    normal  interchange  of  Government  responsibilities.

    Do  you  think  that  such  an  idea  as  that  might  still  provide  sufficient
    incentive  to  private  capital  to  work  in  this  field,  perhaps  not  as  a
    permanent  policy  of  Government  but  simply  as  an  intermediate  policy
    to  cover  the  intervening  period  between  the  present  and  the  time
    Tvhen  the  industrial  uses  of  atomic  power  will  have  been  proved
    and  we  can  relax  the  law  far  more  completely  than  is  now  considered.

    Mr.  Ferguson.  As  an  intermediate  step,  I  think  it  has  good  possi-
    hilities  from  both  the  industry  and  Government  viewpoints,  and  par-
    ticularly in  all  the  phases  that  may  deal  with  national  security  or
    military  end  product,  or  application  where  the  Government  would
    fundamentally  be  interested  in  both  the  domestic  and  in  the  foreign
    usage  factor.

    In  the  later  stages  of  it  and  in  the  commercial  aspects  of  it,  I  think
    we  would  have  to  recognize  that  any  commercial  enterprise  in  our
    country  has  broad  foreign  investments,  frequently,  broad  foreign
    associates,  to  make  the  most  of  the  commercial  product  available
    abroad.  So  I  think  you  could  not  take  it  as  a  permanent  policy,  but
    as  an  interim  policy  during  this  transition  stage  and  in  the  interest
    •of  national  security  I  think  it  would  be  very  sound  ,and  from  my
    view^point  as  one  industrialist,  I  would  favor  such  a  policy.

    Mr.  Hyland.  May  I  comment  on  that,  Mr.  Chairman?

    Chairman  Cole.  Certainly.    I  would  welcome  it.

    Mr.  Hyeand.  There  is  one  aspect  of  atomic  energy  that  appears  to
    me  to  be  very  important  with  respect  to  the  development  of  power,
    and  that  is  the  tremendous  electrical  technological  development  that
    has  taken  place  in  this  country,  plus  the  fact  that  in  effect,  we  are  sit-
    ting on  huge  fuel  beds  of  coal  and  oil  and  water  power,  so  to  speak.

    From  the  purely  competitive  standpoint,  it  is  quite  likely  that  there
    are  many  other  areas  of  the  world  than  the  United  States  that  could
    more  effectively  and  economically  today  use  atomic  power.  So  we
    must  not  lose  sight  of  those  markets.

    I  do  think,  however,  that  in  order  to  strengthen  the  Government's
    hand,  keeping  in  mind  those  foreign  needs,  and  to  give  suitable  recog-
    nition to  the  fact  that  security  policy,  in  trading,  must  be  considered
    of  first  importance,  as  the  first  stage  in  the  development  of  our  policy
    we  would  be  well  advised  to  limit  the  commercial  exploitation  of
    foreign  patent  rights.

    I  don't  think  we  should  lose  sight  of  perhaps  the  real  need  for
    atomic  energy  in  some  of  the  foreign  areas,  even  tliough  we  do  not  now
    give  the  unlimited  privilege  to  use  our  patents  in  those  areas  at  the
    present  time.

    Chairman  Cole.  If  the  patents  were  permitted  to  inventors  but
    their  right  limited  to  the  continent  of  the  United  States,  do  you  think

    408  ATOMIC    POWER    DEVELOPMENT

    that  would  provide  sufficient  incentive  for  them  to  become  active  in  the
    field?

    Mr.  Hyland.  I  believe  it  would  as  a  first  step.

    Chairman  Cole.  Would  not  that  incentive  be  substantially  as  great
    as  though  they  had  the  patent  rights  throughout  the  world  ?

    Mr.  Hyland.  I  think  so,  for  the  reason  that  undoubtedly  the  Gov-
    ernment may  want  to  be  just  as  anxious  as  we  are  to  exploit  these
    other  areas,  except  that  it  could  be  done  in  an  orderly  and  protected
    fashion.

    Mr.  Ferguson.  May  I  make  a  comment,  Congressman  Cole  ?

    Chairman  Cole.  Surely.

    Mr.  Ferguson.  There  is  one  thing  when  we  come  to  the  commercial
    world  market  that  we  cannot  lose  sight  of.  While  it  is  a  far  reach
    from  where  we  are  today  in  atomic  energy,  let's  say  that  the  Bendix
    Aviation  Corp.  were  able  to  develop  some  sort  of  handling  device,  a
    hydraulic  or  electrical  handling  device  that  was  used  in  a  commercial
    phase,  let  us  say  for  the  whole  power  industry.  Let  us  say  it  had  no
    connection  with  the  military  phase  and  no  connection  with  the
    prime  product  itself.  It  is  a  mechanical  or  electronic  gadget,  as
    we  call  it.  If  that  became  a  standard  item  in  industry,  as  many  things
    we  produce  are,  we  have  the  problem  of  the  exportation  of  that  item
    to  the  world.  Where  we  do  not  have  a  patent  background  or  at  least
    a  neutral  patent  position  in  those  countries,  we  couldn't  develop  the
    export  market.

    Industry  must  see  the  potential  of  developing  this  export  market.
    In  fact,  it  is  in  the  best  interests  of  our  Government  that  it  should
    do  so.

    So  all  industry  is  interested  in  not  giving  away  or  signing  away  its
    right  to  develop  its  own  export  market  on  standard  items,  and  par-
    ticularly in  servicing  the  items  which  might  be  shipped  out  of  this
    country.

    That  is  looking  away  out  in  the  future,  and  it  is  a  rather  detached
    phase  of  atomic  energy  as  we  think  about  it  toda;/,  but  nevertheless  in
    these  longer  range  facets  of  what  we  are  talking  about,  we  cannot  over-
    look that  fact.

    Our  plea  on  the  patent  situation  is  this:  Here  we  are  today  up  in
    the  heart  of  a  funnel,  a  very  restricted  region,  a  very  basic  region  in
    the  atomic-energy  field.  We  would  like  to  see  this  funnel  develop  out
    like  this  [indicating]  with  thousands  of  industries  coming  into  these
    outlying  regions,  where  hundreds  of  thousands,  literally  that,  types
    of  devices  may  be  invented  in  the  next  20  or  30  or  40  years  applicable
    to  this  tremendous  technology.

    All  you  have  to  look  at  is  the  automobile  as  an  example.  You  have
    heard  of  the  Selden  patent.  The  Selden  patent  was  basic  to  the  auto-
    mobile engine.  Mr.  Ford  worked  years  to  break  that  patent.  The
    patent  situation  surrounding  the  prime  mover  in  the  automobile  field
    has  been  forgotten  about  many,  many  years  ago,  and  instead  we  have
    hundi-eds  of  thousands  of  patents  today  applying  to  almost  inconse-
    quential tilings  in  the  automotive  art.

    I  do  not  know  how  many  patents  there  might  be  in  just  a  brake
    alone,  but  I  would  guess  there  have  been  over  10,000  patents  applied
    for  just  on  a  brake  alone.

    It  is  the  stimulation  of  that  broad  development  of  the  future  that
    we  would  like  to  see  put  into  this  atomic-energy  picture  at  the  earliest

    ATOMIC    POWER    DEVELOPMENT  409

    possible  date  as  it  can  be  opened  up  to  industrial  use.  That  is  looking
    a  long-  way  in  the  future,  but  we  have  to  start  that  stimulation  in
    some  way  to  bring  industry  into  this  picture.

    Chairman  Cole.  Our  problem  would  be  greatly  simplified  if  it
    were  possible  to  place  in  independent  categories  the  weapon  phase  of
    atomic  energy  and  the  industrial,  nonmilitary  phase,  but  that  is  im-
    possible.

    Mr.  Ferguson.  I  understand  it  would  be.

    Chairman  Cole.  So  your  illustration  of  the  procedures  in  connec-
    tion with  guided  missiles  and  all  those  extremely  important  military
    weapons  is  not  exactly  applicable  as  guideposts  in  this  field,  because
    the  guided  missile  has  no  peacetime  use.  But  the  same  atomic  reactor
    that  might  generate  electric  power  with  suitable  adjustments  can  make
    weapon  material.

    Mr.  Ferguson.  I  cited  those  as  examples  of  cooperative  enterprise
    between  the  Government  and  industry  in  the  development  phase,  and
    how  the  Government  has  been  and  is  adequately  protected  toda}^  in  the
    military  phase  of  those  items,  and  industry  has  a  stimulation  on  the
    commercial  phase  such  as  in  the  radar  phase,  to  take  advantage  of
    what  ever  its  developments  may  be  and  to  put  risk  money  into  it,  in
    hopes  the  commercial  phase  may  be  stimulated.

    The  first  radar  we  built  was  a  radar  during  World  War  II  for
    nothing  but  governmental  purposes,  but  today  we  are  building  an  off-
    shoot to  that  radar  which  is  used  for  commercial  aircraft  guidance
    and  used  very  widely  throughout  the  world.  We  were  stimulated  to
    go  into  it  in  World  War  II,  recognizing  that  it  had  that  potential.
    I  do  not  think  the  military  lost  anything  because  they  had  very  sub-
    stantial control  over  it  for  a  long  time.

    Chairman  Cole.  Furthermore,  because  of  the  simultaneous  duality
    of  atomic  energy  for  industrial  and  weapon  production,  that  makes  it
    all  the  more  important,  it  seems  to  me,  that  our  Government  should
    retain  as  far  as  possible  a  degree  of  control  over  tlie  use  of  lessons
    learned  and  discovered  in  this  coutnry  when  applied  and  used  in
    foreign  countries,  because  it  might  be,  it  is  conceivable  that  it  might
    be  advisable  for  a  new  idea  of  production  to  be  withheld  from  some
    governments  abroad.

    Mr.  Ferguson.  I  agree  heartily.

    Chairman  Cole.  Wliereas  if  the  patent  laws  were  relaxed  so  that
    the  inventor  would  have  the  normal  exercise  of  rights  over  his  patent,
    he  could  control  it  at  any  place  in  the  world,  depending  upon  the
    discretion  of  the  individual,  unless  the  Government  should  pass  some
    law  to  confiscate  it.

    In  the  early  part  of  your  statement,  INIr.  Ferguson,  you  indicated
    that  your  company,  Bendix,  had  made  a  good  bit  of  study  and  re-
    search in  this  fielci,  largely  at  your  own  expense.  I  was  curious  to
    know  the  extent  of  your  studies.  How  long  has  your  company  been
    engaged  in  this  field  !^  How  many  employees  of  the  company  have
    been  engaged  in  it?  How  much  of  your  own  money  have  you  spent
    in  it?

    Would  you  tell  us  that  ?

    Mr.  Ferguson.  Our  first  interest,  of  course,  was  when  we  negotiated
    the  contract  with  the  Commission  to  operate  the  Kansas  City  plant
    in  1949.  and  because  of  our  interest  in  that  program  at  the  time,  we

    410  ATOMIC    POWER    DEVELOPMENT

    began  to  think  abont  a  broader  interest  thereafter.  I  would  say  it
    was  about  1950  that  we  began  to  spend  a  little  bit  of  our  own  money
    in  it,  perhaps  1951  before  we  did  much  and  created  the  research  divi-
    sion in  Detroit.

    We  do  not  have  a  large  number  of  people  employed  in  this  phase,
    even  now.  I  asked  Mr.  Hyland  to  get  together  a  little  report  on  what
    we  had  invested  in  it  at  the  present  time.  Our  financial  figures,  com-
    pared to  $12  billion,  isn't  very  much  money;  still  this  shows  that  we
    have  expended  of  our  own  funds  so  far  a  little  over  $500,000,  up  to  the
    present  time,  plus  $207,000  in  capital,  or  about  $725,000  of  our  own
    money  has  been  put  into  the  research  laboratory,  into  an  instrument
    operation  which  we  have  at  one  location,  and  into  our  cost  on  several
    studies  we  have  made,  as  compared  to  what  we  have  collected  for  the
    studies.

    Mr.  Htland.  Mr.  Cole,  that  is  independent  of  what  I  might  say  is
    the  disproportionate  amount  of  executive  time  which  has  been  spent
    because  of  the  general  interest  in  the  field.

    Mr.  Ferguson.  This  is  the  cost  of  engineers,  direct  labor,  and  detail
    people.

    Chairman  Cole.  Approximately  how  many  people  have  you  engaged
    in  the  program  ?

    Mr.  Hyland,  About  100,  overall.

    Chairman  Cole.  Have  they  had  free  access  to  the  Commission's
    information  ?

    Mr.  Hyland.  I  would  say  perhaps  30  of  them  have  had  rather  free
    access,  and  I  must  say  that  the  Commission  people,  where  security  was
    involved,  have  been  most  generous  in  their  help  in  the  various  studies,
    have  withheld  nothing,  and  have  been  as  careful  to  present  the  bad
    side  of  the  picture  as  the  good  side.

    Chairman  Cole.  In  Mr.  Ferguson's  statement  on  page  2  he  states
    that  the  time  has  now  come  for  a  more  liberal  interpretation  of  the
    present  act  and  a  stronger  support  in  the  field  of  the  peaceful  arts.

    That  leads  me  to  inquire  if  it  is  your  view,  Mr.  Ferguson  that  much
    of  the  goal  which  you  feel  should  be  sought  can  be  accomplished  by
    revised  interpretation  of  the  present  law  rather  than  a  change  in  the
    law  itself?

    Mr.  Ferguson.  I  think  I  would  agree  with  that,  Congressman  Cole,
    except  the  definition  of  the  word  "much."  I  think  considerable  can
    be  accomplished  under  the  present  act  as  I  read  the  act  and  as  I  under-
    stand it.

    I  think  that  the  broad  possibilities  of  the  entire  field  do  require
    legislative  change.  As  I  mentioned  later  on  in  my  statement,  I  would
    like  to  see  some  broad  legislative  changes  made  which  would  give  more
    latitude  to  the  Commission,  or  whatever  regulatory  body  was  estab-
    lished, to  permit  industrial  participation.

    Certainly  we  have  the  matter  of  ownership  of  material,  which
    probably  is  not  possible  under  the  present  act.  We  have  the  owner-
    ship of  facilities,  that  is  of  questionable  character  under  the  present
    act.

    I  would  like  to  see  these  items  and  others,  perhaps,  made  possible
    under  certain  regulatory  procedures.

    Chairman  Cole.  It  is  possible  now,  is  it  not,  for  you  to  build  an
    atomic  facility  with  the  permission  of  the  Commission,  by  arrange-
    ment with  the  Commission?

    ATOMIC    POWER    DEVELOPMENT  411

    Mr.  Ferguson.  Build  and  own  it?  I  do  not  think  that  it  would
    be  possible  for  Bendix  Aviation,  for  instance,  to  build  a  small  re-
    actor and  to  get  and  own  the  material  which  would  be  needed  to  op-
    erate it.

    Chairman  Cole.  I  am  just  talking  about  the  facilities.

    Mr.  Ferguson.  Wouldn't  it  be  sort  of  worthless  if  you  couldn't
    have  material  in  it?

    Chairman  Cole.  Let  us  take  it  one  step  at  a  time.  Is  it  not  possible
    for  you,  if  you  want  to,  by  arrangement  with  the  Commission,  to
    build  an  atomic  facility  ?

    Mr.  Ferguson.  To  build  a  reactor?

    Chairman  Cole.  Yes.

    Mr.  Ferguson.  I  don't  see  any  reason  why  we  couldn't.

    Chairman  Cole.  To  use  the  facility,  you  would  have  to  have  some
    fuel.  Is  it  not  possible  now  for  you  to  obtain  the  use  of  that  fuel
    by  arrangement  with  the  Commissfon?

    Mr.  Ferguson.  I  understand  the  Commission  does  loan  fuel;  yes.
    In  fact,  they  have  loaned  us  certain  fuel  elements  for  some  of  our
    study  w^ork.

    Chairman  Cole.  How  important  do  you  think  the  question  of  the
    ownership  of  the  fissionable  material  is  in  this  problem  of  inducing
    greater  activity  in  the  private-enterprise  field?  I  am  talking  about
    ownership  as  contrasted  to  use.

    Mr.  Ferguson.  In  the  first  place,  I  do  not  want  to  talk  from  the
    power  viewpoint,  because  you  know  that  I  have  no  familiarity  beyond
    a  certain  amount  of  general  knowledge  of  the  power  field  itself.

    Chairman  Cole.  But  your  company  is  very  anxious  to  get  into
    the  business  of  building  power  reactors.

    Mr.  Ferguson.  That  is  correct.  Looking  at  the  general  reactor
    situation,  it  seems  to  me  that  eventually — I  am  not  talking  about
    tomorrow,  but  eventually  we  must  see  the  industrial  participant  given
    the  right  of  ownership  of  the  material  that  he  is  both  using  and  per-
    haps dissipating.  Certainly  he  would  be  dissipating  this  material
    in  any  use  he  might  make  of  it.

    I  would  think  that  not  to  have  control  over  the  dissipation  of  it
    by  right  of  ownership  might  not  give  liim  the  freedom  that  he  would
    want  to  make  a  large  capital  risk  in  the  venture.

    I  want  to  say  that  I  think  this  transition  period  is  a  very  difficult
    one.  I  fully  appreciate  that.  And  I  am  a  great  advocate  of  going
    into  the  transition  period  as  carefully  and  as  thoughtfully  as  we  can
    to  work  toward  this  industrial  participation.

    Chairman  Cole.  At  any  rate,  your  position  is  that  there  should
    be  some  relaxation  in  the  law  itself

    Mr.  Ferguson.  That  is  my  position,  yes.

    Chairman  Cole.  In  order  to  attract  the  degree  of  interest  and  ac-
    tivity on  the  part  of  industry  and  private  capital  to  work  in  the  field
    toward  making  greater  progress?

    Mr.  Ferguson.  That  would  be  my  opinion,  sir.

    Chairman  Cole.  Do  you  have  any  suggestions  regarding  specific
    changes  in  the  law?

    Mr.  Ferguson.  I  have  none.  I  have  not  studied  it  enough  in  de-
    tail to  make  a  suggestion  of  specific  change.

    Chairman  Cole.  Could  you  have  your  people  make  such  a  study
    within  the  next  few  months  and  submit  it  to  the  committee  for  con-
    pideration  ?

    36740—53 27

    412  ATOMIC  POWER  DEVELOPMENT

    Mr.  Ferguson.  We  would  be  very  happy  to  make  a  study  and  sub-
    mit any  suggestions  to  you,  sir.

    Chairman  Cole.  I  wish  you  would  amplify,  Mr.  Ferguson,  the
    thought  you  gave  in  your  statement  that  by  not  relaxing  the  law
    now,  we  might  learn  some  new  means  of  improvement  of  the  method,
    but  in  the  overall  program  it  would  not  result  in  any  degree  of  ac-
    celeration.    I  have  not  worded  it  as  clearly  as  you  did.

    Mr.  Ferguson.  You  mean  this  part  which  I  devoted  to  the  time-
    liness phase  of  it  and  the  delay  phase  of  it  ?

    Chairman  Cole.  That  is  right.

    Mr.  Ferguson.  On  that  score,  I  feel  that  we  are  dealing  with  such
    a  tremendous  force  here,  with  such  a  broad  usage  possibility  in  so
    many  fields,  and  having  in  its  development  process  the  requirement
    of  such  a  large  factor  of  time,  such  as  the  power  reactor,  for  example,
    or  such  as  an  isotope  reactor,  having  so  much  time  required  in  bring-
    ing that  to  commercial  success,  that  the  longer  we  delay  now,  the
    more  we  add  days  and  weeks  and  months  and  years  onto  when  it
    is  going  to  be  accomplished.     I  mentioned  the  fact  of  possibly  5  years.

    I  think  we  certainly  have  the  knowledge  now  to  go  ahead.  I  think
    we  have  the  industrial  interest  to  go  ahead.  Certainly  the  possibili-
    ties are  felt  to  be  there,  I  feel  that,  as  I  say,  this  committee  is  meet-
    ing at  a  very  opportune  time,  from  the  viewpoint  of  making  the
    determination  that  it  is  in  the  public  interest  to  invite  industry  par-
    ticipation so  that  5  years  from  now  we  can  look  back  on  1953  and
    say  that  it  certainly  was  timely  to  have  opened  up  this  situation  back
    in  1953.

    Mr.  Hyland.  I  would  like  to  amplify  that  a  little  bite,  Mr.  Cole.
    I  think  by  and  large,  we  have  been  guided  to  a  considerable  degree
    by  the  statements  and  beliefs  of  Dr.  Zinn  and  Dr.  Weinberg  as  to
    the  amount  of  time  necessary  to  put  a  reactor  on  the  line.  We  re-
    gard theirs  as  very  important  experience.

    It  doesn't  look,  on  the  basis  of  any  of  the  information  we  have,
    as  though  there  is  going  to  be  any  major  technical  know-how  that
    is  going  to  cut  down  the  time  required  because,  unfortunately,  a  re-
    actor power  supply  is  a  very  complex  device.  It  involves  almost  all
    the  technology  in  the  electrical  and  generating  world,  plus  a  new  and
    very  complicated  technology  added  to  it.  Just  the  time  necessary
    to  go  through  all  of  the  steps  and  make  the  designs  and  a  few  of  the
    technical  checks  adds  up,  and  you  can  almost  put  it  back  together
    and  sa}'  it  is  5  years.

    I  have  looked  at  the  figures  of  Dr.  Zinn  in  this  regard,  and  I  think
    that  I  agree  with  him  that  it  is  going  to  take  pretty  nearly  that  long
    to  do  the  job  with  a  clear  start,  and  there  are  not  going  to  be  very
    many  timesaving  discoveries  made  to  push  it  along  any  faster.

    Chairman  Cole.  Are  there  other  questions  by  members  of  the  com-
    mittee to  either  Mr.  Ferguson  or  Mr.  Hyland  ?

    Representative  Price.  Unfortunately,  we  did  not  hear  your  state-
    ment, so  there  is  not  much  we  can  question  on,  but  I  am  interested
    in  knowing  where  your  research  laboratory  is  located.

    Mr.  Ferguson.  In  Detroit,

    Representative  Puice.  You  state  that  you  have  made,  largely  at
    your  own  expense,  four  studies  of  power  reactors  for  the  Commission.

    Mr.  Ferguson.  Riirht.

    ATOMIC    POWER    DEVELOPMENT  413^

    Representative  Price.  I  wonder  if  you  could  elaborate  on  that.  I
    do  not  know  whether  you  have  covered  that  in  the  questions  asked
    by  Mr.  Cole.  Do  you  have  a  study  program  from  the  Commission
    for  the  development  of  a  power  reactor  ?

    Mr.  Ferguson.  These  were  study  programs  on  what  you  might  call
    smaller  power  reactors,  in  general,  of  a  classified  nature.  We  made
    it  under  a  Commission  contract.

    Repi'esentative  Price.  You  state  in  here,  largely  at  your  own  ex-
    pense.

    Mr.  Ferguson.  We  found,  very  much  to  our  surprise  but  at  the  same
    time  we  were  happy  to  do  it,  that  what  we  received  for  this  was
    nowhere  near  what  it  cost  us,  by  any  means.  I  just  stated  to  Congress-
    man Cole  before  you  came  in  that  over  the  period  of  2  years  that  we
    have  been  working  in  this  venture,  largely  at  the  research  and  small-
    instrument  plant  we  have,  our  total  loss  has  been  about  half  a  million
    dollars.

    Representative  Price.  How  much  did  the  Commission  put  into  the
    four  studies?

    Mr.  Hyland.  Those  four  studies  were  contracted  by  the  Commission
    for  $25,000.

    Representative  Price.  They  were  pretty  much  in  basic  research^
    were  they  not?

    Mr.  Hyland.  They  were  to  determine  the  capabilities  of  small  pow-
    ers. After  we  got  into  it  a  little  bit,  as  seems  to  be  general  in  this
    field,  we  ascertained  if  we  were  to  do  a  real  job  it  would  cost  a  great
    deal  more.  We  spent  in  actual  direct  engineering  labor  $67,000,  ex-
    clusive of  overhead  and  administrative  time,  and  that  sort  of  thing.
    We  felt  it  was  worthwhile,  not  only  to  inform  the  Commission,  but  to
    inform  ourselves.

    Representative  Price,  Is  that  $25,000  on  each  study?

    Mr.  Hyland.  No.     One  $25,000  in  total.

    Representative  Price.  You  made  four  different  studies?

    Mr.  Hyland.  There  were  4  studies  included  in  the  1  project.

    Representative  Price.  Did  they  result  in  any  recommendations  to
    the  Commission  ?

    Mr.  Hyland.  Very  definite  recommendations.

    Representative  Price.  Along  what  line?

    Mr.  Hyland.  As  to  the  suitability  of  small  power  reactors  for  cer-
    tain purposes.     They  are  classified,  however.

    Mr.  Ferguson.  We  emphasize  in  our  paper,  when  you  have  a  chance
    to  look  at  it,  that  we  feel  that  this  field  should  not  be  looked  at  just
    in  terms  of  the  large  power  reactor  of  100,000  kilowatts  or  whatever
    you  want  to  call  it.  We  think  tliere  sliould  be  great  emphasis  given
    to  all  sizes  of  reactors,  perhaps  from  100  kilowatts  up.  We  cite  the-
    fact  that,  after  all,  the  harnessed  energy  in  this  country  in  the  form
    of  powerplants  is  over  50  times  as  great  as  it  is  just  in  the  power  field.

    Representative  Price.  I  note  further  in  your  statement  that  you
    have  for  some  time  been  engaged  in  nuclear  studies  at  your  research
    laboratory  where  you  have  a  balanced  staff  of  nuclear  engineers,,
    physicists,  and  technicians.  Is  that  connected  with  a  contract  with
    AEC,  or  is  that  a  private  operation  ?

    Mr.  Hyland.  That  is  a  private  venture.  We  do  liave  a  little  AEC
    work,  but  it  is  relatively  insignificant.     We  are  hoping  for  some.     We

    414  ATOMIC    POWER    DEVELOPMENT

    have  to  establish  our  competence  before  we  can  get  the  work,  and  that
    we  have  to  do  with  our  own  money.

    Representative  Price.  Do  you  find  yourself  handicapped  in  pre-
    liminary studies  in  that  department  by  restrictions  of  the  law?

    Mr.  Htl,and.  I  don't  think  so ;  no,  sir.  The  Commission  has  col-
    laborated very  well  in  that  regard.  The  handicap  comes  when  yoiJ
    want  to  put  money  into  hardware  and  that  sort  of  thing.

    Representative  Price.  Do  you  find  it  difficult  to  get  an  adequate
    staff  of  nuclear  engineers,  physicists,  and  technicians?

    Mr.  Hyland.  Very  much  so.

    Representative  Price.  'S^^iere  did  you  find  them?

    Mr.  Hyland.  We  were  very  fortunate  in  having  an  established  in-
    terest about  the  time  that  the  aircraft  reactor  studies  at  Oak  Ridge
    were  reshuffled  and  terminated.  Some  of  the  people  came  with  us  at
    that  time.  We  picked  up  another  one  here  and  there  over  a  period
    of  time  as  they  became  available.

    Representative  Price.  This  question  has  no  bearing  on  the  power
    question,  but  I  \nsited  your  operation  at  Kansas  City  and  found  it  very
    interesting.  When  you  took  that  over,  did  you  have  much  difficulty
    recruiting  trained  personnel  in  electronics  work?

    Mr.  Hyland.  Oh,  yes.

    Representative  Price.  'Wliat  was  the  situation  about  that  time  in
    that  field,  speaking  of  the  broad  basis  ?

    Mr.  Ferguson.  In  the  first  place,  when  we  started  the  division,  we
    manned  it  with  approximately  50  people,  who  were  top,  key  people
    from  all  of  our  divisions  spread  all  over  the  country.  We  created  the
    basic  organization  from  people  who  had  background  and  training  and
    abilities  in  our  own  corporation.

    The  manager  came  off  my  staff,  one  of  my  assistants.

    We  then  tried  as  much  as  possible  to  employ  people  in  the  Kansas
    City  area  who  had  the  talents  we  needed.  We  got  the  usual  number
    to  be  anticipated  in  a  large  city.  We  took  people  from  universities.
    We  advertised  rather  widely.  It  took  us  about  a  year  to  get  together
    the  organizaiton  that  is  there  today,  although  it  has  been  growing  all
    the  time.  I  would  say  our  difficulties  weer  average  in  expanding  a
    new,  highly  technical  enterprise  such  as  that  is.

    Representative  Price.  You  were  not  very  well  set  in  those  days  for
    workers  in  that  particular  field,  were  you  ?

    Mr.  Ferguson.  It  wasn't  what  you  would  call  an  electronic  com-
    munity, particularly,  although  we  found  a  few  there  who  had  devel-
    oped great  aptitudes  during  World  War  II  because  there  was  a  con-
    siderable war  industry  in  Kansas  City  at  the  time.

    Mr.  Hyland.  At  that  time,  Mr.  Price,  the  big  push  for  technological
    requirements  had  not  quite  yet  developed.  It  was  before  Korea.
    There  was  considerably  less  competition  for  first-rate  technological
    people  than  there  is  today.

    Representative  Price.  Did  you  not  come  into  the  atomic-energy
    field  in  Kansas  City  about  the  time  we  were  promoting  expansion  of
    the  atomic-energy  program?

    Mr.  Hyland.  Our  first  contact  there  was  in  November  1948,  and
    it  was  just  before  the  big  expansion.  The  time  that  we  were  nego-
    tiating with  the  Commission  was  just  about  the  time  of  the  German
    airlift.     That  was  the  time  of  the  first  measures  toward  expansion,

    ATOMIC    POWER    DEVELOPMENT  415

    and  that  is  about  when  we  got  into  the  picture.  We  started  the  nego-
    tiations just  prior  to  that.

    Mr.  Ferguson.  One  point  I  make  in  my  paper  I  would  like  to  em-
    phasize for  a  minute.  The  technology  in  atomic  energy  I  think  is  on
    the  verge  of  what  might  be,  5,  10,  15,  or  20  times  as  great  as  it  is
    today.  One  reason  I  favor  private  enterprise  and  private  industry
    in  this  tremendous  field  is  that  when  we  do  that,  we  will  shift  our
    engineering  latitude  from,  let  us  say,  10,000  a  day,  which  I  understand
    might  be  a  good  average  of  current  scientists  and  engineers,  to  50,000
    througli  the  step  training  of  all  these  people  in  industry  and  in  all  the
    various  facets  of  it.  I  am  not  talking  of  the  facet  of  the  military.
    I  am  talking  about  the  industrial  facet.

    I  think  when  we  have  such  a  tremendous  force  as  we  have  in  atomic
    energy  to  be  used  for  peaceful  purposes,  we  have  before  us  as  a  Nation
    a  tremendous  task  do  institute  and  encourage  the  development  of  that
    technology  through  these  hundreds  and  thousands  of  private
    enterprises.

    Representative  Price.  Of  course,  that  was  the  original  intent  of
    Congi-ess  in  the  event  we  reached  a  day  when  we  could  devote  this
    program  to  the  benefit  of  mankind  rather  than  his  destruction.  We
    hope  we  are  getting  pretty  close  to  that  today.  I  think  the  Commis-
    sion itself  has  recognized  the  value  of  private  industry  in  the  pro-
    gram, because  actually  it  has  been  a  private-industry  program,  even
    from  the  military  standpoint.

    Chairman  Cole.  Thank  you  very  much,  gentlemen.

    Mr.  Ferguson.  Thank  you,  Mr.  Congressman.

    Chairman  Cole.  The  next  witness  scheduled  for  this  afternoon  is
    Mr.  Morris,  of  the  American  Public  Power  Association.  I  under-
    stand that  Mr.  Raleigh,  of  the  New  England  Council,  who  is  the  third
    witness  scheduled,  has  a  plane  reservation  for  4  o'clock,  and  if  it  is
    agreeable  with  you,  Mr.  Morris,  we  will  hear  Mr.  Raleigh  now.

    Mr.  Raleigh,  will  you  come  up  ?

    Thank  you,  Mr.  Morris.

    The  New  England  Council  has  been  actively  encouraging  the  idea
    that  an  atomic  powerplant — either  federally  or  privately  financed —
    should  be  built  in  New  England.  A  Federal  Power  Commission
    study  recently  indicated  that  northern  Maine  is  one  of  the  highest
    conventional  power-cost  areas  in  the  United  States.  So  it  is  under-
    standable that  the  people  in  NeAv  England  should  have  a  particular
    interest  in  this  potential  for  electric  power.

    We  welcome  you  this  afternoon,  Mr.  Raleigh,  and  will  be  glad  to
    hear  your  statement.

    STATEMENT  OF  WALTER  RALEIGH,  EXECUTIVE  VICE  PRESIDENT
    OF  THE  NEV7  ENGLAND  COUNCIL

    Mr.  Raleigh.  Thank  you  very  much,  Congressman  Cole.  I  am
    glad  to  be  with  you  and  to  have  this  opportunity  to  make  this  state-
    ment.

    I  would  like  to  say  at  the  outset  that  we  in  New  England  do  not
    like  to  underscore  the  fact  of  relatively  high  power  cost,  but  it  is  a
    fact  that  we  are  not  sitting  on  top  of  large  sources  of  natural  fuel,
    and  this  fact  is  a  very  important  matter  with  us.

    416  ATOMIC    POWER    DEVELOPMENT

    The  New  England  Council  is  made  up  of  about  3,000  dues-paying
    industrialists  and  others  from  the  C  New  England  States.  It  is  an
    active,  militant,  and  nonpartisan  organization,  formed  and  main-
    tained in  the  belief  that  New  England,  by  hard  work  and  by  making
    the  best  use  of  its  human  and  natural  resources,  can  in  1953  continue
    to  make  an  important  contribution  to  the  national  economy  and  hold
    its  own  in  the  business  life  of  the  Nation.  The  purpose  of  the  council
    is  to  see  that  New  England  does  the  best  with  its  real  resources,  which
    include  a  tradition  of  efficient  industry,  an  intelligent  labor  force,  and
    native  energy  and  ingenuity.

    The  New  England  Council  is  actively  participating  through  its
    membership  in  the  worldwide  advances  in  the  field  of  atomic  science.

    I  would  like  at  this  point  to  say  that  we  were  the  first  organiza-
    tion of  this  type  in  the  country  to  have  an  atomic-energy  committee
    of  our  own,  and  we  have  been  fortunate  in  New  England  in  having
    some  of  the  outstanding  leaders  in  the  field  of  atomic  energy  serve
    on  that  committee.  Such  people  as  Mr.  William  Webster,  of  the  New
    England  Power  Co. ;  Dr.  Karl  Compton,  of  MIT ;  Mr.  Manson  Bene-
    dict, consultant  to  the  AEC  and  on  the  staff  of  MIT;  Dr.  Hartley
    Rowe;  Mr.  Sumner  Pike — all  of  whom  have  given  us  extremely
    fine  guidance  in  the  thinking  of  the  council  in  this  field  of  atorpic-
    energy  development.

    The  council  takes  the  position  that  the  people  of  the  United  States
    during  the  last  10  years  have  had  some  opportunity  to  appraise  the
    significance  of  this  new  frontier  of  science  and  to  fit  it  into  its  proper
    place  in  society.  We  believe  that  it  should  not  be  treated  as  a  unique
    and  frightening  problem,  but  one  that  can  be  controlled  by  policies
    used  in  other  branches  of  physical  science  and  in  accordance  with  our
    democratic  traditions.

    In  any  undertaking  as  new  and  as  broad  in  scope  as  atomic  science,
    it  is  essential  that  all  available  talents  and  resources  be  utilized  to
    develop  its  benefits  for  society.  Such  a  broad-scale  approach  by  indus-
    try, Government,  trade,  and  educational  groups  can  best  develop  in
    an  atmosphere  of  confidence  and  mutual  understanding  and  under  con-
    ditions which  offer  incentives  to  individual  endeavor.

    We  find  that  one  of  the  immediate  requirements  for  progress  in
    this  field  is  revision  of  the  basic  Atomic  Energy  Act  to  fit  today's
    conditions.  This  legislation  represented  our  national  attitude  at  a
    time  when  atomic  science  was  an  almost  undefined  concept  whose  prin-
    cipal immediate  significance  appeared  to  lie  in  the  field  of  weapons
    and  national  security.  As  a  result,  the  act  placed  atomic  science  under
    very  strict  Federal  control,  both  of  facilities  and  of  fundamental
    information.

    Now,  we  believe,  the  act  can  be  safely  amended.  Military  secrecy
    can  be  preserved  just  as  it  is  in  the  development  of  other  types  of
    weapons.  Antitrust  action,  which  is  feared  by  some  and  hoped  for
    by  others,  the  terms  of  which  are  well  understood  as  a  result  of  appli-
    cation over  a  long  period  of  time,  can  be  followed.  Most  important,
    private  investment  of  money  and  effort  can  be  stimulated  by  the  prom-
    ise of  a  share  in  the  benefits  which  may  result.

    To  put  these  ideas  into  specific  form,  the  New  England  Council
    proposes  these  changes  in  legislation :

    1.  To  require  Federal  control  of  information  only  in  those  areas
    which  have  direct  military  significance.

    ATOMIC    POWER    DEVELOPMENT  417

    2.  To  permit  private  ownership  of  equipment  and  facilities  neces-
    sary for  the  production  or  utilization  of  fissionable  material.

    3.  To  permit  private  ownership  of  source  materials,  refined  fission-
    able materials,  and  the  products  of  nuclear  reaction,  including  the
    authority  to  sell  or  transfer  such  materials  to  others  under  appro-
    priate Federal  license.

    4.  To  allow  normal  patent  protection  to  private  inventions  consist-
    ent with  the  requirements  of  national  security.

    5.  To  place  the  responsibility  for  antitrust  regulation  in  the  Depart-
    ment of  the  Attorney  General.

    6.  To  express  a  definite  policy  of  encouraging  participation  by
    industry,  commerce,  and  education  in  the  field  of  atomic  energy  and
    related  sciences.

    These  changes,  based  on  the  beliefs  of  well-informed  leaders  in
    the  field,  should  do  much  to  provide  a  foundation  for  the  next  stage
    of  growth  in  our  use  and  understanding  of  this  new  resource.

    Chairman  Cole.  Thank  you,  Mr.  Raleigh.

    Senator  Pastore,  do  you  have  any  questions  ?

    Senator  Pastore.  Mr.  Raleigh,  do  you  think  that  these  changes  in
    the  basic  law  would  encourage  private  industry  to  invest  more  money
    in  the  development  of  atomic  energy  for  industrial  uses?

    Mr.  Raleigh.  Yes,  Senator.  I  know,  as  a  matter  of  fact,  that  it
    would,  and  I  know  that  there  are  cases  which  have  come  to  our  atten-
    tion where  there  is  hesitancy  at  the  present  time,  and  that  hesitancy
    would  certainly  be  eliminated  by  revision  of  the  act.

    Senator  Pastore.  How  soon  do  you  think  these  amendments  ought
    to  be  effected  ?

    Mr.  Raleigh.  Of  course,  this  is  one  of  those  things  where  we  could
    say  yesterday,  but  in  all  seriousness  we  realize  that  the  changes  are
    going  to  be  the  result  of  some  very  serious  thinking  and  deliberation
    and  hearings  of  this  type,  and  we  merely  hope  that  they  will  be  effec  ■
    tive  as  early  as  possible.

    Senator  Pastore.  It  is  a  fact  that  New  England,  as  contrasted  with
    other  areas  of  the  country,  is  the  one  area  in  the  country  that  lies
    without  benefit  of  hydroelectric  power ;  is  that  not  so?

    Mr.  Raleigh.  We  have  some  hydroelectric  power.  Senator,  but
    certainly  nowhere  near  the  amount  of  hydropower  available  in  certain
    other  parts  of  the  country.

    Senator  Pastore.  Are  you  prepared  to  say  now  what  accounts  for
    the  high  cost  of  electric  energy  in  the  New  England  area  of  the
    country  ?

    Mr.  Raleigh.  The  hydropower  which  we  have  available  in  New
    England  is  not  stable  power,  and  must  always  be  backed  up  by  power
    generated  through  conventional  fuels,  and  the  conventional  fuels
    available  in  New  England  are  considerably  more  expensive  than  they
    are  in  other  parts  of  the  country  nearer  the  source  of  those  fuels.  As
    a  consequence,  the  power  costs  and  prices  to  consumers  reflect  that
    additional  cost.

    Senator  Pastore.  What  is  your  feeling  with  relation  to  the  invest-
    ment of  public  money  in  the  development  of  atomic  energy  for  indus-
    trial uses?

    JNIr.  Raleigh.  We  feel  that  this  is  a  transition  program  from  an
    area  in  which  it  was  practically  all  Government  money  at  one  time,
    and  because  of  the  extent  to  which  the  Government  is  ffoing  to  have

    418  ATOMIC    POWER    DEVELOPMENT

    to  continue  control  of  the  industrial  operations  in  this  field,  it  would
    seem  that  the  Government  should  be  to  some  extent  in  partnership
    with  the  industries  which  will  be  making  developments  in  this  field.

    Senator  Pastore.  What  do  you  think  about  these  patent  rights  to
    private  industry  who  have  the  investment  of  public  money  in  that
    field?

    Mr.  Raleigh.  That  is  a  difficult  one  to  answer.  I  think  if  it  were
    not  for  the  possibility  of  having  patent  rights,  there  would  be  great
    hesitancy  on  the  part  of  industry  in  entering  this  field  at  all.

    While  we  know  that  there  are  some  companies  that  are  willing  to
    spend  substantial  sums  of  money  in  this  field,  chemical  companies,
    mostly,  in  the  hopes  of  developing  further  isotope  utilization,  we
    know  that  power  companies,  which  have  a  prime  interest  in  atomic
    fuels  for  New  England,  are  not  in  a  position  to  make  investments,
    because  of  public  utility  commission  regulations,  to  the  extent  that
    they  could  probably  develop  reactors  and  do  the  experimentation
    necessary  to  come  up  with  a  breeder  or  more  efficient  forms  of  reactors
    in  the  future.

    Senator  Pastore.  I  congratulate  you  on  the  statement  which  you
    have  made.     I  think  it  was  a  good  statement,  Mr.  Raleigh.

    Mr.  Raleigh.  Thank  you.

    Chairman  Cole.  Mr.  Holifield  ?

    Representative  Holifield.  No  questions.

    Chairman  Cole.  Mr.  Price?

    Representative  Price.  Mr.  Raleigh,  let  me  just  put  to  you  in  a  little
    different  way  the  question  of  Senator  Pastore :  In  the  event  that  Con-
    gress should  revise  the  Atomic  Energy  Act  along  the  lines  of  the  sug-
    gestions in  your  statement,  is  there  any  group  in  New  England  ready
    to  build,  on  its  own,  an  atomic  powerplant  ?

    Mr.  Raleigh.  There  is  a  group  interested  in  building  a  powerplant
    which  has  also  expressed  to  us  an  interest  in  building  it  in  New
    England.

    Representative  Price.  On  its  own,  without  any  Federal  par-
    ticipation?

    Mr.  Raleigh.  At  the  time  they  spoke  to  us  they  did  not  state  that
    they  needed  Federal  participation,  but  they  did  say  they  needed
    substantial  financial  support.

    If  I  know  New  England,  as  I  think  I  do,  I  think  the  financial  sup-
    port that  they  are  looking  for  is  of  such  proportions  that  probably
    it  would  not  be  found  privately  in  New  England,  and  they  probably
    would  be  looking  to  some  Government  supply  of  funds  to  that  job.

    Representative  Price.  That  is  all,  Mr.  Chairman.

    Chairman  Cole.  Mr.  Patterson  ?

    Representative  Patterson.  Just  for  the  record,  at  the  present  time,
    Mr.  Raleigh,  there  are  people  or  organizations  in  New  England  who
    are  capable  of  raising  the  necessary  funds  in  order  immediately  to  go
    into  operation,  provided  the  act  is  so  amended  ?

    Mr.  Raleigh.  There  are  companies  of  such  prestige  in  the  field  that
    I  think  they  could  attract  substantial  sums  of  money,  depending  upon
    the  size  of  the  original  reactor  development  that  they  undertook.
    There  will  be  great  interest  in  this  in  New  England  not  only  from
    the  standpoint  of  atomic  power  but  from  the  standpoint  of  isotope
    utilization  and  possibly  side  or  new  uses  of  plutonium,  because  of  the
    great  concentration  of  research  and  scientific  minds  that  we  have  in,

    ATOMIC    POWER    DEVELOPMENT  419

    particularly,  the  Boston-Cambridge  area  of  New  England — minds
    which  are  now  working  on  phases  of  this  whole  atomic  energy  program.

    Representative  Patterson.  Therefore  it  would  not  be  necessary  to
    rely  solely  upon  Federal  funds?

    Mr.  Raleigh.  No;  it  would  not.  As  a  matter  of  fact,  a  statement
    made  to  me  recently  by  an  interest  in  New  England,  a  man  in  a
    position  to  make  such  a  statement  and  to  back  it  up,  was  that,  if  he
    could  find  a  complementary  company  which  was  interested  in  this
    program  on  the  team  basis  that  we  were  speaking  about  in  prior  testi-
    mony here  today,  they  would  be  delighted  to  join  in  such  a  team
    project  in  New  England  without  Government  funds.

    Representative  Patterson.  Geogi'aphically,  have  you  decided  from
    your  studies  that  New  England  would  be  possibly  the  best  place  to
    start  the  first  atomic  operation  ?

    Mr.  Raleigh.  We  have  made  no  profound  study  of  this  question,
    Congressman  Patterson,  up  to  this  time,  but  the  studies  which  have
    been  made  by  Arthur  D.  Little,  industrial  research  consultants,  indi-
    cate to  us  that  the  opportunities  for  the  application  of  atomic  science
    in  New  England  are  very  great.  The  region  has  advantages  over  other
    areas  because  of  the  somewhat  higher  power  cost  in  New  England,
    which  would  make  even  a  relatively  high  atomic  power  cost  less ;  there
    would  be  less  of  a  spread  than  there  would  be  in  some  other  area.
    Therefore  New  England  would  find  it  attractive — attractive  also  be-
    cause it  would  not  be  in  an  area  which  was  quite  arid  so  far  as  scientific
    analysis  is  concerned,  but  one  with  a  large  concentration  of  people
    who  could  quickly  explore  the  possibilities  of  utilization  of  the  side
    products  of  this  reaction  which,  as  I  understand  it,  is  one  of  the  most
    important  things  we  must  do  in  order  to  lower  power  costs  in  the
    future.

    Representative  Patterson.  Coming  from  New  England,  I  hope  we
    can  get  this  plant,  and  I  want  to  congratulate  the  gentleman  on  his
    fine  statement.

    Mr.  Raleigh.  Thank  you  very  much.

    Representative  Holifield.  Before  you  leave,  Mr.  Raleigh,  if  you
    will  delay  just  a  moment.  You  have  studied  section  11,  patents  and
    inventions,  of  the  Atomic  Energy  Act ;  have  you  ?

    Mr.  Raleigh.  I  have  seen  it.

    Representative  Holifield.  It  would  be  of  help  to  this  committee
    if  your  group  would  make  a  study  of  this,  and  then  submit  to  us  spe-
    cific suggestions  as  to  changes  in  that  section  of  the  act.

    Mr.  Raleigh.  Very  good,  sir.

    Representative  Holifield.  We  are  asked  to  change  legislation  re-
    lating to  patents  and  inventions,  and  there  are  a  gi'eat  many  problems
    involved  in  that,  particularly  the  problem  of  security,  and  the  problem
    of  making  known  patent  application  papers,  and  that  sort  of  thing,
    as  you  normally  do  in  patent  procedures.  Yet  we  are  dealing  with  a
    subject  in  which,  so  far,  I  have  not  been  able  to  see  in  most  instances
    how  you  can  separate  the  military  from  the  commercial  applications.
    It  is  obvious  that  unless  we  can  compartmentalize  those  two  areas,  we
    cannot  follow  the  normal  patent  procedure.

    Mr.  Raleigh.  Yes.

    Representative  Holifield.  If  we  cannot  follow  tlie  normal  patent
    ])rocedure,  then  we  must  approach  it  from  an  angle  somewhat  like
    that  we  have  already  used,  in  which  a  special  commission  sits  in

    420  ATOMIC    POWER    DEVELOPMENT

    judgment  on  the  type  of  invention  or  type  of  patent  application,  as
    to  whether  it  has  military  application  or  industrial,  or  both,  where
    it  grants  patent  rights  but  retains  certain  rights  for  the  Government.

    If  you  will  study  section  11,  you  will  see  that  there  has  been  a  great
    deal  of  thought  put  in  on  that  subject,  and  what  we  would  like  to
    have  are  specific  suggestions  as  to  how  to  change  the  patent  provisions,
    and  yet  discharge  our  responsibility  completely.

    Mr.  Raleigh.  It  is  a  very  difficult  problem,  and  I  will  be  very  glad
    to  put  some  people  to  work  on  that  who  I  think  have  some  ideas  about
    it.

    Representative  Holifield.  Unless  we  can  solve  that  key  question,
    we  are  going  to  be  stopped.

    Mr.  Raleigh.  Very  good,  sir.

    Chairman  Cole.  To  what  extent  are  State  governments  or  State
    agencies  in  New  England  a  part  of  your  New  England  Power  Council  ?

    Mr.  Raleigh.  This  is  not  the  New  England  Power  Council;  just
    New  England  Council.  The  State  agencies  in  New  England  are  co-
    operating with  us  and  have  been  for  27  years.  Many  of  them  are
    dues-paying  members  and  integral  parts  of  the  council  organization,
    and  attend  all  of  our  meetings.  The  flow  and  interchange  of  infor-
    mation is  extremely  rapid.     Complete  cooperation  prevails.

    Chairman  Cole.  The  council  is  composed  of  business  concerns,  in-
    terested citizens,  and  it  is  supported  by  those  people  ?

    Mr.  Raleigh.  Chambers  of  commerce,  and  development  organiza-
    tions of  various  kinds,  trade  associations,  farm  groups — all  of  the
    factors  in  the  New  England  economy  are  interested  in  this.

    Chairman  Cole.  Thank  you  very  much,  Mr.  Raleigh.

    Mr.  Raleigh.  Thank  you,  sir.  I  appreciate  very  much  your  cour-
    tesy.

    Chairman  Cole.  Mr.  Morris.  Thank  you  for  deferring  to  Mr.
    Raleigh.

    Do  you  have  an  associate  you  would  like  to  sit  alongside  of  you?

    Mr.  Morris.  Mr.  Alex  Radin,  who  is  manager  of  the  American
    Public  Power  Association,  is  with  me.

    Representative  Holifield.  As  a  fellow  Californian,  may  I  welcome
    Mr.  Morris  to  the  witness  stand  today.  I  will  listen  with  a  great
    deal  of  interest  to  your  statement,  sir.

    Chairman  Cole.  Mr.  Morris,  we  realize  the  source  of  your  roots  in
    California,  so  we  gave  you  some  real  California  weather  today  to
    make  you  happy.

    You  may  proceed.

    STATEMENT  OF  SAMUEL  B.  MOERIS,  CHAIRMAN,  ATOMIC  POWER
    POLICY  COMMITTEE  OF  THE  AMERICAN  PUBLIC  POWER  ASSO-
    CIATION, ACCOMPANIED  BY  ALEX  RADIN,  MANAGER,  AMERICAN
    PUBLIC  POWER  ASSOCIATION

    Mr.  Morris.  My  name  is  Samuel  B.  Morris.  I  am  appearing  here
    under  the  auspices  of  the  American  Public  Power  Association  as  chair-
    man of  the  atomic-power  policy  committee  of  that  organization.  The
    American  Public  Power  Association  is  a  nonprofit  association  incor-
    porated in  the  District  of  Columbia  and  represents  over  700  publicly
    owned  public-utility  systems  in  38  States.  Among  other  things,  its
    purpose  is  to  promote  cooperation  between  and  to  render  service  to

    ATOMIC    POWER    DEVELOPMENT  421

    municipal  corporations,  other  public  or  quasi-public  corporations,
    bodies  or  agencies,  cooperative  associations,  nonprofit  corporations,
    and  similar  organizations  owning  or  operating  electric  light  or
    power  systems  or  facilities.  The  headquarters  of  the  organization  is
    1757  K  Street  N  W.,  Washington  6,  D.  C.

    My  position  is  general  manager  and  chief  engineer  of  the  depart-
    ment of  water  and  power  of  the  city  of  Los  Angeles,  Calif.  Before
    taking  this  position  in  October  19-i4,  I  was  dean  of  engineering  at
    Stanford  University.

    I  have  served  for  several  years  as  a  member  of  the  Committee  on
    Geophysics  and  Geography  of  the  Research  and  Development  Board,
    United  States  Department  of  Defense.  I  have  also  served  as  a  mem-
    ber of  the  President's  Water  Resources  Policy  Commission  appointed
    in  December  1950,  and  am  now  a  member  of  the  national  water-policy
    panel  of  the  engineers  joint  council  composed  of  the  several  national
    engineering  societies.

    As  chairman  of  the  atomic-power  policy  committee  of  the  xVmeri-
    can  Public  Power  Association,  I  have  had  occasion  to  study  the  Atomic
    Energy  Act  of  1946.  This  act,  Avhich  has  s^Tved  the  purpose  of  our
    Government  for  nearly  7  years  in  this  most  important  and  outstanding
    program,  is  well  conceived  and  well  drawn.  A  high  tribute  should
    be  paid  to  those  responsible  for  its  authorship.

    As  a  consequence  of  the  work  of  its  atomic-power  policy  committee
    somewhat  in  advance  of  release  of  public  information  on  the  nature
    of  the  proposed  legislative  changes  of  the  Atomic  Energy  Act  of
    1946,  the  American  Public  Power  Association,  at  its  recent  convention
    in  Boston  on  May  14,  1953,  adopted  a  resolution  defining  policies
    which  it  believes  should  be  followed  in  the  application  of  atomic  energy
    to  the  generation  of  electric  power.  This  resolution  No.  6  is  as
    follows :

    Resolution  No.  6 — Atomic  Energy

    Be  it  rcsolveil,  That  the  American  Public  Power  Association  wholeheartedly
    endorses  the  declaration  of  policy  set  forth  in  section  1  (a)  of  the  Atomic
    Energy  Act,  as  follows  :

    "Accordingly,  it  is  declared  to  be  the  policy  of  the  people  of  the  United
    States  that,  subject  at  all  times  to  the  paramount  objective  of  assuring  the
    common  defense  and  security,  the  development  and  utilization  of  atomic  energy
    shall,  so  far  as  practicable,  be  directed  toward  improving  the  public  welfare,
    increasing  the  standard  of  living,  strengthening  free  competition  in  private
    enterprise,  and  promoting  world  peace"  :  Be  it  further

    Resolved,  That,  in  furtherance  of  this  declaration  of  policy,  this  association
    offers  to  tlie  Congress  of  the  United  States,  and  to  all  officers  and  agencies  of  the
    United  States  charged  with  the  development  of  an  atomic  energy  program,  the
    following  recommendations :

    "One,  the  controls  on  the  use  of  fissionable  materials  which  are  contained
    in  the  Atomic  Energy  Act  of  1946  should  not  be  released  until  adequate  knowl-
    edge and  information  are  available  with  respect  to  the  use  and  development  of
    atomic  energy  for  industrial  purposes  and  production  of  electric  energy.  If
    and  when  such  controls  are  modiiied,  adeciuate  ivrovision  should  be  made  to
    prevent  any  monopolistic  advantage  accruing  to  private  persons  or  corpora-
    tions, through  operation  of  the  patent  laws,  or  otherwise.

    "Two,  the  Atomic  Energy  (Commission  should  assume  the  responsibility  for
    carrying  forward  development  of  a  pilot  plant  for  production  of  electric  energy
    from  nuclear  reactors.  In  view  of  the  larire  quantity  of  electric  power  which
    is  needed  in  connection  with  the  atomic  energy  program,  there  is  ample  justi-
    fication for  the  expenditure  of  Government  funds  for  the  design,  construction,
    and  operation  of  such  pilot  plant  or  plants  which  are  needed  to  advance  the
    feasibility  of  commercial  production  of  atomic  power.

    "Three,  the  carrying  forward  of  research  in  the  industrial  and  electric  genera-
    tion and  the  operation  of  pilot  electric  generating  plants  through  several  con-

    422  ATOMIC    POWER    DEVELOPMENT

    tracts  with  electric  public  utilities  and  other  industrial  groups  is  a  suitable
    means  of  getting  appropriate  contributions  of  ideas  and  verification  of  the
    operations  meeting  the  tests  of  practicality  and  economic  soundness.  Because
    this  energy  potentiality  represents  one  which  starts  as  a  necessary  governmental
    monopoly  and  one  where  the  advantages  must  be  spread  ultimately  to  the  people,
    it  is  urged  that  publicly  owned  electric  utilities  also  be  afforded  the  opportunity
    of  participating  in  such  development  contracts  because  of  their  exi)erience  in
    distributing  such  benefits  to  the  public.  For  similar  reasons,  the  publicly  owned
    electric  utilities  should  be  recognized  and  be  permitted  to  share  adequately  in  the
    application  of  atomic  energy  to  electric  power  production  when  such  application
    has  been  demonstrated  to  be  appropriate  by  the  results  of  pilot-plant  operation."

    I  might  say  that  the  statement  I  have  prepared  here  is  primarily
    directed  toward  the  use  of  atomic  piles  for  the  generation  of  electric
    energy,  and  not  toward  the  developments  and  marketing  of  atomic
    particles  and  chemical  products  such  as  may  be  commercially
    marketed.

    Chairman  Cole.  Mr.  Morris,  since  you  have  interrupted  yourself,
    and  in  order  that  the  record  may  be  accurate,  the  resolution  you  have
    just  read  referred  to  section  1801  of  the  Atomic  Energy  Act.  I  do  not
    know  what  the  source  of  that  reference  was,  but  the  sentence  which
    your  resolution  quoted  from  the  act  is  contained  in  section  1  (a)  of  the
    Atomic  Energy  Act.

    Mr.  Morris.  Thank  you.

    The  Atomic  Energy  Commission  and  your  joint  congressional  com-
    mittee have  arrived  at  a  point  where  a  decision  must  be  made  on
    whether  changes  in  the  act  are  necessary  in  order  to  accomplish  its
    expressed  purpose  of  promoting  progress  in  the  development  of  atomic
    energy  for  the  benefit  of  the  public  welfare;  and  also  to  determine
    the  nature  of  the  changes  in  legislation  if  such  are  to  be  made.

    It  is  recognized  that  the  conditions  under  which  the  atomic-energy
    developments  were  made  necessitated  the  utmost  in  secrecy.  Although
    the  Atomic  Energy  Commission  has  declassified  and  released  infor-
    mation as  liberally  as  it  has  deemed  practicable,  it  may  well  be  that
    there  is  not  enough  general  public  understanding  of  the  essential
    issues  involved  to  provide  sound  public  opinion  to  analyze  and  com-
    ment on  the  full  significance  of  such  legislation  as  may  be  proposed
    and  to  adequately  protect  the  public  interest.  The  Congress  is  depend-
    ent up  a  relatively  small  cross  section  of  public  opinion  for  its
    guidance.  I  am  happy  to  have  the  opportunity  to  present  the  opinion
    of  the  American  Public  Power  Association  and  my  own  views.

    From  a  recent  statement  of  policy  on  nuclear  power  development
    issued  by  the  Atomic  Energy  Commission,  it  is  indicated  that  the
    proposed  legislation  would  {a)  permit,  under  license  by  the  Com-
    mission, the  private  ownership  of  power  reactors  and  processing  facil-
    ities, the  production  of  fissionable  material,  and  the  private  ownership
    and  ]>ossession  of  fissionable  material;  (b)  provide  for  Commission
    regulation  of  the  safety  and  security  aspects  of  licensed  activities;
    (c)  authorize  long-term  commitments  for  sale  or  lease  to  licensees
    of  source,  fissionable,  or  other  special  materials  required  in  the  devel-
    opment, construction,  or  oi:)eration  of  power  reactors;  and  {d)  author-
    ize but  not  require  the  Commission  to  purchase  any  fissionable  or
    byproduct  materials  produced  by  licensees.  In  addition  to  these,  it  is
    my  understanding  that  possible  amendments  to  the  patent  section  are
    also  being  given  separate  consideration.

    ATOMIC    POWER    DEVELOPMENT  423

    Up  to  this  time  the  Atomic  Energy  Commission,  under  the  law,  has
    pursued  a  course  of  enlisting  the  help  of  private  industry  through
    the  device  of  contracts  with  many  public  and  private  agencies,  with
    the  expense  of  such  work  being  carried  by  the  Federal  Government.
    Under  this  method  very  substantial  teclinical  and  physical  progress
    has  been  made  through  the  expenditure  of  many  billions  of  dollars,
    and  the  Commission  holds  in  trust  a  large  fund  of  information  and
    technical  progress  which  is  apparently  on  the  threshold  of  being
    made  available  for  the  general  welfare  of  the  public.

    It  is  true  that  while  the  remaining  progress  to  be  made,  percent-
    agewise, in  comparison  with  progress  to  the  present  time,  may  be
    small,  it  still  represents  an  expensive  program  of  development  in
    terms  of  money  available  to  private  industry  for  such  work.  From
    testimony  before  your  committee  and  information  given  AEC  it  is
    apparent  that  the  complete  cost  of  building  practicable  reactors  and
    handling  the  processing  of  material  to  accomplish  power  production,
    combined  with  salable  byproducts,  might  range  from  $50  million
    to  as  much  as  10  times  that  amount.

    That  such  vast  sums  of  money  may  be  necessary  to  accomplish  the
    ultimate  development  for  economic  power  production  is  indicated  by
    the  fact  that  the  proposals  for  reactor  development  by  the  several
    teams  now  working  on  that  problem  all  indicate  a  number  of  different
    approaches  and  designs,  which,  if  followed  out,  would  represent  tre-
    mendous investments  to  be  made  by  each  of  the  groups,  with  the  prob-
    ability that  some  of  the  designs  would  be  proved  less  economical  and
    not  well  adapted  to  service.  Under  the  proposed  revisions  of  the
    act  the  door  would  be  open  for  such  private  expenditures  of  money  for
    developments  that  inherently  should  be  primarily  for  the  public  wel-
    fare. We  must  be  mindful  of  the  large  stake  the  public  already  has
    in  this  field  of  endeavor.

    If  private  expenditures  are  to  be  made  for  this  research  work,  it
    should  be  specifically  provided  that  no  patents  will  be  issued  to  foster
    or  permit  a  private  monopoly  in  the  production  or  distribution  of
    fissionable  material  or  in  tlie  production  and  distribution  of  electric
    power  from  atomic  energy.  The  legislation  should  be  such  that
    neither  a  private  nor  a  public  monopoly  would  result  and  that  the
    benefits  of  discovery  and  Federal  expenditure  may  be  distributed  to
    the  public  without  paying  tribute  to  a  private  monopoly.

    When  private  capital  takes  such  risks  it  must  normally  be  in  posi-
    tion to  have  a  reasonable  chance  of  deriving  profit  or  economic  bene-
    fits from  such  risks.  The  benefits  that  could  come  are  threefold :  One,
    the  economic  advantage  of  having  a  lower  cost  source  of  heat  energy
    for  the  production  of  electric  power ;  two,  the  income  that  could  be
    derived  from  royalties  resulting  from  patents  essential  to  the  pro-
    duction of  electric  power  from  atomic  energy;  and,  three,  by  getting
    into  a  position  where  private  monopoly  might  be  substituted  for  a
    potential  Government  monoi)oly,  thereby  removing  a  threat  of  com-
    petition or  control  that  would  limit  future  profits.

    If  the  first  advantage,  above-mentioned,  was  sufficient  goal,  ])iivate
    enterprise  would  be  seeking  no  other  objective  than  lapid  develop-
    ment of  the  art  and  technology  and  would  be  content  to  work  under
    the  present  patent  arraiigements  or  such  revision  of  same  as  would
    eliminate  all  possibilities  of  monopolistic  control.

    424  ATOMIC    POWER    DEVELOPMENT'

    The  second  and  third  goals  are  nnthinkable  and  no  private  effort
    should  be  permitted  to  promote  such  objectives.

    It  is  part  of  the  American  way  of  life  that  many  private  businesses
    have  been  established  and  developed  as  a  result  of  patents,  and  where
    these  are  in  the  general  field  of  industry  where  such  products  vie  in
    competition  with  other  products  enhancing  the  standard  of  living,
    but  with  freedom  of  choice  by  the  ultimate  consumer,  great  good  has
    come  from  such  development!

    TVlien  the  patent  control  is  in  the  field  of  an  industry,  which  for
    economy  and  service  is  a  monopoly,  as  in  the  production  and  distri-
    bution of  electric  power  or  for  public  communication  systems,  then
    there  is  grave  danger  that  patent  monopolies,  combined  with  the  serv-
    ice monopoly,  will  result  in  a  privately  planned  monopolistic  economy
    even  more  dangerous  than  a  governmentally  ]:)lanned  and  dominated
    economy.  It  would  not  result  in  the  most  rapid  development  of  the
    industry  nor  in  the  maximum  benefits  to  the  ultimate  consumer.

    The  public  welfare  demands  that  the  results  of  research  and  de-
    velopment programs  in  which  the  Nation  has  invested  so  many  bil-
    lions be  made  available  to  all  utilities,  corporations,  and  industry.  It
    would  be  most  unfortunate  if  the  utility  industry  already  monopolistic
    by  nature  should  be  enabled  to  secure  further  monopolistic  control  by
    gaining  patents  to  the  most  effective  and  economic  means  of  using
    atomic  energy  for  generation  of  electric  power.  The  extension  of
    the  world  supply  of  useful  energy,  its  conservation  and  economic
    utilization  should  be  for  the  gi'eatest  public  good.  If  there  are  to  be
    savings  in  costs  of  producing  electric  energy,  these  savings  should  be
    passed  on  to  the  customers  served.

    If  private  industry  is  prepared  to  finance  constru.ction  and  opera-
    tion of  pilot  or  full-scale  atomic  plants  for  the  production  of  electric
    energy  and  without  the  opportunity  of  securing  patents  or  other
    monopolistic  control  of  new  methods  and  processes,  I  should  like  to
    see  the  door  open  to  them  as  wide  as  national  security  will  permit.

    I  believe  it  is  generally  recognized  that  secrecy  inherent  in  national
    security  is  a  major  hindrance  to  the  most  rapid  development  in  the
    atomic-energy  field  as  it  is  in  other  fields  of  research.

    Under  any  research  progi-am  financed  and  conducted  by  private
    enterprise  we  must  recognize  that  the  discovery  of  new  information
    properly  leads  to  patentable  ideas.  It  would  therefore  be  certain  that
    privately  financed  research  would  be  clouded  in  additional  secrecy.
    Each  project  would  be  cloaked  in  wraps  to  keep  information  from
    similar  privately  financed  research  projects  by  others,  and  from  the
    public.  This  would  be  a  new  secrecy  to  be  compounded  with  the  secrecy
    of  national  security.  It  would  seem  reasonable  to  expect  delay  rather
    than  acceleration  of  the  time  when  kilowatt -hours  can  be  generated
    from  the  atom  in  competition  with  coal,  oil,  and  gas.

    Therefore,  I  believe  that  proper  national  policy  should  require  the
    widest  dissemination  of  knowledge  of  the  progress  of  each  research
    or  development  project  consistent  with  national  security.

    It  should  be  understood  that  the  AEC  in  the  production  of  fission-
    able materials  is  one  of  the  largest  users  of  electric  energy  from  both
    public  and  private  sources.  AEC  and  its  various  contractors  have  the
    widest  experience  and  know-how,  and  AEC  has  the  opportunity,  for
    itself,  of  the  greatest  coordination  of  the  production  of  fissionable

    ATOMIC    POWER    DEVELOPMENT  425

    materials,  byproduct  atomic  particles,  and  the  generation  of  electric
    power.

    For  all  of  the  reasons  hereinbefore  stated,  it  appears  to  me  that  the
    most  rapid  progress  can  be  made  at  the  lowest  overall  cost  by  the
    United  States  through  AEC  itself  building  pilot  and  prototype  atomic-
    energy  piles  to  produce  electric  energy  for  its  own  uses  and  at  con-
    tinually lowered  costs.  Public  and  privately  owned  electric  utilities
    should  be  invited  to  participate  along  with  manufacturers  and  others
    having  personnel  in  position  to  contribute  ideas  toward  the  more  rapid
    solution  of  the  difficult  problems  involved.

    I  am  certain  members  of  the  American  Public  Power  Association
    should  like  to  participate  under  such  arrangements.  The  public,  which
    has  invested  many  billions  of  dollars  in  this  technology,  can  well  afford
    the  remaining  millions  to  round  out  the  program  for  their  own  un-
    restricted use  and  benefit.

    Such  a  program  should  bring  together  the  best  minds  with  full
    freedom  of  exchange  of  ideas.  As  rapidly  as  progress  is  made  in
    development  of  economic  processes  there  should  be  a  maximum  number
    of  interested  manufacturers  and  utilities  with  skilled  personnel  with
    the  know-how  to  afford  the  most  wides])read  and  rapid  iustallation  of
    atomic-energy  power-generation  plants  which  their  economy  may  jus-
    tify in  free  competition.

    Such  a  program  should  be  free  from  any  public  or  private  monopoly
    and  should  assure  the  widest  distribution  of  benefits  to  the  public — the
    purpose  which  I  am  sure  the  Congi*ess  seeks.  The  American  citizen
    who  has  invested  so  much  of  his  substance  in  the  development  may  thus
    be  able  to  receive  another  benefit  in  addition  to  that  of  national  secu-
    rity— the  benefit  of  more  abundant  low-cost  electric  power.

    In  behalf  of  the  American  Public  Power  Association,  we  are  deeply
    grateful  to  your  connnittee  for  the  opportunity  of  expressing  our  ideas
    on  the  proposed  legislation  and  will  follow  your  work  with  great
    interest.

    Chairman  Cole.  Thank  you,  Mr.  Morris.

    Questions,  Senator  ?

    Senator  Pastore.  I  would  like  to  pass  for  the  moment.

    Chairman  Cole.  Mr.  Holifield  ?

    Representative  Holifieed.  I  want  to  compliment  you,  sir,  on  this
    very  frank  statement  that  you  have  made  and  point  out  that  it  is
    quite  different  from  a  number  of  statements  that  we  have  had  from
    other  groups.  Most  of  the  testimony  we  have  had  has  been  in  the
    nature  of  allowing  private  industry  to  come  in  and  finish  this  job  of
    research  and  development',  acknowledging  that  we  have  gone  a  long
    way  but  that  there  are  possibly  3  to  5  years  yet  to  go  before  we  reach
    the  point  of  practical  application  of  industrial  power,  but  in  return
    for  that  they  have  asked  for  subsidization  in  one  form  or  another,
    either  through  the  purchase  of  plutonium  or  through  rapid  amortiza-
    tion or  through  obtaining  patent  rights  in  this  field,  restrictive  patent
    rights.

    I  notice  that  you  particularly  say  that  the  Government  should  go
    ahead  and  finish  this  job  and  then  make  available  to  all  industry,  both
    public  and  private  bodies,  without  discrimination,  tlie  l)enefits  of  this
    development.

    426  ATOMIC    POWER    DEVELOPMENT

    Mr.  Morris.  That  is  my  view  insofar  as  the  production  of  electric
    energy  from  these  piles  is  concerned,  I  recognized  from  the  testimony
    that  Mr.  Ferguson  just  gave  some  other  aspects  of  the  development
    and  disposal  of  chemical  materials  and  atomic  partices  separate  from
    the  field  of  the  generation  of  electric  energy.  It  is  in  the  field  of
    generation  of  electric  energy  to  which  my  paper  is  primarily  directed.

    Representative  Holitield.  On  page  6  of  your  statement  you  analyze
    some  of  the  Atomic  Energy  Commission  recommendations,  and  you
    close  by  saying,  "In  addition  to  these  it  is  my  understanding  that
    possible  amendments  to  the  patent  section  are  also  being  given  separate
    consideration."

    Do  you  believe  that  we  could  go  ahead  and  efficiently  amend  the
    act  unless  we  did  have  the  recommendations  as  to  patent  policy
    changes  ?

    Mr.  Morris.  The  patent  policy  is  a  very  important  item,  and  we
    believe  in  the  field  of  the  production  of  electric  energy  the  public
    should  be  safeguarded  from  patents  in  that  field  and  that  more  rapid
    development  can  take  place  without  the  issuance  of  patents,  because  if
    the  patents  are  to  be  issued  in  that  field  it  seems  to  us  that  necessarily
    the  research  must  be  secret  not  alone  with  regard  to  national  security
    but  secret  from  other  competing  teams  which  are  seeking  themselves
    first  to  invent  the  better  means  of  production  of  electric  power.

    The  electric  industry,  whether  publicly  owned  or  privately  owned,
    is  primarily  a  monopolistic  field.  My  own  organization  has  a  monopoly
    of  the  service  in  the  city  of  Los  Angeles,  and  the  companies  outside
    have  a  monopoly  in  their  respective  fields.

    Representative  Holifield.  As  a  matter  of  fact,  the  production  of
    electric  power  from  the  atom  must  of  necessity  be  distributed  through
    its  public  or  private  monopolies ;  is  that  not  true  ?

    Mr.  Morris.  That  is  correct.

    Representative  Holifield.  If  that  be  the  case,  certainly  the  regula-
    tion of  the  costs  of  these  benefits  should  be  a  matter  of  public  policy
    and  would  be  a  matter  of  public  policy  so  far  as  setting  the  rates  is
    concerned,  would  it  not  ?

    Mr.  Morris.  Yes,  sir.

    Representative  Holifield.  In  addition  to  that,  they  would  have  to
    take  into  consideration  private  patent  rights  in  setting  the  costs  of
    the  benefits  to  the  public.  If  private  patent  rights  were  allowed  in
    this  interim  period,  that  would  become  an  item  of  cost.

    Mr.  Morris.  Yes.  If  the  development  was  to  be  privately  financed
    and  developed,  it  would  appear  necessary  that  those  who  performed
    that  service  would  have  the  right  to  patentsto  recoup  the  expenditures
    which  they  had  made.

    Representative  Holifield.  That  is  right.  We  are  speaking  of  pat-
    ents in  the  normal  sense  of  the  term.

    Mr.  Morris.  Yes.

    Representative  Holifield.  If  it  is  desirable  to  get  large  sum  of
    money  into  this  interim  period  of  development  and  if  those  sums  do
    become  available,  should  we  not  consider  the  rights  of  those  people
    to  take  a  fair  recompense,  but  at  the  same  time  make  available  without
    restrictive  patents  to  all  bodies,  public  and  private,  the  utilization  of
    such  patents  as  they  might  require.  I  am  speaking  now  of  a  special
    kind  of  patent,  a  patent  which  would  not  be  restricted  in  use.  While
    tlie  royalty  might  be  o})tained  for  the  use  of  it,  yet  through  cross-

    ATOMIC    POWER    DEVELOPMENT  427

    licensing  it  should  be  what  you  might  call  a  compulsory  patent
    arrangement  so  all  the  American  people  would  get  the  benefit  of  it,
    at  the  same  time  recompense  the  inventor  for  his  investment.

    Mr.  Morris.  While  those  policies  apply  very  well  to  the  manufac-
    ture and  distribution  of  the  chemicals  and  atomic  particles,  we  do  not
    believe  they  go  so  well  with  the  development  of  electric  energy.

    Representative  Holitield.  Are  you  not  inconsistent  in  that  posi-
    tion? If  there  are  three  kinds  of  benefits  to  be  obtained,  all  based
    upon  the  tremendous  expenditure  of  Government  money  and  accu-
    mulated Government  technology,  are  you  not  inconsistent  in  not  want-
    ing to  pass  those  benefits  on  as  cheaply  as  possible  to  the  major  inves-
    tors, the  taxpayers,  in  the  development  of  this  new  science?

    Mr.  Morris.  It  is  our  belief  that  insofar  as  the  reactors  and  their
    production  of  heat,  energj',  power,  more  progress  would  be  made  by
    the  Federal  Government  going  ahead  in  that  field  with  the  collabora-
    tion of  all  those  who  may  be  interested  working  with  them  from  the
    electrical  industry,  in  which  case  there  would  be  free  interchange  of
    knowledge  between  the  various  teams  working  in  the  field  and  the
    AEC,  subject  only  to  the  matters  of  security.  Whereas  the  private
    teams  would  tend  to  restrict  the  interchange  of  information  in  order
    to  protect  the  secrecy  of  their  own  developments  in  the  field.

    With  regard  to  your  question  involving  "major  investors,"  it  is
    my  position  that  the  largest  major  investor  by  many  times  is  the  gen-
    eral public  through  its  Federal  Government.  With  the  general  pub-
    lic having  such  a  major  interest,  it  is  not  appropriate  to  let  a  few
    minor  investors,  relatively  speaking,  dominate  the  situation  by  obtain-
    ing some  patents  that  might  constitute  a  roadblock  to  the  eft'ective-
    use  of  all  previous  development  by  public  funds.  For  the  proper
    protection  of  the  financial  interest  of  the  public  and  to  guarantee  free
    opportunity  for  the  present  technologic  advance  in  the  knowledge
    and  applications  of  atomic  energy  to  serve  the  public  most  economi-
    cally, private  patent  rights  in  this  field  must  be  severely  restricted.

    Re]:)resentative  Holifield.  It  is  your  considered  judgment,  then,
    tliat  if  legislation  were  passed  which  Avould  put  tliese  different  groups
    of  private  enteiprise  into  this  project  at  tliis  time,  we  could  expect
    delay  rather  than  acceleration  of  the  time  when  kilowatt-hours  would
    be  available?

    Mr.  Morris.  That  is  our  view  in  the  field  of  the  use  of  the  atomic
    pile  to  produce  heat  and  energy  for  the  generation  of  electricity.

    Representative  Holifield.  Is  that  because  of  the  tremendous  invest-
    ment involved  and  the  lack  of  knowledge  of  Avhether  it  can  be  on  a
    competitive  basis?

    Mr.  Morris.  .Vccording  to  best  information  Ave  have,  very  large
    investments  are  involved.  I  think  not  so  large  investments  are  in-
    volved in  these  fields  which  are  competitive  among  themselves,  typical
    manufactured  products  which  derive  competition  from  each  other.
    In  that  we  have  no  interest  in  restricting  patents,  but  in  this  field  of
    generation  of  heat  energy  Ave  belie\'e  that  is  a  field  A\here  the  Federal
    Government  itself  should  proceed.

    RepresentatiA'e  Holifield.  I  belicA-e  that  is  all;  thank  you,  Mr.
    Morris.

    Chairman  Cole.  Mr.  Price.

    Representative  Price.  Mr.  Morris,  I  Avas  interested  in  your  state-
    ment in  Avhich  you  say  tliat  over  700  publicly  owned  utilities  are  mem-

    36740—53 28

    428  ATOMIC    POWER    DEVELOPMENT

    bers  of  your  association.  I  wonder  if  you  could  name  some  of  the
    larger  cities  of  the  country  that  have  public  power.

    Mr.  Morris.  My  own  city  of  Los  Ano-eles  is  the  largest,  serving  a
    little  over  2  million  people  having  a  little  over  a  million  kilowatts
    capacity.  The  city  of  Seattle  is  next,  Taeoma,  Pasadena,  Glendale,
    Burbank,  Cleveland,  Springfield,  111.,  and  a  large  number  of  different
    concerns  in  Nebraska,  a  large  number  in  the  Tennessee  Valley.  I
    might  ask  Mr.  Radin.    He  can  better  answer  that  question.

    Mr.  Radix.  I  think  you  have  named  the  principal  ones.  Also  the
    cities  of  San  Antonio  and  Austin,  Tex.,  Lansing,  Mich.  There  are  also
    some  large  statewide  systems  such  as  the  South  Carolina  Public  Serv-
    ice Authority,  the  Lower  Colorado  River  Authority,  and  the  Grande
    River  Dam  Authority  in  Oklahoma,  and  a  large  number  of  public-
    utility  districts  in  the  Pacific  Northwest.  There  are  altogether  about
    2,300  local  publicly  owned  electric  systems  in  I  think  every  State.
    They  grew  up  along  with  the  privately  owned  companies  and  have
    as  long  a  heritage  as  the  privately  owned  companies.

    Representative  Price.  What  specifically  do  those  interested  in  pub-
    lic power  fear  from  a  change  in  the  present  patent  provisions  of  the
    xVtomic  Energy  Act?

    Mr.  Morris.  If  changes  are  made  involving  the  full  patent  rights,
    we  believe  that  there  will  be  a  limit.'ition  upon  the  use  or  an  increased
    payment  for  use  of  the  piles  for  generation  of  electricity.  We  favor
    the  widest  competition  and  use  among  the  various  organizations  of
    such  atomic  piles  for  the  generation  of  electricity  wherever  they  can
    be  developed  to  that  stage.  We  are  much  of  the  opinion  that  the  AEC
    itself,  which  uses  such  trem.endous  amounts  of  electric  energy,  is  the
    best  one  to  move  ahead  on  that  aspect  of  atomic  research  and  the  pro-
    duction of  low-cost  electric  power.

    Representative  Price.  Under  present  conditions  has  public  power
    found  itself  restricted  in  any  way  by  existing  patent  rights,  forgetting
    the  field  of  atomic  energy  ?  In  the  conventional  power  fields,  has  it
    found  itself  restricted  in  any  way  by  restricted  patent  rights?

    Mr.  Morris.  No.  The  developments  have  been  relatively  slow.  We
    have  not  been  faced  with  patents  such  as  the  Selden  patent  on  auto-
    mobiles, which  Henry  Ford  succeeded  in  defeating.  We  have  not  been
    faced  with  that  sort  of  thing.  It  has  been  a  couple  of  centuries  since
    Watt  invented  the  steam  engine.  Things  have  moved  along,  so  there
    have  not  been  fundamental  basic  patents  of  such  enormous  propor-
    tions as  might  develop  in  this  field.

    Representative  Price.  Iii  other  words,  going  into  the  atomic  field
    presents  an  entirely  different  problem  and  opens  up  a  new  era  in  the
    field  of  electrical  energy.

    Mr.  Morris.  Yes,  it  may  do  so.  We  do  not  know  the  answer  to  that
    yet.  There  is  no  claim  that  electric  energy  is  now  being  produced  any-
    where for  less  than  it  can  be  produced  from  coal,  oil,  or  gas.  That
    lies  ahead.

    We  believe  that  proper  safeguards  must  be  made  in  any  patent
    progi-am.  In  fact,  we  believe  in  that  particular  field  it  doesn't  seem
    that  any  basic  patent  should  be  allowed  which  would  give  any  private
    licensing  of  patentable  methods.

    Representative  Price.  Are  the  different  public  power  groups
    legally  constituted  so  that  they  could  participate  in  atomic-energy
    study  programs?

    ATOMIC    POWER    DEVELOPMENT  429

    Mr.  MoREis.  Yes.  I  know  in  the  case  of  my  own  organization  we
    can  do  so.  I  think  many  others  can.  The  American  Public  Power
    Association  as  such  would  not,  but  units  of  our  membership  would
    do  so.

    Eepresentative  Price.  Have  they  been  invited  to  participate  in  any
    study  groups  ?

    Mr.  Morris.  We  have  met  with  AEC  and  have  been  advised  that
    the  cloor  would  be  open.  The  door  had  been  temporarily  shut  off  at
    the  time  of  our  meeting  with  them.

    Representative  Price.  When  was  that  meeting?

    Mr.  Morris.  My  understanding  is  that  that  door  will  be  opened  up.

    Representative  Price.  Is  it  open  yet  ?

    Mr.  Morris.  I  don't  know  what  the  status  is.    Do  you  know,  Alex?

    Mr.  Radin.  None  of  our  systems  has  made  any  formal  proposal.

    Representative  Price.  When  was  this  meeting  that  you  are  talking
    about  ?

    Mr.  Morris.  Perhaps  3  months  ago  or  2  months  ago.

    Mr.  Radin.  I  think  February  16  of  this  year.  We  met  with  Mr.
    Dean.

    Representative  Price.  Wliy  was  the  door  ever  closed  ?

    Mr.  Morris.  I  do  not  think  the  public  agencies  ever  made  any
    serious  effort  to  get  in,  and  this  was  the  first  meeting  which  we  had,
    which  Mr.  Radin  has  mentioned,  which  was  in  February.

    Representative  Price.  February  of  1953  ?

    Mr.  Morris.  That  is  right.

    Representative  Price.  So  there  had  not  been  any  public-power
    group  in  the  study  programs  up  to  this  time  ?

    Mr.  Morris.  No.  I  think  it  would  be  fair  to  say  that  I  do  not  be-
    lieve that  they  could  get  together  the  funds  to  carry  on  a  total  research
    program  by  themselves.

    Representative  Price.  You  feel  even  if  a  number  of  those  public-
    power  groups  went  together,  they  would  still  have  to  have  Federal
    participation  in  a  program  ?

    Mr.  Morris.  Yes.  I  think  it  is  our  feeling  that  we  would  rather
    participate  with  the  United  States  owning  and  building  the  reactor
    and  our  men  who  are  familiar  with  design  and  operation  of  steam
    plants  working  with  them  in  such  work,  rather  than  setting  up  a
    separate  and  independent  research  program.  We  could  not  recoup
    our  position  by  any  patent  proposal.

    Representative  Price.  At  the  present  time  you  get  all  your  equip-
    ment from  the  same  source  as  the  private  utilities  ?

    Mr,  Morris.  Yes.    We  are  not  manufacturers.

    Representative  Price.  You  have  never  had  any  difficulty,  though  ?

    Mr.  Morris.  No;  no  more  than  the  normal  problems  of  output.

    Representative  Holifield.  I  was  going  to  ask  you,  sir,  if  the  public-
    power  groups  under  their  corporate  organization  could  participate
    in  any  research  program,  legally  speaking.

    Mr.  Morris.  It  depends  upon  each  of  them.  I  cannot  speak  for  all.
    We  could  do  so.

    Representative  Holifield.  You  have  spent  moneys  in  the  pas  for
    research  and  development.

    Mr.  Morris.  Yes.  I  might  say  we  developed  the  first  287,500-volt
    transmission  line  in  the  United  States  and  it  is  still  the  highest  voltage
    line  in  commercial  operation.  We  carried  research  programs  on  that
    tlirough  contributions  to  university  staffs  and  so  on.

    430  ATOMIC    POWER    DEVELOPMENT

    Kepresentative  Hoofield.  On  Boulder  Dam  ?

    Mr.  MoREis.  Yes,  sir.

    Representative  Price.  Mr.  Morris,  I  wonder  if  you  could  give  us
    an  estimate  or  does  your  association  have  any  accurate  figures  on  the
    number  of  consumers  served  by  public  power  in  the  United  States  ?

    Mr.  Radin.  This  Avould  be  only  the  municipally  owned,  the  locally
    publicly  owned  systems,  slightly  over  3  million,  about  3,600,000,  as  a
    matter  of  fact,  I  believe.

    The  nuinicipally  owned  and  other  locally  owned  electric  systems-
    comprise  about  one-tenth  of  the  entire  electrical  industry.  About
    another  10  percent  of  the  generation  is  in  the  Federal  systems.

    Representative  Price.  When  you  say  municipally  owned,  you  are
    excluding  the  overall  program  like  Bonneville  and  the  Tennessee
    Valley  Authority?

    Mr.  Morris.  That  is  correct.

    Representative  Price.  You  are  thinking  only  of  the  local  units.

    Mr.  Morris.  Yes.  Our  association  represents  just  these  local  pub-
    licly owned  electric  systems ;  that  is  right.

    Chairman  Cole.  Mr.  Patterson.

    Representative  Patterson.  No  questions.

    Chairman  Cole.  Mr.  Morris,  in  connection  with  the  success  of  re-
    search done  by  your  Los  Angeles  organization,  they  were  pioneers  in
    developing  the  high- voltage  transmission  system.  Was  that  a  patent-
    able discovery  ?

    Mr.  Morris.  It  is  not  exactly  a  discovery.  It  is  a  development  to
    higher  voltages  than  theretofore  had  been  commercially  used.

    Chairman  Cole.  Is  there  not  a  mechanical  patentable  process-
    involved  ?

    Mr.  Morris.  Not  essentiallj'.  There  may  be  something  in  the  trans-
    formers or  other  equipment  manufactured  by  the  electrical  manufac-
    turers which  have  some  patents  in  them,  but  the  production  of  that
    high  voltage  is  not  at  all  patentable.

    Chairman  Cole.  Did  your  company  engage  in  the  engineering  phase
    of  it?

    Mr.  Morris.  Yes.  We  built  a  section  of  line,  installed  the  trans-
    formers, and  carried  on  the  research  development  to  test  its  perform-
    ance under  all  conditions  of  weather  and  climate  to  develop  the  economy
    of  transmitting  at  that  voltage  rather  than  at  voltages  which  had  been
    developed  up  to  that  time,  which  was  230,000  volts.

    Chairman  Cole.  What  becomes  of  ideas  that  are  developed  in  the
    laboratories  of  public  utilities?  You  indicated  that  you  have  such
    a  researcli  laboratorv.  Presumably  other  city-owned  and  State-
    owned  public  utilities  have  research  laboratories.  Even  if  they  don't
    it  is  conceivable  that  they  have  employees  who  would  conceive  of  an
    idea  in  the  course  of  their  work  by  means  of  which  an  improvement
    can  be  accomplished.  What  become  of  those  ideas?  Are  the}'  sub-
    mitted to  the  Patent  Office  ?

    Mr.  Morris.  We  have  in  our  organization  a  rather  loose  general
    patent  policy  by  which  employees  of  our  department  may  patent
    items,  in  which  we  have  service  rights  in  our  system  and  which,  they
    miirht  sell  for  use  otherwise.

    ATOMIC    POWER    DEVELOPMENT  431

    Chairman  Cole.  How  can  you  take  the  position  of  denying  to  other
    people  the  very  right  that  you  maintain  for  yourself  ?

    Mr.  MoKRis.  This  is  just  in  the  sole  field  of  development  of  elec-
    trical energy  from  atomic  power.  We  feel  it  is  just  like  discovering
    all  the  coal  there  is  in  the  world.  It  is  a  new  field  of  energy  for  the
    use  of  everyone.

    Chairman  Col,e.  That  is  only  because  the  only  field  you  are  inter-
    ested in  is  the  electrical  field,  but  in  principle  you  are  entirely  incon-
    sistent when  you  say  that  you  should  have  the  right  to  permit  any
    of  your  employees  to  patent  any  idea  they  develop  in  the  course  of
    their  employment  and  that  you,  the  association,  or  the  municipality
    who  is  the  employer,  can  have  the  restricted  use  of  that  patent.  That
    is  entirely  inconsistent  with  your  previous  position  in  which  you  say
    that  none  of  the  people  who  might  become  interested  in  developing
    new  ideas  in  the  atomic  field  should  have  a  patent  right.

    Mr.  Morris.  I  say  they  should  have  the  patents  in  general  chemical
    and  atomic  particle  field  where  there  is  such  a  tremendous  number  of
    adaptions  of  use  and  where  there  is  a  large  number  of  people  working
    in  the  field  and  where  there  is  competition  among  the  manufacturers.
    But  in  the  field  of  the  production  of  electric  power  from  the  atom,
    which  is  the  field  which  the  electric  utility  industry,  both  public  and
    private,  has  such  a  tremendous  portion  of  its  total  cost  involved,  we
    don't  believe  that  should  be  locked  up  in  a  restrictive  patent  program
    and  we  do  not  think  that  is  the  fastest  way  to  get  the  answers  because
    it  takes  very  large  amounts  of  money  to  work  in  that  field.

    Chairman  Cole.  No  larger  amounts  in  that  field  than  in  the  chemi-
    cal field  or  any  other  aspect?

    Mr.  Morris.  Oh,  yes,  we  believe  so.  The  devices  which  we  were
    discussing  with  the  Atomic  Energy  Commission  are  these  piles  for  the
    production  of  large  amounts  of  energy,  which  are  going  to  involve
    very  large  expenditures.

    Chairman  Cole.  It  certainly  seems  strange  to  me  that  you  would  be
    willing  to  let  private  capital  capitalize  on  its  ideas  and  improvements
    in  the  atomic-energy  field  in  every  area  except  in  electric  power,  and
    in  that  field  you  feel  that  they  should  not  have  any  patentable  rights.

    Mr.  Morris.  I  feel  there  is  a  difference  in  that.  Perhaps  I  don't
    make  our  position  clear :  It  is  clear  in  my  mind  that  the  manufacturer
    of  the  isotopes,  the  tremendous  chemical  field,  and  so  forth,  which
    depends  on  that,  can  be  in  competition  with  many  other  services,  many
    other  manufacturers.  Here  we  have  one  whose  sole  purchaser,  prac-
    tically, is  the  electric  utility  industry,  public  and  private.  As  I  un-
    derstand it,  many  millions  of  dollars — the  lowest  cost  I  have  seen  is
    $50  million — are  involved  in  setting  up  the  research  for  that  field.

    Chairman  Cole.  I  noted  in  your  argument  in  discussion  with  Mr.
    Holifield  that  since  the  public  utilities  are  in  and  of  themselves
    monopolies  and  subject  to  supervision  by  public  agencies,  public-serv-
    ice authorities,  therefore  patents  in  that  field  need  not  be  under  the
    patent  laws  because  of  the  monopolistic  nature  of  the  enterprise.  You
    have  overlooked  the  fact,  have  you  not,  that  as  Mr.  Ferguson  indi-
    cated, electric  power  generated  and  distributed  through  private  and
    public  utility  systems  is  about  one-fiftieth  of  the  power  that  is  gener-

    432  ATOMIC    POWER    DEVELOPMENT

    ated  and  used  in  this  country?  You  cannot  have  a  yardstick  with
    respect  to  patent  laws  that  might  be  used  in  the  generation  of  electric
    power  that  goes  into  distribution  systems  and  a  different  law  that
    applies  where  the  electricity  is  consumed  on  station.  If  it  were  true
    that  all  of  the  electrical  energy  produced  in  this  country  were  distrib-
    uted through  public-utility  systems,  then  your  argument  might  have
    some  weight  and  some  bearing,  but  since  the  amount  that  is  distrib-
    uted through  public-utility  systems  is  negligible  in  contrast  to  the
    total  amount  that  is  generated  and  consumed,  I  think  that  your  argu-
    ment does  not  carry  much  weight.

    I  am  curious  to  know  what  inducement  you  think  there  would  be
    for  persons  to  try  to  devise  improvements.  You  say  by  denying
    them  the  right  to  patents  your  program  would  be  accelerated,  that
    more  people  would  devise  means  of  improvement.  AVhat  would  be
    their  incentive?

    Mr.  Morris.  We  believe  the  Federal  Government,  which  is  already
    in  the  AEC  program  and  uses  such  tremendous  amounts  of  electric
    power,  is  justified  in  going  ahead  on  these  atomic  piles  for  the  pro-
    duction of  electricity  and  carrying  on  research  and  inviting  in  the
    largest  number  of  private  utilities  and  public-utility  personnel  to  col-
    laborate in  advancement  in  the  field.  The  reason  we  feel  that  progress
    would  be  more  rapid  that  way  is  that  we  believe  the  private  job  where
    patents  are  sought  must  be  cloaked  in  secrecy  as  against  another  re-
    search project  going  on  that  is  also  seeking  to  profit  from  a  patent
    development.

    Chairman  Cole.  That  would  be  equally  true  of  any  research  and
    development  program  under  Government  sponsorship.  The  extent
    of  secrecy  would  apply ;  would  it  not  ?

    Mr.  Morris.  Not  as  I  understand  it.  In  the  Federal  Government
    as  between  all  others  working  and  AEC  there  would  be  full  knowledge
    and  understanding  of  what  was  going  on  in  each  of  those  research
    projects.

    Chairman  Cole.  Your  position,  then,  is  that  the  Federal  Govern-
    ment should  continue  and  be  the  spearhead  for  research  and  develop-
    ment in  this  field?

    Mr.  Morris.  In  the  field  of  the  production  of  electric  power  from
    atomic  piles ;  yes.

    Chairman  Cole.  You  do  not  feel  that  the  program  would  be  accel-
    erated or  benefited  by  allowing  private  capital  to  become  actively  inter-
    ested in  that  if,  alon^  with  that  allowance  was  the  right  of  patent?

    Mr.  Morris.  That  is  correct.

    Chairman  Cole.  Are  there  any  other  questions  ?

    Thank  you,  Mr.  Morris,  and  Mr.  Radin.

    Mr.  Morris.  Thank  you  very  much,  Mr.  Chairman.

    Chairman  Cole.  Subsequent  correspondence  from  Mr.  Morris  will
    be  inserted  in  the  record  at  this  point.

    ATOMIC    POWER    DEVELOPMENT  433

    (The  material  referred  to  follows:)

    Department  of  Water  and  Power,  the  City  of  Los  Angles,

    July  24,  195S.
    Kepresentative  W.  Sterling  Cole,

    Chairman,  Joint  Committee  mi  Atomic  Energy,
    The  Capitol,  Washington,  D.  C.

    My  Dear  Congressman  :  Near  the  end  cf  my  testimony  before  your  committee
    the  afternoon  of  July  20  you  asked  questions,  the  proper  answer  to  which
    would  require  my  revelation  of  information  orally  given  to  me  and  other  repre-
    sentatives of  APPA  by  Gordon  Dean  and  others  of  AEC  at  a  conference  Febru-
    ary 16,  1953.  Believing  in  justice  to  your  questions  and  more  completeness
    to  my  reply  I  should  add  further  facts  and  comments,  I  am  writing  this  letter.

    Our  understanding  from  AEC  differs  markedly  from  the  testimony  of  a  prior
    witness  that  afternoon,  and  from  some  of  your  own  comments  and  questions.

    AEC  told  us  that  there  could  be  no  economy  in  an  electric  generation  plant
    of  10,000  to  20,000  kilowatt  capacity  as  the  atomic  pile  and  the  equivalent  of
    12  feet  of  concrete  shielding  would  be  the  same  as  for  a  300,000  to  400,000
    kilowatt  installation.  Only  such  larger  units  would  prove  economical.  The
    difference  was  only  in  the  rate  of  "burning,"  not  in  the  size  of  the  atomic  pile
    and  shielding.

    Accordingly,  we  have  viewed  the  production  of  economic  energy  for  land
    installations  as  of  the  size  and  type  to  be  expected  for  central  station  use  in.
    the  generation  of  electric  energy  from  heat  released  from  atomic  piles  of  the
    order  of  300,000  to  400,000  kilowatts.  Oar  testimony  was  upon  this  premise,
    based  upon  information  given  us  by  AEC.  It  is  in  this  field  of  central  station
    power  in  which  we  believe  there  should  be  no  restrictive  patents  to  prevent
    the  most  rapid  development  of  this  new  science  and  art  and  the  widest  and
    freest  use  by  publicly  owned  and  privately  owned  utilities  alike.

    Just  prior  to  my  testimony  a  witness  had  expressed  interest  in  atomic  pile
    heat  energy  units  of  10,  100,  LOOO,  and  10,000  kilowatts.  This  was  inconsistent
    with  what  we  had  been  advised  by  AEC.

    Apparently  you  had  such  possibilities  in  mind  when  you  stated  that  it  seemed
    unreasonable  for  me,  reijresenting  APPA,  to  urge  against  restrictive  patents
    to  the  development  of  electricity  from  atomic  pile  heat  energy  for  the  reason
    that  central  station  power  in  the  United  States  is  only  one-fiftieth  of  the  total
    power  capacity,  and  therefore  "insignificant."

    After  signing  the  statement  properly  required  by  your  committee  not  to
    reveal  classified  atomic  information  and  myself  having  Q  clearance  I  hesitated
    to  clarify  our  position  and  the  AEC  information  upon  which  we  arrived  at
    these  conclusions.

    If  our  information  is  in  error  and  the  small  automotive  units  constituting
    the  bulk  of  the  forty-nine-fiftieths  of  the  Nation's  aggregate  horsepower  are
    within  the  range  of  economic  opportunity  for  use  of  atomic  power,  then  I  am
    certain  that  APPA  would  not  seek  to  restrict  in  any  way  the  play  of  patents
    and  free  enterprise  in  the  manufacture  of  such  small  units.

    We  do,  however,  still  hold  to  our  opinion  that  every  citizen,  householder,  and
    industry,  large  and  small,  is  vitally  interested  in  the  production  and  delivery
    of  low-cost  electric  pov.er  from  central  station  plants ;  that  this  great  new
    basic  source  of  atomic  energy  should  not  be  controlled  by  restrictive  patents
    and  that  all  publicly  owned  and  privately  owned  electric  utilities  should  have
    the  freest  access  to  such  sources  of  atomic  power  as  a  free  people  may  develop.
    We  do  not  regard  the  production  of  electric  power  by  our  Nation's  utilities  as
    insignificant.

    We  deeply  appreciate  the  opportunity  presented  to  APPA  of  appearing  be-
    fore your  committee,  and,  if  permissible,  we  would  appreciate  this  letter  of
    clarification  being  incorporated  in  our  testimony.
    Sincerely,

    Samuel  B.  Morris,
    Chairman,  APPA  Atoniic  Energy  Policy  Committee.

    434  ATOMIC    POWER    DEVELOPMENT

    Chairman  Cole.  The  final  witness  this  afternoon  is  Mr.  Dixon,
    who  represents  the  Edison  Electric  Institute,  which  has  among  its
    members  many  utility  companies  individually  interested  in  atomic
    power.  Institute  meetings  have  provided  central  meeting  points  for
    these  companies  on  many  occasions.

    Mr.  Dixon,  we  welcome  you  this  afternoon  and  will  be  glad  to  have
    jour  statement.

    STATEMENT  OF  EDGAR  H.  DIXON,  CHAIRMAN,  COMMITTEE  ON
    ATOMIC  POWER,  EDISON  ELECTRIC  INSTITUTE,  PRESIDENT,
    MIDDLE  SOUTH  UTILITIES,  INC.,  ACCOMPANIED  BY  PAUL  HALL-
    INGBY,  JR.,  ASSISTANT  TO  THE  PRESIDENT,  MIDDLE  SOUTH
    UTILITIES,  INC.,  NEW  YORK

    Mr.  Dixon.  Thank  you,  Mr.  Chairman.  My  associate  is  Mr.  Paul
    Hallingby,  my  assistant.

    As  you  have  stated,  my  name  is  Edgar  Dixon,  and  I  am  president
    of  Middle  South  Utilities,  Inc.,  and  also  chairman  of  the  Edison  Elec-
    tric Institute  committee  on  atomic  power.

    The  membership  of  the  Edison  Electric  Institute  numbers  178  in-
    vestor-owned electric  utility  operating  companies.  In  1952  these
    companies  accounted  for  84  percent  of  the  electric  operating  revenues
    of  the  investor-owned  electric  utility  industry.  At  the  end  of  last
    year  the  member  companies  were  serving  approximately  33  million
    electric  customers,  or  85  percent  of  the  electric  customers  receiving
    service  from  the  investor-owned  electric  utility  industry.  The  in-
    vestor-owned electric  utility  industry,  in  turn,  serves  approximately
    82  percent  of  the  total  number  of  electric  customers  in  the  United
    States.

    I  am  appearing  here  today 'in  response  to  a  letter  addressed  by  the
    Honorable  Sterling  Cole,  chairman  of  the  joint  committee,  to  Mr.
    W.  H.  Sammis,  president  of  the  Edison  Electric  Institute.  Your  in-
    vitation for  a  representative  of  the  Edison  Electric  Institute  to  ap-
    pear before  you  today  is  very  much  appreciated,  in  view  of  the  im-
    portance of  these  hearings  and  the  vital  interest  which  the  institute,
    as  a  body,  and  its  member  companies  have  in  these  matters.

    Chairman  Cole's  letter  was  referred  to  the  Edison  Electric  Insti-
    tute's standing  committee  on  atomic  power,  and  I  should  like  to  pre-
    sent to  you  a  prepared  statement  authorized  by  that  committee.

    Chairman  Cole.  Are  you  now  reading  that  authorized  statement?

    Mr  DixoN.  Yes.

    Chairman  Cole.  So  beginning  with  that  paragraph  it  should  be
    in  quotations  indicating  it  is  such  a  statement?

    Mr,  Dixon.  That  is  right.  This  is  an  authorized  statement  ap-
    proved by  the  full  committee.

    The  investor-owned  electric  power  industry  has  an  important  interest  in
    the  development  of  atomic  power  for  several  reasons.  To  liegin  with,  the  pro-
    duction of  fissionable  materials,  particularly  the  gaseous  diffusion  plant  opera-
    tions, requires  very  large  quantities  of  electric  power  to  the  point  where  the
    Atomic  Energy  Commission  is  today  the  largest  single  user  of  electric  energy
    in  the  world.  In  the  case  of  the  gaseous  diffusion  plant  at  Paducah,  Ky.,  5
    investor-owned  companies  formed  Electric  Energy,  Inc.,  which  will  supply  6
    billion  kilowatt-hours  a  year,  or  38  percent  of  the  required  electric  energy ;  the
    balance  will  be  supplied  by  the  Tennessee  Valley  Authority.  In  the  case  of
    the  gaseous  diffusion  plant  under  construction  at  Portsmouth,  Ohio,  15  electric

    ATOMIC    POWER    DEVELOPMENT  435

    power  companies  formed  Ohio  Valley  Electric  Corp.,  which  will  supply  the
    total  requirements  of  15  billion  kilowatt-hours  per  year.

    The  electric  power  industry  has  a  further  special  interest  in  the  develop-
    ment of  atomic  power.  This  derives  from  the  prospect  of  utilizing  atomic
    energy  economically  for  the  generation  of  electric  power,  with  fissionable  ma-
    terials taking  the  place  of  conventional  fuels,  and  nuclear  reactors  and  heat
    transfer  systems  replacing  conventional  boilers.  Commercial  utilization  of
    nuclear  energy  in  this  manner  could  result  in  important  conservation  of  the
    Nation's  reserve  of  fossil  fuels,  a  highly  desirable  long-range  objective.  More-
    over, this  potential  soui'ce  of  fuel  may  ultimately  provide  a  means  of  reducing
    fuel  costs  incurred  in  generating  electric  power.  Exploring  this  source  of  fuel
    thus  would  appear  to  be  an  integral  i)art  of  the  everday  activities  of  our  indus-
    try in  seeking  to  lower  costs  of  fuel — conventional  or  otherwise— for  the  con-
    tinuing benefit  of  the  public.

    The  investor-owned  electric  power  industry  has  a  long  record  of  reducing  the
    cost  to  the  public  of  its  service  through  development  of  new  methods  and  proces-
    ses and  improved  efficiency  of  operations,  and  seeks  every  possible  means  of
    continuing  this  long-term  trend  for  the  benefit  of  its  customers.

    Another  area  of  special  interest  to  the  electric  power  industry  regarding  atomic
    energy  relates  to  the  earnest  desire  of  free  enterprise  and  private  capital  to
    further  the  development  of  nuclear  power  sources  and  the  related  production
    of  fissionable  materials.  In  this  manner  we  can  possibly  take  part  in  devis-
    ing more  economical  methods  of  producing  fissionable  materials  for  national
    defense,  and  also  assist  in  creating  continuing  production  of  and  a  commercial
    market  for  these  products.

    We  recognize  that  in  order  that  our  customers  may  share  in  the  benefits  of
    commercial  application  of  atomic  power  to  electricity  production,  if  achieved,
    the  development  of  this  important  energy  source  must  have  the  active  support
    and  leadership  of  competitive  enterprise.

    In  the  light  of  the  stimulation  that  the  subject  of  atomic  iwwer  for  com-
    mercial use  has  been  receiving,  and  its  prospective  potential  development,  the
    problem  facing  members  of  the  power  industry,  and  particularly  the  electric
    power  companies,  has  been  to  appraise  what  can  be  done  within  the  limitations
    of  the  Atomic  Energy  Act  of  1946.

    Shortly  after  passage  of  the  McMahon  Act  in  1946,  the  electric  power  industry
    began  to  study  and  appraise  the  Atomic  Energy  Commission's  program.  In  1951
    the  Commission  accepted  into  the  program  four  industrial  groups  for  the  pur-
    pose of  studying  the  practicability  of  private  investment  in  the  nuclear  power
    field.  Each  of  these  groups  is  managed  or  comanaged  by  an  investor-owned
    utility  company.  A  fifth  group,  which  also  includes  investor-owned  utility  com-
    panies, recently  was  authorized  and  has  initiated  activities.

    Last  year  the  four  original  groups  reported  to  the  Commission  their  initial
    findings,  and  one  group  has  been  authorized  to  proceed  with  the  second  stage
    of  its  study,  consisting  primarily  of  developing  a  nuclear  reactor  to  produce
    power.  The  two  primary  participants  in  this  group  have  been  authorized  to
    have  ass(x?iated  with  them  25  additional  companies  in  connection  with  this  proj-
    ect. Of  these  companies,  18  are  electric  power  companies.  I  understand  that
    representatives  of  these  groups  have  made  appearances  before  this  committee.

    The  electric  power  industry  favors  every  effort  toward  advancing  the  solution
    of  problems  involved  in  developing  commercial  and  economical  atomic  power.
    The  industry  is  aijpreciative  of  the  attitude  of  the  Atomic  Energy  Commission
    in  encouraging  additional  companies  and  organizations,  which  can  make  a  con-
    tribution to  development  work  on  atomic  power  projects,  to  Ijecome  associated
    with  existing  study  groups  or  to  apply  for  the  formation  of  new  groups.

    While  at  the  present  time  the  success  of  the  atomic-power  program  seems
    to  be  best  assured  by  individual  companies  or  organizations,  or  groups  of  them,
    working  with  the  Atomic  Energy  Commission,  the  electric-power  industry  is
    prepared  to  assist  in  stimulating  and  maintaining  interest  in  this  subject  among
    individual  electric-utility  companies  through  this  or  other  industry  organiza-
    tions. The  industry  has  traditionally  shared  the  experience  and  information
    gathered  by  any  one  member  witli  all  other  members  for  the  benefit  of  the  public.
    Historically,  this  same  attitude  has  prevailed  in  our  dealings  with  the  many
    brandies  of  engineering  and  manufacturing  associated  with  the  electric-power
    industry.

    While  progress  is  being  made  within  the  present  limitations  of  the  McMahon
    Act,  we  appear  to  be  approaching  a  time  when  larger  amounts  of  private  capital
    will   be  required   for   investment   in   the   atomic-power   development   program.

    436  ATOMIC    POWER    DEVELOPMENT

    The  terms  of  the  present  statute  virtually  prohiljit  tlie  flow  of  sizai„>Ie  invest-
    ment funds  into  the  atomic-power  development  program,  since  they  do  not  allow
    normal  rights  of  ownership  by  industry  and  nojmal  opportunities  to  recover
    investments.

    In  the  interest  of  broadening  participation  and  use  of  private  capital  in  the
    atomic-power  program,  the  large  segment  of  the  investor-owned  electric-power
    industry  which  is  represented  by  membership  in  the  Edison  Electric  Institute
    wishes  to  recommend  revision  of  the  Atomic  Energy  Act  so  as  to —

    1.  Permit  industry  to  own  both  source  materials  and  fissionable  materials,
    and  facilities  for  the  production  and  utilization  of  such  materials  ;

    2.  Deal  fairly  with  patent  rights  and  incentives  for  new  developments;  and

    3.  Permit  industry  to  obtain  workable  licenses  from  appropriate  regulatory
    authorities  for  projects  in  this  field.

    These  recommended  revision  are  considered  consistent  with  governmental
    participation,  since  Government  ownership  and  operation  of  its  extensive  facili-
    ties can  continue  as  at  present.  Private  industry  simply  desires  the  right  to
    own  and  operate  its  own  facilities,  subject  to  appropriate  regulation  in  the
    interest  of  national  security,  health,  and  safety.  This  would  afford  industry
    an  opportunity  to  attract  the  necessary  investors'  dollars.  It  is  in  this  way,
    too,  that  most  effective  development  of  nuclear  energy,  as  a  resource  to  supple- '
    ment  coal,  gas,  and  oil,  can  be  achieved  for  the  continuing  benefit  of  the  public.

    If  I  might  take  another  second,  sir,  I  would  like  to  identify  the
    members  of  the  committee,  I  think  it  would  serve  to  emphasize  the
    very  real  interest  that  the  institute  takes  in  the  atomic-development
    program.     There  are  12  members.

    Mr.  J.  B.  Black,  president  of  the  Pacific  Gas  &  Electric  Co.,  San
    Francisco.

    Mr.  Walker  Cisler,  president  of  the  Detroit  Edison  Co.,  Detroit.

    Mr.  G.  M.  Gadsby,  president,  Utah  Power  &  Light  Co.,  Salt  Lake
    City,  Utah.

    Mr.  Allen  S.  King,  executive  vice  president,  Northern  States  Power
    Co.,  Minneapolis.

    Mr.  E.  L.  Lindseth,  president,  Cleveland  Electric  Illuminating  Co.,
    Cleveland,  Ohio.

    Mr.  J.  W.  McAfee,  president.  Union  Electric  Co.  of  Missouri,  St.
    Louis.

    Mr.  C.  B.  McManus,  president,  the  Southern  Co.,  Atlanta,  Ga.

    Mr.  I.  L.  Moore,  president,  New  England  Electric  System,  Boston.

    Mr.  R.  G.  Rincliffe,  president,  Philadelphia  Electric  Co.,  Philadel-
    phia, Pa.

    Mr.  H.  R.  Searing,  president.  Consolidated  Edison  Co.,  of  New
    York.

    Mr.  Philip  Sporn,  president,  American  Gas  &  Electric  Co.,  and  I
    serve  as  chairman  and  as  stated,  I  am  president  of  Middle  South  Util-
    ities, Inc.

    Chairman  Cole.  Thank  you,  Mr.  Dixon.

    Mr.  Holifield,  do  you  have  any  questions?

    Representative  Holifield.  I  will  say  this,  Mr.  Dixon:  That  your
    three  recommendations  are  all  right,  with  this  exception,  that  you
    make  general  recommendations  which  do  not  deal  specifically  with  the
    problem  the  committee  has  to  deal  with,  particularly  I  want  "to  address
    that  to  No.  2  in  which  you  say,  "Deal  fairly  with  patent  rights  and
    incentives  for  new  developments."

    Then  I  would  ask  you  if  you  have  studied  section  11,  the  patent  and
    invention  provision  of  the  act,  and  if  you  would  tell  us  in  what  ways
    that  is  not  fair  and  in  what  ways  you  would  like  to  have  it  changed
    90  it  would  be  f  air«

    ATOMIC    POWER    DEVELOPMENT  437

    Mr.  Dixon.  Mr.  Holifield,  I  think  that  your  suggestion  is  quite  a
    fair  one  that  these  are  quite  general.  I  think  the  position  I  find
    myself  in  today,  of  representing  a  very  large  segment  of  the  industry,
    almost  makes  that  essential.

    A  number  of  our  groups,  our  investor-owned  companies,  have  ap-
    peared before  this  committee.  I  have  in  mind  when  IVIr.  Cisler  ap-
    peared. I  believe  he  accompanied  his  testimony  with  a  rather  detailed
    analysis  of  the  act  and  the  various  sections  which  he  and  his  group  felt
    deserved  attention.  He  of  course  was  speaking  specifically  for  the
    companies  definitely  involved.

    I  just  question  whether  in  all  wisdom  at  this  rather  early  stage  of
    development  the  industry,  as  an  industry,  should  be  too  specific.

    Representative  Holifield.  I  can  see  that  you  are  taking  a  very  fair
    and  reasonable  position  insofar  as  you  have  been  authorized  to  appear
    before  the  committee.  However,  I  would  ask  you  to  consider  further
    more  specific  changes  in  the  act,  because  when  it  comes  time  for  the
    committee  to  sit  down  and  draft  legislation  we  are  going  to  want  all
    the  help  we  can  get,  particularly  from  gentlemen  of  your  standing  in
    the  industry.  If  you  do  have  specific  ideas  as  to  changes  in  the  act,
    that  would  fit  your  industry  into  this  new  development  in  an  equitable
    way,  we  would  like  to  have  those  specific  suggestions.

    Mr.  Dixon.  Just  in  general,  of  course,  the  utility  industry  as  an
    industry  has  no  deep  traditional  feeling  toward  patents.  Offhand,
    I  can't  think  of  a  utility  company  that  of  itself  owns  a  patent.  We
    are  deeply  concerned  that  the  manufacturers  are  protected,  the  people
    who  provide  us  with  materials  and  supplies,  because  we  find  that  when
    they  develop  a  process  they  make  it  available,  they  want  to  sell  it.
    If  it  will  help  us  to  generate  electricity  cheaper,  if  we  can  provide
    better  service,  we  have  a  very  great  concern  that  the  equipment  manu-
    facturers have  every  incentive  to  do  those  things.  We  certainly  would
    like  to  see  changes  made  to  promote  that  status  for  the  manufacturers,
    particularly  to  provide  normal  incentives  for  individuals.

    If  I  might  make  a  suggestion — I  don't  know  the  procedures  of  this
    committee — it  occurs  to  me  that  our  committee  might  well  serve  a
    useful  function  if  we  had  an  opportunity  to  review  suggested  drafts
    of  changes.  I  think  we  might  be  a  means  of  correlating  ideas  and
    tftese  rather  diverse  opinions.  I  think  you  have  observed  among  the
    utility  companies  which  have  appeared  here,  that  they  have  rather
    wide  and  diverse  opinions  as  to  how  development  should  proceed  at
    this  stage,  and  we  think  that  is  a  healthy  thing.  We  think  the  more
    fertile  minds  at  work,  the  more  rapidly  we  will  get  better  answers.
    As  chairman  of  this  committee  I  certainly  would  welcome  the  oppor-
    tunity to  try  to  do  that  work  and  to  try  to  get  our  overall  notions  and
    suggestions  at  the  time  when  perhaps  your  legislation  is  taking  form.

    Representative  Holifield.  The  statement  has  been  made  repeatedly
    that  the  McMahon  Act  as  it  now  exists  is  not  adequate  for  the  situa-
    tion, that  it  should  be  changed.  Of  course,  we  feel  that  if  that  be
    true,  the  people  who  are  advocating  the  changes  in  the  act  must  have
    come  to  that  conclusion  as  a  result  of  their  study  of  the  present  act.
    If  we  are  wrong  in  that,  if  they  are  just  saying  to  change  this  without
    knowing  what  they  are  talking  about,  then  their  advocacy  is  subject  to
    some  further  scrutiny  on  our  part.

    Mr.  Dixon.  Addressing  myself  to  our  first  point,  we  feel  very
    strongly  there  must  be  changes  if  as  an  industry  we  are  to  attract  pri-
    vate capital.    Building  a  powerplant  today,  even  under  the  conven-

    438  ATOMIC    POWER    DEVELOPMENT

    tional  methods,  is  an  expensive  program.  I  think  none  of  us  would
    build  an  expensive  central  power  station  without  an  assured  source  of
    fuel  or  without  assured  ownership.  We  couldn't  finance  it.  We  are
    a  strictly  regulated  industry.  The  price  of  our  product  is  controlled.
    Our  profits  are  limited.  Traditionally  we  have  had  to  raise  virtually
    all  our  new  capital  in  competition  with  other  seekers  of  capital.  We
    have  had  to  pay  out  a  fair  amount  of  dividends  to  attract  that  capital.
    So  retained  earnings  do  not  provide  a  source  of  venture  capital,  if
    you  wish  to  call  it  that,  that  might  be  devoted  to  this  purpose.

    If  we  are  to  finance  development  work,  if  we  are  to  finance  the  con-
    struction of  atomic-energy  plants,  there  must  be  assurance  that  we  will
    have  a  supply  of  fuel,  and  that  we  will  have  ownership.  We  must  give
    normal  assurances  to  our  potential  investors.

    Mr.  HoLiFiELD.  Does  any  of  your  group  at  this  time  obtain  electric
    energy  from  Federal  projects  at  the  bus  bar?

    Mr.  Dixon.  I  would  think  yes,  sir.  Usually  when  you  are  in  the
    neighborhood  of  other  power  sources  you  interchange  power.  On
    balance  we  sell  and  have  sold  very  large  amounts — speaking  for  my
    own  company — we  have  sold  very  large  amounts  of  power  to  the  TVA
    in  order  to  permit  the  expansion  at  Oak  Ridge.  We  put  in  very,
    very  large  amounts  of  firm  power  over  many  months.  At  ofFpeak
    hours  they  have  surplus  and  we  take  some  capacity  from  them.

    Representative  Holifield.  The  reason  I  brought  that  up  was  to  ex-
    plore your  insistence  on  your  No.  1  provision  that  it  would  be  neces-
    sary for  industry  to  own  the  source  of  materials.  They  do  not  own
    the  TVA,  and  yet  they  use  the  power  that  comes  from  the  TVA.

    Mr.  Dixon.  What  we  use  is  surplus  or  dump  power.  We  wouldn't
    rely  on  that  kind  of  power  to  provide  for  our  own  loads.  We  have
    our  base  pow^erplants.

    Representative  Holifield.  You  might  not  in  that  particular  area.^
    There  are  plants,  such  as  the  Southern  California  Edison  Co.,  that  buy
    their  power  from  Hoover  Dam.  They  supplement  it  with  steam
    power,  it  is  true.

    Mr.  Dixon.  As  I  understand  the  McMahon  Act,  sir,  the  AEC  could
    not  legally  enter  into  a  long-term  fuel  contract.  As  I  understand  it,
    they  may  lease  it,  but  it  is  subject  to  recall  at  any  time.  When  it  would
    take  in  our  case  a  minimum  of  3  years  to  replace  a  power  source,  I
    doubt  that  we  could  afford  to  rely  on  that  rather  indefinite  source  of
    energy.

    Representative  Holifield,  Yes.  As  long  as  the  power  of  immediate
    recapture  for  national-security  purposes  is  there,  you  could  not  pro-
    ceed. I  can  see  that.  I  concede  that  point.  However,  the  very
    nature  of  this  material,  having  the  dual  purpose  of  being,  on  the  one
    hand,  energy  for  civilian  use  and  on  the  other  hand,  energy  for  a  bomb,
    puts  it  in  a  class  by  itself,  and  the  question  occurs  whether  the  Govern-
    ment can  make  a  firm  contract  with  you  to  furnish  you  fissionable
    materials  without  a  recapture  clause  in  case  of  national  emergency.
    That  problem  is  involved.

    Mr.  Dixon.  I  recognize  that.  It  is  because  that  problem  is  there
    that  utilities  are  building  very,  very  large  numbers  of  conventional
    steam  powerplants  today.  Atomic  power  is  not  a  dependable  energy
    source  yet.  There  may  come  a  time  when  it  is.  To  attract  investors^
    dollars  for  w^hat  would  appear  to  be  a  dependable  source  of  power  we
    would  need  some  changes  in  the  rules.     As  yet  it  isn't  in  that  stage.

    ATOMIC    POWER    DEVELOPMENT  439

    Representative  Holifield.  That  presupposes  that  we  can  change  the
    rules  to  where  you  can  have  assurance  of  a  long-term  supply  of  fuel
    at  a  reasonable  price.

    Mr.  Dixon.  That  is  my  point,  sir.  We  think  that  would  be  a  very
    great  aid  in  attracting  investor  dollars.  We  think  private  capital  can
    aid  this  progi'am  materially.

    Representative  Holifield.  That  is  a  matter  of  policy  and  wisdom
    that  the  committee  must  exercise  in  drawing  legislation.

    Mr.  Dixon,  Yes,  sir ;  and  again  I  say  that  is  among  the  reasons  that
    my  approach  of  necessity  has  been  general.  We  are  feeling  our  way.
    We  think  it  is  perfectly  wonderful  that  so  many  of  our  companies  are
    attacking  this  problem.  We  think  the  great  diversity  of  opinions
    among  our  fellows  is  a  wonderful  tiling.  It  is  different  approaches,
    it  is  different  theories  wliich  ultimately  will  come  up  with  the  right
    answer.  Pending  the  time  wiien  the  right  answer,  if  there  is  a  single
    right  answer,  evolves,  we  would  like  to  see  many,  many  more  com-
    panies participate.  We  would  like  to  see  every  conceivable  approach
    followed.     We  think  it  is  just  in  that  stage  right  now.

    To  the  extent  that  we  as  a  committee  can  coordinate  ideas  and  be
    of  value  to  your  committee,  we  certainly  would  like  to  do  that.

    Mr,  HoLiFiEi.D.  Tliank  you  very  much  for  your  testimony.

    Chairman  Cole.  That  is  quite  right,  Mr.  Dixon.  Our  committee
    has  been  pressed  for  time  because  the  Senate  membei-s  of  the  com-
    mittee are  now  engaged  in  a  hearing  on  the  nomination  of  Mr.  Joseph
    Campbell  to  the  Commission,  and  tliose  of  us  who  have  remained  are
    anxious  to  go  over  and  participate  in  that  hearing.

    Apropos  of  the  suggestion  which  you  made  that  your  committee
    might  do  well  to  review  any  proposed  draft  of  changes  in  the  legisla-
    tion, I  would  urge  that  you  go  one  step  backward  and  undertake  to
    formulate  such  a  draft  rather  than  wait  for  someone  else  to  formulate
    it  and  you  just  review  it.  I  tliink  your  institute  would  be  a  very
    proper  group  through  which  utility  companies  could  concentrate  their
    efforts  in  formulating  suggested  changes  in  legislation.  We  have
    asked  many  of  the  individual  companies  which  have  appeared  to  do
    that.  In  order  to  avoid  liaving  scores  of  different  suggestions,  I
    think  it  might  be  very  well  and  appropriate  that  that  effort  on  tlie
    part  of  the  various  utility  companies  were  concentrated  in  your
    committee.

    With  that  in  mind,  we  will  close  the  hearing  today  with  tlie  expecta-
    tion that  we  may  liave  some  affirmative  product  of  your  effort  within
    the  next  few  months.

    Mr.  Dixon.  I  will  guarantee,  Mr.  Chairman,  we  will  move  heaven
    and  earth  to  do  anything  that  will  help  this  committee.  If  it  is  doable,
    we  will  do  it.

    Chairman  Cole.  You  can  be  very  helpful,  I  am  sure.

    Mr.  Dixon.  We  will  give  you  everything  we  luive.  We  deeply
    apj)reciate  the  opportunity  of  being  here  today.

    Cliairman  Cole.  Tliank  you,  Mr.  Dixon.

    The  next  meeting  will  be  Wednesday  afternoon  in  this  room,  when
    we  will  hear  former  United  States  Patent  Commissioner  Casper  Ooms
    and  also  Senator  Malone,  of  Nevada,  and  Mr.  Oscar  Ruebhausen,  rep-
    resenting the  New  York  Bar  Association.

    (Whereupon,  at  4:  o5  p.  m.,  Monday,  July  20,  1953,  the  committee
    was  recessed,  to  reconvene  Wednesday,  at  2  p.  m,,  July  22,  1953.)

    ATOMIC  POWER  DEYELOPMENT  AND  PEIVATE
    ENTEEPRISE

    WEDNESDAY,  JULY   22,    1953

    Congress  of  the  United  Stai-es,
    Joint  Committee  on  Atomic  Energy,

    Washington^  D.  C.

    The  joint  committee  met  at  2  p.  m.,  pursuant  to  recess,  in  room  318
    of  the  Senate  Office  Building,  Hon,  Carl  Hinshaw,  presiding.

    Present:  Representative  Hinshaw  (presiding),  Senator  Pastore,
    Representatives  Van  Zandt,  and  Holifield.

    Professional  staff  members  present :  Corbin  C.  Allardice,  executive
    director;  and  Walter  A.  Hamilton  of  the  professional  staff  of  the
    joint  committee.

    Representative  Hinshaw.  The  meeting  will  come  to  order.

    The  purpose  of  the  meeting  is  to  hear  testimony  on  some  problems
    relating  to  the  definition  of  a  Federal  policy  on  atomic-power  devel-
    opment and  private  enterprise.

    Today  we  are  to  hear  Senator  George  Malone,  of  Nevada,  who,  for
    over  a  year,  has  shown  active  interest  among  various  groups  to  en-
    courage the  selection  of  Eureka,  Nev.,  as  the  site  of  the  first,  or  one
    of  the  first,  atomic  powerplants.  This  interest  was  stimulated  at  least
    in  part  by  the  efforts  of  the  AEC  to  locate  a  suitable  site  for  possible
    construction  of  an  experimental  atomic  powerplant  in  a  high  power-
    cost  area.  There  have  never  been  firm  plans  within  the  Commission
    for  such  a  plant,  but  several  studies  have  been  conducted  in  prepa-
    ration for  the  possibility  that  this  might  prove  to  be  a  feasible  step
    in  development  of  commercial  economic  atomic  power.  Only  last
    week  the  AEC  announced  the  grant  of  a  $50,000  study  contract  to
    Walter  Kidde  Nuclear  Laboratories,  Inc.,  to  explore  suitable  atomic
    powerplant  designs  for  such  use.  The  committee  invited  the  Atomic
    Power  Utilization  Committee  of  Reno,  Nev.,  to  submit  a  statement
    of  its  findings  and  views  for  the  record.

    We  have  a  letter  from  the  Governor  of  Nevada,  the  Honorable
    Charles  H.  Russell.  I  believe  that  that  is  the  same  gentleman  who
    was  formerly  a  Member  of  the  House  of  Representatives.

    Senator  Malone.  Formerly  a  Member  of  the  Congress  from  the
    State  of  Nevada.

    Representative  Hinshaw.  In  the  letter,  he  discusses  an  ideal  site
    for  such  an  ex])erimental  ])owerplant  in  Eureka  County,  Nev.  At-
    tached thereto  is  a  letter  addressed  to  him  by  the  chairman  in  reply,
    and  then  another  letter  from  the  chairman  of  the  Atomic  Power
    Utilization  Committee  of  Reno,  Nev.,  Mr.  Alfred  Merritt  Smitli,  sub-
    mitting certain  views  and  enclosures  for  these  hearings.

    This  material,  in  part  at  least,  will  be  made  a  part  of  the  record.

    441

    442  ATOMIC    POWER    DEVELOPMENT

    (The  material  referred  to  follows :)

    The  Statk  of  Nevada,

    Executive  Chamber,
    Carson  Clin,  Jahj  3,  1953.
    Congressman  W.  Sterung  Cole,

    Chnirman,  Joint  Congressional  Committe  on  Atomic  Energy,
    House  Office  Building,  Washington,  D.  C.
    Dear  Representative  Cole  :  As  you  know,  the  State  of  Nevada  lias  been  a
    proving  ground  for  the  Atomic  Energy  Commission's  tests  on  the  explosive  power
    of  nuclear  fusion.

    There  is  need,  too,  that  Nevada  share  further  in  the  program  of  atomic
    development.

    The  field  which  we  in  Nevada  think  should  be  explored  in  our  State  is  that
    of  atomic  power  for  commercial  use.

    An  ideal  site,  we  all  believe,  for  such  atomic-power  experiments  is  located  in
    Eureka  County.  That  county  is  in  the  central  section  of  the  State.  It  is  a  sec-
    tion rich  in  mining  possibilities  which  require  cheap  power  for  development.

    The  location  of  an  atomic  powerplant  in  the  Eureka  area  would  aid  not  only
    the  State  of  Nevada,  but  the  entire  Nation,  for  it  would  result  in  vastly  increased
    production  of  critically  needed  materials,  such  as  tungsten.

    It  is  my  sincere  hope  that  you  will  give  every  consideration  toward  the  selec-
    tion of  Eureka  as  a  site  for  the  proposed  atomic  powerplant.
    With  every  best  personal  wish.
    Sincerely  yours,

    Charles  H.  Russell,  Oovemor.

    July  10,  1953.
    Hon.  Charles  H.  Russell,

    Governor,  State  of  Nei'ada,

    Executive  Chamber,  Carson  City,  Net'.

    Dear  Govetknor  Russell  :  Your  letter  of  July  3  was  most  persuasive  and  logi-
    cal. I  want  to  thank  you  for  calling  to  my  attention  the  possibilities  which  the
    State  of  Nevada  affords  as  a  location  for  atomic-power  experiments.

    The  weapons-testing  program  conducted  by  the  Atomic  Energy  Commission  in
    Nevada  has  been  one  of  the  most  dramatic  and  important  contributions  to  Ameri-
    can security  in  recent  years.  The  privilege  afforded  to  the  Nation  and  the
    patience  shown  by  the  people  of  your  State  put  the  rest  of  us  in  their  debt.

    The  promise  which  increased  supply  of  low-cost  power  holds  out  for  Eureka
    County  certainly  makes  your  quest  worthwhile.  The  reports  on  this  and  other
    high  cost  power  areas  in  the  country  which  have  been  filed  with  the  joint  com-
    mittee by  the  Federal  Power  Commission  bear  out  your  observations.

    The  Atomic  Energy  Commission  is  exclusively  and  completely  responsible
    under  the  Atomic  Energy  Act  of  1946  for  the  administration  of  the  atomic-energy
    programs  authorized  by  the  Congress.  The  Commission  has  informed  the  joint
    committee  that  it  lias  and  will  continue  to  give  every  possible  consideration
    to  Eureka  County  as  a  location  for  an  experimental  atomic  powerplant  in  the
    event  that  it  should  determine  at  any  time  in  the  future  to  undertake  construc-
    tion of  such  a  plant.    No  such  decision  has  yet  been  made.

    I  am  also  informed  that  one  of  the  most  diificult  asi>ects  in  the  location  of
    experimental  atomic  powerplants  is  the  fact  that  such  plants  are  not  expected
    to  provide  firm  electric  power  for  commercial  application.  To  require  them  to
    do  so  would  so  seriously  limit  the  designers  as  to  make  the  plants  virtually
    useless  from  an  experimental  standpoint.

    Your  letter,  along  with  those  I  have  received  from  both  organizations  and
    individuals  in  Nevada,  is  being  forwarded  to  the  Atomic  Energy  Commission
    with  a  request  for  reeaxmination  of  the  entire  problem     I  shall  be  happy  to
    forward  the  Commission's  reply  to  you  as  soon  as  it  is  received.
    Sincerely  yours.

    Sterling  Cole,  Chairman.

    ATOMIC    POWER    DEVELOPMENT  443

    Jui,Y  23,  1953.

    United  States  Atomic  Energy  Commission,

    Washington  25,  D.  C.
    (Attention  of  Mr.  Lewis  L.  Strauss,  Chairman.)

    Gentlemen  :  In  the  course  of  the  joint  committee  hearings  on  some  of  the
    problems  incident  to  detinitiou  of  a  Federal  policy  on  atomic-power  development,
    we  have  received  correspondence  and  statements  from  various  individuals  and
    groups  urging  the  selection  of  Eureka  County,  Nev.,  as  a  site  for  an  experi-
    mental atomic  powerplant.

    A  copy  of  a  letter  from  the  atomic  power  utilization  committee,  of  Reno,
    Nev.,  is  attached  for  your  information.  I  believe  it  is  quite  possible  the  en-
    closures noted  in  their  letter  have  also  been  made  available  to  the  Atomic
    Energy  Commission.

    I  understand  there  has  been  a  review  of  this  matter  within  the  Commission.
    It  would  be  helpful  to  the  committee  if  that  review  could  be  summed  up  in  some
    concise  form  and  provided  to  us.

    An  unciassitied  reply  available  in  at  least  several  copies  would  be  appreciated
    in  order  tliat  we  may  pass  it  on  to  Governor  Russell  of  Nevada  and  tlie  atomic
    power  utilization  committee.
    Sincerely  yours,

    Steeling  Cole,  Chairman.

    United  States  Atomic  Energy  Commission,

    Washington  25,  D.  C.,  August  11, 1953.
    Hon.  Sterling  Cole,

    Chairman,  Joint  Committee  on  Atomic  Energy,

    Congress  of  the  United  States,  Washington  25,  D.  C.
    Dear  Mr.  Cole  :  In  response  to  your  request  of  July  23,  1953,  the  following
    summary  outlines  the  present  situation   in  connection  with  the  location  of  a
    nuclear  package  powerplant  in  the  Eureka,  Nev.,  area  :

    A.    COST  OF  POWER  GENERATION  AND   MARKET  STUDIES

    1.  Surveys  and  studies  have  been  made  by  the  Atomic  Energy  Commission,
    the  Federal  Power  Commission,  and  the  Department  of  the  Interior  with  re-
    spect to  the  market  for  electric  power  in  the  Eureka  region  and  the  cost  of
    providing  power,  both  from  conventional  and  nuclear  sources.

    2.  It  is  estimated  from  these  studies  that —

    a.  At  10  mills  per  kilowatt-hour  cost,  the  demand  for  power  by  1960  would
    approximate  30,000  kilowatts  at  60-percent  load  factor.

    h.  From  10  to  15  mills  per  kilowatt-hour  the  demand  would  fall  off  gradu-
    ally ;  above  15  mills  it  would  drop  rapidly.

    c.  By  construction  of  a  transmission  line  from  contiguous  areas  such  as
    Twin  Falls,  Idaho ;  Summit,  Calif. ;  and  Salt  Lake  City,  Utah,  the  cost  of
    power  delivered  to  Eureka  is  estimated  to  range  from  10  to  13.1  mills  per
    kilowatt-hour.

    d.  Power  of  the  required  magnitude  and  load  factor  would  cost  from
    20  to  25  mills  from  reactor  sources  of  the  small  size  needed,  assuming
    present  technology.

    B.    FACTORS  AFFECTING  LOCATION  OF  PACKAGE  POWERPLANT

    i.  Economic  feasibility

    From  the  above  discussion  it  would  appear  that,  considering  cost  of  power
    generation  only,  it  would  not  be  practical  at  this  time  to  locate  a  nuclear  power-
    plant  in  Eureka.  Studies  made  of  other  high-power-cost  areas  in  the  United
    States  result  in  the  same  conclusions.

    2.  Experimental  reactor

    The  selection  of  a  site  for  an  experimental  reactor  need  not,  of  course,  be  based
    on  an  economic  argument.     The  Commission  will  consider  the  merits  of  the

    >740 — 53-

    444  ATOMIC    POWER    DEVELOPMENT

    Eureka  area  in  any  site  selection  it  may  make  but  notes  that  the  location  of
    existing  Commission  facilities  plays  an  important  role  in  determining  the  most
    valuable  location  for  any  new  facility  from  the  point  of  view  of  research  and
    development.

    5.  Other  factors

    Admittedly,  there  are  other  considerations  which  could  influence  the  selection
    of  an  otherwise  uneconomic  site,  such  as  reclamation,  or  special  (noneconomic)
    mineral  stockpiling  incentives.  These  considerations  do  not  appear  to  fall
    within  the  primary  resiwnsibilities  of  the  Atomic  Energy  Commission.  Nonethe-
    less, we  shall  (in  selecting  sites)  attempt  to  take  these  factors  into  account.

    I  shall  be  glad  to  furnish  you  with  more  detailed  information  in  regard  to
    this  matter  if  you  so  desire.

    Sincerely  yours,

    Lewis  L.  Strauss,  Chairman.

    Atomic  Power  Utilization  Committee,

    Reno,  Nev.,  July  13,  1953.
    Hon.  W.  Sterling  Cole,

    Chairman,  Joint  Committee  on  Atomic  Energy,

    Washington,  D.  C.
    Dear  Congressman  Cole  :  I  have  your  letter  of  July  8,  1953,  inviting  the  local
    Atomic  Power  Utilization  Committee  to  submit  any  statement  of  their  views
    on  atomic-power-development  problems  for  inclusion  in  the  record  of  the  open
    hearings  to  be  soon  published.  The  Nevada  Atomic  Power  Utilization  Commit-
    tee has  a  membership  of  247,  all  of  whom  are  leaders  in  Nevada.  Its  board
    of  directors  are  men  exceptionally  well  informed  in  the  mining  and  engineering
    profession,  and  I  think  it  would  be  very  informative  to  your  committee  if  one
    or  more  of  them  could  personally  appear  at  the  hearing  to  make  a  statement  and
    answer  questions.  As  you  state,  however,  the  remaining  time  is  short  and  none
    would  wish  to  incur  loss  of  time  and  expense  of  a  journey  to  Washington  with-
    out positive  assurance  of  being  heard  before  the  adjournment  of  Congress.

    I  submit  the  following  enclosures  for  inclusion  in  the  record  of  the  hearings
    or  such  portions  of  them  as  may  seem  advisable  :

    1.  Atomic  Power  Utilization  Committee,  organization  proceedings.

    2.  Report  as  to  feasibility  of  construction  of  atomic  reactor  at  Eureka,  Nev. ;
    July  25,  1952.

    3.  Report  on  present  and  potential  electric  power  markets  for  proposed  dual-
    purpose  atomic  reactor  near  Eureka,  Nev. ;  September  30,  1952.

    4.  Nuclear-power  effect  upon  the  mining  industry.  An  address  before  the
    American  Mining  Congress,  Denver,  Colo.,  by  Senator  George  W.  Malone ;  Sep-
    tember 25,  1952.     [Not  printed.]

    5.  Transcript  of  the  testimony  of  Dr.  Lawrence  R.  Hafstad,  Director  of  Re-
    actor Development,  Atomic  Energy  Commission,  at  Henderson,  Nev. ;  October
    10  and  11,  1952.

    Our  committee  greatly  appreciates  the  opportunity  given  us  to  present  the  case
    for  atomic-power  development  in  Nevada.

    I  further  suggest  that  you  communicate  with  Senator  George  W.  Malone  who
    is  exceptionally  well  informed  on  the  resources  of  Nevada.  He  is  a  lifetime
    engineer  and  maintains  an  office  in  Reno  which  is  my  headquarters.  He  is
    greatly  interested  in  the  possibility  of  developing  many  of  Nevada's  remotely
    located  resources  in  both  mining  and  agriculture,  and  he  might  well  appear  be-
    fore your  committee  with  a  statement  if  the  limited  time  will  permit.
    Most  sincerely,

    AiJTiED  Mekritt  Smith,  Chairman.

    (The  following  are  excerpts  from  the  documents  noted:)

    Atomic  Power  Utilization  Committee — Organization  Proceedings

    The  committee  was  organized  at  Reno,  Nev.,  on  July  1,  19.52,  upon  the  sugges-
    tion of  Dr.  Lawrence  R.  Hafstad,  Director  of  Reactor  Development,  United  States
    Atomic  Energy  Commission,  who  came  to  Nevada  upon  the  request  of  Senator
    George  W.  Malone  for  a  preliminary  examination  of  the  Eureka  mining  district  as
    a  site  for  the  construction  of  a  reactor  to  supply  electric  energy  to  the  mining  in-
    dustry while  primarily  engaged  in  the  production  of  plutoniuni  for  the  Govern-

    ATOMIC    POWER    DEVELOPMENT  445

    ment.  It  is  proposed  to  install  a  reactor  of  sufficient  capacity  to  supply  the  power
    needs  of  all  the  various  mines  of  the  Eureka  mining  district,  and  also  power  for
    pumping  ground  water  for  irrigation  in  several  desert  valleys  located  within
    economic  electric  transmission  distance.

    PUEPOSES

    1.  To  prepare  a  feasibility  report  on  the  Eureka  project,  setting  forth  com-
    parative costs  with  those  of  diesel-electric  and  hydroelectric  power.

    2.  To  disseminate  information  throughout  the  State  in  regard  to  atomic  energy,
    and  its  use  in  various  industries.     This  will  be  done  by  lectures  to  service  clubs

    and  other  civic  groups  and  by  the  distribution  of  unclassified  and  unrestricted
    literature  supplied  by  the  Atomic  Energy  Commission  and  affiliates.

    3.  To  arouse  the  interest  of  the  mining  industry  and  owners  of  mines  located
    in  areas  of  difficult  and  remote  accessibility  in  the  use  of  atomic  reactors  to  solve
    their  power  problems.

    4.  To  promote  educational  programs  in  high  schools  in  order  to  spread  general
    information  regarding  nuclear  energy  physics,  chemistry  and  technology,  in  the
    belief  that  such  knowledge  will  do  much  for  the  future  development  and  welfare
    of  our  citizens.

    5.  To  actively  support  the  program  that  has  been  initiated  at  the  University  of
    Nevada  for  the  beneficiation  of  low  grade  uranium  ores ;  to  promote  the  adoption
    of  additional  studies  covering  effects  of  radioactivity  on  plant,  animal,  and
    human  life  and  in  the  special  fields  of  medicine,  therapeutics,  the  conditioning
    and  preservation  of  foods,  and  of  procedures  to  prevent  or  neutralize  any  delete-
    rious effects  that  may  be  created.

    ORGANIZATION

    Present  at  a  dinner  meeting  in  Reno,  Nev.,  on  .July  1,  which  had  been  called
    by  Senator  George  AV.  ^Malone,  were  a  number  of  leading  men  in  engineering,
    mining,  financial,  legal,  and  educational  fields.  With  Senator  Malone  acting  as
    moderator,  these  men  organized  as  a  general  committee  for  an  investigation
    of  the  possibilities  of  use  of  atomic  energy  as  a  source  of  power  in  Nevada.
    A  chairman  and  a  board  of  directors  was  elected,  consisting  of  the  following  men  :
    Alfred  Merritt  Smith,  E.  M.,  Nevada  State  engineer,  1935-51,  chairman
    Roy  A.  Hardy,  E.  M.,  Wingfield  mining  interests,  manager,  Getchell  mine,  etc.
    George  W.  Mitchell,  E.  M.,  managing  director.  Eureka  Mining  Corp.,  Ltd.,  Eureka,

    Nev.
    Joseph  E.  Moose,  Ph.  D.,  chief  of  chemistry  department.  University  of  Nevada
    Stanley  G.  Palmer,  D.  Sc,  dean.  College  of  Engineering,  University  of  Nevada
    Vernon  E.  Scheid,  Ph.  D.,  dean  and  director,  Mackay  School  of  Mines,  Univer-
    sity of  Nevada

    The  directors  were  requested  by  Dr.  Hafstad  to  proceed  rapidly  with  the
    preparation  of  a  feasibility  report  concerning  tlie  proposed  construction  of  an
    atomic  reactor  by  AEC  at  Eureka,  Nev.,  upf)n  or  near  the  property  of  the  Eureka
    Corp.,  Ltd.,  to  generate  electric  power  for  dewatering  the  Richmond-Eureka
    mine  in  order  to  permit  recovery  of  large  bodies  of  valuable  lead-zinc  ores  now
    urgently  required  in  the  national  economy ;  and  for  the  operation  and  devel-
    opment of  other  mines  in  the  Eureka  mining  district,  and  for  pun)ping  ground
    water  in  the  several  adjacent  arid  valleys  for  irrigation.

    Dr.  Hafstad  stated  that  a  new  reactor  would  definitely  be  constructed  by  AEC
    somewhere  in  the  United  States  as  soon  as  possible  for  the  manufacture  of  plu-
    tonium  ;  that  electric  energy  would  be  a  byproduct  which  would  be  sold  as  profit-
    ably as  possible  as  a  credit  to  the  cost  of  the  plutonium.

    Each  of  the  directors  will  be  cleared  by  the  Atomic  Energy  Commission  in
    order  to  receive  restricted  information,  particularly  as  to  data  and  costs  of
    reactor  construction  and  operation.

    The  directors  were  further  instructed  to  contact  operators  in  all  fields  of
    private  work  and  invite  them  to  become  niemiiers  of  the  Atomic  Power  Util-
    ization Committee,  and  participate  in  discussions.

    The  membership  will  be  composed  of  iiersons  who  are  active  in  State  affnirs
    and  in  the  advancement  of  industry,  including  those  engaged  in  professional
    work,  especially  in  education.  Meetings  will  l.e  held,  at  which  speakers  who
    are  specialists  will  appear.  Lectures  and  panel  di.scnssions  will  be  arranged.
    The  njore  highly  technical  features  of  the  subject  will  be  avoided.  The  great
    advantages  of  peacetime  utilization  of  this  great  force  in  science,  industry,  and

    446  ATOMIC    POWER    DEVELOPMENT

    commerce  will  be  described  and  discussed  in  the  light"  of  present  widespread
    developments.  The  phenomenally  rapid  and  dramatic  progress  in  nuclear  energy
    use  has  gone  ahead  of  public  information  and  education  on  the  subject.  An
    essential  part  of  the  committee  program  will  be  the  spreading  of  knowledge
    regarding  atomic  energy,  destined  soon  to  become  of  major  importance  to  the
    welfare  of  mankind,  and  vital  to  the  economic  development  of  mining  and
    agriculture  in  the  arid  Western  States.

    Report  as  to  Feasibility  of  Consteucting  an  Atomic  Reactor  at
    EuKEKA,  Nev. — July  25,  1952

    *******

    While  exploring  the  industrial  field  for  an  initial  site,  the  Eureka,  Nev.,  area
    was  brought  to  the  attention  of  AEC  and  a  preliminary  examination  was  made
    by  Dr.  Lawrence  R.  Hafstad,  Director,  Division  of  Reactor  Development,  during
    July  1952.  At  that  time  a  group  of  mine  operators,  and  interested  engineers  met
    with  him  in  Reno,  Nev.,  following  his  return  from  Eureka.  Dr.  Hafstad  sug-
    gested that  the  group  organize  and  submit  a  report  to  AEC  on  the  apparent
    advantages  and  feasibility  of  the  Eureka  site.  The  group  thereupon  organized
    as  the  Atomic  Power  Utilization  Committee,  and  the  following  were  selected  as
    the  board  of  directors :

    Alfred  Merritt  Smith,  E.  M.,  Nevada  State  engineer,  1935-51,  chairman
    Roy  A.  Hardy,  E.  M.,  Wingfield  mining  interests,  manager,  Getchell  Mine,  etc.
    -George  W.  Mitchell,  E.  M.,  vice  president  and  managing  director,  Eureka  Corp.,

    Ltd.,  Eureka,  Nev.
    Joseph  E.  Moore,  Ph.  D.,  chief  of  chemistry  department.  University  of  Nevada
    Stanley  G.  Palmer,  D.  Sc,  dean,  College  of  Engineering,  University  of  Nevada
    Vernon  E.  Schied,  Ph.  D.,  dean  and  director,  Mackay  School  of  Mines,  University

    of  Nevada

    The  board  was  instructed  to  prepare  a  report  on  the  feasibility  of  the  Eureka
    mining  district  for  a  reactor  site  without  delay  and  submit  it  to  AEC  for  con-
    sideration.   This  report  is  in  compliance  with  the  committee's  directive.

    ECONOMIC  ASPECTS

    Locaiion

    The  mining  district  and  the  town  of  Eureka  are  located  somewhat  east  of  the
    geographical  center  of  the  State  of  Nevada.  The  town  has  a  population  of  about
    7(X)  and  is  the  county  seat  of  Eureka  Covmty,  Nev.  It  is  3  miles  distant  from  the
    principal  working  site  of  the  Richmond  Eureka  mine  of  the  Eureka  Corp.,  Ltd.,
    the  suggested  location  for  the  reactor.

    The  district  is  without  railroad  service.  The  nearest  railroad  connection  is
    the  Nevada  Northern  Railway  at  Ely,  Nev.,  77  miles  east.  Another  outlet  to  the
    main  east-west  lines  of  the  Southern  &  Western  Pacific  Railroads  is  So  miles
    north  via  State  Highway  20.  Eureka  is  on  United  States  Highway  50 — a  first-
    cla,3S,  paved,  2-lane  highway  extending  east  and  west  through  the  State  and
    passing  through  Reno,  Austin,  Eureka,  Ely,  and  Salt  Lake  City.  A  paved  two-
    lane  highway  connects  Eureka  with  the  properties  of  the  Eureka  Corp.  Tele-
    phone lines  of  the  Bell  Telephone  Co.  connect  the  town  with  outlying  commu-
    nities. A  5,000-foot  gravel  airstrip  adjacent  to  the  town  provides  facilities  for
    light-  to  medium-sized  aircraft.

    A  map  prepared  by  the  Federal  Power  Commission  is  attached  to  this  report,
    showing  the  remote  location  and  complete  absence  of  electric  power  transmission
    lines.  The  elevation  of  the  town  is  approximately  6,500  feet,  the  mine  7.000
    leet,  and  the  terrain  in  general  is  desert  with  sagebrush  covered  valleys,  lying
    between  rough  mountains.

    *******
    History

    In  Eureka  were  found  the  first  important  lead-silver  mines  in  the  United  States.
    At  one  time  Eureka  controlled  the  lead  market  of  the  world.  The  district  was
    discovered  in  1865,  but  the  high  lead  content  of  the  ore  prohibited  milling,  and
    the  district  did  not  become  an  important  producer  until  about  1870,  shortly  after
    smelting  was  introduced.  In  1881,  a  heavy  flow  of  water  was  encountered  in  the
    Eureka  Consolidated  shaft  at  765  feet,  and  despite  the  installation  of  a  large
    steam  pumping  plant  the  shaft  was  flooded  in  1882.  Leasers  continued  to  operate
    intermittently,  but  in  1890  the  Richmond  smelter  closed,  and  the  Eureka  smelter

    ATOMIC    POWER    DEVELOPMENT  447

    also  closed  in  1891.  Since  then  the  district  has  been  inactive  as  a  substantial
    producer,  although  from  time  to  time  shipments  of  ores  from  deposits  near  the
    surface  continue  to  be  made.  A  concise  history  of  the  district  up  to  1923  is  con-
    tained in  Mining  Districts  and  Mineral  Resources  of  Nevada,  by  Francis  Church
    Lincoln,  available  at  the  Mackay  School  of  Mines,  University  of  Nevada,  Reno,
    Nev.

    Since  1923  the  outlook  for  Eureka  District  took  an  upward  turn,  although  there
    has  been  little  change  in  production.  The  United  States  Smelting,  Refining  &
    Mining  Co.,  75  Federal  Street,  Boston,  Mass.,  acquired  a  controlling  interest  iq
    the  Richmond-Eureka  Mining  Co.,  which  owned  the  important  Richmond  and
    Eureka  mines,  and  leased  them  to  the  Eureka  Corp.,  Ltd.  To  date  the  Eureka
    Corp.  has  expended  $7  million  in  efforts  to  reach  large  and  valuable  bodies  of  ore
    discovered  by  themselves  and  explored  jointly  with  the  United  States  Bureau  of
    Mines  at  depth  by  a  diamond  core  drilling  campaign.  The  corporation  now  plans
    to  spend  about  $8  million  additional  in  order  to  get  into  production.

    •  *****•

    Summarizing  the  feasibility  features  mentioned  herein

    1.  The  location  is  within  a  great  desert  area,  the  nearest  population  center
    being  Ely,  Nev.,  77  miles  distant.

    2.  Although  the  location  is  remote  it  is  reached  by  paved  main-line  highways
    and  has  good  telephone  and  telegraph  connections.

    3.  The  Eureka  district  is  one  of  the  most  attractive  potential  gold-silver-lead-
    zinc  producing  areas  of  the  United  States.  Recent  development  of  a  large  body
    of  ore  in  one  mine  alone  apparently  will  justify  the  installation  of  a  dual-purpose
    reactor  to  supply  power.

    4.  Diesel-electric  power,  the  only  power  presently  available,  costs  3  cents  per
    kilowatt-hour.  The  AEC  could  furnish  power  for  much  less,  and  yet  obtain  a
    rate  far  in  excess  of  what  could  be  paid  by  large  commercial  firms  in  populous
    centers.

    5.  Disposal  of  radioactive  wastes  from  the  reactor  should  be  a  minor  problem
    because  of  favorable  location.

    6.  The  financial  backing  of  Eureka  Corp.  is  strong  and  it  would  make  a  long-
    term  agreement.

    7.  The  Eureka  Corp.  has  facilities  for  construction,  operation,  and  management
    of  a  reactor  powerplant,  and  a  6,000-kilowatt  powerplant  ready  for  immediate
    operation.

    8.  Initial  experimentation  could  he  carried  on  without  interference,  and  all
    State  agencies  would  cooperate  to  the  fullest  extent.

    *******

    Atomic  Power  Utilization  Committee,

    Alfred  Merritt  Smith,  Chairman.

    Roy  a.  Hardy.

    George  W.  Mitchell.

    Jos.  E.  Moose.

    Stanley  G.  Palmer.

    Vernon  E.  Schied.

    Report  on  Present  and  Potential  Electric  Power  Markets  for  Proposed  Dual-
    Pubpose  Atomic  Reactor  Near  Eureka,  Nev. — September  30,  1952

    PUEPOSE  OF  report

    Business  and  professional  men  living  in  the  Eureka,  Nev.,  mining  district  are
    very  much  interested  in  the  possibility  of  the  Atomic  Energy  Commission  con-
    structing an  atomic  reactor  there  for  the  double  purpose  of  manufacturing  plu-
    tonium  and  generating  electric  power.  A  feasibility  report  had  been  requested
    by  Dr.  Lawrence  Hafstad,  and  such  a  report  had  been  prepared  and  submitted
    by  the  Nevada  Atomic  Power  Utilization  Committee,  organized  for  that  purpose.

    The  i)eople  of  Eureka  were  of  the  belief  that  the  report  was  not  sufficiently  com-
    prehensive in  that  more  detail  was  necessary,  and  that  the  resources  had  been
    underestimated.  It  was  suggested  that  a  local  subcommittee  be  organized  to
    cover  the  subject  more  comph^tely  by  a  supplemental  report.  Accordingly  a  sub-
    committee was  appointed  by  the  Atomic  Power  Utilization  Committee,  and
    Charles  A.  McKay  of  Eureka  was  designated  as  chairman.    The  committee  has

    448  ATOMIC    POWER    DEVELOPMENT

    diligently  assembled  much  information  and  has  endeavored  to  present  it  in  the
    following  paper.    The  committee  hopes  that  it  will  lead  to  the  selection  of  Eureka,
    Nev.,  as  the  site  of  the  first  large-scale  commercial  jjower  generating  reactor.
    Jti  *  *  *  *  f,!  m

    CONCLUSIONS

    Numerous  mines  contributing  copper,  zinc,  lead,  and  tungsten  required  for
    national  defense  are  within  this  area.  They  need  more  and  cheaper  power  for
    economical  production  and  expansion.

    A  vast  acreage  of  arable  land  can  be  developed  by  pumping  of  the  available
    groundwater.  Local  citizens  state  they  are  ready  to  take  up  some  6,000  acres
    as  soon  as  an  atomic  reactor  is  assured.  This  initial  influx  of  settlers  will
    probably  be  followed  by  hundreds  of  others  as  soon  as  facilities  are  ready.
    Pumping  will  be  necessary  on  all  of  the  land.

    The  subcommittee  was  surprised  to  find  the  resources  of  the  area  much  greater
    than  they  had  previously  surmised,  and  are  convinced  that  a  detailed  survey
    of  such  resources  and  their  economic  value  to  the  project  is  more  than  justified
    and  should  be  undertaken  by  the  AEG  immediately.  All  State  agencies  will
    gladly  assist.

    Our  investigation  indicates  that  30,000  kilowatts  will  be  required  to  satisfy
    present  and  potential  power  requirements  within  a  radius  of  75  miles.

    *******

    Centrai,  Nevada  Subcommittee  of  the  Atomic
    Power  Utilization  Committee,
    Charles  A.  McKay,  Chairman,  Eureka,  Nev. ;  E.  B.  Crane,  Owner,  Santa
    Clara  Mine,  Eureka,  Nev. :  Charles  Damele,  Chairman,  Board  of  County
    Commissioners,  Eureka ;  Bert  Acree,  County  Recorder  and  Treasurer,
    Austin,  Nev. ;  LeRoy  Casady,  Garage  Owner,  Austin,  Nev. ;  P.  P.
    Hoover,  President,  White  Pine  Power  District  No.  9,  Ely,  Nev. ;
    Kathryn  E.  McKay,  Vice  Chairman,  Eureka  County  Republicans,
    Eureka ;  Alfred  Merritt  Smith,  Chairman,  Atomic  Power  Utilization
    Committee,  Reno,  Nev.

    Excerpt  From  Testimony  of  Dr.  Lawrence  R.  Hafstad,  Director  of  Reactor

    Development,  Atomic  Energy  Commission,  Henderson,  Nev. — October  10-11,

    1952

    *  ******

    Dr.  Hafstad.  There  is  another  point  which  I  think  should  be  stressed  in  a
    hearing  of  this  kind,  while  the  cost  on  the  busbar  can  be  very  low,  the  cost  of
    transmission  is  the  big  element  in  any  electric  power  project.  We  were  dis-
    cussing only  the  cost  of  transmission  for  electric  power.  I  don't  think  it  is
    generally  realized  the  extent  to  which  your  transmission  costs  enter  into  the
    cost  which  the  consumer  has  to  pay  for  his  electric  power.  This  suggests  that
    in  areas  remote  from  either  big  hydro  installations  or  local  coal  and  oil  sup-
    plies, it  might  be  cheaper  to  truck  in  a  pound  of  uranium  or  something  of  that
    kind,  and  run  on  that  instead  of  hauling  in  many  tons  of  coal  or  oil  or  build-
    ing an  expensive  transmission  line.  This  is  another  way  of  emphasizing  the
    fact  that  uranium  will  probably  begin  to  compete  first  in  high-power  cost  areas.

    Senator  Malone.  You  find  those  places  mostly  in  wide  stretches  of  desert  and
    mountainous  areas  where  there  is  no  concentrated  demand  for  power,  such  as
    there  is  in  San  Francisco,  Los  Angeles,  Las  Vegas,  or  Reno.  Where  the  min-
    ing industry  and  the  pumping  of  water  and  all  development  depends  on  low-cost
    povv'er,  but  where  there  is  no  load  suflScient  to  justify  a  long  transmission  line?

    Dr.  Hafstad.  The  thing  that  you  bring  out  there — that  is  something  which
    those  of  us  who  have  been  in  the  atomic-energy  business  for  a  long  time  feel
    to  be  true.  The  raining  industry  often  operating  in  the  most  peculiar  places
    you  can  imagine,  the  most  remote  areas,  would  be  one  of  the  first  to  cash  in
    on  the  unique  advantages  of  atomic  power.  So,  it  is  not  a  surprise  to  us  at
    all  that  regions  such  as  the  intermountain  States  out  here  should  be  very  much
    interested  in  atomic  power.

    Senator  Malone.  Now,  of  course,  you  remember  when  I  first  discovered  you,
    you  had  been  discovered  by  many  other  people  no  doubt,  but  I  discovered  you

    ATOMIC    POWER    DEVELOPMENT  449

    for  myself,  I  was  trying  to  find  someone  who  was  interested  in  the  examina-
    tion of  just  such  areas.  I  remember  my  first  remarlcs  to  you,  not  knowing
    you  were  quite  as  interested  as  you  have  been,  I  tried  to  explain  to  you  that
    the  mountainous  areas,  eight  States  between  the  Rocky  Mountains  and  the  Sierra
    Nevada,  had  very  little  power  available,  and  some  States  like  Nevada  have
    no  fuel,  no  oil,  or  no  gas.  In  isolated  areas  where  it  is  150  miles  to  the  next
    jtown  and  that  town  very  small,  the  population  depending  entirely  on  mining
    operations,  livestock,  and  limited  agriculture,  that  there  were  many  areas  of
    potential  greatness.  I  mentioned  a  few  to  you  at  that  time,  one  of  them  being
    Eureka,  Nev.  I  stated  to  you  that  I  thought  it  was  worthy  of  an  examination
    since  there  was  an  estimated  12,000  gallons  per  minute  of  water  to  pump  2,500
    feet  to  make  available  $100  million  to  $150  million  worth  of  lead  and  zinc
    which  are  strategic  metals  wanted  very  badly  by  the  Government  and  where
    there  were  around  8,000  kilowatts  of  diesel-electric  power  installed  costing  about
    3  cents  per  kilowatt-hour  to  operate  which  has  been  shut  down  because  of  the
    high  cost.  I  requested  you  to  examine  at  least  that  one  area  and  I  believe
    as  a  result  we  did  set  a  chain  of  thinking  in  motion  as  you  have  just  described,
    where  wide  undeveloped  areas  might  be  first  to  benefit  from  nuclear  power.

    *  *  *  *  :k  «  *

    I  have  a  statement  from  the  chairman  which  I  think  should  be  read  into  the
    record  at  this  stage.  It  is  a  letter  from  Chairman  Dean  to  me.  '"Dear  Mr.
    Hafstad :  I  am  glad  to  learn  that  you  will  have  an  opportunity  next  week  to
    explore  with  the  members  of  the  Public  Works  Committee  of  the  Senate  some
    of  the  problems  which  face  the  Commission  in  its  endeavor  to  secure  useful
    power  from  atomic  energy.  There  has  been  little  question  in  the  Commission's
    mind  that  in  high-cost-fuel  areas  reactors  might  appropriately  supply  power.  I
    hope,  however,  that  you  will  be  quite  frank  with  the  committee  in  explaining
    some  of  the  difliculties,  including  the  legislative  changes,  that  will  be  required
    before  we  can  induce  private  enterprise  to  come  in  and  participate  with  risk
    capital  in  the  construction  of  such  power  units."

    *  :):  «  *  *  :|:  *

    Representative  Hinshaw.  Now,  Senator  Malone,  we  shall  be  very-
    happy  to  hear  from  you.

    STATEMENT  OF  HON.  GEOEGE  W.  MALONE,  A  UNITED  STATES
    SENATOR  FROM  THE  STATE  OF  NEVADA

    Senator  Malone.  Chairman  Hinshaw,  I  am  glad  to  see  you.  I  did
    not  realize  you  were  a  member  of  the  Commission.     I  am  glad  you  are.

    Representative  Hinshaw.  I  am  not.  I  am  a  member  of  the  com-
    mittee.    We  differentiate  between  the  Commission  and  the  committee.

    Senator  Malone.  I  stand  corrected.  I  know  about  that.  You  are
    from  the  House,  that  is  part  of  the  committee,  of  10  members,  I  believe.

    Representative  Hinshaw.  There  are  9  members  from  the  House
    and  9  members  from  the  Senate.  We  are  honored  to  be  within  your
    portals.

    Senator  Malone.  With  reference  to  the  report  that  you  have  just
    referred  to,  from  A.  M.  Smith.  Mr.  Smith  is  a  former  State  engineer
    of  Nevada  and  is  very  familiar  with  the  entire  area.

    First,  Mr.  Chairman.  I  would  like  to  say  that  I  became  interested
    in  this  particular  problem  of  the  location  of  the  first  commercial
    powerphmt,  after  talking  to  the  members  of  the  Atomic  Energy  Com-
    mission ;  cliiefly  to  tlie  Chairman,  and  to  Dr.  Hafstad,  who  is  the  tech-
    nician in  direct  charge  of  that  particular  activity.

    First,  I  was  interested  in  the  whole  problem  of  atomic  energy  for
    civilian  uses.

    Naturally,  there  has  been  a  tremendous  amount  of  money  expended
    in  the  field  for  national  defense,  and  that  was  pretty  well  taken  care  of.
    That  is  to  say,  there  is  nothing  very  much  that  I  could  contribute  to  it.

    450  ATOMIC    POWER    DEVELOPMENT

    Eepresentative  Hinshaw.  Well,  I  would  like  to  say,  Senator  that
    after  experiencing  the  shocks  that  come  from  atomic  explosions  in  the
    State  of  Nevada,  those  that  have  been  conducted  in  the  State  of
    Nevada,  if  you  fellows  still  want  atomic-energy  experiments,  even
    though  of  a  different  nature,  my  compliments  to  you.

    Senator  Malone.  I  will  say,  Mr.  Chairman,  that  I  became  interested
    in  this  matter,  and  we  are  intensely  interested  in  it.  It  is,  of  course,
    of  great  importance  to  select  the  most  feasible  site,  wherever  that  may
    be,  for  the  first  commercial  plant.  I  consider  it  one  of  the  greatest
    of  discoveries,  and  it  may  have  more  effect  on  the  future  of  this  Nation
    and  the  world,  and  it  could  very  well  have  as  much  effect,  or  more  than
    any  of  the  discoveries  in  the  past.  They  built  the  pyramids,  and
    someone  discovered  the  wheel,  and  they  won  wars  by  that  method,
    through  the  chariots.  Someone  discovered  gunpowder  and  then  one
    man  could  disperse  a  whole  tribe.  Then  came  the  steam  engine,  but
    it  did  not  come  all  at  once.  It  took  about  75  years  to  get  it  on  wheels
    after  they  discovered  steam  would  move  certain  parts  of  a  vessel  or
    container.  Then  electricity  took  a  long  time,  from  the  time  Ben
    Franklin  experimented  with  the  kite  until  Edison  came  along  and
    made  it  practical.

    This  one  discovery,  in  my  humble  opinion,  can  change  the  course  of
    history  more  than  any  of  the  others.  I  say  that  after  a  considerable
    study,  not  in  reference  to  the  military  at  all,  but  in  reference  to  civilian
    uses.  That  is  the  reason  I  am  so  greatly  concerned  that  we  lose  little
    time  in  what  you  might  call  an  experimental  plant  or  a  pilot  plant,
    which  in  my  judgment  should  be  constructed  by  the  Government,
    because  there  is  considerable  discussion  as  to  the  method  to  be  used
    and  there  are  many  things  to  be  learned  in  constructing  the  first  plant.

    After  these  decisions  are  made  and  the  first  plant  constructed — I
    believe  it  should  be  constructed  by  the  Government,  for  the  same
    reason  that,  it  being  an  experimental  plant,  they  being  in  entire  charge
    of  it,  then,  they  could  change  and  adopt  whatever  improvements  or
    changes  in  design  they  wished  to  as  they  go  along  and  would  not  be
    beholden  to  any  other  agencies.  And  then,  after  the  first  pilot  plant
    is  made  to  work — and  there  is  no  question  in  my  mind  but  that  it  will
    work — it  will  be  up  to  the  Congress,  I  believe,  to  work  out  ways  and
    means  for  a  licensing  process  to  private  outfits,  not  that  the  Govern-
    ment would  stay  in  the  business,  but  that  it  would  be  like  the  experi-
    mental rubber  plants.  My  own  committee,  the  Interior  and  Insular
    Affairs  Committee,  had  several,  what  we  call,  pilot  plants  running;
    like  petroleum  fuels  from  oil  shale,  petroleum  fuels  from  coal.  The
    chairman  is  no  doubt  familiar  with  the  Government  plant  for  zir-
    conium and  various  other  very  important  experiments  and  formulas
    that  are  being  turned  into  practical  use.  The  Government  only  goes
    far  enough,  or  at  least  that  is  the  general  practice,  and  that  is  what  I
    favor,  to  show  the  practical  aspects,  and  then  it  turns  them  over  to  a
    private  outfit  under  appropriate  jurisdiction.

    Nevada  is  the  scene  of  not  only  the  trial  runs  on  the  atomic  bombs
    and  various  other  military  aspects  in  the  atomic-energy  field,  but  it
    may  be  known,  though  perhaps  not  generally  known,  that  at  the
    University  of  Nevada,  School  of  Mines,  which  has  been  one  of  the
    outstanding  mining  schools  of  the  Nation  for  40  years,  we  have  a
    project  sponsored  by  the  Atomic  Energy  Commission  on  new  and  im-

    ATOMIC    POWER    DEVELOPMENT  451

    proved  methods  of  beneficiating  uranium  ores.  Of  course,  you  know,
    Mr.  Chairman,  the  difference  between  country  rock  and  ore  is  many
    times  just  a  proper  method  of  beneficiating  it.  Like  the  copper  ore
    in  the  country.  It  required  7  or  8  percent  copper  to  be  commercially
    feasible.  Then  some  fellow,  by  the  name  of  Colonel  Jackling,  came
    up  out  of  a  laboratory  a  good  many  years  ago  with  a  process  that
    made  one-half  of  1  percent  of  copper  feasible.  And  in  the  country,
    over  in  Butte,  Mont.,  and  in  Salt  Lake  City,  it  turned  that  country
    rock  into  copper  ore.  One  of  the  largest  copper  areas  in  the  world
    is  there.

    Now,  we  have  uranium  ore  in  Nevada.  There  is  a  tremendous
    amount  in  Colorado  and  Utah  and  on  the  plateaus.

    There  is  no  question  about  it.     It  is  just  a  question  of  grade.

    It  is  my  firm  belief  that  the  United  States,  right  in  that  particular
    area,  may  become  self-sufficient  in  uranium  ore  for  the  production  of
    their  needs,  and  certainly  in  the  Western  Hemisphere.  I  have  little
    doubt  that  in  Canada  it  is  in  sight  now.  We  can  produce  the  ores.
    But  a  new  and  improved  method  of  beneficiating  these  ores  will  bring
    great  improvement,  and  that  is  going  on  at  the  University  of  Nevada
    right  now.

    There  was  another  project  recently  placed  in  the  university  on
    radiation  dust.  This  has  little  to  do  with  the  powerplant,  but  I  want
    to  show  that  the  State  of  Nevada  is  really  trying  to  help  in  this  whole
    situation.

    Radiation  dust,  as  the  chairman  remembers,  was  dust  that  settled
    down  on  Rochester,  N.  Y.,  and  no  one  knows  just  what  bad  effect
    this  radiation  dust  does  have.

    Representative  Hinshaw.  I  take  it.  Senator,  that  a  little  bit  of  Ne-
    vada settled  on  Rochester,  N.  Y.,  in  that  case.

    Senator  Malone.  That  is  just  about  right.  And  maybe  a  little  bit
    of  some  other  State  that  went  into  the  manufacture  of  the  bomb  itself.

    At  least,  this  radiation  dust  settled  there  and  settled  other  places.
    A  good  deal  of  this  is  classified  information.  But  we  do  not  know
    yet  the  effect  of  radiation  dust  on  plant  and  animal  life.

    In  the  Tennessee  plant,  outside  of  the  plant,  on  the  farm,  they  are
    running  experiments  now  on  various  animals.  I  have  visited  that
    farm,  and  it  does  not  look  very  good.

    So  I  merely  mention,  Mr.  Chairman,  that  Nevada  is  interested  in
    this  whole  problem.  Of  course,  we  are  the  most  sparsely  settled  State
    in  the  Union,  sixth  largest,  600  miles  long,  400  miles  wide.  There  is  a
    lot  of  area  there.

    Then  we  come  to  the  matter  of :  Wliy  a  commercial  plant  ?  We  have
    read,  no  doubt  the  chairman  has,  that  many  learned  gentlemen  have
    said  that  feasible  commercial  power  may  be  10,  15,  20,  25  years  away.
    I  listened  to  those  stories  for  a  long  time.  But  I  come  from  an  area,
    Mr.  Chairman,  where  there  are  wide  distances,  in  the  mountains  and
    the  deserts,  where  you  might  drive  50  miles  for  breakfast.  We  are
    not  talking  about  a  thickly  settled  area.

    Now,  in  these  areas  are  large  deposits  of  minerals.  And  that  applies
    to  the  northern  area  and  the  eastern  area  of  the  chairman's  own  State,
    California.  But  there  are  eight  States  between  the  Rocky  Moimtains
    and  the  Sierra  Nevada  Mountains,  all  mountain  and  desert  States.  It
    is  just  a  matter  of  degree,  starting  with  Arizona,  New  Mexi(;o,  and
    ending  with  Montana  and  Wyoming,  Colorado  on  the  east,  Idaho,

    452  ATOMIC    POWER    DEVELOPMENT

    Nevada.  Those  States  are  just  about  alike,  with  the  exception  of
    the  latitude ;  and  the  elevation  determines  the  rainfall,  and  it  is  all  dry
    desert  and  mountain  area,  except  where  you  dam  the  water  in  the
    rivers  and  have  irrigation  projects,  which  is  another  job,  and  a  very
    small  percentage  of  the  area  of  these  States  will  ever  be  cultivated,
    because  the  water  is  just  not  there.

    Now,  in  my  opinion,  in  my  humble  opinion — I  have  been  in  the
    engineering  business  for  30  years,  all  over  the  western  States,  The
    chairman  may  remember  that  I  was  consulting  engineer  on  the  Cen-
    tral Valley  project,  your  Shasta  and  San  Joaquin  Dam,  and  on  your
    Los  Angeles  Flood  Control  District.  I  am  entirely  familiar  with  all
    of  the  country  out  there.  It  is  my  opinion  that  since  feasibility  is  a
    relative  thing,  a  relative  term,  it  will  be  in  those  areas  that  you  will
    first  find  feasible  the  generation  of  nuclear  energy  power,  commer-
    cial power.  Certainly  it  would  not  be  near  Hoover  Dam,  where  power
    sells  for  2  mills  a  kilowatt-hour  at  the  switchboard.  It  would  not  be
    in  Los  Angeles,  where  oil  and  gas  power  would  be  around  3%  or  4
    mills  a  kilowatt-hour.  It  would  not  be  in  the  coal  areas  back  here,
    where  they  can  generate  power  for  about  the  same  amount,  3%  or
    4  mills  a  kilowatt-hour.  It  certainly  would  not  be  in  the  Tennessee
    Valley,  nor  would  it  not  be  up  in  Washington  near  Grand  Coulee.
    But  when  you  get  away  from  these  areas,  50  to  100  miles,  you  cannot
    run  a  transmission  line  100  miles  for  20,000  kilowatts  of  power.

    Wlien  they  asked  me  about  it,  after  we  had  discussed  the  relative
    feasibility  aspects,  I  said,  "I  will  mention  1  town,  1  place,  Eureka,
    Nev.,  in  about  the  center  of  our  State.  There  are  many  other  areas
    where  they  are  now  trying  to  mine  there  with  power  that  costs  2  cents
    or  21/2  cents  a  kilowatt-hour.  They  have  built  7,000  or  8,000  kilowatts
    of  diesel  power.  It  is  very  expensive  power.  We  haul  the  diesel  fuel
    from  your  State  of  California  600  or  700  miles,  and  in  the  wintertime
    it  is  pretty  near  impossible  to  get  it  in  there.  So  when  you  are  talk-
    ing about  a  cent  and  a  half,  or  2  cents  or  2i/2  cents  per  kilowatt-hour
    for  electric  energy,  it  is  my  opinion,  Mr.  Chairman,  that  you  are  pretty
    close  to  feasibility  now  in  the  uranium  energy  field.  There  would
    have  been  a  greater  chance  of  feasibility  on  a  byproduct,  plutonium.

    Now  there  seems  to  be  a  greater  supply  of  plutonium,  and  maybe
    that  source  of  revenue  is  not  so  valuable  now.  But  the  first  site,  the
    first  feasibility,  will  be  in  the  desert  and  the  mountain  areas,  and
    wherever  there  is  a  sufficient  load  for  a  feasible  size  reactor.

    Now,  let  me  say  something  about  the  surveys  that  were  made  here
    by  Mr.  A.  M.  Smith — we  call  him  "Tom"  Smith— former  State  en-
    gineer of  Nevada,  the  man  who  followed  me  as  State  engineer  of
    Nevada.  Tom  Smith  was  a  mining  engineer  before  he  took  this  job,
    worked  for  me  before  he  did  take  it.  He  has  made  a  survey  of  the
    area,  two  surveys,  as  a  matter  of  fact,  a  secondary  survey  not  only  to
    determine  the  amount  of  power  in  that  area  that  would  be  contribu-
    tory to  the  load  now,  but  what  would  probably  be  available  if  it  were
    known  that  the  energy  was  going  to  be  available  within  certain
    brackets  at  a  certain  price.

    So  it  is  thought,  there,  that  there  would  be  a  load  of  anywhere  from
    20,000  to  30,000  kilowatts,  which  would  be  a  reasonably  sized  power-
    plant.  There  could  be  determined,  of  course,  from  a  plant  of  that
    kind,  the  most  feasible  method  of  constructing  a  reactor — there  are

    ATOMIC    POWER    DEVELOPMENT  453

    three  main  methods — and  also  learn  something  about  it  as  they  go
    along.    They  will  learn  a  good  deal  from  the  first  commercial  reactor.

    Now,  I  think,  after  discussing  this  matter  over  a  period  of  a  couple
    of  years  with  the  Atomic  Energy  Commission — I  have  been  cleared
    for  all  of  the  information,  confidential  information,  so  without  dis-
    cussing the  matter,  I  have  seen  most  of  the  plants,  most  of  the  installa-
    tions, like  Long  Island  and  Oak  Ridge,  and  I  am  keeping  a  very
    close  track  of  the  atomic-energy-powered  submarine.  It  is  a  great
    thing  which  in  my  opinion  has  revolutionized  the  whole  submarine
    business.  You  can  stay  under  water  for  6  months.  It  will  be  some-
    thing that  will  change  the  whole  complexion  of  what  submarines
    can  do.

    Now,  the  same  thing  can  be  done  in  reactors.  I  look  forward  to
    the  time.  It  won't  all  come  at  once.  I  am  not  saying  to  you,  Mr.
    Chairman,  that  this  atomic  power  is  going  to  displace  a  lot  of  large
    projects  in  this  country.  I  do  not  think  it  will.  Because  it  will  be
    a  long  time  in  coming,  perhaps  the  time  of  their  amortization  period.
    But  it  will  provide  power  where  there  is  now  no  power ;  that  is,  power
    at  a  feasible  price.

    One  of  the  reasons  I  mentioned  Eureka,  when  they  asked  me  about
    it:  The  estimate  there  is  that  there  is  about  $150  million  worth  of
    lead  and  zinc  at  the  bottom  of  a  2,500-foot  shaft,  but  you  have  to  pump
    12,500  to  15,000  gallons  of  water  a  minute  to  make  it  available.  There-
    fore, the  load  is  there.  That  is  a  base  load.  Then  you  have  the  seven
    or  eight  thousand  kilowatts  of  power  already  installed,  the  diesel
    ]jower,  that  could  be  used  as  standby  in  case  it  was  necessary  to  close
    the  plant  down.    And  no  doubt  it  will  be,  in  experimental  runs.

    So  it  just  seemed  to  be  one  of  the  most  feasible  sites  that  could  be
    mentioned.

    The  Bureau  of  Reclamation,  I  think,  of  the  Department  of  the
    Interior,  I  think,  made  a  survey  of  certain  power  areas,  and  I  think
    more  or  less  centered  on  the  Eureka  site.  At  least,  the  mountain  and
    desert  areas  were  considered  the  areas  where  it  would  first  really  be-
    come feasible.

    Now,  Mr.  Chairman,  I  have  no  further  statement.  I  have  a  short
    prepared  statement  I  would  like  to  offer  for  the  record.  I  would  like
    also  to  have  the  privilege  of  reorganizing  and  coordinating  any  state-
    ments I  have  made  in  your  record.

    Representative  Hinshaw.  We  will  be  pleased  to  have  your  state-
    ment, Senator,  and  of  course  you  have  the  courtesies  of  the  committee.

    (The  statement  referred  to  follows:)

    Statement  op  Senator  George  Malone

    '  Let  me  thank  you,  Congressman  Cole,  and  members  of  your  committee,  for
    givins  me  this  opportunity  to  appear  before  you.  On  July  13  a  letter  was  written
    to  this  committee  by  A.  M.  Smith,  of  Reno,  chairman  of  the  Nevada  Atomic  Power
    Utilization  Committee.

    Five  reports  were  included  in  Mr.  Smith's  letter.  Those  reports  told  of  the
    formation  of  the  Nevada  committee  and  of  the  committee's  efforts  in  inducing
    the  Atomic  Energy  Commission  to  build  a  reactor  power  project  in  Nevada.

    You  have  those  reports  on  file  and  they  will  be  included  in  your  printed  record.
    I  realize  you  have  volumes  of  material  before  you  but  I  hope  all  of  you  will  have
    a  chance  to  study  these  reports.  They  show  that  the  Nevada  site  selected  for
    proposed  construction  of  sucli  an  atomic  powerplant  is  highly  feasible.

    454  ATOMIC    POWER    DEVELOPMENT

    The  Atomic  Energy  Commission  is  fully  alive  to  the  possibilities  of  commercial-
    power  development  through  the  construction  of  atomic  reactors  to  make  fission-
    able materials  for  bombs  and  at  the  same  time  use  the  heat  of  the  reaction  to
    generate  electric  power  for  commercial  industrial  uses,  and  the  Commission  has
    intensively  investigated  this  field  for  about  2  years.

    Four  major  power  companies,  each  allied  with  a  great  chemical  or  industrial
    company,  have  joined  them  in  these  studies.  In  July  of  last  year  the  AEC
    stated  that  at  least  one  of  these  groups  was  ready  to  cooperate  on  the  con-
    struction of  a  power  reactor.

    I  suggested  to  the  AEC  that  a  sounder  procedure  would  be  to  build  the  first
    pilot-plant  reactor  near  Eureka  in  central  Nevada,  a  remote  but  important  mining
    area,  where  the  3-cent  per  kilowatt-hour  power  cost  has  prevented  mining  and
    irrigation  development  and  where  there  is  a  large  initial  permanent  load  at  once
    available,  and  sufficient  installed  diesel  standby  power  to  make  it  a  safe  experi-
    ment in  operation.

    Gentlemen,  the  time  has  come  for  the  construction  of  such  a  plant.  The  wide
    stretches  of  mountains  and  deserts  in  Nevada,  remote  from  the  low-cost  fuel  and
    hydroelectric-power  areas,  are  a  natural  for  the  location  of  the  contemplated
    nuclear  energy  power  pilot  plant.

    All  of  you,  I  am  sure,  are  acquainted  with  Dr.  Lawrence  R.  Hafstad  of  the
    Atomic  Energy  Commission.  Dr.  Hafstad  is  the  Director  of  Reactor  Develop-
    ment— the  man  who  builds  these  powerplants.

    I  have  the  highest  regard  for  Dr.  Hafstad,  professionally  and  personally.  I
    have  known  Dr.  Hafstad  for  several  years  and  know  that  he  is  vitally  interested
    in  the  Eureka  site  as  a  possil>le  location  for  a  reactor  power  project.  He  is  very
    familiar  with  the  area  and  knows  the  situation  firsthand.

    In  a  letter  recently.  Dr.  Hafstad  informed  me,  and  I  quote :  "It  would  appear,
    therefore,  that  construction  of  a  power  r(?actor  project  capable  of  producing
    30,000  kilowatts  of  power  could  lie  justified  at  the  present  time  only  as  a  pilot
    plant  or  experimental  unit  contributing  to  our  knowledge  of  the  technology  and
    ultimate  cost  of  atomic  power.  In  selecting  a  site  for  such  a  reactor  a  number
    of  considerations  besides  power  costs  in  the  area,  including  proximity  to  the
    development  laboratory,  will  necessarily  have  to  be  taken  into  account."

    Gentlemen,  the  Nevada  Atomic  Power  Utilization  Committee — backed  by
    chambers  of  commerce  and  individuals  throughout  Nevada — stand  ready  to
    work  hand  in  hand  with  the  Atomic  Energy  Commission  in  any  way  so  as  to
    bring  favorable  consideration  of  the  Nevada  location.

    Nevada,  where  the  AEC  has  its  testing  grounds  and  at  whose  university  two
    research  programs  currently  are  under  way,  is  the  natural  location  for  such
    a  reactor.

    Out  of  the  entire  eight  States  located  within  the  intermountain  area,  my
    State  of  Nevada  is  the  most  rugged  and  thinly  populated.  Eureka,  Nev.,  is  one
    of  the  most  remote  among  all  these  vast  mountain  and  desert  areas  considering
    the  availability  of  waterpower  or  fuel  to  produce  steam  power.

    These  vast  areas  include  the  largest  potential  production  of  the  vital  strategic
    and  critical  minerals  so  necessary  to  our  domestic  economy  and  absolutely
    necessary  to  our  very  existence  as  a  nation.  The  effect  of  commercial  atomic
    power  upon  the  mining  industry  will  be  of  almost  incalculable  value.

    As  to  feasibility,  feasibility  is  a  relative  term.  I  have  been  in  the  engineering
    business  for  30  years  and  know  that  feasibility  is  a  relative  term  and  depends
    on  a  number  of  factors  and  conditions.  It  may  be  that  nuclear-produced  electric
    power  within  areas  now  served  by  low-cost  hydroelectric  and  steam  electric
    power  is  several  years  away,  but  within  these  vast  and  isolated  power-starved
    desert  and  mountain  areas,  the  time  is  here  now.

    Tlie  Government  should  build  the  first  pilot  plant  just  as  it  has  built  the  pilot
    plants  to  determine  the  practicability  of  producing  petroleum  fuels  from  oil
    shale  and  from  coal  in  an  emergency.  When  the  first  plant  has  thoroughly
    proven  the  practicability  of  such  production,  private  capital  should  then  be
    encouraged  to  actively  enter  the  field.

    If  such  power  is  feasible  in  Eureka,  Nev.,  then  similar  plants  can  be  con-
    structed anywhere  under  proper  competitive  conditions  and  will  be  the  answer
    to  the  Mountain  States'  100-year  prayer  for  the  development  of  their  resources,
    including  mining,  irrigation,  and  indiistry  in  their  mountain  areas.

    I  would  like  to  urge  members  of  this  committee  to  consider  the  construction
    of  such  a  plant,  preferably  in  a  high-power-cost  area  such  as  we  have  in  the
    intermountain  regions.  Governmental  agencies  tend  to  move  slowly  and  with
    extreme  caution,  except  when  spurred  by  dire  necessity  or  fear.     The  War  De-

    ATOMIC    POWER    DEVELOPMENT  455

    partment  did  not  wait  to  eliminate  all  the  bugs  from  the  atomic  bomb  before
    exploding  it  on  Japan.

    We  are  now  ready  to  build  an  atomic-power  reactor.  Several  small  plants
    have  operated  successfully.  One  had  a  capacity  of  100  kilowatts,  so  20,000  should
    be  easy  and  500,000  is  certainly  coming.

    The  public  has  paid  for  the  development  of  this  new  source  of  power  and
    delivery  should  not  be  delayed.  I  am  confident  this  type  of  reactor  can  be
    built  now.  It  is  feasible  in  high  cost  power  areas.  I  feel  that  it  would  be  an
    unnecessary  burden  on  the  taxpayers  and  an  imposition  on  the  miners  and
    ranchers  of  the  West  to  wait  longer  for  the  practical  application.

    We  are  spending  billions  of  dollars  abroad.  The  time  is  here  to  spend  a  few
    millions  to  build  peacetime  power  reactors  at  places  where  there  is  every  facility
    for  its  safe  and  profitable  operation  and  where  a  crying  economic  need  exists.
    Gentlemen,  all  great  inventions  that  changed  the  course  of  history  were  crude
    at  first.     They  bad  to  be  improved  by  public  use.

    The  wheel,  gun  powder,  the  first  steam  engine,  the  cotton  gin,  grain  reaper,
    locomotive,  radio,  automobile,  telephone,  all  represented  inventions  that  have
    changed  the  world.  Application  of  atomic  energy  to  peacetime  development
    can  be  the  greatest  single  factor  to  better  this  world  of  ours.

    I  would  like  to  impress  upon  members  of  this  committee  that  commercial
    nuclear  power  is  feasible  in  the  high  power  cost  mountain  and  desert  areas  now.

    Every  time  a  plant  is  built,  something  new  will  be  learned  to  reduce  the  cost
    of  production.  I  would  like  to  emphasize  the  time  is  here  now  for  the  AEG  to
    construct  a  nuclear  power  pilot  plant  where  power  can  be  sold  at  a  profit  and
    simultaneously  create  profitable  mining,  irrigation,  and  industrial  operations.
    I  am  convinced  that  the  location  we  have  under  study  in  Nevada  is  the  logical
    spot  to  commence  construction.     Let's  not  delay  any  longer.

    Again,  let  me  thank  you.  Congressman  Cole,  and  members  of  this  committee
    for  giving  me  the  opportunity  of  appearing  before  you  liere  today.  Your  com-
    mittee is  a  vital  one  and  I  wish  you  every  success  in  this  important  under-
    taking.

    Thank  you  very  much.

    Representative  Hinshaw.  We  thank  you  very  much  for  your  pres-
    entation, and  we  certainly  feel  that  Nevada  has  been  an  unusual  host
    on  several  occasions.

    And  again  I  say  that,  being  still  interested,  in  spite  of  those  occa-
    sions, is  a  great  compliment  to  your  State.

    Senator  Maloxe.  I  might  say  in  that  connection  that  we  are  in-
    terested. You  already  have  your  installations  there,  and  we  still
    have  some  of  these  areas  that  are  active,  where  they  set  aside  areas
    that  are  active,  where  they  set  aside  areas  for  practice  bombing  in
    that  north-central  Nevada  area.  There  are  certain  advantages  there
    for  the  Atomic  Energy  Commission  and  the  Atomic  Energy  Commit-
    tee, in  my  opinion.

    One  of  them  is  that  they  do  not  have  such  wide  diversified  interest,
    and  being  a  small  State  in  population  and  wealth,  they  are  interested
    in  developments.

    Now,  of  course,  this  does  take  out  a  certain  amount  of  area  in
    rangelands.  in  the  atomic  experimental  area.  Nevertheless,  it  is  an
    area  that  is  not  highly  productive.  And  the  people  of  Nevada  made
    up  their  minds  that  it  Avas  all  right.

    In  such  an  action  as  the  construction  of  a  reactor,  like  in  Eureka,
    or  any  of  the  areas  there — I  am  sure  that  the  mining  areas,  the  moun-
    tain and  desei't  areas,  will  be  the  feasible  areas — 3'ou  have  a  State  that
    is  intensely  interested  in  the  whole  practical  advancement  of  not  only
    the  mil  itary  aspects  but  the  commercial  aspects.  They  are  really  more
    interested  in  the  commercial  aspects.

    You  have  a  letter  from  the  Governor.  There  are  100,000  people
    in  1  lO.OOO  square  miles.  It  means  that  in  anything  you  do  there,  the
    whole  Slate  is  behind  you.     I  think  you  alf  realize  that  that  is  an

    456  ATOMIC    POWER    DEVELOPMENT

    item.  Because  if  you  started  to  construct  something  in  any  State
    or  any  community  and  the  people  objected  to  it,  it  would  make  it  very
    uncomfortable.  I  do  not  believe  you  would  ever  find  that  in  the
    State  of  Nevada,  because  they  welcome  development.

    Another  factor  I  want  to  mention  to  you  is  your  defense,  the
    safety  factor.  Most  of  your  atomic-energy  brains  right  at  the
    moment,  at  least  a  year  ago  when  I  investigated  it,  are  within  sub-
    marine shooting  distance  of  either  coast,  like  your  Cal-Tech,  your
    University  of  California,  your  Masssachusetts  Tech ;  and  it  will  become
    an  item  in  case  we  really  have  any  trouble  with  anyone,  and  we  are
    talking  about  it  all  the  time.

    On  the  other  hand,  anything  you  have  between  those  two  ranges
    of  mountains,  the  Sierra  Nevada  Mountains  on  the  west,  which  form
    quite  a  lot  of  boundary  between  California  and  Nevada,  and  the
    Rocky  Mountains  on  the  east,  eight  States  in  there,  is  surely  well
    located.  And  I  think  increasingly  you  will  determine  through  your
    studies  that  the  more  of  your  laboratories  and  your  experiments
    you  can  get  in  between  those  mountains,  where  you  have  a  secondary
    defense,  the  better.

    You  will  remember  that  when  the  Japs  bombarded  Alaska  I  went
    up  there  for  the  Senate  Military  Affairs  Committee  and  made  the
    report.  If  they  had  not  finished  the  Japanese,  which  they  apparently
    did  not  in  some  ways,  they  could  have  taken  Alaska  and  gone  down
    the  coast,  and  the  Sierra  Nevada  Mountains  might  have  been  our
    frontlines.

    So  you  need  some  of  your  brains — and  I  am  talking  about  atomic-
    energy  brains,  which  are  not  common  at  all — in  between  the  Sierra
    Nevadas  and  the  Rocky  Mountain  Range.

    I  expect  most  all  of  you  folks  have  been  to  these  plants — Oak  Ridge,
    Long  Island.  The  men  who  are  doing  these  jobs  are  not  men  of  the
    age  of  your  chairman  or  the  junior  Senator  from  Nevada.  They
    are  from  25  to  40  years  old.  A  lot  of  them  look  like  kids.  But  they
    are  experts  in  the  nuclear-energy  field.  And  that  is  a  field  in  itself.
    We  are  not  going  to  become  experts  in  that  field.  We  do  not  have
    time.

    So  those  are  the  kind  you  need,  and  you  need  a  laboratory,  one
    or  more,  whatever  is  necessary,  in  that  intermountain  area.  I  am
    talking  about  this  reactor  now,  the  safety  of  it,  and  these  experi-
    ments that  are  going  on  at  the  University  of  Nevada  that  I  men-
    tioned, the  experiments  of  the  effect  of  radiation  dust  on  animal
    and  plant  life,  water,  and  soil,  and  the  new  and  improved  methods
    of  beneficiation  of  uranium  ore.     All  of  that  is  going  on  there  now.

    And  I  urge  you  just  to  consider  that  safety  factor  along  with  the
    rest  of  it.

    Mr.  Chairman,  I  want  to  thank  you  for  the  opportunity  of  visiting
    with  you.

    Representative  Hinshaw.  Thank  you  very  much,  Senator.  It  has
    been  a  pleasure  to  have  you  before  us.

    Senator  M alone.  Thank  you.

    Representative  Hinshaw.  Is  Mr.  Casper  W.  Ooms  here?

    Mr.  OoMS.  Here.

    Represeiitative  Hinshaw.  Mr.  Ooms  is  well  known  as  a  former
    United  States  Commissioner  of  Patents.  Mr.  Casper  W.  Ooms  has
    long  been   recognized  as  a  leading  patent  authority.     Since  April

    ATOMIC    POWER    DEVELOPMENT  457

    1949  lie  has  served  as  the  Chairman  of  the  Atomic  Energy  Commis-
    sion's Patent  Compensation  Board,  as  well  as  a  member  of  its  Patent
    Advisory  Panel,  and  has  had  a  particularly  active  interest  in  the
    workings  of  the  patent  portion  of  the  act,  section  11.  Mr.  Ooms
    addressed  the  Fifth  Summer  Institute  of  the  Phoenix  memorial
    project  at  the  University  of  Michigan  in  June  1952.  That  symposium
    was  devoted  to  some  of  the  industrial  and  legal  problems  arising  in
    connection  with  peacetime  utilization  of  atomic  energy.  His  lecture
    appears  in  the  published  transcript  of  the  Summer  Institute.

    We  are  particularly  pleased  to  have  you,  Mr.  Ooms,  and  I  expect
    that  you  will  make  a  valuable  contribution  to  our  thinking.

    STATEMENT  OF  CASPER  W.  OOMS,  FORMER  UNITED  STATES  PATENT
    COMMISSIONER,  AND  CHAIRMAN  OF  THE  AEC  PATENT  COMPEN-
    SATION BOARD

    Mr.  Ooms.  Thank  you,  Mr.  Chairman  and  gentlemen.

    My  name  is  Casper  W.  Ooms.  I  am  an  attorney  with  an  office  in
    Chicago.  For  the  past  25  years  I  have  specialized  in  patent  prob-
    lems and  the  trial  of  patent  cases.  From  1945  to  1947  I  was  United
    States  Commissioner  of  Patents.  Since  the  creation  of  a  Patent
    Advisory  Panel  of  the  Atomic  Energy  Commission,  I  have  been  a
    member  of  that  panel,  and  since  the  creation  of  the  Patent  Com-
    pensation Board  of  the  Atomic  Energy  Commission,  I  have  been  its
    Chairman.

    I  am  appearing  here  at  the  invitation  of  the  committee  and  pre-
    senting only  my  own  personal  views.

    Inasmuch  as  there  is  no  bill  before  this  committee  to  which  I  can
    address  myself,  I  plan  to  make  a  brief  statement  with  respect  to  the
    patent  provisions  of  the  Atomic  Energy  Act  of  1946  and  then,  if  the
    members  of  the  committee  desire,  answer  such  questions  as  they  may
    ask.

    I  have  been  interested  in  the  Atomic  Energy  Act  since  its  passage,
    have  attempted  to  keep  informed  on  the  patent  activities  under  the
    act,  and  have  written  a  few  articles  on  the  subject.

    In  my  opinion,  the  patent  provisions  in  section  11  of  the  Atomic
    Energy  Act,  directed  as  they  were  to  a  program  which  contemplated
    a  continuing  Government  monopoly  in  the  field  of  atomic  energV' ,  have
    fairly  well  served  their  purpose  without  any  serious  impact  either
    upon  the  program  or  upon  the  patent  system.  Considering  the  other
    formidable  aspects  of  this  entire  subject,  the  patent  question  has
    been,  I  think,  given  more  weight  and  created  more  controversy  than
    it  warrants.  There  is,  however,  a  sincere  concern  expressed  by  in-
    dustry and  by  many  responsible  critics  of  the  program  with  respect
    to  the  patent  provisions  of  the  act,  and  any  legislation  must  neces-
    sarily give  heed  to  that  concern  and  attempt  to  meet  the  problem
    to  insure  the  widest  possible  participation  by  civilian  industry  in
    the  program.

    As  I  have  said,  in  my  opinion,  the  patent  provisions  of  the  act
    have  served  their  purpose  and  have  been  without  any  sulistantial
    adverse  eifect.  Now,  however,  that  the  Government  monopoly  in
    the  production  and  utilization  of  atomic  energy'  is  to  be  surrendered
    and  industry  drawn  into  the  program,  every  incentive  and  encourage-

    458  ATOMIC    POWER    DEVELOPMENT

    ment  must  be  given  to  enlist  that  participation.  The  patent  provi-
    sions must  be  modified  and  atomic  energy  brought  within  the  normal
    operations  of  the  patent  system  to  the  fullest  extent  that  that  is  now
    possible.  The  patent  system  has  been  an  integral  factor  in  Ameri-
    can industrial  enterprise  since  the  creation  of  this  Government.
    Whatever  its  shortcomings,  its  contribution  to  our  industrial  progress
    has  been  substantial  if  not  immeasurable.  Its  effect  upon  the  tech-
    niques in  the  field  of  atomic  energy  should  be  substantial.

    This  does  not  mean,  however,  that  all  departures  from  the  con-
    ventional patent  system  must  be  eliminated  from  atomic  energy  leg-
    islation. We  have,  on  the  one  hand,  the  substantial  concern  by  indus-
    try for  the  protection  of  the  patent  system  upon  the  contributions
    it  makes  to  this  technology.  We  have,  on  the  other  hand,  a  widely
    expressed  fear,  that,  inasmuch  as  participation  in  the  development
    of  civilian  atomic  energy  applications  cannot  be  universal  because
    of  the  limitations  of  necessary  materials,  the  scarcity  of  competent
    technical  men,  and  inevitable  security  problems,  the  select  group  that
    may  be  enlisted  in  the  early  stages  of  this  work  may  derive  an  un-
    conscionable advantage  and  actually  secure  a  monopolistic  position
    that  will  embarrass  the  program  forever.

    The  temptation  to  exaggerate  this  latter  aspect  is  great.  How  real
    the  threat  is  cannot  be  demonstrated,  but  as  long  as  the  possibility
    exists  or  as  long  as  there  is  real  concern  that  it  may  arise,  this  legisla-
    tion should  take  account  of  that  possibility  and  provide  against  it.

    In  brief,  what  I  propose  is  that  the  patent  section  of  the  act  be
    modified  to  eliminate,  except  as  to  military  weapons,  the  prohibitions
    wuth  respect  to  patenting  certain  inventions  in  this  field.  I  would
    maintain  the  reporting  provisions  and  the  exemption  from  patent
    interference  of  research  activities.  I  would  also  prescribe  a  restricted
    and  tightened  up  provision  for  making  the  inventions,  where  neces-
    sary to  effectuate  tlie  policies  and  purposes  of  this  legislation,  avail-
    able by  licensing  to  others  than  the  inventors.  I  have  redrawn  sec-
    tion 11  (c)  (1-2)  to  accomplish  that  and  I  am  attaching  to  this  state-
    ment that  revised  section.

    This  provision  would  probably  make  unnecessary  any  provision  in
    the  act  with  respect  to  the  acquisition  of  patents  of  others  by  the
    Atomic  Energy  Commission,  although  I  would  leave  undisturbed  the
    provisions  with  respect  to  the  award  system  created  under  the  act
    and  the  Patent  Compensation  Board  to  hear  claims  for  compensation
    and  awards.

    With  respect  to  eliminating  prohibitions  of  patenting  certain  inven-
    tions now  found  in  section  11  (a)  (1-2)  of  the  act  of  1946,  I  would
    adopt  the  amendments  proposed  in  the  bill  of  Congressman  Van
    Zandt,  H.  R.  4687.

    There  are  certain  other  saving  clauses  with  respect  to  these  changes
    in  the  act  that  would  be  necessary  in  view  of  the  changes  in  section  11
    (a)  (1-2)  and  suggestions  for  these  are  found  on  pages  8  and  9  of  the
    draft  submitted  by  Karl  Colien,  who  testified  before  this  committee.

    The  draft  of  tlie  licensing  provision  which  I  am  presenting  is  merely
    suggestive,  and  I  call  attention  to  the  fact  that  it  is  distinguished
    from  the  earlier  section  11  (c)  in  that  there  is  no  automatic  licensing
    even  tliough  the  Connnission  declares  the  patent  affected  with  "the
    public  interest,''  but  that  each  aj)plicant  for  a  license  nuist  demonstrate
    separately  that  the  license  is  necessary  to  effectuate  the  policies  and

    ATOMIC    POWER    DEVELOPMENT  459

    purposes  of  the  act.  Tliis  restriction  is  maintained  to  make  the  invo-
    cation of  this  licensing  power  an  exception  and  an  infrequently  used
    device.  It  is  intended  to  guard  against  the  fear  that  the  inventor  who
    is  willing  to  devote  his  resources  to  making  developments  in  this  field
    would  be  compelled  to  share  his  contributions  with  his  competitors
    and  to  insure  that  he  will  be  required  to  give  licenses  only  in  the
    extreme  and  infrequent  situation  where  that  is  necessary  to  accomplish
    the  designs  of  this  legislation.

    It  sliould  also  be  observed  that  it  is  not  contemplated  tliat  tins  pro-
    cedure is  intended  to  be  a  permanent  exception  to  our  patent  system.
    All  legislation  in  this  field  is  necessarily  tentative.  Some  explanation
    should  be  made,  however,  that  this  provision  is  designed  merely  as  an
    interim  measure  during  the  transitional  period  when  general  partici-
    pation in  the  program  is  not  feasible.

    I  realize  that  there  will  be  a  great  deal  of  discussion  before  this
    committee  on  the  patent  phases,  and  no  doubt  some  better  expedient
    than  that  which  I  have  suggested  may  be  contrived.  I  have  no  par-
    ticular affection  for  this  form  of  language  or  licensing  device.  I  have
    no  use  whatsoever  for  a  general  compulsory  licensing  scheme.  I  do
    think,  however,  that  the  special  considerations  which  are  involved  in
    liberating  atomic  energy  from  a  Government  monopoly  and  domesti-
    cating it  for  general  industrial  use  dictate  that  some  exceptions  to
    conventional  patent  protection  may  still  have  to  be  invoked.

    Representative  Hinshaw.  Mr.  Ooms,  we  will  include  in  your  state-
    ment the  proposed  amendment  of  section  11  (c)  of  the  act,  immedi-
    ately following  your  statement.

    (The  material  referred  to  follows:)

    Atomic  Energy  Act  of  1946 — Proposed  Amendment  of  Section  11  (c)

    PATENTS  AND  INVENTIONS

    (12  U.  S.  C.  1811)
    Sec.  11.  *  *  *
    (c)   Nonmilitary  Utilization —

    (1)  The  Commission  may  declare  any  patent  to  be  affected  with  the  public
    interest  if  (A)  the  invention  or  discovery  covered  by  the  patent  produces,
    utilizes,  or  is  essential  in  the  production  or  utilization  of  fissionable  material
    or  atomic  energy;  and  (B)  the  licensing  of  such  invention  or  discovery
    under  this  subsection  is  necessary  to  effectuate  the  policies  and  purposes  of
    this  Act.

    (2)  Whenever  any  patent  has  been  declared,  pursuant  to  paragraph  (1),
    to  be  affected  with  the  public  interest —

    (A)  The  Commission  is  hereby  licensed  to  use  the  invention  or  dis-
    covery covered  by  such  patent  in  performing  any  of  its  powers  under
    this  Act ;  and

    (B)  Any  i)erson  may  apply  to  the  Commission  for  a  license  to  use  the
    invention  or  discovery  covered  by  such  patent,  and  the  Commission  may
    grant  such  license  if  it  finds  that  the  granting  of  such  license  is  necessary
    to  effpcfnate  the  policies  and  jmrposes  of  this  Act.  The  owner  of  the
    patent  shall  be  entitled  to  a  reasonable  royalty  fee  for  any  use  of  an
    invention  or  discovery  li<'ensed  by  this  subsection.  Such  royalty  fee  and
    the  terms  of  the  license  may  be  agreed  upon  by  sucli  owner  and  the
    licensee,  or  in  the  absence  of  such  agreement  shall  be  determined  by  the
    Commission.

    (3)  *  *  *   (no  change).

    Representative  Hinshaw.  I  wish  to  thank  you  ver^-  gratefully  for
    this  contribution.

    Are  there  any  questions?

    36740—53 30

    460  ATOMIC    POWER    DEVELOPMENT

    Representative  Holifield.  Mr.  Chairman,  I  would  like  to  ask  a  few
    questions.

    Representative  Hinshaw.  Mr.  Holifield.

    Representative  Holifield.  Mr.  Ooms,  your  statement  is  going  to
    be  very  valuable  to  the  committee,  particularly  in  view  of  your  back-
    ground of  knowledge  on  this  subject,  and  it  is  obvious  that  upon  such  a
    short  scrutiny  of  it,  there  may  be  many  points  in  it  which  we  cannot
    at  this  time  question  you  on,  because  of  our  own  lack  of  knowledge
    of  their  implications.

    However,  I  was  pleased  to  note  that  your  statement  is  quite  judicious,
    in  that  you  recognize  that  we  are  dealing  with  a  problem  which  is
    not  a  normal  industrial  problem.  I  think  that  is  expressed  in  several
    places  in  your  statement.

    Also  I  am  interested  in  the  statement  that  you  made  that  up  until
    this  time  you  do  not  believe  that  the  patent  provisions  in  section  11  has
    had  an  adverse  effect  upon  the  development  of  atomic  energy  under
    the  purposes  of  the  act.

    Now,  down  at  the  bottom  of  the  first  page,  you  say  that  there  is  a
    widely  expressed  fear  that  a  select  group  may  be  enlisted  in  the  early
    stages  of  this  work  and  that  they  may  derive  an  unconscionable  ad-
    vantage and  actually  secure  a  monopolistic  position  that  will  em-
    barrass the  program  forever.

    It  is  true  that  some  of  us  do  have  that  fear.  I  would  like  to  ask
    you  why  we  should  give  any  restrictive  patent  rights  during  this
    comparatively  short  interim  period  and  during  the  time  when  all
    of  the  technology  that  has  been  accumulated  over  the  past  Y  years  is
    Hearing  fruition,  when  there  is  a  comparatively  short  length  of  time
    to  go  until  we  get  to  the  point  envisaged  by  the  act  where  it  has
    practical  industrial  value?  Wliy  should  any  restrictive  patents  be
    given  during  this  interim  period  ?

    Mr.  OoMS.  I  wonder,  Mr.  Holifield,  whether  we  can  say  with  any
    assurance  that  it  is  going  to  be  a  short  period  ?

    Representative  Holifield.  I  do  not  think  we  can.  But  I  think  it  is
    generally  conceded  by  the  testimony  that  is  before  us  that  energy  can
    be  produced  at  this  time  within  a  range  of  2  or  3  times  the  cost  of
    conventional  power,  the  average  cost  of  conventional  power.  And  if
    that  be  true,  and  we  have  had  some  very  strong  testimony  on  that  point,
    then  it  would  indicate  that  in  many  parts  of  the  world  it  is  already
    possible,  where  power  costs  are  high,  to  almost  compete  with  the  cost
    of  presently  produced  power.

    Mr.  OoMS.  To  answer  your  question,  the  objective  that  I  think  every
    industrial  witness  that  has  appeared  here  has  expressed  is  a  desire  to
    get  into  this  on  a  normal  industrial  basis.  And  I  think  we  must
    recognize  that  this  is  not  a  normal  industrial  problem.  If  it  were,  I
    woukl  say,  "Forget  all  special  regulations.  Just  throw  it  under  the
    regular  patent  system."

    But  here  we  have  a  system  where,  as  I  have  gathered  rather  hur-
    I'iedly  from  the  testimony  of  the  witnesses  that  have  appeared  here
    in  the  last  month,  I  find  none  of  them  saying  that  there  is  likely  to
    be  any  one  way  to  do  anything  in  this  program.  I  think  the  people
    who  know  most  about  reactors  have  said  there  are  great  numbers  of
    designs  and  alternatives  for  each  one  of  these.  And  there  is  one  thing
    tliat  our  patent  system  has  done:  We  think,  most  frequently,  of  the
    restrictive  aspects  of  it — but  that  has  a  blessing  to  it,  too,  in  that

    ATOMIC    POWER    DEVELOPMENT  461

    if  you  give  on  inventor  a  patent  upon  one  way  of  doing  something,  if
    other  people  want  to  compete  with  him,  they  have  to  devise  an  equally
    good  way  to  do  it.  The  patent  system  works  what  some  of  the  au-
    thorities call  a  compulsory  diversification.  And  in  this  field,  it  is
    just  as  necessary  as  any  place  else,  that  we  put  as  many  people  with  as
    many  different  approaches  to  this  thing  at  work  upon  it  as  we  can,
    considering  all  the  other  limitations,  such  as  materials  and  security
    and  everything  else.

    I  think  if  we  say,  "None  of  you  will  have  the  benefit  of  your  research
    in  it,"  we  may  put  all  of  them  in  a  position  where  they  will  say,  "Let
    the  Atomic  Energy  Commission  or  the  big  people  in  the  world  do  the
    experimental  work,  and  then  we  will  come  in  5  years  from  now."

    I  say  that  that  might  have  an  adverse  effect  upon  the  program.
    And  the  reason  why  I  suggest  this  one  licensing  procedure  to  be  used
    in  extremities  is  because  if  the  case  ever  does  arise  where  a  patent  is
    issued  to  somebody  on  a  technique  in  this  field  that  is  so  unique  that
    no  substitute  can  be  found  for  it,  then  the  Commission  shall  have  the
    power,  under  this  section  11  (c),  to  make  it  available  to  other  people.
    But  I  think  to  do  that  generally,  with  everything  that  is  devised  in
    this  program,  may  have  a  dampening  effect  upon  the  approach  of
    industry.  I  do  not  think  you  will  get  as  many  people  trying  to  con-
    trive new  ways  of  applying  atomic  energy  if  you  make  everything  that
    is  learned  immediately  available  without  cost  to  everybody  involved
    in  the  program.

    I  think  there  is  an  advantage  in  the  restrictions,  in  that  you  compel
    people  to  apply  themselves  to  diverse  approaches  and  alternative
    methods.

    That  is  the  way  it  has  worked  in  the  patent  system,  and  I  think  it
    will  work  that  way  here.  But  we  still,  by  this  provision  of  section
    11  (c)  would  prevent  anybody  from  ever  getting  such  a  restrictive
    liolcl  on  any  particular  technique  that  it  would  embarras  the  program.

    Representative  Holifield.  I  think  that  is  a  wise  suggestion.  Be-
    cause if  we  assume,  as  an  example,  and  I  am  not  using  the  correct
    numbers,  that  there  are  5  different  types  of  reactors  in  prospect,  and
    assume  that  5  study  groups  go  into  this  program,  and  there  are  going
    to  be,  of  necessity,  a  limited  number  go  in,  because  of  the  amount  of
    funds  necessary  and  other  complications,  such  as  adequately  trained
    personnel,  assuming  that  5  go  into  it,  suppose  out  of  the  5  types  of
    reactor  development,  there  is  a  reactor  development  which  is  so  out-
    standingly successful  that  it  almost  nullifies  the  value  of  the  other
    reactors.  Now,  it  would  seem  to  me  that  if  that  does  occur,  it  has
    occurred  because  of  the  tremendous  amount  of  free  technology  which
    is  now  available  to  these  study  groups,  which  has  be«n  paid  for  with
    tax  moneys.

    Therefore,it  would  seem  to  me  that  an  ordinary  type  of  patent  which
    would  allow  that  particular  group  to  restrict  the  use  of  that  type  of
    a  reactor  from  all  the  rest  of  American  industry  and  American  political
    subdivisions  would  be  highly  undesirable,  and  it  would  certainly  not
    fulfill  the  purpose  of  the  act,  which  is  to  strengthen  free  competition.
    It  would  be  just  the  opposite;  it  would  limit  free  competition.  And
    it  would  limit  the  benefits  of  it  being  obtained  by  the  masses  of  the
    American  people.

    So  it  seems  to  me  that  you  have  touched  upon  a  very  important
    point  there,  and  I  think  you  have  wisely  suggested  that  somewhere

    462  ATOMIC    POWER    DEVELOPMENT

    in  the  changes  in  the  patent  laws,  there  be  an  escape  clause  there  which
    would  allow,  upon  reasonable  determination  by  a  competent  patent
    award  board,  a  finding  that  such  a  type  of  drastic  or  radical  improve-
    ment would  not  become  restricted  and  restrained  from  general  use.

    I  think  you  have  wisely  suggested  that,  and  it  has  not  been  sug-
    gested before,  incidentally.

    Mr.  OoMs.  Well,  it  was  in  the  original  act.

    Representative  Holifield.  Yes,  it  is  in  the  original  act.  And  that
    is  one  of  the  things  that  has  bothered  me,  tliat  in  what  we  believe  to
    be  a  relatively  short  interim  period  between  the  status  where  we  are
    now  and  the  final  accomplishment,  someone  should  be  allowed  to  come
    in  and  skim  the  cream  off  this  whole  development  through  a  restrictive
    patent.

    I  think  if  Congress  allows  that,  they  would  be  defaulting  on  their
    duty  to  the  taxpayer,  personally.

    Mr.  OoMS.  Mr.  Holifield,  I  do  not  think  it  could  occvn^  with  the  kind
    of  act  which  I  contemplate  here,  and  with  this  single  provision  for
    preventing  just  that  thing.

    Representative  Holifield.  What  do  you  mean  on  page  2,  third  para-
    graph, by  the  adopting  of  amendments  in  Congressman  Van  Zandt's
    bill  ?     What  is  your  general  thought  on  that  ?

    Mr.  OoMS.  You  will  recall,  Mr.  Holifield,  that  in  the  original  act
    there  were  prohibitions  against  the  patenting  of  inventions  for  the
    production  of  fissionable  material,  and  the  utilization  of  fissionable
    material  or  atomic  energy  for  a  military  weapon.  That  was  pro-
    hibited. Obviously,  the  prohibition  was  innocuous  there,  because  no-
    body could  own  production  facilities.  No  one  could  own  any  uranium
    at  that  time.

    Now  that  you  are,  if  the  legislation  which  everybody  envisages  does
    occur,  going  to  permit  facilities  for  the  production  of  fissionable  ma-
    terial and  atomic  energy,  a  patent  should  likewise  be  permitted  in
    that  field.  There  would  remain  the  patenting  restrictions  as  to  mili-
    tary weapons.

    Representative  Holifield.  You  think  that  should  be  maintained,  do
    you  not  ?

    Mr.  OoMs.  I  do.

    As  a  general  proposition,  I  have  a  quarrel  with  a  great  many  of  my
    brothers  as  to  whether  you  should  permit  any  patents  on  military
    weapons.  Because  as  distinguislied  from  an  invention,  a  patent  is
    merely  the  power  to  exclude  somebody  from  using  something.

    Representative  Holifield.  That  is  right.

    Mr.  OoMS.  And,  obviously,  your  enemies  are  the  people  you  want
    to  stop  using  military  weapons,  and  not  your  friends,  and  you  really
    don't  need  patents  on  military  weapons.  But  as  long  as  the  provision
    is  here,  it  has  certain  side  values,  such  as  reducing  the  opportunities
    for  leakage,  secrecy,  things  of  that  kind;  so  that  I  think  the  provision
    should  be  retained  with  respect  to  military  weapons  but  nothing  else.

    Representative  Holifield.  Getting  back  to  our  previous  line  of
    inquiry,  do  you  believe  that  the  redrawn  section  11  (c)  (1)  and  (2),  as
    submitted  here,  would  effectively  protect  the  Government  in  making
    available  by  licensing  to  others  than  the  inventors  these  very  impor-
    tant patents  that  we  spoke  of?

    Mr.  OoMS.  I  think  it  would.  I  think  it  would  furnish  adequate
    ])rotection  to  the  people,  to  the  patent  owner,  to  the  patent  owner's

    ATOMIC    POWER    DEVELOPMENT  463

    competitors.  I  think  it  would  meet  precisely  the  problem  which  you
    put  your  finger  on  in  the  first  place.

    Representative  Holifield.  I  notice  that  as  to  the  restrictions  with
    respect  to  the  award  system  created  under  the  act,  and  the  Patent
    Compensation  Board  to  hear  claims  for  compensation  awards,  you
    leave  that  untouched.  And  I  am  wondering,  on  that  point,  if  it  would
    not  be  better  to  have  a  separate  patent  compensation  board  acting
    independently  of  the  Atomic  Energy  Commission,  rather  than  under
    the  domination  of  a  Commission,  which,  of  necessity,  is  interested  more
    in  other  things  ?  And  I  am  wondering  if  this  is  not  a  matter  of  such
    importance  that  it  would  justify  a  special  board  appointed  by  the
    President  and  confirmed  by  the  Senate,  of  men  that  are  highly  quali-
    fied in  the  field  of  patent  technology  and  background  of  patent  law
    and  so  forth,  and  also  with  the  public  interest  involved  in  that  Board.

    Mr.  OoMs.  I  think  everything  should  be  done  to  maintain  the  in-
    dependence of  the  Board.

    I  always  fear,  as  I  am  sure  you  must,  the  creation  of  board  upon
    board.  Having  sat  on  that  Board  continuously  since  it  was  created
    in  1949,  I  can  say  we  have  had  complete  independence.  In  fact,  when
    the  regulations  were  drawn,  at  the  suggestion  of  the  Patent  Advisory
    Panel,  a  provision  was  put  in  there  that  the  decision  of  the  Board
    would  be  final  and  could  not  even  be  disturbed  by  the  Commission.
    There  has  not  been  any  kind  of  dominance  of  that  Board  by  the
    Commission.

    Representative  Holifield.  I  did  not  mean  to  infer  that  there  had
    been.  I  recognize  that  the  arrangement  has  been  very  satisfactory
    to  date.  But  I  was  thinking  of  the  future.  Because,  as  a  matter  of
    fact,  your  Board  has  not  had  to  function  on  the  scale  that  it  will  have
    to  function  on  in  the  future,  nor  in  as  wide  a  field,  with  possibly  as
    many  applications  for  patents.  It  being  up  to  now  a  restricted  field,
    my  opinion  would  be  that  you  have  not  had  to  function  as  broadly  as
    you  will  in  the  future.

    Mr.  OoMS.  That  is  correct.  We  have  had,  I  think,  only  a  dozen
    applications  before  us,  some  of  them  of  great  difficulty,  some  of  them
    extremely  simple.  And  there  isn't  any  doubt  that  as  this  program
    expands  and  you  get  civilian  participation,  the  functions  of  the
    Board,  if  one  is  retained  under  the  legislation,  would  be  enlarged
    very  substantially.

    Representative  Holifield.  Are  they  subject  to  tenure  of  office  by
    the  will  of  the  Commission  ?

    Mr.  OoMs.  Yes,  under  the  statute  they  have  to  be  employees  of
    the  Commission.  I  don't  think  any  of  them  are  paid.  We  are  all
    serving  without  compensation.  We  are  WAE,  as  I  think  the  civil
    service  phrase  is.  We  are  Government  employees  to  that  extent.  We
    could  be,  I  think,  dismissed  by  the  Commission  at  any  time.

    Representative  Holifield.  Looking  forward  into  this  function  in
    a  larger  field,  do  you  not  think  this  is  going  to  be  a  matter  of  enough
    importance  to  require  a  permanent  board  acting  independently,  with
    membership  with  standard  terms,  just  as  we  have  on  other  quasi-
    judicial  boards,  quasi-regulatory  boards  ?

    Mr.  OoMS.  I  w^ould  think  so,  but  I  think  I  would  be  cautious
    about  assuming  that  it  is  going  to  be  immediately  a  board  with  any
    large  burdens.    I  think  it  will  start  out  quite  modestly.

    464  ATOMIC    POWER    DEVELOPMENT

    Representative  Holifield.  But  in  the  changing  of  the  act,  I  think
    if  we  do  change  the  act,  I  think  we  want  to  do  a  good  job  and  draft
    as  nearly  as  possible  a  pretty  strong  and  competent  act.  And  cer-
    tainly this  field  is  a  field  that  cannot  be  ignored  and  should  be  given
    a  great  deal  of  thought  and  a  great  deal  of  wisdom  in  the  drafting.

    Mr.  OoMs.  I  agree  with  you.  I  would  hate  to  have  anybody  think
    that  I  was  suggesting  it  to  preserve  this  free  job  I  have.

    Representative  Holifield.  Even  though  the  applications  come
    gradually  at  first,  I  can  foresee  the  time  when  they  might  come  very
    fast,  or  when  one  particular  application  might  be  of  such  tremendous
    importance  that  it  would  more  than  justify  having  a  very  carefully
    appointed  statutory  board.

    Mr.  OoMs.  We  have  one  before  us  now  which  I  think  has  a  problem
    in  it  which  is  as  great  as  any  that  have  come  before  the  courts  of  this
    country.

    Representative  Holifield.  That  is  indicative  of  what  I  am  con-
    cerned with.

    Mr.  OoMs.  I  think  we  have  the  men  to  take  care  of  it.  We  have  an
    attorney,  a  technical  man,  and  a  great  industrial  expert,  and  every
    time  the  Board  has  sat  all  have  participated,  and  nothing  has  hap-
    pened that  hasn't  been  unanimously  decided  upon,  and  we  have  had
    no  serious  criticism  of  any  kind.

    Representative  Holifield.  I  am  sure  that  is  true.

    Now,  as  a  member  of  the  committee,  I  confess  that  I  am  not  as  well
    informed  on  the  work  of  your  Board  as  I  should  be.  And  I  do  not
    believe  any  other  member  of  the  committee  is  as  well  informed  as  he
    should  be.  And  the  reason  we  are  not  is  that  we  know  the  action  has
    been  very  limited  up  to  date,  and  we  have  had,  of  course,  complete  con-
    fidence in  the  members  of  the  Commission  and  in  the  members  of  your
    Advisory  Board.  But  looking  forward  to  a  different  situation,  I
    think  it  behooves  us  to  find  out  what  you  have  done,  how  many
    patents  you  have  granted,  how  you  have  arrived  at  an  agreement  upon
    compensation.

    Mr.  OoMS.  That  has  been  summarized  up  to  June  of  last  year  in  that
    article  of  mine  to  which  the  chairman  referred.

    Representative  Holifield.  Yes.

    Mr.  OoMS.  There  has  been  very  little  activity  since  then.  We  have
    had  a  couple  of  hearings,  and  there  has  been  one  case  settled,  and  we
    have  two  cases  pending  before  us  at  the  present  time.

    Representative  Holifield.  Are  the  criteria  that  you  make  your  de-
    cisions on  publicly  available?

    Mr.  OoMS.  Yes;  we  have  written  an  opinion  in  every  case,  Mr.
    Holifield.

    Representative  Holifield.  You  have  rendered  a  written  opinion,
    and  your  reasons  therefor  are  a  matter  of  record,  I  suppose?

    Mr.  OoMS.  Yes,  sir;  and  copies  of  them  are  available  from  the
    Atomic  Energy  Commission.

    Representative  Hinshaw.  You  mean  they  are  available  to  the
    public  ?

    Mr.  OoMS.  Yes.  We  have  thus  far  not  been  required  to  classify
    anything.

    There  have  been  some  of  the  ap])lications  and  documents  that  have
    been  under  classification  for  short  periods,  but  we  have  expressed  our-
    selves quite  early  as  making  freely  available  to  the  public  everything
    that  could  safely  be  made  available  to  the  public  in  those  proceedings.

    ATOMIC    POWER    DEVELOPMENT  465

    Representative  Holifield.  Now,  that  is  another  point.  In  the
    granting  of  these  patents  by  the  Board,  they  face  an  abnormal  situa-
    tion, in  that  in  some  instances  they  are  not  allowed  to  be  publicized  as
    would  normal  patent  data,  because  of  their  military  application ;  dual
    applications,  I  mean,  both  for  civilian  purposes  and  for  military
    purposes.

    Mr.  OoMs.  Of  course,  the  Patent  Office  still  handles  the  function  of
    issuing  the  patents.  All  we  pass  on  is  the  values  of  those  that  have
    been  condemned  by  the  act.  I  think  there  has  been  only  one  that  has
    been  actually  vitiated  by  the  act.  And  we  pass  upon  applications  for
    awards  for  making  inventions  which  are  no  longer  patentable  under
    the  act.

    We  did  contemplate  that  we  would  have  a  great  many  problems  of
    security ;  and  in  the  case  in  which  that  did  arise,  the  case  was,  fortu-
    nately, settled,  so  that  we  did  not  have  to  meet  the  problem  of  just
    how  to  handle  it.

    Representative  Holifield.  Now,  just  a  minute.  You  said  it  was
    fortunately  settled.  You  mean  it  was  settled  by  compromise  and  by
    agreement  with  the  inventor  ?

    Mr.  OoMs.  The  inventor  and  his  counsel  and  the  Atomic  Energy
    Commission  and  its  counsel.

    Representative  Holifield.  And  did  that  involve  military  applica-
    tion as  well  as  civilian  application.

    Mr.  OoMS.  Oh,  yes.

    Representative  Holifield.  All  right.  Tliat  is  the  kind  of  an  inven-
    tion that  I  am  thinking  of,  an  important  invention  which  will  be
    used  in  reactor  machinery  or  reactor  processes  and  chemical  processes,
    which  might  be  of  tremendous  civilian  use  and  also  might  be  of  a  great
    deal  of  use  to  our  enemies  in  a  military  way.

    Now,  if  we  are  going  to  go  into  the  field  of  widespread  industrial
    application,  is  it  not  true  that  we  are  going  to  widen  the  field  of
    security  risk  a  great  deal,  if  these  gadgets  and  processes  become  avail-
    able on  a  wide  scale  among  many  clifierent  users  of  reactors?

    Mr.  OoMS.  Undoubtedly.  The  security  problem  is  one  in  which  I
    haven't  indulged  myself  any  further  than  to  be  sure  that  everything
    we  did  was  amply  protected  by  the  security  authorities  of  the  Com-
    mission. But  there  isn't  any  question  that  the  moment  you  expand
    the  activities,  you  do  increase  that  risk.  That  has  to  be  taken  care  of.
    And  I  fear  it  will  be  a  very  serious  embarrassment  to  the  program,  as
    long  as  security  is  a  necessary  aspect  of  it.

    But  I  don't  think  that  you  can  go  into  a  civilian  industry  without
    taking  on  that  additional  burden.

    Representative  Holifield.  Well,  I  am  inclined  to  agree  with  you  on
    that,  and  that  is  one  of  the  reasons  why  I  have  been  a  little  slow  in
    wanting  to  jump  into  this  thing  and  turn  everything  loose.  Because
    1  have  not  yet  been  able  in  my  own  mind — maybe  it  is  lack  of  knowl-
    edge— to  differentiate  between  civilian  and  military  application  on
    most  of  these  principles  that  are  involved.  I  have  not  been  able  to
    draw  the  line.

    And  I  notice  you  have  handled  this  very  considerately,  because
    here  is  another  instance  here  in  the  last  paragraph,  where  you  say
    that  "some  exceptions  to  conventional  patent  protection  may  still  have
    to  be  invoked."     That  is  along  the  line  of  your  testimony.

    466  ATOMIC    POWER    DEVELOPMENT

    Mr.  OoMS.  I  think  that  is  unavoidable  at  this  stage  of  this  project.
    I  would  hate  to  think  that  that  is  a  permanent  problem.  But  I  think
    the  broader  our  industrial  participation  becomes,  the  less  need  there
    will  be  for  exceptional  treatment.

    Kepresentative  Holifield.  Now,  I  notice  you  referred  to  Mr.  Cohen's
    statement  on  pages  8  and  9.

    Will  you  give  in  your  own  words  what  that  means  to  you  i

    Mr.  OoMS.  Mr.  Cohen,  when  he  appeared  here,  presented  as  part  of
    his  statement  a  redraft  of  the  act,  and  I  did  examine  the  patent  pro-
    visions of  that  redraft,  because  he  had  gone  very  thoroughly  into  this
    whole  thing.  And  he  did  what  the  Van  Zandt  bill  would  do,  and
    eliminated  the  prohibitions  in  paragraph  11  (a) ,  and  also  with  respect
    to  military  weapons,  which  neither  the  Van  Zandt  bill  or  my  proposals
    disturb.  And  then  he  tried  to  recreate  the  situation  as  if  these  pro-
    hibitions had  never  existed.  He  put  into  his  draft  of  the  act  a  number
    of  saving  clauses,  that  would  take  the  man,  for  example,  who  had  filed
    an  application  with  the  Patent  Office  since  1946

    Representative  Holifield.  It  would  be  retroactive  ?

    Mr.  OoMS.  That  is  right.     Yes.

    He  would  give  that  man  an  opportunity  to  recapture  a  patent  which
    was  prohibited  by  the  old  act.  And  I  think  that  would  be  a  good
    thing  to  do.  His  saving  clauses  are  very  well  drawn  in  that  respect,
    with  one  exception.  Of  course,  I  can  load  this  down  with  detail,  but
    I  think  the  detail  can  more  properly  come  into  an  actual  draft  of  the
    statute.  And  that  is  that  he  made  the  revival  of  these  applications
    which  the  Patent  Office  had  denied,  automatic.  I  think  it  should  re-
    quire some  action  on  the  part  of  the  holder  of  the  patent  application
    which  had  been  denied  before  the  revival  took  place.

    Representative  Holifield.  They  should  certainly  be  screened  from
    a  security  standpoint  first.  It  certainly  should  not  be  made  automatic
    without  screening  for  security,  evaluation  of  worth,  and  claim  to
    private  ownership.

    Mr.  OoMS.  Everything  in  the  Patent  Office  is  screened  for  security.

    Representative  Holifield.  Yes,  I  realize  it  is.  But  I  mean  the
    passage  of  the  act  itself  should  not  make  such  items  automaticallj
    patentable.

    Mr.  OoMS.  No.  That  is  something  that  can  be  taken  care  of  when
    you  get  to  the  details  of  the  draft.

    Representative  Holifield.  In  writing  the  legislation.

    Mr.  OoMS.  Yes,  sir.

    Representative  Holifield.  And  I  notice  in  section  4,  here,  Mr.
    Cohen  retains  the  judicial  review  of  the  Board,  the  action  of  the  Com-
    mission or  the  Board.

    Mr.  OoMs.  He  went  a  little  further,  Mr.  Holifield.  As  it  now
    stands,  the  Patent  Compensation  Board  makes  a  full  record,  and  any
    review  of  it  is  upon  the  record  made  before  that  Board.  He  goes  a
    little  further.

    Representative  Holifield.  And  that  review  is  by  the  Commission  ?

    Mr.  OoMs.  What  is  that  ?

    Representative  Holifield.  And  that  review  is  by  the  Commission?

    Mr.  OoMs.  No,  the  Commission  has  no  power ;  the  Patent  Compen-
    sation Board  makes  the  decision,  and  under  the  regulations  of  the
    Commission  with  respect  to  that  Board,  the  Commission  has  no  power
    over  that  decision.

    ATOMIC    POWER    DEVELOPMENT  467

    RepresBiitative  HoLiriELD,  I  see.

    Mr.  OoMS.  That  was  intended  to  give  this  Board  as  complete  inde-
    pendence, which  you  mentioned  before,  as  possible.

    Then,  if  a  man  is  dissatisfied  with  the  treatment  that  he  has  re-
    ceived at  the  hands  of  the  Board,  he  may  take  the  case  to  the  Coiu't
    of  Appeals  of  the  District  of  Columbia.

    Now,  Mr.  Cohen's  amendment  would  provide  that  when  he  took
    his  case  for  review  he  would  go  to  the  district  court  and  be  permitted
    to  put  in  additional  evidence.  Whether  that  is  desirable  or  not  is  a
    matter  on  which  lawyers  will  debate  at  great  length.  But  as  we  have
    tried  to  conduct  this  Board,  we  have  given  each  side — including  the
    Commission,  which  does  not  really  take  an  adverse  position  but  pre-
    sents very  fully  its  views,  and  the  applicant — every  opportunity  to
    bring  before  that  Board  every  fact  and  consideration  which  they  think
    important.  We  have  completely  eliminated  any  technical  require-
    ments, to  the  extent  that  they  were  not  necessary,  merely  for  orderly
    procedure.

    The  result  is  that  the  records  that  we  have  had  before  that  board
    have  been  so  full  that  I  doubt  whether  any  man  could  really  add  much
    to  them.    But  another  board  might  treat  it  differently.

    Representative  Holifield.  Who  are  the  other  members  of  your
    board,  sir  ?

    Mr.  OoMS.  John  V.  L.  Hogan,  of  New  York,  the  famous  radio  in-
    ventor and  consultant,  and  Mr.  Isaac  Harter,  formerly  chairman  of
    the  board  of  Babcock  and  Wilcox,  who  have  been  in  various  parts  of
    the  atomic-energy  program  since  its  beginning.  He  is  a  man  well
    known  in  the  high-temperature  field  and  has  been  on  the  industrial
    advisory  panel  of  the  Commission  and  has  served  the  Commission  in
    other  ways.    He  is  our  industrial  member.

    Mr.  Hogan  is  our  technical  man.     And  I  happen  to  be  an  attorney.

    Representative  Holifield.  I  hope  your  board  will  give  further
    study  to  this  matter  between  the  time  that  you  now  appear  and  future
    consideration  of  legislative  drafts,  and  that  you  will  give  to  the  com-
    mittee the  benefit  of  your  background  of  knowledge.

    Mr.  OoMS.  After  you  have  the  record  as  far  as  your  joint  committee
    does  take  it,  I  would  like  to  review  it  with  that  in  mind  and  submit  a
    draft  of  the  proposed  patent  section  of  the  new  act,  and  if  I  can  be  of
    any  further  help  to  the  committee  I  shall  be  glad  to  be  available.

    Representative  Holifield.  I  appreciate  your  testimony  very  much.

    Thank  you.

    Representative  Hinshaw.  Senator  Pastore?

    Senator  Pastore.  Mr.  Ooms,  I  was  not  here  when  you  started  your
    testimony.  I  have  been  trying  to  catch  up  by  reading  it  while  you
    were  being  questioned  by  Mr.  Holifield.

    I  direct  your  attention  now  to  the  last  2  paragraphs  on  page  1  of
    your  manuscript.  And  I  think  very  aptly  you  bring  out  the  two
    points  of  views;  that  is,  with  reference  to  the  fears  on  the  part  of
    industry,  that  they  would  not  invest  their  money,  their  private  capital,
    unless  they  are  given  certain  concessions  on  patent  rights,  and  the  fear
    of  the  public,  generally,  that  if  we  have  a  select  group  that  comes  in
    at  the  beginning  and  derives  all  of  these  benefits  to  the  disadvantage
    of  other  people,  that  would  not  be  fair,  either.

    468  ATOMIC    POWER    DEVELOPMENT

    Now,  you  say,  in  your  last  paragraph  on  page  1 :

    The  temptation  to  exaggerate  this  latter  aspect  is  great.  How  real  the  threat
    is  cannot  be  demonstrated.

    Now,  that  is  true.  As  far  as  the  uhimate  proof  is  concerned,  we
    could  not  demonstrate  it  here  this  afternoon.  But,  from  your  expe-
    rience in  this  whole  field,  and  your  work  in  the  patent  rights,  in  your
    opinion  how  real  is  that  fear?

    Mr.  OoMS.  The  fear  that  some  one  inventor  may  get  a  dominating
    patent  ?

    Senator  Pastore.  Well,  not  some  one ;  but  that  this  whole  field  will
    be  opened  up  to  a  great  exploration  of  patent  rights  that  will  develop
    into  great  assets  on  the  part  of  a  select  group,  to  the  exclusion  of  all
    American  business.

    Mr.  OoMS.  I  don't  envision  that  the  fear  is  substantial.  But  I
    think  that  we  know  so  little  about  this  whole  field  of  atomic  energy
    today  that  for  anybody  to  be  pontifical  about  it  is  going  to  be  dangerous.
    And  so  I  would  say  that  as  long  as  that  fear  exists,  as  long  as  th^e
    possibility  seems  to  be  that  there  is  such  a  real  danger,  we  should  pro-
    vide for  it  in  the  legislation.

    Senator  Pastore.  And  all  this,  of  course,  is  predicated  upon  the  fact
    that  the  money  that  will  be  invested  is  exclusively  private  money  ?

    Mr.  OoMS.  I  wonder  whether  anybody  has  ever  proposed  that  it  all
    would  be  exclusively  private  money  ?

    Senator  Pastore.  Well,  now,  this  is  what  I  mean :  How  much  are
    you  going  to  liberalize  these  patent  rights  to  people,  when  there  is  a
    partnership  arrangement,  where  public  money  and  private  money  is
    being  used  in  conjunction,  one  with  the  other?  Certainly  you  are  not
    going  to  give  private  investors  exclusive  patent  rights  when  part  of
    the  money  that  is  being  used  in  this  project  is  public  money  too?

    Mr.  OoMS.  We  have  never  done  it.  As  long  as  there  has  been  con-
    tracting with  any  of  the  Government  services,  I  think  that  they  have
    required  that  the  Government  get  part  of  the  patent  rights,  if  not  all  of
    them.

    Senator  Pastore.  And  you  would  allow  that  to  be  done  through
    negotiations  ?

    Mr.  OoMs.  Yes,  that  is  done  through  contract  today,  and  I  don't
    think  anything  in  that  act  will  interfere  with  that  administrative
    feature  of  the  whole  program.  But  it  is  very  difficult  to  sit  here
    today  and  say  there  never  will  be  any  great  invention  or  any  great
    group  of  inventions  that  will  not  create  an  island  in  this  field,  and
    that  those  on  the  island  will  not  have  a  greatly  preferred  position.

    I  think  a  lot  of  people  are  tempted  to  say  that ;  they  think  that  we
    do  know  a  great  deal  about  the  field  now.

    Senator  Pastore.  And  the  power  to  decide  that  will  be  left  up  to
    this  Board  that  you  speak  of  ?

    Mr.  OoMs.  To  decide  whether  the  patent  is  one  such  that  it  should
    be  opened  to  licensing,  yes.    You  must  put  it  somewhere.

    Senator  Pastore.  And  you  feel  it  is  rather  significant  that  that
    can  be  determined  ?

    Mr.  OoMS.  Yes.     I  think  it  can  be.

    Senator  Pastore.  I  say  that  in  view  of  the  statement  that  you  have
    already  made,  that  sometimes  the  granting  of  these  patent  rights
    is  an  encouragement  rather  than  a  discouragement;  it  encourages
    other  people  to  find  other  ways  and  methods  of  doing  the  same  thing.

    ATOMIC    POWER    DEVELOPMENT  469

    Mr.  OoMs.  That  is  right.

    Senator  Pastore.  And  I  wonder  at  what  point  we  can  determine
    that  that  cannot  be  done.

    Mr.  OoMs.  I  think  each  one  of  those  cases  is  going  to  have  to  be
    met  on  its  own  facts.  I  have,  in  the  25  years  I  have  been  in  this
    business,  seen  only  1  or  2  patents  for  which  no  immediate  alternative
    was  available.  There  have  been  a  couple.  But  in  every  field,  as  the
    progress  develops,  a  patent  that  may  seem  to  be  dominating  today
    may  be  obsolete  3  years  from  now.

    Senator  Pastore.  And  you  feel  that  all  this  field  of  atomic  energy
    or  the  exploration  of  atomic  energy  for  industrial  use  would  not
    be  any  different  from  the  cases  you  have  experienced  ?

    Mr.  OoMs.  No  difi^erent  in  that  respect.

    Senator  Pastore.  That  is  all  I  want  to  ask.

    Representative  Hinshaw.  Are  there  any  other  questions  ?

    If  not,  Mr.  Ooms,  I  may  say  that  up  to  this  time  your  contribution
    made  in  the  summer  session,  a  transcript  of  which  I  have  before  me,
    the  Summer  Institute,  that  is,  of  the  University  of  iSIichigan  Law
    School,  has  certainly  been  almost  the  "Bible"  in  reference  to  the  pat-
    ent situation.  We  hoj)e  that  others  will  now  take  an  interest  in  it
    and  join  you  in  your  thinking,  or  present  different  thoughts,  as  the
    case  may  be,  to  the  end  that  a  wholesome  policy  may  be  finally  estab-
    lished by  the  Government  in  respect  to  the  patents  in  this  field.

    We  thank  you  very  much  for  your  presentation  and  for  coming
    down  here  again  to  meet  with  us.

    Mr.  OoMS.  Thank  you,  Mr.  Chairman.

    Representative  Hinshaw.  Now,  is  Mr.  Ruebhausen  here?

    Mr.  Ruebhausen,  as  chairman  of  the  committee  on  atomic  energy  of
    the  Association  of  the  Bar  of  the  City  of  New  York,  has  been  active  in
    discussions  on  some  of  the  problems  involved  in  getting  industrial
    participation  in  atomic-power  development.  He  has  spoken  particu-
    larly strongly — both  at  the  National  Industrial  Conference  Board
    conference  in  October  1952  and  at  the  American  Power  Association
    Forum  in  March  1953 — about  the  need  for  changes  in  the  act.  The
    particular  revisions  which  he  has  advocated  which  concern  atomic-
    power  development  relate  to  declassification  of  industrially  useful
    nonweapon  data,  ownership  of  both  plants  and  materials,  and  allow-
    ance for  private  patents.  Mr.  Ruebhausen  has  proposed  the  appoint-
    ment of  a  special  Presidential  commission  of  inquiry  to  review
    operations  to  date  under  the  act.

    Mr.  Ruebhausen,  we  are  particularly  pleased  that  you  have  come
    down  here  from  New  York,  and  we  are  delighted  to  hear  you.

    STATEMENT  OF  OSCAR  M.  EUEBHAUSEN,  CHAIRMAN,  SPECIAL  COM-
    MITTEE ON  ATOMIC  ENERGY,  THE  ASSOCIATION  OF  THE  BAR  OF
    THE  CITY  OF  NEW  YORK

    Mr.  Ruebhausen.  Mr.  Chairman  and  members  of  the  committee,
    I  am  pleased  to  be  here.  I  have  a  statement  that  I  would  like  to  read,
    if  I  may,  sir.

    My  name  is  Oscar  M.  Ruebhausen.  I  am  a  lawyer  and,  currently,
    I  am  the  chairman  of  the  special  committee  on  atomic  energy  of  the
    Association  of  the  Bar  of  the  City  of  New  York.  It  is  in  that  ca-
    pacity that  I  have  been  asked  to  appear  at  this  hearing.

    470  ATOMIC    POWER    DEVELOPMENT  '

    At  the  outset,  I  think  I  should  tell  you  something  about  our  bar
    association's  special  committee.

    We  are  a  group  of  lawyers  first  appointed  as  a  committee  more  than
    4  years  ago  by  the  late  Robert  P.  Patterson,  who  was  then  the  presi-
    dent of  our  association.  Judge  Patterson  saw  in  the  atom  a  challenge
    to  lawyers  as  technicians  and,  more  importantly,  as  citizens.  He
    recognized  that  the  process  of  assimilating  atomic  energy  effectively
    and  constructively  into  the  fabric  of  a  free  society  was  certain  to  be
    difficult  and  he  wished  our  bar  association  to  assist  in  the  process.

    It  was  also  hoped  that  our  special  committee,  by  vigorous  attention
    to  atomic  problems  but  without  seeking  access  to  any  restricted  data,
    might  help  to  make  up  for  the  very  disturbing  lack  of  any  real  public
    debate  on  atomic  matters.

    In  October  1949  we  filed  our  first  report  as  a  special  committee,
    Bethuel  M.  Webster,  who  is  now  the  president  of  our  association,  was
    then  our  committee  chairman.  We  commented  in  that  report  on  the
    fact  that  the  policies  of  secrecy  and  monopoly  made  it  inevitable  that
    the  Nation's  atomic  program  would  be  conducted  without  the  whole-
    some effects  of  real  public  accountability  and  without  the  stimulus
    of  public  understanding  and  constructive  debate.  We  saw  a  real  chal-
    lenge in  putting  atomic  energy  fully  to  work  for  the  national  well-
    being.     Our  report  then  continued :

    In  the  face  of  challenges  so  fundamental,  citizen  groups,  of  which  the  bar  is
    one,  should  take  vigorous  leadership,  in  working  out  a  constructive  response.
    The  objectives  of  such  leadership  should  be  at  least  fourfold  :

    First,  the  development  of  the  fullest  possible  public  understanding  of  atomic
    energy  and  its  implications  ;

    Second,  *  *  *  an  evaluation  of  the  extent  to  which  secrecy  and  monopoly
    are  now,  or  will  continue  to  be,  desirable  and  necessary;

    Third,  to  the  extent  that  secrecy  or  monopoly  are  wise  and  essential,  the
    development  of  mechanisms  which  will  in  part  make  up  for  the  free  interplay
    of  democratic  forces  which  is  now  denied  to  atomic  energy  ;  and

    Fourth,  *  *  *  tiip  isolation  and  resolution  *  *  *  of  technical  legal  problems
    which  are  within  the  particular  professional  competence  of  lawyers  to  study
    and  resolve.

    In  the  past  4  years  we  have  made  progress  on  each  of  these  4  fronts.
    We  have,  I  think,  begun  to  acquire  perspective  about  the  atom.  It
    has  been  for  us  a  salutary  experience.

    I  shall  not,  unless  you  wish  it,  describe  the  steps  taken  by  our
    special  committee  toward  the  four  objectives  recited  in  our  first  re-
    port. But,  with  your  permission,  I  will  turn  to  the  matter  which  is
    of  more  immediate  concern  today,  namely,  the  definition  of  Federal
    policy  on  industrial  atomic  power  development.

    As  a  preliminary  comment,  I  should  report  that  the  problems  sur-
    rounding greater  industrial  participation  in  atomic  development  are
    still  under  consideration  by  our  special  committee.  We  have  reached
    no  final  conclusions.  We  do  not  yet  have  a  formal  committee  report
    to  file  with  you.  When  our  own  studies  of  this  problem  are  further
    advanced  and  when  we  have  had  the  benefit  of  the  thinking  developed
    by  tlie  joint  committee  through  these  important  hearings,  we  hope
    you  will  give  our  special  committee  another  opportunity  to  appear
    before  you  and  to  submit  detailed  suggestions  for  action.

    Pending  formal  committee  action,  accordingly,  the  views  expressed
    by  me  must  be  made  on  my  own  responsibility.  Those  views  are  in  a
    very  real  sense,  hoAvever,  a  product  of  the  deliberations  of  our  special
    committee.

    ATOMIC    POWER    DEVELOPMENT  471

    I  would  like  to  make  three  observations.

    First,  I^belive  the  time  has  come  for  a  full  reexamination  of  the
    Atomic  Energy  Act  of  1946,  of  the  assumptions  to  which  it  gave
    exf)ression,  and  of  the  policies  which  it  put  into  effect.

    Second,  I  believe  that  the  secrecy  complex  has  wrongly  dominated
    the  national  approach  to  atomic  problems,  that  secrecy — which  is  a
    negative  policy  at  best — has  been  mistakenly  relied  upon  to  achieve
    affirmative  objectives,  and  that  the  role  of  secrecy  in  atomic  matters
    should,  in  the  imperative  national  interest,  be  reduced.

    Third,  I  believe  that  the  reasons  which  led  to  the  establishment  of
    a  Government  atomic  monopoly  in  1946  are  no  longer  compelling
    and  that  those  provisions  of  the  law  which  created  that  monopoly
    should  be  amended.

    Let  me  comment  briefly  on  each  of  these  three  points.

    The  need  for  a  full  review  of  atomic  policy :  The  suggestion  that
    there  should  be  a  full  reexamination  of  our  basic  atomic  law  is  not
    a  new  thought.  In  fact  it  was  first  expressed  in  the  McMahon  Act
    which  itself  acknowledged  that  the  legislation  must  "necessarily  be
    subject  to  revision  from  time  to  time."  It  was  echoed  also  by  Senator
    Millikin  early  in  1947  when  he  reminded  the  AEC  that  it  was  the
    intention  of  the  Congress  to  restore  to  private  enterprise  as  soon  as
    it  was  safe  to  do  so  the  extraordinary  grants  of  power  embodied  in
    the  McMahon  Act.

    Nearly  7  years  have  passed,  however,  since  the  McMahon  Act  was
    passed.  During  all  that  period  there  has  been  no  attempt  at  a  public
    reevaluation  of  our  national  atomic  policies  until  the  joint  committee
    opened  these  hearings.  I  am  pleased  that  the  Congress  has  taken  this
    most  important  step  and  I  am  grateful  for  the  opportunity  to  par-
    ticipate.

    The  reasons  why  a  reexamination  of  our  atomic  law  and  atomic
    policy  is  particularly  timely  might  be  summarized  as  follows :

    1.  The  act  was  adopted  by  a  nation  largely  ignorant  of  the  new  force
    with  w^hich  it  must  come  to  terms.  The  act  therefore  was  a  temporary
    expedient,  although  a  wise  one.  It  was  designed,  you  might  say,  to
    hold  the  status  quo  pending  a  greater  knowledge  and  a  fuller  under-
    standing of  all  the  factors  involved.

    2.  Seven  years  of  aggressive  administration  by  the  AEC  have  opened
    up  new  vistas  and  new  problems.  They  have  also  brought  the  atom
    into  perspective  as  a  fixture  of  modern  life.  This  new  understanding
    and  new  knowledge  should  be  drawn  upon  not  only  to  test  the  wisdom
    of  the  policies  to  which  we  are  now  committed  but  to  move  forward
    affirmatively  and  with  confidence  to  the  realization  of  the  goals  ex-
    pressed in  the  McMahon  Act.  We  cannot  afford  to  presevere  without
    question  in  policies  which  were  grounded  on  the  tentative  assumptions
    of  1946.

    3.  Responsible  men  who  liave  been  closely  associated  with  the  atomic
    enterprise  have  asserted  that  the  atomic  policies  embedded  in  the
    McMahon  Act  are  wrong,  that  they  are  hurting  our  military  progress,
    our  economic  development,  and  our  welfare  as  a  nation.  When  men
    like  Lilienthal,  Oppenheimer,  and  Dean — to  whom  tlie  Nation  is
    deeply  indebted  for  their  dedicated  and  outstanding  service — when
    such  men  urge  that  we  are  on  the  wrong  path,  we  owe  it  to  ourselves
    to  hear  them  out.

    472  ATOMIC    POWER    DEVELOPMENT

    For  some  time  I  have  felt  that  a  real  contribution  could  be  made
    to  the  construction  of  new  and  affirmative  atomic  policies  if  public
    hearings  by  the  joint  committee  were  supplemented  by  a  high  level,
    nonpartisan  study  of  our  atomic  program  by  men  of  unimpeachable
    competence  and  objectivity.  To  this  end  I  once  proposed  that  the
    President  of  the  United  States  create  a  special  Commission  of  citizens
    to  review  the  Government's  stewardship  of  the  atom  during  the  past
    decade  and  to  recommend  desirable  revisions  in  our  atomic  policies
    and  the  controlling  law.  I  still  think  that  proposal  has  merit.  Such  a
    Presidential  Commission  made  up  of  leading  citizens,  scientists,  and
    industrialists  who  have  not  previously  had  any  responsibility  for  the
    administration  of  our  atomic  affairs  coidd  bring  a  much-needed  fresh
    point  of  view  to  our  atomic  problems.  It  would  be  a  partial  substitute,
    moreover,  for  the  public  opinion  and  the  public  debate  on  atomic
    affairs  which  has  failed  to  develop  as  it  would  have  were  it  not  for
    secrecy.

    As  matters  now  stand  there  is  only  one  group  in  this  entire  country
    today  that  has  in  its  possession  all  of  the  pertinent  facts  relating  to  our
    atomic-energy  program.  That  group  is  the  AEC  itself.  While  the
    AEC  enjoys,  and  deserves,  the  full  confidence  of  the  American  people,
    the  definition  of  the  proper  atomic  policies  for  the  Nation  is  a  matter
    of  exceeding  importance.  It  is  not  only  sound,  but  necessary,  that  the
    judgment  and  testimony  of  the  AEC  be  supplemented  with  that  of
    independent  and  objective  private  citizens  who  have  full  access  to  all
    the  facts.  I  know  of  no  such  private  citizens,  today.  There  could  be
    informed  private  citizens  of  this  type,  however,  if  the  President  would
    empanel  a  special  citizens'  Commission  to  ascertain  the  facts,  if  he
    would  grant  to  it  the  funds  for  an  adequate  staff  and  request  a  report
    in  time  for  action  at  the  next  session  of  Congress.

    Representative  Hinshaw.  Mr.  Ruebhausen,  I  might  suggest  to  you
    that  this  committee  is  such  a  body.

    Mr.  Ruebhausen,  It  is,  sir.  And  the  point  I  had  in  mind  about
    it  not  having  all  the  facts  is  that  I  understood  in  self-restraint  it  had
    asked  that  some  of  the  facts  not  be  revealed  to  it;  and,  secondly,
    while  the  full  daily  flow  of  information  would  reach  the  Commission,
    this  committee  would  not  have  the  responsibility  for  the  knowledge
    that  the  AEC  had.

    Representative  Hinshaw.  Well,  I  think  that  that  time  has  long
    passed.

    IMr.  Ruebhausen.  I  had  not  appreciated  that,  sir.

    Well,  I  will  amend  my  statement  to  that  effect.

    Representative  Hinshaw.  We  are  conducting  such  an  investigation
    at  this  time.

    Mr.  Ruebhausen.  That  is  correct,  sir,  and  it  is  a  very  worthwhile
    thing  and  one  which  I  should  think  the  Nation  would  be  proud  to
    have  done.  There  is  notliing  more  important  than  to  try  to  reevaluate
    the  premises  on  Avhich  we  have  been  proceeding.  We  may  come  out
    with  tlie  same  conclusions,  but  I  think  it  would  be  a  healthy  thing  to
    look  into  the  premises  that  we  liave  been  operating  on.

    Now,  a  word  about  secrecy.  Secrecy  in  government  is  the  very
    antitliesis  of  democracy.  The  basic  tenet  of  our  democracy  is,  as
    Judge  Learned  Hand  has  said,  that  "the  right  conclusions  are  more
    likely  to  be  gathered  out  of  a  multitude  of  tongues  than  through
    any  kind  of  autlioritative  selection."    This  is  the  principle  on  which

    ATOMIC    POWER    DEVELOPMENT  473

    we  have  staked  our  all  as  a  nation — yet  it  is  a  principle  from  wliich
    we  have  departed  in  the  case  of  nuclear  fission.

    In  the  name  of  security  we  have  fenced  off  and  marked  "For  the
    AEC  only"  an  entire  science,  a  wholly  new  industry,  and  a  large  and
    steadily  expanding  Government  operation.  We  would  not  have
    dreamed  of  indulging  in  such  a  fundamental  departure  from  principle
    for  anything  other  than  nuclear  physics.  We  don't  do  it  for  elec-
    tronics, or  for  chemistry,  or  for  the  aircraft  industry.  •  Yet  each  of
    them  is  as  inextricably  involved  in  our  security  as  is  the  atom.  Why
    then  have  we  done  this  to  the  atom  ?  Atomic  secrecy  is,  I  think,  the
    special  price  we  are  paying  for  the  fright  and  the  shock  with  which
    the  phenomenon  of  fission  clouded  our  thinking  in  1945.  The  price
    is  exorbitant  because  it  subordinates  a  fundamental  principle  of  de-
    mocracy to  a  concept  of  temporary  military  expediency.

    Representative  Holifield.  Could  I  stop  you  for  just  a  minute,  Mr.
    Ruebhausen  ?  You  are  making  some  statements  there  which  I  would
    like  you  to  explain  a  little  bit.

    Do  you  mean  to  say  that  now  you  have  no  compunction  at  all  about
    revealing  everything  that  we  know  about  atomic  fission  ?

    Mr.  Ruebhausen.  No,  sir.

    Representative  Holifield.  Well,  how  far  would  you  go  ?  We  have
    got  the  Atomic  Energy  Commission,  a  group  of  representative  men,
    who  have  been  studying  this  and  have  been  periodically  making
    known  to  the  public  everything  that  they  felt  was  safe  from  a  mili-
    tary standpoint.  We  have  had  periodic  declassifications  of  a  great
    deal  of  information.

    Now,  with  all  fairness,  I  do  not  think  you  can  put  electronics  or
    chemistry  or  the  aircraft  industry  into  the  same  compartment  as
    that  into  which  you  put  atomic  fission.

    Mr.  Ruebhausen.  No  ;  I  don't  think  you  can,  sir ;  but  my  point  is
    this :  With  atomic  energy  the  whole  attitude  has  been  that  it  is  pri-
    marily and  paramountly  a  military  weapon.  That  certainly  was  true
    back  in  1946,  but

    Representative  Holifield.  Now,  on  that  point,  our  objective  has
    been,  since  the  forming  of  the  AEC,  to  achieve  military  stature.  That
    has  been  the  primary  objective.  It  is  the  primary  objective  of  the  act.
    It  remains  the  primary  objective  at  this  point,  because  we  have  no  lack
    of  conventional  power.  We  have  plenty  of  conventional  power,  and
    will  have  for  four  or  five  hundred  years.  It  is  desirable.  We  want  to
    explore  it.  We  want  to  obtain  it,  from  the  standpoint  of  acquisition
    of  another  source  of  power.  But  there  is  no  driving  necessity  on  it
    like  there  has  been  in  the  last  7  years  upon  the  acquiring  of  a  strong
    military  stature.

    And  so  it  is  not  a  matter  that  has  been  idly  decided  upon  or  negli-
    gently approached.  It  has  been  a  deliberate  policy,  a  considered  pol-
    icy, by  the  President,  by  the  Congress,  and  by  everyone  else  concerned
    with  it,  to  get  ourselves  into  a  position  of  military  strength  as  quickly
    as  possible.

    These  other  things,  that  are  secondary  in  importance,  can  come  later.

    Mr.  Ruebhausen.  And  I  wouldn't  take  away  from  that  paramount
    objective,  sir.

    In  answer  to  your  fii'st  queston,  as  to  wliere  you  draw  the  lino,  that
    is  a  most  crucial  and  difficult  question  on  which  I  am  not  prepared  to
    answer.    I  can't  answer  it.

    474  ATOMIC    POWER    DEVELOPMENT

    Representative  Holifield.  You  have  made  the  statement  here  that
    "the  price  is  exorbitant  because  it  subordinates  a  fundamental  prin-
    ciple of  democracy  to  a  concept  of  temporary  military  expediency."

    Mr.  RuEBHAusEN.  Ycs,  sir.

    Representative  Holifield.  Of  course,  I  do  not  believe  that  is  true.

    Mr.  RuEBHAusEN.  Well,  in  terms  of  principle,  I  feel  confident,  my-
    self, that  the  lasting  progress  of  this  country  can  only  come  if  the  ad-
    ministration of  our  Government  is  open  and  free  and  information  is
    free.  Secrecy  has  a  place,  and  a  most  important  place.  And  I  would
    certainly  say  without  qualification  that  anything  pertaining  to  a  mili-
    tary weapon  should  be  secret.

    Now,  the  crucial  question  is,  and  it  is  one  I  think  you  asked  Mr.
    Ooms  before:  Are  you  satisfied  that  there  is  anything  involved  in
    atomic  energy  that  does  not  pertain  to  a  military  weapon  ?

    I  can't  answer  that.    I  don't  have  the  facts.

    Representative  Holifield.  Then  the  price  that  we  have  paid,  in
    terms  of  secrecy  or  in  terms  of  subordinating  a  fundamental  principle,
    may  not  have  been  exorbitant.    It  may  be  a  necessary  price.

    Mr.  RuEBHAusEN.  If  it  is  necessary,  it  is  not  exorbitant,  sir.

    Representative  Holifield.  You  may  proceed.

    Mr.  RuEBHAusEN.  Morcover,  it  seems  to  me  we  have  been  confusing
    secrecy  with  security.  Secrecy  can,  it  is  true,  in  many  situations,  con-
    tribute to  security.  But  secrecy,  applied  wholesale  as  an  affirmative
    instrument  of  policy,  will  ultimately  defeat  security.  Secrecy  badly
    impedes  our  own  progress  as  a  Nation ;  and  yet  real  security  lies  only
    in  our  dynamic  and  continuous  development,  on  all  fronts,  at  a  rate
    faster  than  that  of  any  other  nation.  Our  main  effort,  therefore,
    should  be  directed  to  creating  the  conditions  under  which  maximum
    progress  is  possible.     Pervasive  secrecy  is  not  one  of  these  conditions.

    There  is  a  place,  and  a  necessary  one,  for  secrecy.  But  secrecy  should
    be  the  exception,  not  the  rule.  Certainly  all  atomic  military  gadgetry,
    weapons,  and  plans  should  be  secret  and  remain  so  as  long  as  there
    is  any  clear  advantage  in  it — but  I  do  not  think  secrecy  should  extend
    much  further.

    There  is,  I  think,  another  and  fundamental  reason  why  the  present
    policy  of  atomic  secrecy  should  be  changed.  I  have  grave  doubts  about
    the  present  situation  under  which  access  to  atomic  knowledge  is  con-
    fined to  the  relatively  few  who  are  AEC  contractors  or  subcontractors.
    I  question  the  fairness  and  hence  the  propriety  of  a  system  by  which
    the  United  States  Government  opens  an  area  of  such  fruitful  and
    limitless  possibilities  as  nuclear  fission  to  less  than  all  of  its  citizens.
    This  is  not  said  critically  of  the  AEC  for  in  this  regard  the  AEC  has
    consciously  endeavored  to  mitigate  the  consequences  imposed  upon
    it  by  the  law.  Nor  is  it  said  critically  of  those  companies  which,  not
    without  sacrifice,  have  taken  on  AEC  contracts.

    It  is,  however,  a  fact  that  rich  advantages  beckon  for  those  who
    have  access  to  this  new  frontier  of  science  and  industry.  Accordingly,
    while  there  are  several  possible  courses  of  action,  only  one  seems  to
    me  to  be  sound.  The  alternatives  are  three:  Either  first,  the  new
    frontier  should  be  closed  to  all  except  Government  officials — and  that
    would,  I  think,  be  the  height  of  folly — or  second,  the  frontier  should
    be  opened,  as  it  is  now,  to  a  selected  group  of  corporations  chosen
    by  the  Government,  or  third,  the  frontier  should  be  opened  to  all  citi-
    zens alike.    The  latter  course,  alone,  is  in  keeping  with  the  traditions

    ATOMIC    POWER    DEVELOPMENT  475

    and  principles  which  have  (^iven  us  our  strength  and  vitality  as  a
    Nation,

    A  more  limited  application  of  secrecy  in  atomic  affairs  would  have
    other  advantages  as  well.  It  would  be  more  managable;  it  would
    cost  less  both  in  dollars  and  in  the  time  of  the  scientists  and  admin-
    istrators responsible  for  the  success  of  our  atomic  program.  If  there
    were  fewer  so-called  secrets  to  keep  I  think  we  could  also  expect  to
    be  more  successful  in  keeping  them.

    Let  us  assume  we  can  agree  that  the  area  of  secrecy  should  be  re-
    duced. How  then  do  we  define  the  matters  that  should  remain  secret?
    How  do  we  determine  in  advance  which  data,  if  released,  would,  on
    balance,  be  hurtful  to  our  security?  How  can  we  decide  when  data
    long  held  secret  need  no  longer  be  so  confined?  Such  questions  are
    by  no  means  easy.  Nor  do  I  think  they  can  be  conclusively  answered
    in  advance  by  legislation.  In  the  last  analysis,  within  standards  estab-
    lished by  the  Congress,  the  final  decisions  on  secrecy  nmst  be  left  for
    administrative  discretion.

    But  there  is  one  specific  suggestion  I  would  like  to  make.  Under
    tlie  present  law  the  conception  of  secret,  or  restricted,  atomic  data
    is  extremely  broad.  It  includes  not  only  military  data  but  also  all
    data  concerning  the  production  of  fissionable  material  and.  indeed,
    the  use  of  fissionable  material  in  the  production  of  power.  Today,  in
    effect,  all  data  in  the  atomic  field  is  "born  secret" — and  it  stays  secret
    until  the  Commission  can  meet  the  almost  impossible  burden  of  proving
    that  its  release  will  not  adversely  affect  the  common  defense  and
    security.

    I  think  it  clear  that  this  approach  should  be  reversed.  I  would  urge
    that  the  law  be  revised  so  that  all  atomic  data  will  be  "born  free,"  as
    it  were,  except  for  data  falling  within  certain  specific  categories  de-
    fined by  the  Congress — such  as  data  related  to  the  manufacture  or  use
    of  atomic  weapons — and  except  for  data  which  the  AEC  affirmatively
    determines  cannot  be  published  without  adversely  affecting  the  com-
    mon defense  and  security.  Under  such  a  proposal  data  concerning  the
    use  of  fissionable  material  in  the  production  of  power,  for  example,
    would  become  public  unless  the  AEC  found  positive  reasons  for  hold-
    ing it  secret.

    This  proposal  may  seem  like  a  minor  cliange  in  the  law ;  but  I  be-
    Jieve  it  could  have  a  powerful  effect  on  lifting  the  withering  hand  of
    secrecy  from  our  atomic  progress.  Any  amendment  putting  such  a
    change  into  effect,  however,  should  involve  two  other  features:  first,
    the  amendment  should  before  it  becomes  effective  grant  a  sufficient
    interval  of  time,  say  6  months,  to  the  AE'C  to  review  all  classified
    data  and  to  determine  affirmatively  what  portions  of  it  would  ad-
    versely affect  our  security  if  published;  and  second,  tlie  amendment
    should  contain  a  clear  statement  of  the  standards  to  be  applied  by  the
    AEC  in  determining  the  limited  types  of  information  whicli  must
    still  be  held  in  secrecy.  I  would  urge,  moreover,  that  such  standards
    should  not  be  materially  different  from  the  classification  standards
    now  applied  to  any  other  national  activity  which  has  military  sig-
    nificance.

    In  conclusion,  I  should  like  to  say  just  a  word  about  the  atomic
    monopoly.

    I  am  satisfied  tluit  the  present  atomic  monopoly  is  unnecessary  and
    undesirable.     It  i-s  unnecessary  because  the  reasons  which  dictated

    36740 — 03 31

    476  ATOMIC    POWER    DEVELOPMENT

    the  establishment  of  a  monopoly  in  1946  do  not  have  a  persuasive  force
    today.  Moreover,  I  do  not  believe  that  a  monopoly,  no  matter  how
    able  or  enlightened,  is  the  best  instrumentality  for  the  achievement
    of  the  atomic  progress  which  is  desired  by,  and  assuredly  due  to,  the
    American  people.

    The  job  of  developing  vigorously  our  atomic  potential  for  the  safety
    and  welfare  of  the  Nation  is,  simply,  too  important,  too  big  and  too
    varid  to  entrust  to  any  single  group.  Such  a  job  should  be  entrusted,
    under  Government  guidance  and  regulation,  to  the  multitude  of  talents
    that  make  up  American  industry,  American  management,  and  the
    American  professions.  No  monopoly  can  ever  command  the  versa-
    tility, the  daring,  or  the  willingness  to  fail  which  is  characteristic  of
    the  free-enterprise  system.

    Our  job  as  a  Nation  is  to  convert  the  potentialities  of  atomic  energy
    into  the  greatest  good,  for  the  greatest  number  in  the  shortest  possible
    time.  There  is  nothing  in  American  history,  experience,  or  philos-
    ophy which  indicates  that  a  monopoly  will  do  that  job.  We  can,
    however,  look  with  confidence  to  what  might  be  accomplished  if  the
    full  vigor  and  ingenuity  of  this  country  are  turned  loose  on  atomic
    matters.  While  under  a  system  such  as  ours  we  can  never  tell  in
    advance  from  what  quarter  progress  will  come,  we  can  be  certain  that
    progress  will  surely  be  made.  As  long  as  men  are  free,  ideas  are
    open,  and  the  successful  are  rewarded,  this  will  continue  to  be  so.

    I  urge,  accordingly,  that  the  McMahon  Act  be  revised  so  as  to  put
    an  end  to  the  Government  monopoly,  so  as  to  permit  the  private  owner-
    ship  and  use  of  fissionable  materials  and  so  as  to  permit  the  private
    ownership  and  use  of  production  facilities.  Any  such  amendment  of
    the  act  will  clearly  be  a  complicated  task.  In  order  to  begin  thinking
    through  some  of  the  difficult  problems  involved,  an  associate  of  mine,
    Robert  B.  von  Mehren,  and  I,  collaborated  in  preparing  a  manuscript.
    This  manuscript  was  designed  in  part  as  a  working  tool  for  our  special
    committee.  As  our  writing  progressed,  however,  we  thought  our
    studies  might  make  a  useful  contribution  if  published.  We  were
    pleased  that  the  editors  of  the  Harvard  Law  Review  agreed  in  this
    and  in  June  published  our  manuscript  under  the  title,  "The  Atomic
    Energy  Act  and  the  Private  Production  of  Atomic  Power."  I  refer
    to  this  article  because  in  it  you  will  find  my  present  thoughts  on  a
    number  of  the  detailed  problems  which  will  be  involved  in  any
    amendment  of  the  McMahon  Act  along  the  lines  I  have  suggested
    today.

    I  repeat  the  hope  that  our  special  committee  will  have  an  oppor-
    tunity to  report  to  you  more  fully  next  year  on  any  proposed  changes
    either  in  atomic  policies  or  the  basic  legislation.

    In  the  meantime,  for  myself  and  on  behalf  of  our  special  committee,
    I  thank  you  for  the  opportunity  to  appear  today,  and  I  appreciate
    your  courtesy  in  hearing  my  statement.

    Representative  Hinsiiaw.  Mr.  Ruebhausen,  we  are  very  pleased  to
    have  had  you  and  certainly  will  accept  your  comments  for  study.

    There  are  perhaps  a  few  points  in  it  that  might  be  challenged.

    You  seem  to  think  that  the  information  that  is  classified  by  the
    Atomic  Energy  Commission  is  only  in  the  hands  of  the  Government
    and  a  few  corporations.

    I  would  like  to  point  out  to  you  that  28  universities,  in  conjunction
    with  the  University  of  Chicago,  are  engaged  in  a  very  important

    ATOMIC    POWER    DEVELOPMENT  477

    project  in  DuPage  County  and  the  adjoining  Cook  County;  that  9
    universities  are  engaged  in  conjunction  with  the  Brookhaven  Labora-
    tories; at  least  30  are  working  in  conjunction  with  the  Oak  Ridge
    Laboratories;  and  then  there  is  the  University  of  California  in  the
    Los  Alamos  Laboratories  and  the  Radiation  Laboratory,  at  Berkeley ;
    and  also  the  activities  at  Livermore,  Calif.;  and  that  some  150  uni-
    versities and  25  hospitals  are  engaged  by  the  Commission  in  doing
    research  on  various  subjects ;  and  that  about  75  percent  of  the  scientists
    who  are  at  all  competent  on  matters  of  this  sort  or  even  matters
    related  to  it  are  engaged  in  the  project  or  have  been  engaged  in  the
    project.

    So  that  it  is  not  confined  to  a  few  corporations,  nor  is  it  confined  to
    the  Government.  Many  persons  have  been  employed  by  the  Govern-
    ment from  time  to  time  that  are  now  in  the  universities,  and  the  uni-
    versities themselves  have  contributed  greatly  to  the  Government.
    This,  I  think  my  colleagues  will  agree  with  me,  has  been  a  great  public
    undertaking.

    Representative  Van  Zandt.  Mr.  Chairman,  is  it  not  true  that  there
    is  a  standing  invitation  to  universities  and  individuals  to  contact  the
    AEC  for  the  purpose  of  joining  study  groups?

    Representative  Hinshaw.  I  think  that  is  true.  While  there  has
    been  a  very  strong  degree  of  secrecy  surrounding  the  work,  the  prob-
    lems of  secrecy  and  the  problems  of  security  have  been  met  only  by  a
    widespread  demand  that  those  who  are  engaged  in  the  project  in  one
    way  or  another  keep  their  mouths  shut.  That  means  that  a  lot  of
    people  have  had  to  keep  their  mouths  shut,  and  it  means  that  a  great
    many  security  officers  are  engaged  in  seeing  to  it  that  only  those  people
    who  can  successfully  keep  their  mouths  shut  are  engaged  in  the  project.

    Representative  Holifield.  It  might  interest  you,  Mr.  Ruebhausen,
    to  know  that  some  15,000  corporations  have  participated  in  atomic-
    energy  work,  and  close  to  a  half  million  people  have  been  given  security
    check  by  the  FBI  and  the  Civil  Service  Commission  for  participation
    in  the  program.

    Mr.  Ruebhausex.  Those  are  all  impressive  totals,  and  I  think  the
    Commission  should  be  congratulated  that  it  has  been  able  to  bring
    that  about.

    Representative  Hinshaw.  It  has  been  a  monumental  task,  I  might
    say,  for  the  security  officers.  And  the  fact  that  the  information  has
    been  so  well  held  even  by  so  many  people  is  a  compliment  to  the  Ameri-
    can scientists  and  the  American  workers  who  have  joined  in  the  project.

    Mr.  Ruebhausen.  I  think  my  only  point,  sir,  is  that  15,000  cor-
    porations or  even  a  half  a  million  people,  large  as  those  totals  are,  are
    really  only  just  a  small  part  of  the  latent  talent  that  is  in  this  country.
    We  can't  tell  whether  it  will  be  a  22-3'ear  old  in  his  own  laboratory  in
    Iowa  or  whether  it  will  be  a  director  of  research  in  one  of  our  major
    organizations  who  will  produce  progress.  I  think  our  Nation  can
    gain  if  there  is  tlie  fullest  access  to  such  scientific  knowledge  and  such
    technology  as  can  be  released  without  compromising  genuine  military
    applications.

    Representative  Hinshaw.  Well,  there  have  been  a  great  many  vol-
    umes of  facts  released  by  the  Atomic  Energy  Commission  in  its  de-
    classification work.  There  have  been  several  sessions  of  declassifica-
    tion, that  have  produced  many  volumes  of  material.  And  I  am  sure
    that  declassification  is  a  thing  that  takes  place  constantly,  not  over  a

    478  ATOMIC    POWER    DEVELOPMENT

    period  of  any  6  months  or  a  year,  because  a  new  quantity  of  classifiable
    material  appears  every  day,  that  in  turn  must  be  studied  for  declas-
    sification.

    Representative  Vax  Zandt.  Mr.  Chairman,  in  the  field  of  news-
    papers, radio,  and  magazines  we  have  a  lot  of  individuals  posing  as
    scientists  in  the  field  of  atomic  energy.

    Representative  Hinshaw.  Why,  certainly.  And  many  of  the  news-
    writers  are  far  ahead  of  most  of  us  in  the  business.

    Well,  I  only  make  those  comments  because  perhaps  as  a  lawyer  you
    are  a  little  far  from  scientific  magazines,  and  so  forth.  You  no  doubt
    read  the  law  journals.  But  being  an  engineer,  myself,  I  read  the
    scientific  publications,  not  the  law  journals.  And  in  the  scientific
    publications  there  is  a  great  deal  of  declassified  atomic  energy  material.

    Mr.  RuEBHAUSEN.  I  am  sure  there  has  been  more  that  has  been
    declassified  than  the  Commission  has  gotten  credit  for.  And  I  un-
    derstand also,  that  most  of  what  might  be  called  basic  science  has  been
    declassified;  but  that  when  you  get  into  the  area  of  technology,  in-
    cluding the  technology  on  breeder  reactors,  that  has  not  been  declassi-
    fied to  the  extent  that  would  make  possible  private  progress.

    Representative  Hinshaw.  Well,  I  think  that  your  committee  would
    find  it  very  interesting  to  discuss  this  subject  with  those  of  the  Com-
    mission whose  responsibility  it  is  to  decide  the  questions  of  classifica-
    tion or  declassification.

    We  thank  you  for  your  presentation.  We  thank  you  for  coming
    down  to  give  us  this  information  and  the  viewpoint  of  your  committee.
    The  fact  that  we  would  argue  with  you  at  all  is  an  indication  that  we
    have  been  interested  in  your  remarks.

    Mr.  RuEBHAUSEN.  Thank  you  very  much.

    Representative  Hinshaw.  The  next  meeting  will  be  tomorrow  after-
    noon at  2, 1  am  informed ;  and  we  will  have,  at  that  time,  representa-
    tives of  the  National  Association  of  Manufacturers,  the  Congress  of
    Industrial  Organizations,  and  the  American  Federation  of  Labor.

    (Whereupon,  at  3 :  55  p.  m.,  Wednesday,  July  22,  1953,  the  hearing
    was  recessed  until  2  p.  m.,  Thursday,  July  23,  1953.)

    ATOMIC  POWEE  DEVELOPMENT  AND  PRIVATE
    ENTERPRISE

    THURSDAY,   JULY   23,    1953

    Congress  of  the  United  States,
    Joint  Committee  on  Atomic  Energy,

    Washington,  D.  C.

    The  joint  committee  met  at  2 :  15  p.  m.,  pursuant  to  recess,  in  room
    318,  Senate  Office  Building,  Hon.  W.  Sterling  Cole  (chairman)
    presiding.

    Present:  Representative  Cole  (chairman).  Senator  Pastore,  and
    Representatives  Patterson,  Holifield,  and  Price.

    Professional  staff  members  present :  Corbin  C.  Allardice,  executive
    director;  and  Walter  A.  Hamilton  of  the  professional  staff  of  the
    joint  committee.

    Chairman  Cole.  The  meeting  will  come  to  order.

    First,  I  apologize  for  the  delay  in  startino;  the  meeting.  There  was
    an  important  vote  over  in  the  House  which  prevented  starting  the
    meeting  earlier.

    I  understand  that  the  witnesses  scheduled  for  today  have  important
    engagements,  and  that  some  of  them  have  expressed  a  desire  to  rear-
    range the  schedule  of  appearance  of  the  witnesses.  Ordinarily  we  try
    to  accommodate  the  witnesses  as  much  as  possible  to  meet  their  per-
    sonal commitments  and  conveniences,  but  I  fin:l  if  we  were  to  rearrange
    the  order  of  appearance  today  it  would  involve  disarranging  and  incon-
    veniencinor  other  witnesses  for  today.  So  it  has  been  determined  to
    continue  with  the  schedule  as  originally  planned.

    The  first  witness  in  that  order  is  the  representative  of  the  American
    Federation  of  Labor,  our  former  House  colleague,  Mr.  Andrew  J.
    Biemiller,  whom  we  welcome  this  afternoon  as  the  si^okesman  for  the
    .\.  F.  of  L.

    STATEMENT  OF  ANDREW  J.  BIEMILLER,  MEMBER  OF  THE  NA-
    TIONAL LEGISLATIVE  COMMITTEE  OF  THE  AMERICAN  FEDERA-
    TION OF  LABOR

    Mr.  Biemiller.  Thank  you,  ]Mr.  Chairman.

    Mr.  Chairman  and  members  of  the  committee,  my  name  is  Andre^v
    J.  Biemiller.  I  appear  today  in  behalf  of  the  American  Federation
    of  Labor,  which  comprises  a  membership  of  more  than  8  million
    persons  in  the  organized  labor  movement.  I  am  a  member  of  the
    national  legislative  committee  of  the  A.  F.  of  L.

    We  wish  to  commend  this  committee  for  the  public-spirited  and
    nonpartisan  attitude  it  has  manifested  toward  a  subject  of  the  greatest
    national  importance  and  for  the  conscientious  discharge  of  its  duties
    in  exercising  surveillance  over  the  'activities  of  the  Atomic  Energy

    479

    480  ATOMIC    POWER    DEVELOPMENT

    Commission.  The  comprehensive  public  hearing  which  you  are  now
    holding  on  the  industrial  possibilities  of  atomic  power  should  serve
    to  clarify  the  complex  issues  involved  and  to  stimulate  further  public
    thinking  on  the  matter.  In  view  of  the  large  public  investments
    made  in  the  atomic  energy  program  to  date  and  of  the  urgent  need  to
    keep  this  country  in  the  forefront  of  this  new  field  of  endeavor,  the
    clarification  of  issues  afforded  by  these  hearings  is  greatly  to  be  desired.

    It  is  our  understanding  that  the  committee  is  not  addressing  itself
    at  this  time  to  specific  legislation,  but  is  bringing  together  the  views
    of  various  individuals  and  agencies,  public  and  private,  to  assist  the
    committee  in  formulating  amendments  to  atomic  energy  legislation  at  a
    future  date.  It  has  been  reported  that  the  Atomic  Energy  Commission
    prepared  a  specific  draft  of  new  legislation  but  that  the  Bureau  of  the
    Budget  has  not  as  yet  cleared  those  legislative  proposals  as  being  in
    accord  with  the  program  of  the  President.  Therefore,  my  statement
    will  not  be  directed  to  specific  points  of  legislation  but  will  consider
    some  of  the  broader  policy  implications  of  atomic  power  development.

    First  let  me  read  to  you  an  official  statement  of  the  American  Fed-
    eration of  Labor  adopted  last  year.  The  executive  council  of  the
    A.  F.  of  L.  in  its  report  to  the  1952  convention  said :

    Atomic  energy  itself  and  technology  arising  out  of  nuclear  fission  must  remain
    in  the  public  domain.  While  development  of  private  investment  and  enterprise
    for  civilian  use  of  atomic  energy  should  be  encouraged,  such  use  of  it  by  private
    enterprise  should  be  strictly  competitive.  Private  monopoly  in  any  phase  or
    segment  of  the  atomic-energy  industry  is  intolerable.  Yet  even  now  monopolistic
    aggregates  are  already  building  up,  not  only  around  fringes  of  this  public  pro-
    gram, but  within  it.  Monopoly  of  engineering  skill  and  scientific  technology  is
    no  less  dangerous  than  monopoly  of  private  capital.  No  private  corporation
    .should  be  permitted  to  accumulate  materials,  equipment,  or  skill  of  this  industry
    for  its  own  exclusive  use  or  to  arrogate  to  itself  the  power  derived  from  their
    exclusive  possession.

    The  convention  concurred  in  the  report  of  the  executive  council
    and  made  the  following  official  comment :

    On  the  great  strides  our  country  is  making  in  the  development  of  atomic  energy
    depends  the  security  of  our  Nation  and  the  winning  of  peace  for  freemen.  We
    are  also  just  beginning  to  realize  the  new  dream  of  putting  atomic  energy  in  the
    service  of  human  welfare  in  biology,  medicine,  and  as  a  source  of  productive
    power.  Labor  must  assert  its  leadership  in  making  sure  that  the  broad  public
    interest  is  fully  served  in  the  future  developments  of  atomic  policy.

    Mr.  Chairman,  the  American  Federation  of  Labor  is  concerned
    with  atomic-energy  development  not  only  because  of  its  direct  and
    vital  bearing  upon  the  organized  labor  movement  but  because  we  rep-
    resent a  broad  segment  of  the  American  community  interested  in  the
    welfare  of  our  country.  As  citizens  and  taxpayers,  as  well  as  workers,
    our  membership  has  contributed  its  share  in  developing  the  atomic-
    energy  program  for  national  defense  and  security.  We  have  a  stake,
    as  do  all  other  Americans,  in  this  program.  When  and  if  the  atomic
    resources,  made  possible  by  the  expenditure  of  billions  of  dollars  from
    the  National  Treasury,  are  devoted  to  atomic  power  and  other  indus-
    trial purposes,  we  would  expect,  and  indeed  insist,  that  the  benefits  of
    this  huge  public  investment  be  widely  shared  rather  than  closely  held
    by  a  favored  few.

    In  furtherance  of  the  public  interest  and  to  protect  the  public  stake
    in  atomic-energy  development,  we  suggest  that  in  the  formulation  of
    any  new  legislation  there  should  be  included  an  explicit  declaration
    of  congressional  intent  that  atomic  power  be  produced  and  distributed

    ATOMIC    POWER    DEVELOPMENT  481

    SO  as  to  serve  the  national  welfare.  In  making  this  declaration  of
    intent,  it  would  seem  wise  for  the  Congi-ess  to  lay  down  certain  guiding
    principles  such  as  are  found  in  Federal  statutes  relating  to  hydro-
    electric development.  For  example,  the  Flood  Control  Act  of  1944
    recites,  in  the  case  of  power  produced  at  certain  Federal  dams,  that
    such  power  be  distributed  "in  such  manner  as  to  encourage  the  most
    widespread  use  thereof  at  the  lowest  possible  rate  to  consumers  con-
    sistent with  sound  business  principles  *  *  *."  Without  arguing  the
    extent  to  which  statutes  governing  the  production  and  distribution  of
    hydroelectric  power  or  other  forms  of  energy  are  applicable  in  the
    atomic  field,  we  wish  to  emphasize,  Mr.  Chairman,  that  the  public
    interest  in  atomic-power  development  merits  a  congressional  declara-
    tion to  that  effect  which  includes  defined  objectives  of  national  policy.

    In  implementing  this  declaration,  it  should  be  made  clear  in  the
    statute  that  public  as  well  as  private  agencies  will  have  full  oppor-
    tunity to  produce  and  distribute  atomic  power  and  that  the  Atomic
    Energy  Commission  itself,  or  some  other  appropriate  Federal  agency,
    will  undertake  to  produce  atomic  power  for  its  own  use,  for  use  by
    other  Government  agencies,  or  for  industrial  and  domestic  consump-
    tion in  areas  deficient  in  energy  supplies.  "Wliile  the  American  Fed-
    eration of  Labor  is  anxious  to  see  private  initiative  and  enterprise
    participate  more  actively  in  atomic  power  development,  we  believe  it
    would  be  a  mistake  to  abandon  or  curtail  Government  activities  in  the
    expectation  that  private  industry  can  take  over  the  whole  job.  Atomic
    power  should  be  viewed  as  a  national  objective.  The  technical  prob-
    lems yet  to  be  solved,  the  heavy  costs  for  producing  facilities  that
    must  be  incurred,  the  strong  competitive  position  of  other  power
    sources,  all  indicate  that  the  achievement  of  this  objective  must  rest
    on  a  broader  base  than  profit-making  opportunities.  The  role  of  Gov-
    ernment in  atomic  power  development  dare  not  be  shelved.

    In  drafting  new  legislation  to  promote  the  peacetime  uses  of  atomic
    energy  and  the  development  of  atomic  power,  careful  consideration
    must  be  given  also  to  the  impact  of  these  uses  on  established  industries
    and  occupations.  We  recognize,  of  course,  that  atomic  power  will  not
    be  developed  overnight  and  that  immediate  radical  transformations
    of  the  present  economic  structure  are  not  necessarily  to  be  anticipated.
    Nevertheless,  it  is  wise  policy  to  pay  heed  to  the  changes  that  may
    take  place  in  order  to  avoid  economic  hardship  and  dislocation  in  the
    future.

    The  Congress,  in  drafting  the  original  legislation,  known  as  the
    McMahon  Act,  was  alert  to  this  problem.  In  section  7  of  the  act  cer-
    tain procedures  were  laid  down  for  congressional  review  of  specific
    proposals  for  industrial  uses  of  atomic  energy  because  of  the  complex
    and  difficult  problems  that  would  be  presented.  The  special  Senate
    committee  which  prepared  the  original  legislation,  while  expressing
    its  desire  "to  promote  tlie  use  of  atomic  energy  in  all  possible  fields
    for  peacetime  purposes,"  also  stated :

    The  committee  is  aware,  nonetheless,  that  the  sudden  introduction  of  certain
    devices  utilizing  the  power  released  by  nuclear  fission  might  precipitate  profound
    economic  disorganization.  Great  industrial  installations,  representing  nation-
    wide investments,  employing  many  thousands  of  workers,  might  be  rendered
    obsolete.

    Furthermore,  devices  utilizing  atomic  energy,  if  widely  used,  would  so  multiply
    potential  hazards  to  national  health  and  safety  that  even  careful  Government
    regulation  would  fail  to  provide  adequate  safeguards  (79th  Cong.,  2d  sess.,
    S.  Kept.  No.  1211,  pp.  21,  22) .

    482  ATOMIC    POWER    DEVELOPMENT

    Accordingly  the  original  legislation  in  section  7  provided  for  licens-
    ing the  manufacture  and  use  of  atomic  energy  devices ;  for  reporting
    to  Congress  on  the  social,  economic,  and  other  effects  of  the  industrial
    application  of  atomic  energy;  and  for  submitting  to  the  Congress,
    90  days  in  advance,  any  specific  licensing  action.  It  is  apparent  from
    the  context  of  these  provisions  in  section  7  that  the  Congress  intended
    the  Atomic  Energy  Commission  to  report  on  the  overall  industrial
    application  of  atomic  energy  prior  to,  or  at  least  simultaneous  with,
    submission  of  a  report  on  specific  licensing.  This  interpretation  is
    borne  out  by  the  following  statement  in  the  report  of  the  special  Sen-
    ate committee  explaining  the  original  legislation :

    No  license  for  manufacture  or  use  may  be  issued  until  tlie  Commission  has
    made  a  report  to  the  Congress  stating  all  the  facts  with  "respect  to  the  use  of
    such  devices,  the  Commission's  estimate  of  the  social,  political,  economic,  and
    international  effects  of  such  use,  and  the  Commission's  recommendations  for
    necessary  or  desirable  supplemental  legislation"  (79th  Cong.,  2d  sess.,  S.  Rept.
    1211,  p.  21).

    We  believe  the  Congress  should  adhere  to  its  original  purpose  in
    requiring  reports  from  the  Atomic  Energy  Commission  on  the  indus-
    trial impact  of  atomic  power  before  licensing  any  given  company  in
    this  field.  If  the  Commission  is  authorized  to  go  ahead  and  license
    atomic-power  operations  on  its  own,  without  reporting  to  Congress
    under  section  7,  the  best  that  Congress  could  expect  is  a  report  in  the
    future,  after  the  social  and  economic  consequences  of  atomic-power
    use  have  been  felt,  not  before,  as  intended  in  the  original  act.  Thus
    the  specific  purpose  of  Congress  to  prescribe  procedures  for  an  orderly
    transition  to  atomic  power,  to  minimize  or  prevent  undue  economic
    dislocation,  would  be  vitiated.

    In  connection  with  the  above-discussed  licensing  activities,  section  7
    of  the  Atomic  Energy  Act  also  j)rovides :

    Where  activities  under  any  license  might  serve  to  maintain  or  to  foster  the
    growth  of  monopoly,  restraint  of  trade,  unlawful  competition,  or  other  trade
    position  inimical  to  the  entry  of  new,  freely  competitive  enterprises  in  the  field,
    the  Commission  is  authorized  and  directed  to  refuse  to  issue  such  license  or  to
    establish  such  conditions  to  prevent  these  results  as  the  Commission,  in  consul-
    tation with  the  Attorney  General,  may  determine.  The  Commission  shall  report
    promiitly  to  the  Attorney  General  any  information  it  may  have  with  respect  to
    any  utilization  of  fissionable  material  or  atomic  energy  which  appears  to  have
    these  results.

    We  believe  that  the  Congress  should  not  relieve  the  Atomic  Energy
    Commission  of  its  positive  obligation  to  prevent  or  discourage  monop-
    oly in  the  field  of  atomic  power.  It  is  not  enough  to  rely  simply  on
    the  antitrust  laws  and  to  "pass  the  buck"  to  the  Antitrust  Division
    of  the  Department  of  Justice.  Although  these  laws  have  an  impor-
    tant function  in  limiting  the  monopolistic  tendencies  of  big  business,
    the  protracted  and  cumbersome  procedures  for  determining  whether
    the  antitrust  laws  have  been  violated  in  a  given  case  may  not  work
    ver};  well  in  the  completely  new  field  of  atomic  power.

    The  antitrust  lawyers,  working  in  an  intricate  maze  of  judicial
    decisions,  are  accustomed  to  thinking  in  terms  of  degrees  of  market
    control  and  percentages  of  production  accounted  for  by  established
    firms.  In  the  case  of  atomic  power,  which  breaks  new  ground  and
    contains  no  precedents  for  evaluating  industrial  controls,  it  would
    seem  more  appropriate  for  tlie  Atomic  Energy  Commission  to  main-
    tain its  original  responsibility  through  its  licensing  powers  to  prevent
    the  growth  of  monopoly  in  atomic  energy.    No  proposals  should  be

    ATOMIC    POWER    DEVELOPMENT  483

    entertained  which  would  weaken  the  positive  mandate  in  the  Atomic
    Energy  Act  to  strengthen  free  competition  in  private  enterprise.

    By  the  same  token,  extreme  care  should  be  exercised  to  prevent  the
    acquisition  of  restrictive  patent  privileges  which  might  serve  to  choke
    off  the  growth  of  this  promising  new  field  of  enterprise.  The  need
    for  vigilance  in  this  respect  is  especially  acute,  for  a  limited  number
    of  firms,  as  present  or  previous  contractors  with  the  Atomic  Energy
    Commission,  have  a  virtual  monopoly  of  technical  skills  and  know-
    how  in  the  atomic-energy  program.  It  would  be  unwise  and  inequi-
    table for  a  few  firms  to  exploit  a  technical  advantage  acquired  through
    the  use  of  public  funds  and  property  by  acquiring  exclusive  patent
    privileges  for  future  development.  Admittedly  the  problems  of  assess-
    ing equities  in  this  field  are  delicate  and  difficult,  but  we  urge  the
    committee  not  to  tie  the  hands  of  the  Atomic  Energy  Commission  in
    patent  matters,  so  that  all  newcomers  in  the  atomic-energy  industry
    can  be  assured  equal  opportunity  to  gain  a  foothold  and  to  develop.

    At  its  last  convention  the  American  Federation  of  Labor  officially
    paid  tribute  to  the  late  Senator  McMahon  for  bringing  representatives
    of  economic  groups  into  consultation  with  the  joint  committee.  We
    believe  that  they  have  a  great  contribution  to  make.  The  advisory
    panel  appointed  by  Senator  MclSIahon  performed  a  very  useful  public
    service  on  certain  specific  problems.  We  believe  that  this  technique
    should  be  revived  and  the  services  of  representatives  of  economic
    groups  utilized  on  the  broad  problems  confronting  the  committee.
    They  can  be  of  particular  value  on  these  complicated  problems  of
    patents  and  licensing  with  their  far-reaching  implications.  They  can
    also  be  helpful  in  evaluating  the  social  and  economic  impact  of  new
    uses  of  atomic  energy.

    We  are  aware  that  various  proposals  have  been  made  to  give  atomic
    power  a  financial  and  economic  boost  by  Government  guaranties  to
    buy  plutonium  from  private  com]:)anies  undertaking  to  produce  power.
    In  view  of  the  fact  that  the  Nation  has  large  hydroelectric  resources
    still  undeveloped  and  coal  or  other  fuels  in  relative  abundance,  a  se-
    rious policy  question  arises  whether  atomic  power  should  be  acceler-
    ated by  subsidy  incentives  to  private  industry.  It  is  our  view  that
    private  enterprise  in  atomic  power  should  be  self-supporting  and  in-
    dependent. The  permanent  position  of  an  atomic-power  industry  in
    the  American  economy  can  only  be  assured  when  that  power  can  pay
    its  own  way.  In  the  meantime  we  believe  that  the  Government  should
    proceed  expeditiously  under  present  legislation  to  design  and  build
    reactors  for  submarines,  ships,  and  airplanes,  and  for  ])roduc(ion  of
    power  in  special  areas  lacking  access  to  power  and  in  plutonium  plants
    already  owned  by  the  Government.  Tlie  technical  lessons  to  l)e  learned
    in  these  Government-financed  developments  can  be  utilized  by  private
    industry  in  working  to  bring  atomic  power  to  the  level  of  economic
    feasibility.

    Finally,  Mr.  Chairman,  I  want  to  direct  attention  to  certain  matters
    of  immediate  and  very  direct  concern  to  organized  labor.  As  the
    members  of  this  committee  well  know,  labor  relations  in  the  atomic-
    energy  program  have  not  always  been  of  the  happiest.  This  vast  new
    field  of  endeavor  was  launched  in  wartime  under  military  auspices
    when  the  Manhattan  District  was  organized  by  the  Army  engineers.
    The  stringent  secrecy  requirements,  so  necessary  at  the  outset  in  pro-
    ducing the  atomic  bomb,  have  placed  heavy  obstacles  in  the  way  of

    484  ATOMIC    POWER    DEVELOPMENT

    collective  bargaining  and  the  normal  routine  of  union-sponsored  ac-
    tivities. The  American  Federation  of  Labor  gave  all-out  coopera-
    tion in  working  for  continuous,  uninterrupted  production  on  atomic
    projects.  We  voluntarily  waived  many  collective-bargaining  rights
    and  cooperated  fully  with  a  necessarily  strict  security  program.  We
    recognize  that  in  a  weapons  program  this  strict  security  is  essential.

    From  the  very  start  the  Manhattan  Engineer  District  selected  large
    industrial  concerns  to  operate  the  atomic-energy  program.  This  prac-
    tice was  continued  by  the  Atomic  Energy  Commission,  although  the
    duties  and  responsibilities  vested  in  the  Commission  by  the  Congress
    did  not  necessarily  require  it  as  a  matter  of  law.  American  industry
    and  labor,  with  the  help  of  scientists,  engineers,  and  administrators,
    have  done  an  outstanding  job  in  atomic  energy.  However,  one  un-
    fortunate aspect  of  the  contractor  method  of  performance  has  been
    the  management-oriented  position  of  the  Atomic  Energy  Commissioa.
    That  legacy  of  the  Manhattan  Engineer  District,  acquired  by  the  Com-
    mission, is  still  in  evidence.

    It  is  to  be  noted  that  the  membership  of  the  Atomic  Energy  Com-
    mission, drawn  mainly  from  the  professions  of  law.  Government,  and
    business,  has'  never  included  anyone  from  the  ranks  of  organized  labor.
    Corporation  lawyers,  investment  bankers,  and  Government  bureau-
    crats are  supposed,  somehow,  to  have  a  greater  aptitude  in  the  admin-
    istration of  atomic-energy  affairs  than  labor-union  officers.  We  be-
    lieve that  within  the  ranks  of  organized  labor  there  are  many  talented
    and  public-minded  administrators  who  could  perform  a  useful  service
    on  the  Atomic  Energy  Commission.

    We  appreciate,  Mr.  Cliairman,  the  continuing  need  for  rigorous
    security  controls  in  the  military  phases  of  atomic  energy.  However,
    it  is  our  position  that  in  the  same  measure  as  private  industry  is  per-
    mitted to  participate  in  atomic  power  and  related  enterprises,  Ameri-
    can labor  should  be  allowed  to  engage  in  collective  bargaining  and
    other  normal  union  pursuits.  We  do  not  intend  to  see  the  require-
    ment of  secrecy  and  security  controls  become  a  weapon  in  the  hands
    of  employers  to  curtail  union-labor  activities  while  extracting  a  profit
    from  the  atom.  The  situation  is  difficult  and  awkward  enough  when
    private  firms  act  as  contracting  agents  of  the  Government  in  an  arma-
    ments program.  When  they  go  out  on  their  own  in  the  atomic  field,
    the  imbalance  in  their  favor  must  be  corrected.

    The  American  Federation  of  Labor  favors'  across-the-table  bar-
    gaining by  management  and  labor,  without  any  Government  inter-
    ference. We  recognize  the  exceptional  security  requirements  of  the
    atomic  field  and  are  willing  to  discuss  the  security  problem  which
    will  remain  when  private  enterprise  engages  in  work  in  the  atomic
    field.  But  we  go  on  record  as  stating  our  belief  that  as  free  private
    enterprise  enters  the  field  we  expect  labor  to  be  free  to  carry  on  normal
    collective-bargaining  activities.  In  this  connection  the  committee
    might  well  consider  the  establishment  by  statute  of  a  labor-manage-
    ment advisory  committee  to  the  Atomic  Energy  Commission  to  assist
    in  formulating  administrative  policies  and  procedures  that  will  facili-
    tate amicable  relations  and  orderly  progress  in  atomic-energy  develop-
    ment.

    We  thank  the  chairman  and  members  of  the  committee  for  this
    opportunity  to  present  the  views'  of  the  American  Federation  of  Labor
    on  atomic  power,  and  again  assure  you  of  our  willingness  to  consult

    ATOMIC    POWER    DEVELOPMENT  485

    at  any  time  with  the  committee  or  the  Commission  to  help  make  a
    reality  of  the  great  potential  blessings  which  atomic  energj^  can
    bring  to  the  American  people.

    Chairman  Cole.  Thank  you,  Mr.  Biemiller.

    Any  questions,  Senator?

    Senator  Pastore.  No.

    Chairman  Cole.  Mr.  Holifield?

    Representative  Holifield.  Mr.  Chairman,  unfortunately  I  arrived
    late  and  did  not  get  to  hear  the  full  statement  of  our  former  colleague,
    Mr.  Biemiller,  but  I  would  like  to  comment  on  one  thought  which  he
    has  advocated  near  the  bottom  of  page  4,  where  he  makes  the  state-
    ment that  it  is  his  position  that  in  the  same  measure  as  private
    industry  is  permitted  to  participate  in  atomic  power  and  related
    enterprises,  American  labor  should  be  allowed  to  engage  in  collective
    bargaining  and  other  normal  union  pursuits.

    This  is  bringing  a  new  thought  to  the  committee.  In  times'  gone
    by  we  have  had  more  or  less  Government  pressure,  let  us  say,  on  the
    workers  in  these  atomic-energy  plants  because  of  the  fact  that  they
    were  engaged  in  producing  implements  of  defense  at  the  time  that  we
    first  needed  them  during  the  war,  and  then  for  preparation  during
    this  cold-war  period.  It  is  true  that  normal  union-management  rela-
    tions have  not  obtained.

    Mr.  Biemiller.  That  is  correct.

    Representative  Holifield.  You  make  the  statement  that  as  private
    enterprise  is  allowed  into  the  field,  so  shall  labor  be  allowed  into  the
    field  on  an  equal  basis,  and  the  resumption  of  normal  collective  bar-
    gaining between  labor  and  such  management  as  is  allowed  into  the
    field  shall  take  place.

    Mr.  Biemiller.  So  far  as  is  consistent  with  the  security  of  the
    country  and,  as  we  state,  we  would  be  very  happy  to  sit  down  and
    discuss  that  problem,  but  it  is  our  feeling  that  as  private  enterprise
    is  allowed  more  and  more  into  this  field,  it  is  obvious  that  some  de-
    cision has  been  made  that  security  problems  are  not  as  acute  as  they
    have  previously  been.  To  the  extent  that  they  are  not,  we  would
    assume  that  we  would  then  be  permitted  to  resume  full  coollective-
    bargaining  procedures.

    There  have  been  many  instances  in  the  past  where  we  have  waived
    many  aspects  of  our  normal  collective  bargaining  procedures.  There
    have  even  been  cases  where  a  settlement  at  one  installation  was
    automatically  put  into  effect  at  another  installation,  without  consulta-
    tion of  any  sort.

    It  is  that  kind  of  thing  which  we  would  certainly  resent  if  atomic
    power  were  to  become  to  any  large  extent  a  field  for  free  private
    enterprise.

    Representative  Holifield.  I  notice  you  also  advocate  the  establish-
    ment by  statute  of  a  labor-management  advisory  committee  to  the
    Atomic  Energy  Commission  to  assist  in  formulating  administrative
    policies  and  procedures.  Just  what  do  you  have  in  mind?  What
    kind  of  commission  would  you  have  in  mind  there?

    Mr.  Biemiller.  It  is  a  two-fold  suggestion,  actually.  First  of  all,
    to  try  to  evaluate  the  problem  of  security  as  atomic  power  is  utilized
    by  private  industry,  and  to  reach  an  agreement  on  that  matter  so
    that  we  would  not  be  faced  with  the  problem  that  we  have  had  in  some

    486  ATOMIC    POWER    DEVELOPMENT

    instances  in  the  past,  or  at  least  we  think  we  have  had,  of  security
    regulations  being  used  as  a  club  against  union  members.

    Secondly,  as  I  stated  in  another  part  of  this  testimony,  we  believe
    that  labor-union  officials  as  well  as  management  officials  have  a  great
    contribution  to  make  in  evaluating  the  problems  of  licensing,  the
    problems  of  patents,  the  problems  of  possible  social  and  economic
    impact  of  the  widespread  use  of  atomic  energy.  We  think  the  advice
    of  the  various  economic  groups,  not  just  labor  but  also  management
    and  other  economic  groups,  should  be  sought  by  this  committee  and  by
    the  Commission  in  meeting  those  problems.

    It  is  the  sort  of  thing,  as  I  am  sure  you  know,  Congressman,  that
    worked  effectively  during  World  War  II  in  much  of  the  War  Produc-
    tion Board  and  the  War  Manpower  Commission.  We  feel  it  is  an-
    other way  of  getting  the  grass  roots  cooperation  of  the  citizens  of
    this  country  in  developing  this  program,  which  to  date  has  been  en-
    tirely at  their  expense  and  in  which  they  have  a  tremendous  invest-
    ment.

    Representative  Holitield.  This,  of  course,  does  not  set  any  pre-
    cedent, as  far  as  having  advisory  boards  and  consultative  boards  in  the
    statute,  because  there  are  advisory  boards  at  the  present  time.

    Mr.  BiEMiLLER,  That  is  correct.

    Representative  Holifield.  There  are  boards  at  the  present  time,
    which  are  operating  without  compensation  in  most  instances.

    Mr.  Biemiller.  Incidentally,  that  is  not  a  problem  at  all.  I  wasn't
    necessarily  suggesting  employing  people,  as  far  as  this  committee  is
    concerned.  I  am  sure  our  people  would  be  glad  to  cooperate  without
    compensation.

    Representative  Holifield.  On  page  2  you  bring  back  to  our  minds
    the  admonition  that  the  Commission  has  had  a  duty  imposed  upon
    it  by  the  original  statute  of  preparing  a  report  to  the  Congress  and
    to  the  President  prior  to,  or  simultaneous  with,  submitting  a  draft
    of  legislation.  You  are  aware,  of  course,  that  they  have  submitted  a
    draft  of  legislation  which  has  not  been  made  public.  They  submitted
    an  explanatory  statement  on  that  legislation  which  has  been  made
    public.

    Mr.  Biemiller.  Which  we  have  read.

    Representative  Holifield.  Which  you  have  read.

    You  are  also  aware  that  they  did  not  present  an  accompanying
    report  upon  the  social,  economic,  political,  and  international  impact
    of  this  new  legislation.

    Mr.  Biemiller.  We  believe  sucli  a  report  sliould  be  made,  and  that
    this  provision  of  the  McMahon  Act  should  be  retained  in  any  pos-
    sible revision  of  the  act.

    Representative  Holifield,  The  only  excuse  for  not  presenting  that
    report  was  that  the  time  of  practical  value  application  had  not  arrived,
    which  was  called  for  in  the  act,  and  therefore  they  did  not  have  to
    make  the  report.

    Notwithstanding  the  fact  that  that  time  of  industrial  application
    had  not  arrived,  they  went  ahead  and  advocated  legislation,  thereby
    bypassing,  in  my  opinion,  one  of  their  responsibilities.  What  com-
    ments do  you  have  upon  that?

    Mr.  BiEMiLi>ER.  Obviously,  as  a  member  of  the  committee,  you  are
    in  a  better  position  to  make  that  judgment  than  we  are  as  citizens
    observing  it,  but  certainly  our  conclusion  would  be  the  same  as  yours,

    ATOMIC    POWER    DEVELOPMENT  487

    that  the  report  should  have  been  made  if  they  are  coming  in,  as  we
    know  they  are,  with  some  concrete  legishative  suggestions.  From
    the  summary  which  we  have  seen  of  those  legislative  suggestions,
    which  has  been  made  available  by  the  Commission,  it  would  appear
    to  us  that  they  are  getting  into  a  realm  of  some  far-reaching  social
    and  economic  implications,  part  of  which  we  discussed  in  this  testi-
    mony.   We  think  the  report  should  have  been  made.

    Representative  Hulifield.  As  a  matter  of  fact,  their  summarj^  of
    their  policy  statement  and  their  legislative  intent  indicated  that  this
    was  a  far-reaching  and  basic  change  in  the  act ;  and  notwithstanding
    that  fact,  they  failed  to  provide  this  committee  and  the  Congress  and
    the  President  with  the  analysis  called  for  in  the  legislation.  I  think
    particularly  that  part  of  your  statement  is  very  valuable  because,  as  one
    member  of  the  committee,  I  believe  that  they  should  not  evade  or  shift
    the  responsibility  which  the  Congress  has  placed  upon  them  prior  to
    the  advocating  of  basic  changes  in  the  act.

    Chairman  Cole.  Mr.  Price  ?

    Representative  Price.  No  questions.

    Chairman  Cole.  Mr.  Biemiller,  in  connection  with  your  statement
    where  you  refer  to  labor  relations  in  the  atomic  program,  on  page  4,
    you  say  that  they  have  not  "always  been  of  the  happiest."  From  my
    observation  of  the  program,  there  has  been  a  minimum  of  labor  unrest
    and  dissatisfaction  in  this^atomic-energj'  business.  What  unrest  and
    disturbances  or  dissatisfactions  have  occurred,  it  appears  to  me,  are  in
    those  areas  where  the  full  interplay  of  labor-management  relationships
    and  bargaining  responsibilities  have  prevailed,  principally  in  the  con-
    struction phase  of  various  plants;  but  in  the  operation  of  the  plants
    themselves,  there  has  been  almost  a  complete  absence  of  labor  dissatis-
    faction or  unrest,  which  can  be  taken  either  as  an  expression  of  great
    restraint  on  the  part  of  the  individual  working  people,  or  as  an  indi-
    cation of  full  and  adequate  and  fair  treatment  by  the  Commission
    through  its  contractors,  or  perhaps  a  combination  of  both.

    At  any  rate,  I  think  that  the  people  engaged  in  the  production  phase
    of  the  atomic-energy  program  are  entitled  to  a  good,  generous  pat
    on  the  back  for  the  work  they  have  done,  continuing  to  report  for
    duty,  and  not  suspending  for  a  moment  any  of  the  important  opera-
    tions which  are  so  vital  to  our  national  security.  I  think  they  have
    done  a  splendid  job.

    Mr.  Biemiller,  Mr.  Chairman,  I  appreciate  very  much  your  remarks
    in  that  respect.  As  j^ou  know,  a  very  large  percentage  of  the  workers
    in  the  plants  are  organized  in  A.  F.  of  L.  unions.  We,  too,  feel  that
    we  have  shown  restraint  and  have  cooperated  in  many  matters.

    I  think,  though,  that  in  your  statement  you  are  underscoring  the
    point  that  I  am  making.  In  the  plants  themselves,  where  the  weapons
    program  is  under  way,  where  Ave  recognize  the  need  for  a  stringent
    security,  we  have  been  willing  to  waive  certain  matters,  and  we  have
    tried  to  cooperate  in  every  way  possible.  In  certain  phases  of  the
    construction  program,  where  the  worker  may  not  realize  the  security
    implications,  there  has  been  unrest  in  several  areas.  You  know  of
    these,  as  this  committee,  on  a  couple  of  occasions  that  I  am  aware  of.
    has  investigated  some  of  these  problems.

    Likewise,  I  think  the  role  of  the  Atomic  Energy  Commission's,
    special  panel  on  labor  relations  has  been  fruitful  in  some  instances.

    488  ATOMIC    POWER    DEVELOPMENT

    However,  we  do  know  that  these  problems  are  there,  that  they  exist,
    particularly  as  the  program  becomes  one  of  more  private  enterprise.

    Chairman  Cole.  If  there  are  no  further  questions,  thank  you  very
    much,  Mr.  Biemiller,  for  your  appearance  and  your  statement.

    Mr.  Biemiller.  Thank  you  very  much.

    Chairman  Cole.  The  next  witness  is  a  representative  of  the  Con-
    gress of  Industrial  Organizations,  Mr.  Ben  Sigal.  If  he  has  his  asso-
    ciate, Mr.  Elwood  Swisher,  with  him,  he  may  come  forward  also.

    We  will  be  very  glad  to  hear  your  statement,  Mr.  Sigal.

    STATEMENT  OF  BENJAMIN  C.  SIGAL,  EEPEESENTING  THE
    CONGRESS  OF  INDUSTRIAL  ORGANIZATIONS

    Mr.  Sigal.  Mr.  Chairman,  my  name  is  Benjamin  C.  Sigal.  I  am
    appearing  today  in  place  of  James  B.  Carey,  secretary-treasurer  of
    the  Congress  of  Industrial  Organizations,  who  is  unavoidably  detained
    in  Europe  in  connection  with  the  World  Congress  of  the  International
    Confederation  of  Free  Trade  Unions  which  recently  completed  its
    third  conference  in  Stockholm,  Sweden.

    I  should  add  that  I  am  general  counsel  of  two  international  unions
    which  represent  employees  in  the  atomic-energy  industry,  namely,  the
    International  Union  of  Electrical,  Radio,  and  Machine  Workers,  CIO,
    and  the  Gas,  Coke,  and  Chemical  Workers  ©f  America,  CIO.

    Mr.  Swisher,  president  of  the  gas,  coke,  and  chemical  workers,  is
    here  with  me,  and  will  make  some  remarks  after  I  have  completed  my
    statement.

    Chairman  Cole.  Very  well.

    Mr.  Sigal.  The  CIO  appreciates  this  opportunity  to  participate  in
    public  discussions  before  this  committee  regarding  the  question  of
    amending  the  Atomic  Energy  Act  in  order  to  permit  the  private  own-
    ership of  fissionable  materials  and  the  facilities  for  producing  them.
    The  CIO  has  taken  an  active  interest  in  the  problems  relating  to  the
    production  and  use  of  atomic  energy  from  the  time  they  became  a
    matter  of  public  discussion.  We  participated  actively  in  the  discus-
    sions which  preceded  the  passage  of  the  Atomic  Energy  Act  of  1946.
    We  were  in  full  accord  with  the  policy  of  that  act  vesting  ownership
    of  fissionable  materials,  patents,  and  production  facilities  in  the  peo-
    ple of  the  United  States.  It  is,  therefore,  a  matter  of  deep  concern
    to  us  that  concerted  efforts  are  now  being  made  to  alter  in  funda-
    mental respects  the  wise  policy  now  incorporated  in  that  act.

    In  order  to  place  this  discussion  in  the  proper  perspective,  we  think
    there  are  two  fundamental  questions  to  be  answered:  First,  does  the
    Atomic  Energy  Act  in  its  present  form  permit  the  development  of  the
    industrial  use  of  atomic  energy  at  a  satisfactory  rate?  Secondly,  will
    the  ownership  of  fissionable  materials  by  private  interests  bring  about
    faster  development  of  the  industrial  use  of  atomic  energy  while  at
    the  same  time  adequately  protecting  the  public  interest  ?

    Objectives  of  the  Atomic  Energy  Act :

    What  is  the  reason  for  the  policy  set  forth  in  the  present  act?

    There  can  be  no  doubt  that  the  overriding  consideration  of  Congress
    at  the  time  the  act  was  adopted  was  that  of  security.  The  reasons
    for  establishing  a  complete  Federal  monopoly  of  fissionable  materials
    in  order  to  achieve  "the  paramount  objective  of  assuring  the  common
    defense  and  security"  is  effectively  set  forth  in  the  report  of  the  Senate

    ATOMIC    POWER    DEVELOPMENT  489

    special  committee  which  recommended  adoption  of  tlie  McMahon-
    Donglas  bill,  which  subsequently  became  the  Atomic  Energy  Act.
    This  report  stated  in  part  that —

    From  the  start  of  its  deliberations  the  committee  has  been  convinced  that  an
    absolute  Government  monopoly  of  production  of  fissionable  materials  is  indis-
    pensable to  effective  domestic  control  of  atomic  energy.  A  number  of  factors
    point  unmistakably  in  this  direction :

    1.  Fissionable  material  is  the  principal  ingredient  of  the  atomic  bomb.  Thus,
    to  permit  private  manufacture  of  fissionable  material  would  be  to  permit  private
    manufacture  of  material  of  enormous  destructive  potentialities.

    2.  The  production  of  fissionable  material  is  attended  by  serious  hazards  to
    public  health  and  safety.  The  responsibility  for  minimizing  these  hazards  is
    clearly  a  Government  function.

    3.  The  future  production  of  fissionable  material  is  closely  interrelated  with
    the  possibility  of  achieving  effective  and  reciprocal  international  safeguards
    against  the  use  of  atomic  weapons.  It  is  undesirable,  therefore,  to  permit  private
    development  in  an  area  which  may  soon  be  placed  under  Government  control  by
    reason  of  international  agreements.

    4.  The  production  of  fissionable  material  is  technologically  in  its  infancy;
    unforeseen  and  unforeseeable  factors  may  play  a  great  part  in  its  development.
    To  permit  decontrol  and  decentralization  of  this  activity,  and  weaken  continuing
    Government  supervision,  would  be  contrary  to  the  principle  of  prudent  steward-
    ship demanded  of  the  Government  by  considerations  of  national  defense  and
    national  welfare.

    5.  The  technology  of  fissionable  material  production  teaches  that  even  a  slight
    interruption  in  the  manufacturing  process  may  occasion  great  loss  and  damage
    to  the  entire  operation.  Government  control  is  more  likely  to  assure  continuity
    of  operation  than  is  private  control.

    In  our  opinion,  any  persons  proposing  a  change  in  the  law  which
    would  permit  the  ownership  of  fissionable  materials  and  the  produc-
    tion of  atomic  energy  to  be  placed  in  the  hands  of  private  interests,
    have  an  obligation  and  a  burden  to  show  that  conditions  have  so
    changed  since  the  adoption  of  this  act  that  the  foregoing  factors  are
    no  longer  of  such  controlling  importance  as  they  were  at  that  time.  I
    will  discuss  some  of  these  factors  in  greater  detail  below.

    The  act  states,  in  part,  in  its  declaration  of  policy,  that —

    It  is  reasonable  to  anticipate  *  *  *  that  tapping  this  new  source  of  energy
    will  cause  profound  changes  in  our  present  way  of  life.  Accordingly,  it  is  hereby
    declared  to  be  the  policy  of  the  people  of  the  United  States  that,  subject  at  all
    times  to  the  paramount  objective  of  assuring  the  common  defense  and  security,
    the  development  and  utilization  of  atomic  energy  shall,  so  far  as  practical ile,  be
    directed  toward  improving  the  pul)lic  welfare,  increasing  the  standard  of  living,
    strengthening  free  competition  in  private  enterprise,  and  promoting  world  peace.

    Certainly  these  objectives  are  as  fundamental  and  paramount  as
    they  ever  were.  The  burden  is  upon  those  who  would  amend  the  act
    to  demonstrate  that  their  proposals  would  achieve  these  objectives
    more  effectively  than  the  present  law  would  permit.  In  our  opinion,
    they  have  not  made,  nor  can  they  make,  such  a  demonstration.

    In  setting  the  groundwork  for  this  discussion,  one  other  statutory
    provision  must  be  examined.  The  framers  of  the  act  looked  forward
    to  the  time  when  industrial  use  of  atomic  energy  would  be  feasible,
    and  they  therefore  established  a  procedure  through  which  such  uses
    could  be  promoted  under  proper  safeguards.  Section  7  (b)  of  the
    act  provides :

    (b)  Report  to  Congress. — Whenever  in  its  opinion  any  industrial,  commer-
    cial, or  other  nonmilitary  use  of  fissionable  material  or  atomic  energy  has  been
    sufliciently  developed  to  be  of  practical  value,  the  Connuission  shall  prepare
    a  report  to  the  President  stating  all  the  facts  with  respect  to  such  use,  the  Com-
    mission's estimate  of  the  social,  political,  economic,  and  international  effects

    490  ATOMIC    POWER    DEVELOPMENT

    of  such  use  and  the  Commission's  recommendations  for  necessary  or  desirable
    supplemental  legislation.  The  President  shall  then  transmit  this  report  to  the
    Congress  together  with  his  recommendations.  No  license  for  any  manufacture,
    production,  export,  or  use  sliall  l)e  issued  by  the  Commission  under  this  section,
    until  after  (1)  a  report  with  respect  to  such  manufacture,  production,  export,
    or  use  has  been  filed  with  the  Congress;  and  (2)  a  period  of  90  days  in  which
    the  Congress  was  in  session  has  elapsed  after  the  report  has  been  so  filed.  In
    computing  such  period  of  90  days,  there  shall  be  excluded  the  days  on  which
    either  House  is  not  in  session  because  of  an  adjournment  of  more  than  3  days.

    If  amendments  to  the  act  of  the  nature  proposed  are  desirable,  the
    procedures  set  forth  in  section  7  (b)  shouki  be  observed.  They  have
    not  been  observed,  and  it  is  tlierefore  necessary  to  determine  whether
    or  not  there  is  any  justification  for  this  faihire.

    PRODUCTION  KECORD  OF  AEG

    There  seems  to  be  little  question  that,  generally  speaking,  the  pro-
    duction record  of  the  Atomic  Energy  Commission  has  been  note-
    worthy, despite  the  enormous  complexity  of  the  problems  with  which
    it  has  been  faced.  One  qualified  witness,  Mr.  J.  Robert  Oppenheimer,,
    Chairman  of  the  AEC  General  Advisory  Committee,  told  the  mem-
    bers of  this  joint  committee  in  1949  that —

    When  the  Commission  took  over  (from  the  Manhattan  District)  thv,  future
    of  the  whole  enterprise  was  uncertain,  the  continuity  of  production  of  fissionable
    materials  was  far  from  assured,  the  design  and  development  of  improved  weapons
    was  nearly  stagnant.  In  each  of  these  respects  the  picture  has  radically  changed.
    Better  weapons  have  been  developed  and  tested,  the  production  of  materials  has
    been  substantially  increased  and  assured,  and  a  sound  and  forward-looking
    program  has  been  established.

    The  Commission's  own  semiannual  reports  reveal  that  during  the
    first  2  years  of  its  existence  it  increased  the  output  of  fissionable  mate-
    rials with  the  facilities  built  by  the  Manhattan  District,  while  at  the
    same  time  it  improved  these  facilities  and  built  additional  production
    capacity.  By  1948,  this  building  program  became,  according  to  the
    Commission,  "the  greatest  single  construction  project  in  peacetime
    history,"

    By  1949  this  construction  of  constantly  more  productive  facilities
    had  been  going  on  at  an  accelerated  pace,  which  has  continued  up  to
    the  present  time.  The  reports  reveal  that  each  year  the  amount  of
    fissionable  material  produced  has  exceeded  amounts  produced  during
    previous  similar  periods.

    In  its  Thirteenth  Semiannual  Report,  issued  in  January  1953,  the
    Commission  reported  that  the  second  half  of  1952  had  witnessed  ''the
    crystallization  of  important  lines  of  exploration,  research,  and  develop-
    ment that  began  earlier  in  the  decade."

    As  a  result  of  new  uranium  discoveries  and  the  development  of
    improved  processes  for  extracting  it  from  low-grade  sources,  large
    additional  authorizations  for  production  of  fissionable  materials  and
    weapons  were  made.  The  development  of  reactors  for  the  output  of
    power  resulted  in  more  accelerated  progress  than  in  any  other  half-year
    of  the  previous  decade.  Assembly  was  substantially  complete  on  one
    prototype  reactor  for  submarine  propulsion  and  work  began  on  the
    prototype  reactor  to  power  the  submarine.  A  contract  to  supply
    atomic  power  for  a  large  naval  vessel,  such  as  an  aircraft  carrier,  was
    entered  into.  Work  began  on  testing  facilities  for  nuclear  power
    plants  for  aircraft.

    ATOMIC    POWER    DEVELOPMENT  491

    Outside  of  the  military  application  of  atomic  enertry  great  strides
    have  been  made  with  radioactive  isotopes,  which  are  making  startling
    contributions  in  medicine,  agriculture,  and  industry.

    In  short,  although  criticism  may  be  leveled  at  some  aspects  of  the
    Connnission's  record — and  we  shall  make  some  ourselves — we  think
    there  is  no  reasonable  basis  for  asserting  that  the  act,  in  its  present
    form,  does  not  permit  the  widest  possible  development  of  the  poten-
    tialities of  atomic  energy.  Why,  then,  the  concerted  drive  for  sub-
    stantial amendments  to  the  act?

    PROPOSALS    FOR    AMENDMEXT

    One  of  the  major  proponents  of  a  change  in  the  act  is  the  Atoraic
    Energy  Commission  itself.  The  Commission  has  declared  in  substance
    that,  while  it  recognizes  its  responsibility  to  continue  research  and
    development  in  the  field  of  nuclear  power,  it  proposes  that  interim
    legislation  be  adopted  to  permit  ownership  and  operation  of  nuclear
    power  facilities  by  private  interests,  to  permit  sale  or  lease  of  fission-
    able materials,  and  to  grant  more  liberal  patent  rights  than  are  pres-
    ently granted  to  private  persons.  The  Commission  declares  that  it  is
    the  objective  of  this  policy  to  promote  development  of  nuclear  plants
    which  are  economically  independent  of  Government  commitments  to
    purchase  plutonium  for  military  weapons.  All  this  is  proposed  on  the
    ground  of  providing  reasonable  incentives  to  encourage  wider  partici-
    pation in  power  reactor  develo])ment.  The  Commission  states,  how-
    ever, that  since  atomic  power  has  not  yet  lieen  developed  to  the  point
    of  economic  use,  the  time  is  not  yet  at  hand  for  the  report  called  for  in
    section  7  (b)  of  the  Atomic  Energy  Act.

    In  our  opinion,  this  proposal,  with  the  justification  offered  for  it,
    fails  to  reflect  that  degree  of  candor  Ave  have  a  right  to  expect  from
    a  governmental  body  charged  with  so  heavy  a  responsibility  as  that
    carried  by  the  Atomic  Energy  Commission.  It  has  not  stated  why
    it  cannot  carry  on  the  research  and  development  of  nuclear  power
    as  well  as  or  better  than  private  industry.  It  has  offered  no  evidence
    tliat  there  is  any  private  group  now  prepared  to  develop  nuclear
    plants  which  are  economically  independent  of  Government  com-
    mitments to  purchase  weapons-grade  plutonium.  Nowhere  has  the
    Commission  shown  specific  justification  for  turning  over  to  private
    interests,  by  way  of  "more  liberal  patent  rights"  as  well  as  in  other
    ways,  a  subst^antial  part  of  the  fruit  of  the  $12  billion  investment
    made  by  the  American  people  in  atomic-energ}^  development.  So
    far  as  we  know,  the  Commission  has  failed  to  give  any  consideration
    to  the  social,  political,  and  international  effects  of  its  proposals,  while
    its  discussion  of  the  economic  effects  is  extremely  vague  and  hypo-
    thetical. In  short,  the  Commission  has  failed  utterly  to  make  out
    a  case  justifying  amendments  of  the  act  at  the  j)reseut  time  which
    would  permit  the  private  ownership  of  fissionable  materials  and
    private  production  of  atomic  energy.

    In  our  opinion  these  proposals  of  AEC  stem  not  so  much  from
    new  developments  of  a  significant  nature  as  from  an  apparently  fixed
    intention  of  the  Commission  to  turn  over  to  private  industry  the
    production  of  atomic  power.  This  intention  Avas  foreshadowed  by
    the  Commission's  abandonment  early  in  1950  of  the  only  major
    mdustrial-power  project  it  had  started.     A  public  statement  of  what

    ofi740 — 5." 32

    492  ATOMIC    POWER    DEVELOPMENT

    some  or  all  of  the  Commissioners  were  thinking  was  revealed  in  a
    speech  made  by  Commissioner  Pike  to  the  National  Association  of
    Manufacturers  on  December  8,  1950.  That,  you  remember,  was  prior
    to  the  time  that  the  industrial  teams  really  began  their  surveys.  Mr.
    Pike  said,  in  part :

    We  will  probably  have  to  ask  for  a  change  in  this  act.  We  will  have  to  get
    the  opinion  of  Congress,  and  to  get  the  Congress  to  form  an  opinion  there  will
    have  to  be  some  testimony  from  industry,  I  talie  it — from  the  direct  companies
    that  will  want  to  take  an  interest  in  power  from  atomic  energy.

    I  think  it  is  fair  to  say  that  for  us,  as  Commissioners,  to  go  up  to  Congress
    and  say  we  want  to  take  the  bars  down  on  large  operative  powerplants — and
    remember,  any  plant  large  enough  to  make  any  appreciable  amount  of  power
    almost  by  its  own  nature  will  make  appreciable  amounts  of  plutonium — I  expect
    the  boys  would  say,  "You  fellows  are  always  coming  up  here  trying  to  give
    things  away  to  the  Russians."  Of  course,  this  is  not  quite  a  fair  statement,
    but  I  don't  think  that  fairness  in  committee  hearings  is  outstanding.  That  is
    what  the  boys  might  say,  but — those  of  you  who  are  interested — if  you  will  come
    up  or  send  somebody  (and  I  would  say  preferably  not  a  lawyer,  but  somebody  who
    is  actually  going  to  have  his  nose  rubbed  in  paying  for  the  cost  of  this  thing  and
    is  interested  in  the  results)  if  you  go  up  and  talk  industry  language  to  these
    gentlemen  you  will  probably  carry  the  day.  Put  it  this  way :  You  will  have  a
    great  deal  better  chance  of  carrying  the  day  than  if  you  leave  it  to  us  who  have
    to  be  in  contact  with  these  people  all  the  time.  We  have,  let  us  say  over  the
    last  3  or  4  years,  developed  certain  little  frictions  between  ourselves  which  show
    up  at  times,  when  they  don't  see  quite  eye  to  eye  with  us.

    That  was  the  advice  of  Commissioner  Pike  almost  3  years  ago  to
    members  of  private  industry  as  to  how  to  handle  the  Congress.

    Most  of  those  who  support  the  proposed  amendments  attempt  to
    create  the  impression  that  if  private  industry  were  permitted  to  par-
    ticipate in  the  atomic  energy  program  on  the  basis  of  private  owner-
    ship of  facilities  and  materials,  privately  owned  power  reactors  would
    spring  up  as  soon  as  they  could  be  built.  This  is  certainly  not  the
    case.  I  think  the  record  made  before  this  committee  shows  that  not
    a  single  person  or  group  indicated  a  willingness  to  invest  enough
    money  to  build  and  operate  a  full-scale  reactor  for  the  production  of
    atomic  energy  power.  In  every  case,  it  was  stipulated  that  the  Fed-
    eral Government  should  put  up  the  bulk  of  the  money  involved  for
    either  a  pilot  plant  or  a  full-scale  plant,  would  actively  participate
    in  research  and  development,  and  would  guarantee  these  brave  entre-
    preneurs against  any  loss.  Finally,  putting  a  frosting  on  the  cake,
    these  free  enterprisers  want  the  benefit  of  the  patents  which  they
    would  be  able  to  develop  after  acquiring  all  the  knowledge  available
    from  the  Atomic  Energy  Commission.  Is  this  the  kind  of  private
    enterprise  on  which  our  Nation  has  been  built?  Certainly  no  one
    can  reasonably  claim  that  this  is  what  Congress  had  in  mind  when
    it  declared,  in  the  act,  that  atomic  energy  should  be  utilized  and  devel-
    oped, among  other  things,  to  strengthen  "free  competition  in  private
    enterprise."

    The  witnesses  who  discussed  the  types  of  power  reactors  they  favor
    fall  into  two  groups,  namely,  those  who  propose  dual-purpose  reactors
    and  tliose  who  propose  single-purpose  reactors.  The  first  would  pro-
    duce both  power  and  plutonium,  and  the  second  would  produce  power
    only.  So  far  as  we  are  aware,  all  of  the  industrial  groups  repre-
    sented based  their  proposals  on  the  construction  of  a  dual-purpose
    reactor.  These  proposals  will  require  that  the  Government  commit
    itself  to  buying  the  plutonium  produced.

    ATOMIC    POWER    DEVELOPMENT  493

    On  the  teclmical  aspects  of  this  problem,  we  will  not  venture  an
    opinion.  However,  this  committee  is  aware  that  the  principal  tech-
    nical research  experts  who  testified  do  not  consider  the  dual-purpose
    reactor  feasible  for  the  economic  production  of  atomic  power.  They
    point  out,  further,  that  a  full-scale  atomic  powerplant  would  cost  no
    less  than  $75  million,  and  closer  to  $100  million.  No  industrial  group
    has  indicated  that  it  is  prepared  to  provide  sums  of  this  magnitude.

    The  proposal  to  permit  private  participation  in  the  construction
    and  operation  of  dual-purpose  reactors  at  the  present  time  has  been
    effectively  criticized  by  an  industrial  leader  familiar  with  the  prob-
    lem. Mr.  Philip  Sporn,  president  of  the  American  Gas  &  Electric
    Service  Corp.,  who  served  as  chairman  of  the  Advisory  Committee  on
    Cooperation  between  the  electric  power  industry  and  the  Atomic
    Energy  Commission,  and  can  scarcely  be  accused  of  bias  against  pri-
    vate industry,  recently  had  the  following  to  say,  in  part,  on  this
    problem :

    *  *  *  Power  as  a  byproduct  of  plutonium  could  afford  an  exciting  prospect
    for  early  development  of  nuclear  energy  on  a  substantial  scale.  But  this  state-
    ment of  the  situation  should  also  make  clear  that  such  an  operation  is  likely
    to  remain  exceptional — for  the  reason  that  it  would  have  to  be  underwritten
    by  a  long-term  Government  guaranty  of  dubious  soundness.

    A  few  words  are  necessary  to  explain  this  conclusion.  Feasibility  in  devel-
    opment along  this  route  depends  upon  the  availability  of  a  continuing  market
    for  Plutonium  because  the  economics  of  the  power  is  inextricably  linked  with
    sale  of  Plutonium.  So  far  as  we  can  now  tell  a  market  for  plutonium  means
    a  Government  market  for  the  metal  to  make  stockpile  bombs.  If  the  market  for
    plutonium  ceases  or  contracts,  the  value  of  the  power  becomes  questionable
    unless  it  has  been  guaranteed  by  a  long-term  Government  underwriting  which
    would  persist  regardless  of  the  sale  of  the  metal  upon  which  the  economics  of
    the  byproduct  depends.  The  difficulty  of  assuring  a  permanent  market  for  plu-
    tonium is  evidenced  by  the  recent  statement  of  Chairman  Dean  of  the  Atomic
    Energy  Commission  that  there  will  come  a  time  when  we  can  stop  our  urgent
    drive  to  make  more  and  more  atomic  weapons  and  sit  back,  look  at  our  stock-
    pile, and  say,  "Now  we  have  enough."  *  *  *

    *  *  *  When  we  plan  powerplants  for  commercial  use  economics  requires  that
    we  think  of  them  in  terms  of  a  useful  life  of  25.  30,  or  even  40  or  more  years.  It
    is  difficult,  therefore,  to  think  of  byproduct  nuclear  powerplants  being  developed
    on  other  than  the  very  exceptional  basis  of  long-term  Government  commitment  to
    buy  the  plutonium  at  a  fixed  price  or  otherwise  to  underwrite  the  project.

    Whatever  the  value  and  the  interest  in  proceeding  with  present  developments
    of  Ideas  of  such  plants,  in  the  end,  hope  for  nuclear  energy  as  a  more  or  less
    permanent  economical  source  of  power,  must  rest  on  the  straight  power  reactor
    and  the  breeder  reactor.  And  the  optimism  of  recent  months,  however  .lustifled,
    has  not  grown  particularly  out  of  any  spectacular  developments  in  relation  to
    such  reactors.  As  to  them,  while  we  are  certainly  ahead  of  the  point  where  we
    stood  when  people  were  saying,  several  years  ago,  that  it  would  be  a  matter  of
    "decades"  before  we  had  economical  power,  there  is  no  reason  for  believing  that
    we  are  unexpectedly  further  ahead.

    So  that  all  of  this  gratifying  experience,  actual  and  in  prospect,  still  leaves  us
    quite  far  removed  from  a  real  solution  to  the  problem  of  producing  nuclear  energy
    economically  and  of  making  it  contribute  significantly  to  satisfy  our  overall
    requirements  for  electric  energy.

    The  foregoing  opinions  of  Mr.  Sporn  parallel  those  of  a  number  of
    witnesses  who  have  appeared  before  this  committee.

    PRESENT  PARTICIPATION  OF  PRIVATE  INDUSTRY

    One  impression  that  may  be  obtained  from  some  of  the  testimony
    of  industry  witnesses  w^ho  have  appeared  before  this  committee  is  that

    494  ATOMIC    POWER    DEVELOPMENT

    private  industry  has  been,  to  a  large  extent,  excluded  from  the  atomic
    energy  program.  Nothing  could  be  further  from  the  truth.  In  the
    first  place,  section  4  (c)  (1)  of  the  act  specifically  provides  for  private
    ownership  of  "facilities  which  (A)  are  useful  in  the  conduct  of  re-
    search and  development  activities  in"  all  fields  of  scientific  investi-
    gation relating  to  atomic  energy,  so  long  as  they  "do  not,  in  the  opinion
    of  the  Commission,  have  a  potential  production  rate  adequate  to  enable
    the  operator  of  such  facilities  to  produce  within  a  reasonable  period
    of  time  a  sufficient  quantity  of  fissionable  material  to  produce  an
    atomic  bomb  or  any  other  atomic  weapon."  It  is  under  that  section
    that  private  laboratories  have  been  established  and  have  produced
    some  fissionable  material.  Thus  those  who  are  interested  in  research
    and  development  may  own  their  own  production  facilities  and  may
    operate  them  to  make  fissionable  material  in  the  course  of  their  work.
    The  basic  limitation  is  that  they  cannot  produce  within  a  reasonable
    period  of  time  enough  fissionable  material  to  produce  an  atomic
    w^eapon.  So  far  as  we  know,  the  Atomic  Energy  Commission  has  not
    yet  found  it  necessary  to  restrict  normal  private  laboratory  operations.
    In  the  light  of  this  provision  it  is  evident  that  those  who  seek  an
    amendment  to  the  act  desire  the  right  to  produce  fissionable  materials
    in  sufficient  quantities  in  a  reasonable  time  to  make  atomic  weapons.

    More  significant  in  this  connection  is  the  fact  that  practically  all
    atomic-energy  facilities  are  now  operated  by  private  industry.  At
    the  present  time  all  fissionable  material,  except  for  small  amounts  pro-
    duced in  private  research,  is  today  manufactured  for  the  Atomic
    Energy  Commission  by  a  few  large  companies  operating  under  con-
    tract with  the  AEC.  Not  a  single  major  facility  is  operated  by  the
    AEC  itself.  Indeed,  this  manufacture  is  concentrated  in  the  hands  of
    only  a  few  firms  like  General  Electric  Co.,  Du  Pont,  Union  Carbide,
    and  Monsanto.  It  certainly  cannot  be  said  that  private  industry  is
    barred  from  acquiring  all  the  available  know-how  to  produce  fission-
    able material.

    Indeed,  the  CIO  is  firmly  of  the  opinion  that  the  AEC  should
    never  have  begun  this  process  of  delegating  its  production  responsi-
    bility. We  believe  that  the  public  welfare  demands  public  operation,
    as  well  as  public  ownership,  of  the  atomic  energy  industry.

    Certainly  those  who  believe  that  private  industry  should  participate
    as  fully  as  ))ossible  can  scarcely  complain  about  the  policy  that  the
    AEC  has  followed  in  that  regard.  Wliat  sweeter  arrangement,  from
    the  point  of  view  of  private  industry,  could  have  been  provided,  with-
    in the  barest  limits  of  common  decency,  than  for  the  Federal  Govern-
    ment to  take  all  the  risk,  spend  fantastic  sums  of  money,  and  at  the
    same  time  give  private  industry  the  benefit  of  all  the  know-how  that
    has  been  acquired  as  a  result  of  taking  that  risk  and  making  that
    investment.

    But  it  is  said,  this  is  not  really  private  enterprise,  because  owner-
    shi])  remains  in  the  hands  of  the  Government,  mangement  fees  allowed
    to  the  operating  corporations  are  not  adequate  incentives,  and  there
    is  no  real  inducement  to  pioneer  in  this  field.  What  is  it  then  that
    the  proponents  of  change  desire?  Do  they  want  to  take  any  risks?
    Certainly  not.  Every  proposal  to  build  a  reactor  providing  commer-
    cial quantities  of  power  is  conditioned  upon  ample  subsidies  from  the
    Government.  Do  they  want  to  build  with  their  own  funds  reactors
    large  enough  to  sui)ply  power?     Certainly  not.     Every  proposal  is

    ATOMIC    POWER    DEVELOPMENT  495

    conditioned  on  the  Government  providing  all  or  tlie  major  part  of  the
    money  necessary  to  build  these  plants.  Do  they  want  to  provide
    power  in  a  free  market  on  a  competitive  basis  ?  Certainly  not.  They
    all  agree  that  cannot  be  done  now,  and  probably  not  for  at  least  another
    10  yeai-s.  Are  they  willing,  despite  the  demand  for  huge  Government
    subsidies,  to  accept  compulsory  licensing  of  all  atomic-energy  patents
    to  qualified  applicants,  and  thus  perhaps  save  the  appearance  of  free
    competition?  Certainly  not.  Those  industry  representatives  who
    were  candid  indicated  that  they  would  insist  on  an  unrestricted  right
    to  license;  that  is,  their  unrestricted  right  to  license  or  to  refuse  to
    license.

    Only  one  conclusion  can  reasonably  be  derived  from  an  examination
    of  the  record.  That  is  that  a  few  corporations  desire  to  get  in  on  the
    ground  floor  before  atomic  power  on  a  competitive  basis  has  actually
    been  produced,  so  as  to  prepare  the  way  for  the  creation  of  a  huge
    private  monopoly  to  substitute  for  the  present  public  monopoly.
    They  want  the  present  prohibition  against  private  ownership  of  pat-
    ents in  the  atomic  energy  field  lifted  so  that  they  can  get  sufficient
    control  to  enable  them  to  dominate  the  entire  industry.  This  would  be
    comparatively  easy,  because  of  the  vast  amounts  of  money  required
    to  build  reactors  for  production  purposes.  The  creation  of  such  a
    monopoly  is  a  consummation  devoutly  to  be  resisted.

    As  to  the  effect  on  national  defense,  we  cannot  enter  into  an  extended
    discussion  of  this  aspect  of  the  problem  since  we  are  without  the  vital
    secret  information  necessary  for  an  informed  judgment  about  it.  We
    can,  however,  offer  certain  reflections  upon  it.

    If  it  is  true,  as  has  been  authoritatively  stated,  that  the  facilities
    now  in  operation,  plus  those  authorized,  can  produce  enough  atomic
    weapons  for  our  defense,  then  there  can  be  no  justification  for  permit-
    ting the  construction,  under  private  control,  of  additional  facilities
    for  the  production  of  fissionable  materials  intended  for  atomic
    weapons.  Aside  from  the  fact  that  this  would  be  putting  into  the
    liands  of  private  industry  materials  of  fantastic  destructive  potentiali-
    ties, it  Avould  require  that  the  Government  obligate  itself  to  buy  enor-
    mously expensive  fissionable  materials  for  which  it  had  no  use.  It
    would  mean  that  we  would  have  to  continue  the  manufacture  of  atomic
    weapons  even  if  we  had  attained  what  our  militarAT-  officials  deemed
    to  be  a  sufficient  stockpile.

    On  the  other  hand,  if  the  present  and  projected  production  facilities
    of  the  Government  will  not  be  sufficient  to  provide  enough  atomic
    weapons,  then  it  would  be  highly  irresponsible  to  expect  to  obtain
    the  needed  additional  materials  from  jirivate  manufacturers.  We
    say  "irresponsible"  because  it  appears  to  be  the  consensus  that  the
    amount  of  plutonium  which  could  be  obtained  in  the  near  future
    from  those  reactors  which  may  possibly  be  built  under  private  auspices
    is  highly  indeterminate  and  uncertain.  If  it  is  known  now  that  the
    present  and  projected  production  facilities  are  not  sufficient  to  pro-
    vide the  needed  atomic  weapons  for  our  defense,  then  it  woukl  be
    utterly  inexcusable  if  authorizations  are  not  now  made  to  construct
    them.  The  obligation  and  the  power  to  determine  liow  much  plu-
    tonium should  be  produced,  and  the  rate  of  its  prockiction,  for  military
    purposes  must  at  all  times  remain  a  governmental  prerogative.

    We  recognize  that  persons  in  high  authority  do  not  entirely  agree
    with  us.    On  this  point,  the  Congressional  Record  of  June  2.  1953,

    496  ATOMIC    POWER    DEVELOPMENT

    reported  that  representatives  of  tlie  Joint  Chiefs  of  Staff  discus^^^
    with  the  joint  committee,  in  executive  session,  the  effects  of  the^
    velopment  of  atomic  power  upon  the  military  use  of  fissionable  mat
    rials.  These  representatives  of  the  Joint  Chiefs  of  Staff  recommend-,
    that  any  legislative  changes  to  further  atomic  power  developmeuu
    should  include  adequate  safeguards  to  protect  military  claims  upon
    fissionable  materials,  and  concurred  in  the  view  that  development  of
    atomic  power  by  private  enterprise  would  be  beneficial  to  the  military
    services  and  to  the  national  security.  The  nature  of  the  safeguards
    they  proposed  was  not  revealed.

    However,  these  representatives  stated  further  that  in  the  event
    private  enterprise  did  not  undertake  rapid  development  of  atomic
    power,  it  was  the  view  of  the  Joint  Chiefs  of  Staff  that  the  Govern-
    ment should  continue  to  push  ahead  in  this  field.

    Inasmuch  as  the  record  before  the  committee  establishes,  in  our
    opinion,  that  private  industry  is  not  ready  or  able  to  undertake  the
    rapid  development  of  atomic  power,  the  net  effect  of  the  recommenda-
    tions of  the  Joint  Chiefs  of  Staff  would  seem  to  rebut  any  claim  that
    the  act  must  be  amended  now.  Those  recommendations  recognize  that
    the  Government  can  push  ahead  in  this  field  and,  under  the  circum-
    stances, should  do  so  without  delay.

    On  the  effect  on  world  peace :  One  of  the  objectives  of  the  Atomic
    Energy  Act  is  that  the  development  and  utilization  of  atomic  energy
    shall  be  directed  toward  promoting  world  peace.  Almost  before  the
    dust  of  the  Hiroshima  bomb  had  been  dissipated,  efforts  were  begun
    to  outlaw  the  atomic  bomb.  The  United  States  took  a  leading  part
    in  these  endeavors.  It  participated  actively  in  developing  the  United
    Nations  plan  for  control  of  the  bomb.  This  plan  provides  for  effective
    prohibition  of  the  manufacture,  possession,  and  use  of  atomic  weapons,
    and,  at  the  same  time,  would  promote  the  development  of  atomic
    energy  for  peaceful  purposes  only.  In  addition  to  providing  for  an
    international  system  of  inspection,  it  provides  for  international  owner-
    ship of  source  and  fissionable  materials  and  international  ownership,
    operation,  and  management  of  facilities  making  or  using  materials  in
    quantities  sufficient  for  weapon  purposes.  President  Eisenhower  has
    only  recently  emphasized  the  willing-ness  of  the  United  States  to  enter
    into  agreements  providing  for  "the  international  control  of  atomic
    energy  to  promote  its  use  for  peaceful  purposes  only,  and  to  ensure  the
    prohibition  of  atomic  weapons."

    In  order  for  the  United  States  to  be  ready  at  any  time  to  enter
    into  international  agreements  under  the  United  Nations  plan,  it  must
    have  complete  control  over  fissionable  materials  and  procluction  facil-
    ities. If  this  Government  should  adopt  a  policy  which  would  per-
    mit private  industry  to  own  and  produce  fissionable  materials  in  sub-
    stantial quantities,  it  will  thereby  give  notice  to  the  world  that  we
    have  retreated  from  our  determination  to  abolish  atomic  weapons
    by  international  agreement.  When  we  give  private  industry  a  stake
    in  the  continued  production  of  fissionable  materials  for  military  pur-
    poses, we  give  it,  to  that  extent,  a  measure  of  control  over  our  efforts
    to  abolish  the  atomic  bomb.  Such  action  would  indeed  be  a  great
    disservice  to  world  peace.

    The  public  investment:  There  is  one  other  consideration  to  which
    little  explicit  attention  has  been  paid  by  administration  and  industry
    witnesses.     The  people  of  the  United  States  have  already  invested.

    ATOMIC    POWER    DEVELOPMENT  497

    1  or  committed,  $12  billion  in  the  atomic-energy  industry.     All  of  that

    -  has  been  done  in  a  dozen  years,  more  or  less.     It  can  certainly  be

    -  anticipated  that  additional  sums  in  great  amounts  will  be  spent  by
    f'  the  Federal  Government  on  this  industry.

    Consider  the  immensity  of  this  investment  in  relation  to  present
    common  stock  equities  in  private  industry,  equities  which  have  been
    built  up  over  scores  of  years.  As  of  the  first  quarter  of  1953,  stock-
    holders' equities  in  all  manufacturing  industries  in  the  Nation  were
    valued  at  $106  billion,  less  than  9  times  the  Government's  investment
    in  the  atomic  energy  industry;  for  the  same  period  the  equities  in
    the  electrical-machinery  industry  were  valued  at  $5.1  billion ;  in  the
    chemical  and  allied  industries  $9.7  billion.  The  entire  equity  in  the
    electric-power  industry  was  valued,  as  of  December  31,  1952,  at  $11.4
    billion.  With  the  possible  exception  of  the  petroleum  refining  in-
    dustry, the  production  of  atomic  energy  is  by  far  the  greatest  indus-
    try in  the  United  States.  The  combined  common-stock  equity  of  the
    five  major  corporations  operating  in  the  atomic-energy  field,  namely,
    General  Electric  Co.,  E.  I.  du  Pont  de  N'emours  &  Co^,  Union  Carbide
    &  Carbon  Corp.,  Westinghouse  Electric  Corp*.,  and  Monsanto  Electric
    Co.,  is  $3.6  billion.  These  comparisons  provide  a  yardstick  of  a  sort
    to  give  some  appreciation  of  the  staggering  size  of  the  public's  stake
    in  the  atomic  energy  industry,  solely  from  a  monetary  point  of  view.

    As  a  result  of  these  expenditures,  the  Government  has  acquired,
    not  only  a  stockpile  of  atomic  bombs,  but  also  a  great  body  of  knowl-
    edge— scientific,  technical,  and  engineering — concerning  the  produc-
    tion of  atomic  energy.  A  basic  issue  raised  by  these  hearings  is
    whether  that  knowledge  will  be  used  entirely  in  the  public  interest,
    or  whether  any  significant  part  of  it  will  be  used  for  private  profit
    and  the  possible  development  of  a  powerful  monopoly.

    The  answer  is  clear  to  us,  and  we  think  it  should  be  clear  to  Congress
    as  steward  of  the  interest  of  all  the  people  of  this  country.  We  think
    it  intolerable  that  a  patrimony  of  such  great  value  should  be  given
    away  without  even  the  pretense  of  a  mess  of  pottage  in  return.  In
    addition,  the  proposals  made  by  the  industry  representatives  to  this
    committee  constitute  the  most  extraordinary  looking  of  an  antici-
    pated gift  horse  in  the  mouth.  The  prospective  donees  would  not  be
    satisfied  merely  with  receiving  the  gift,  but  they  insist  on  an  indefinite
    continuance  of  gifts  to  support  the  original  one.  It  may  be  that,  in
    the  present  climate  of  opinion,  many  people  have  become  somewhat
    insensitive  to  the  enormity  of  the  giveaway  programs  which  have  been
    initiated  by  the  Federal  Government  within  the  past  few  months.
    Those  actions,  however,  should  not  dull  us  to  the  fact  that  if  such  a
    program  is  carried  over  into  the  atomic-energy  industry,  it  will  even-
    tually have  a  social,  political,  and  economic  impact  far  beyond  that  of
    any  action  of  a  similar  nature  heretofore  contemplated.

    The  potential  multi-billion-dollar  giveaway  of  atomic  know-how,
    reinforced  by  patent  rights,  contemplated  by  industiy  representatives
    who  have  appeared  before  this  committee,  may  dwarf  the  combined
    value  of  all  previous  and  other  proposed  giveaways  of  our  country's
    national  resources.

    Tliere  is,  of  course,  no  accurate  way  of  assessing  how  many  tens  of
    billions  of  dollars  this  know-how  represents — nor  how  much  addi-
    tional money  from  the  American  taxpayer  will  be  necessary  to  enable
    private  industry  to  exploit  fully  these  advantages.     It  is  a  virtual

    498  ATOMIC    POWER    DEVELOPMENT

    certainty,  however,  that  the  possible  future  vahie  of  these  acquisitions,
    which  private  industry  wishes  to  monopolize,  would  make  the  tide-
    lands  oil  giveaway  look  like  a  bargain-basement  transaction.

    To  summarize  our  viewpoint  on  this  matter,  we  think  the  questions
    raised  by  the  proposals  pending  before  the  joint  committee  must  be
    answered  as  follows :

    1.  The  Atomic  Energy  Act  in  its  present  form  permits  the  fullest
    possible  development  of  atomic  energy  for  industrial  use.

    2.  The  private  ownership  of  fissionable  materials,  and  the  facilities
    to  produce  them  in  substantial  quantities,  will  not  bring  about  a
    faster  development  of  atomic  energy  for  industrial  purposes  than
    the  AEC  can  achieve.

    3.  The  interests  of  national  defense  will  not  be  promoted  now,  any
    more  than  they  would  have  been  in  1946,  by  permitting  the  private
    manufacture  of  matter  having  the  enormous  destructive  potentialities
    of  fissionable  material.

    4.  The  possibility  of  achie^'ing  effective  and  reciprocal  international
    safeguards  against  the  use  of  atomic  weapons  would  be  reduced  if
    private  development  of  fissionable  material  in  substantial  quantities
    were  permitted.

    5.  Since  private  industry  would  require  large  subsidies  and  guaran-
    ties against  loss,  in  order  to  engage  in  the  building  and  operation  of
    full-scale  power  reactors,  it  is  economically  not  feasible  to  embark
    on  a  program  of  private  development  of  such  reactors.

    6.  The  conditions  under  which  private  industry  generally  is  willing
    to  engage  in  such  a  program,  particidarly  the  liberalization  of  patent
    privileges,  would  promote  the  creation  of  a  giant  private  monopoly,
    and  defeat  the  objective  of  the  Atomic  Energy  Act  to  strengthen  free
    competition  in  private  enterprise.

    7.  The  vast  public  investment  already  made  in  the  atomic-energy
    industry  requires  that  power  reactors  be  owned  and  operated  by  the
    Government,  so  that  the  people  of  this  country  will  not  be  denied  what
    is  potentially  one  of  the  major  fruits  of  their  tremendous  expenditures.

    We  have  several  recommendations  on  this  whole  problem.  We
    think  the  course  to  be  followed  is  clear.  First,  the  proposals  for
    amendment  of  the  Atomic  Energy  Act  along  the  lines  suggested  by
    the  AEC,  and  all  similar  proposals,  should  be  rejected  in  their  en-
    tirety. Second,  the  Atomic  Energy  Commission  should  proceed  with-
    out delay  to  build  full-scale  nuclear  reactors  for  power  purposes  only.

    One  of  the  areas  in  which  the  Commission  may  be  properly  criti-
    cized vigorously  is  its  failure  to  build  nuclear-power  reactors  suffi-
    ciently large  to  produce  substantial  amounts  of  power.  It  has  the
    available  know-how.  It  recognizes  the  need  for  research  and  develop-
    ment of  such  reactors.     It  has,  or  can  get,  the  necessary  funds.

    The  amount  of  electric  power  used  by  the  Commission's  facilities
    is  enormous.  Published  figures  indicate  that  they  use  approximately
    21/2  percent  of  the  total  amount  of  electric  power  produced  in  this
    country.  It  is  obvious  that  the  AEC  could  use  all  the  power  that  it
    could  produce  from  its  own  reactors.  In  the  course  of  building  such
    reactors  the  necessary  experience  will  be  acquired,  and  arrival  of  the
    time  when  atomic  power  can  be  produced  at  competitive  prices  will
    be  hastened.  Indeed,  in  view  of  the  Commission's  desire  to  turn  over
    the  production  of  power  to  private  industry,  the  Commission  will  have

    ATOMIC    POWER    DEVELOPMEXT  499

    a  strong  inducement  to  produce  electric  power  from  a  nuclear  reactor
    at  competitive  prices  at  the  earliest  possible  moment.

    The  AEC  has  declared  that  "as  a  Nation  we  should  not  delay  the
    development  of  this  great  potential  source  of  energy  for  constructive
    purposes"  and  that  it  believes  "the  attainment  of  economically  com-
    petitive nuclear  power  to  be  a  goal  of  national  importance."  In  the
    light  of  these  statements,  if  the  Commission  fails  to  proceed  now  with
    the  construction  of  nuclear-power  reactors  it  will  be  derelict  in  the
    performance  of  its  duties.

    Chairman  Cole.  Thank  you,  Mr.  Sigal.

    Senator,  do  you  have  any  questions  ?

    Senator  Pastore.  No  questions.

    Chairman  Cole.  Mr.  Holifield  ?

    Kepresentative  Holifield.  I  will  pass  at  this  time.

    Representative  Price.  No  questions.

    Kepresentative  Patterson.  No  questions.

    Chairman  Cole.  Then  we  will  hear  from  Mr.  Swisher.

    Representative  Hollfield.  If  you  are  passing  to  Mr.  Swisher  at
    this  time,  I  would  like  to  say  that  your  statement  has  been  very
    thoughtfully  prepared  and  certainly  presents  to  this  committee  a  very
    definite  viewpoint.  You  have  been,  if  I  might  say,  brutally  frank,
    and  the  challenge  which  is  represented  by  your  statement  on  many
    different  problems  here  in  which  you  have  not  minced  words,  is  cer-
    tainly a  challenge  which  this  committee  intends  to  meet,  and  to  meet
    the  responsibilities  which  are  enjoined  upon  us  by  law.

    IVIr.  Sigal.  We  think  that  blunt  language  is  required.  Congress-
    man, because  of  the  enormous  importance  of  this  problem.  The  ques-
    tion should  not  be  discussed  in  circuitous  language  so  that  the  meaning
    may  be  obscured.

    Representative  Holifield.  I  am  glad  to  see  on  page  6,  where  you
    quote  Mr.  Sumner  Pike's  speech,  that  he  gave  to  the  National  Associa-
    tion of  Manufacturers  advice  on  how  to  get  what  they  want  out  of
    Congress,  and  I  hope  when  the  representative  comes  before  us  lie
    utilizes  those  methods.

    Chairman  Cole.  Mr.  Swisher.

    STATEMENT  OF  ELWOOD  D.  SWISHER,  INTERNATIONAL  PRESI-
    DENT, UNITED  GAS,  COKE,  AND  CHEMICAL  WORKERS  OF
    AMERICA,  CIO

    Mr.  Swisher.  My  name  is  Elwood  Swisher.  I  am  president  of  the
    United  Gas,  Coke,  and  Chemical  Workers  of  America,  CIO.

    Our  union  represents  thousands  of  workers  employed  in  the  atomic
    energy  program  by  contractors  for  the  Atomic  Energy  Connnission.
    Our  organization  is  most  closely  involved  in  the  day-to-day  opera-
    tions of  this  vast  enterprise.  We  adhere  to  the  policy  enunciated
    by  Mr.  Sigal  in  behalf  of  national  CIO  who  has  preceded  me.  We
    have  been  designated  as  the  collective  bargaining  agent  for  some  of
    the  most  fundamental  units  involved  in  the  process  of  preparing
    uranium  for  the  atom  bomb  program.

    Our  experiences  with  the  contractors  and  with  tlie  Atomic  Elnergy
    Commission  have  not  been  of  the  most  cordial  relationship,  but  we
    have  made  collective  bargaining  work.  We  have  luid,  and  continue
    to  have,  serious  differences  with  the  whole  method  of  operation  of  this

    500  ATOMIC    POWER    DEVELOPMENT

    program ;  but  we  have  sought  to  look  beyond  the  immediate  collective
    t)argaining  needs  of  our  members,  and  have  discussed  and  debated
    at  great  length  the  problems  posed  by  the  developments  in  this  indus-
    try. Following  the  most  extensive  discussion,  the  executive  board  of
    our  organization  adopted  a  statement  of  policy  on  atomic  energy  in
    Detroit,  Mich.,  January  16,  1953.  Pertinent  excerpts  follow :
    Regarding  Government  control,  we  say :

    Wise  men  in  Government  saw  that  atomic  energy  was  too  powerful  and  pos-
    sessed potentials  too  great  to  let  a  few  men  or  a  few  companies  get  control  of  it.

    For  that  reason,  the  development  of  atomic  energy  was  placed  in  the  hands
    of  a  Government-controlled  commission  with  the  idea  of  spreading  the  potential
    l)enefits  of  atomic  energy  over  the  Nation  for  the  benefit  of  all  the  people.

    On  security :

    Of  equal  importance  to  the  economic  and  political  implications  of  private
    control  of  atomic  energy  is  that  of  personal  security.  Public  ownership  of
    atomic  energy  is  vital  so  that  security  of  the  individual  vs^orker  in  the  industry
    can  be  safeguarded.

    A  straw  in  the  wind  to  show  Vv^hat  can  and  may  happen  is  the  manner  in  which
    AEC  has  turned  over  the  employment  of  workers  by  the  private  companies
    under  contract  to  develop  atomic  energy.  The  company  hires  the  worker,  it
    decides  whether  or  not  he  is  a  good  security  risk  and  it  can  employ  lie  detectors,
    the  use  of  which  this  union  vigorously  opposed  and  the  wide  use  of  which  has
    been  abolished,  and  a  diabolical  espionage  system  to  spy  on  the  worker.  His
    every  word  and  action  is  under  suspicion  in  many  instances.  If  private  indus-
    try got  control  of  atomic  energy,  this  same  system  could  be  developed  into  a
    thought-control  program  which  would  not  be  concerned  merely  with  national
    security,  but  could  be  used  as  a  union-busting  device.  This  would  set  the  stage
    for  a  Fascist  state  with  atomic  energy  as  the  vital  core.

    On  the  question  of  labor  relations :

    Another  practice  which  has  been  very  annoying  and  expensive  to  the  UGCCWA
    has  been  tliat  of  deliberate  stalling  by  the  companies  on  atomic  plant  grievances.
    This  has  meant  that  such  cases  have  gone  to  arbitration  where  the  union  must
    pay  half  the  costs.  The  irony  of  this  situation  is  that  our  members  pay  their
    share  of  arbitration  costs  through  their  union  dues,  and  they  help  pay  the
    company's  share  through  taxes,  inasmuch  as  the  Government  pays  the  company
    for  operating  the  plant.  This  is  double  taxation  and  insult  is  added  to  injury
    because  the  worker  helps  to  pay  the  cost  of  the  company's  fight  against  the
    worker's  best  interests.  Only  American  big  business  could  figure  out  a  steal
    like  that  and  get  away  with  it.

    I  also  might  say  to  the  members  of  the  committee  that  this  also  ap-
    plies to  negotiations  and  the  exploration  of  contracts  as  well  as  wage
    reopeners.  The  Government  is  paying  the  company's  lost  time  and
    the  union  is  paying  the  union's  lost  time  out  of  their  union  dues.

    On  the  question  of  fooling  the  public  and  the  Congress,  our  position
    was:

    The  campaign  in  regard  to  atomic  energy  will  be  twofold,  as  we  said  before,
    (1)  to  sell  the  public  on  the  idea  that  AEC  has  failed  to  do  its  job,  has  wasted
    public  money,  and  that  atomic  energy  should  be  turned  over  to  private  concerns,
    and  (2)  to  do  a  similar  selling  job  on  Capitol  Hill.

    On  protecting  the  public  interest :

    This  union,  therefore,  serves  notice  that  it  will  vigorously  oppose  any  moves
    to  weaken,  cripple,  or  sabotage  the  Atomic  Energy  Act  of  1946  including  any
    effort  to  change  the  law  so  the  financiers  and  industrialists  can  lay  hold  of  the
    facilities  and  materials  used  in  producing  nuclear  energy.

    The  United  Gas,  Coke,  and  Chemical  Workers  hereby  calls  on  President  Dwight
    D.  Eisenhower  to  use  the  full  power  and  prestige  of  his  office  to  prevent  a  grab
    of  atomic  energy  by  private  interests,  and  we  urge  the  Members  of  the  Congress
    similarly  to  defend  the  rights  of  the  people  in  respect  to  public  ownership  of

    ATOMIC    POWER    DEVELOPMENT  501

    atomic  power  and  energy,  and  to  strengthen  the  Atomic  Energy  Act,  rather
    than  wealien  it.

    Tliis  union  also  suggests  that  the  Congress  appropriate  additional  funds  for
    atomic  research  for  peaceful  purposes  which  would  benefit  the  public,  rather  than
    concentrating  on  the  development  of  atomic  energy  as  a  destructive  force.

    This  union  urges  the  Congress  of  Industrial  Organizations  and  its  aflBliates
    representing  more  than  6  million  Americans  to  join  in  the  fight  to  keep  atomic
    energy  in  the  hands  of  the  people.

    This  policy  statement  was  adopted  prior  to  the  calling  of  these  hear-
    ings, which  were  so  directly  suggested  in  the  remarks  of  Commissioner
    Pike  almost  3  years  ago.

    We  did  not  have  the  advantage  in  January  as  we  do  now  of  knowing
    how  thin  the  basis  has  been  for  the  tremendous  ballyhoo  campaign
    which  has  been  waged  to  sell  the  concept  that  only  private  enterprise
    can  complete  the  process  of  developing  atomic  energy  for  civilian  use.

    Now  that  this  committee  is  developing  the  facts,  now  that  those  who
    have  had  any  contribution  to  make  have  had  an  opportunity  to  appear
    before  this  committee,  it  is  clear  that  the  whole  ballyhoo  campaign
    lias  very  little  essence  to  it.  It  is  clear  that  the  possibilities  of  imme-
    diate atomic  power  have  been  greatly  exaggerated  for  self-serving
    ends.  It  is  clear  that  no  industrial  combine  is  prepared  to  initiate  and
    finance  the  construction  of  an  atomic  power  reactor  without  Federal
    subsidy  or  guaranties  against  risk.

    Most  fundamental  of  all  is  the  fact  that  we  have  achieved  the  present
    state  of  knowledge  in  this  whole  field  of  atomic  energy  only  through
    the  expenditure  of  vast  sums  of  public  funds.  No  better  program  for
    increasing  the  benefits  from  atomic  energy,  nor  for  reducing  the  costs
    of  the  operations  could  be  arranged  than  for  the  AEC  to  build  power-
    producing  reactors  to  meet  part  of  their  own  power  needs.

    It  is  my  understanding  such  a  program  was  initiated  in  Oak  Ridge,
    and  discontinued.  Later  the  experiments  were  conducted  at  the  Knolls
    Laboratory,  Schenectady,  N.  Y.  Three  years  ago  this  program  was
    canceled.  I  have  never  understood  why.  Just  in  the  past  few  days
    the  Congress  has  been  discussing  how  to  meet  the  power  needs  of  the
    Tennessee  Valley.

    Gentlemen,  one  method  would  be  to  have  the  Atomic  Energy  Com-
    mission substitute  power  produced  from  atomic  energy  for  some  of
    the  power  now  purchased  from  the  TVA.  Everybody  would  benefit.
    The  AEC  would  have  completed  the  first  large-scale  power  reactor.
    The  AEC  would  control  part  of  its  own  power  source.  The  TVA
    would  have  available  for  industrial  expansion  in  the  Tennessee  Valley
    a  substantial  block  of  power.  Industry  and  the  community  would
    benefit.

    To  meet  the  power  needs  of  the  gaseous  diffusion  plant  in  Pike
    County,  Ohio,  for  which  over  $2  billion  have  been  appropriated,  the
    Congress  has  already  amended  the  law  to  provide  cancellation  costs
    which  might  total  $400  million.  If  this  substantial  obligation  can  be
    assumed  by  the  Government  on  the  basis  of  a  possible  cancellation,  it
    seems  to  me  that  the  wiser  investment  would  have  provided  for  the
    completion  of  a  second  power  reactor  to  produce  part  of  this  electric
    power  needed  directly  by  the  Commission  itself.  Thus  the  hazardous
    adventure  by  the  Ohio  Valley  Electric  Corp.,  which  is  composed
    of  more  than  14  utility  companies,  would  have  been  substantially
    reduced.

    502  ATOMIC    POWER    DEVELOPMENT

    Likewise  in  the  Hanford  plant,  production  of  some  of  its  electric
    power  needs  directly  by  the  AEC  would  make  available  to  that  ex-
    panding region  portions  of  public  power  now  used  by  the  Commission.
    Every  argument  for  the  earliest  completion  of  tliis  power  program
    seems  to  require  that  it  be  achieved  by  direct  Government  completion
    of  at  least  the  first  power  reactor.

    We  have  had  some  experience  with  the  shortcomings  of  the  present
    system  of  operation  of  the  AEC.  We  know  as  human  beings  the  diffi-
    culties of  dealing  with  the  AEC.  The  members  of  this  committee
    know  of  our  efforts  to  establish  normal  community  life  in  the  areas
    where  AEC  operates.  More  than  money,  material,  and  training  are
    involved  in  this  program.  Hundreds  of  thousands  of  human  beings
    are  directly  affected  by  the  policy  attitudes  of  the  Atomic  Energy  Com-
    mission. We  know  the  difficulty  of  dealing  with  that  group.  One  of
    your  own  colleagues  recently  said  (Congressional  Eecord,  June  17,
    1953,  p.  6911)  :

    Let  me  say  that  I  spent  a  year  workiug  for  the  Atomic  Energy  Commission  and
    I  find  that  I  cannot  rely  on  anything  the  Atomic  Energy  Commission  tells  me,
    because  everything  they  have  done  has  been  wound  up  in  a  cloak  of  secrecy  and
    security,  and  behind  the  cloak  are  some  things  that  would  certainly  amaze  and
    disgust  you  gentlemen  of  this  Congress.

    We  do  not  wonder,  then,  at  the  difficulties  which  we  have  had  at-
    tempting to  establish  normal  community  life  in  such  areas  as  Oak
    Ridge,  since  the  Commission,  using  security,  is  able  to  bamboozle  the
    public,  misrepresent  the  facts  to  Congress,  and  pose  as  virtuous  angels
    in  the  reams  of  publicity  which  they  pour  onto  the  American  people.
    But  we  who  work  in  the  plants  know  the  Commission's  shortcomings.
    We  know  nevertheless  the  need  for  maintaining  primary  focus  on  the
    public  interest.  We  do  not  want  the  American  people  to  suffer  from
    a  transfer  to  a  pseudo  private  enterprise  but  in  reality  to  a  tight-fisted
    monopoly.

    On  the  same  day  that  the  Congress  took  steps  to  grant  authority  to
    President  Eisenhower  to  extend  FHx\  mortgage  terms  to  30  years,  the
    first  25  families  who  were  being  permitted  an  opportunity  to  build
    their  own  homes  in  Oak  Ridge  were  offered  mortgage  terms  by  the
    new  bank  in  Oak  Ridge.

    Gentlemen,  a  private  banking  monopoly  offered  to  loan  25  fam-
    ilies money  which  is  deposited  by  thousands  of  our  members,  50  per-
    cent of  the  cost  of  the  home,  $6,000  on  a  $12,000  house,  to  be  repaid  in
    5  years  at  6-percent  interest.

    In  contrast,  under  the  GI  bill,  these  25  families,  many  of  whom  are
    veterans,  are  entitled  to  form  a  section  213  cooperative,  secure  a
    95-percent  loan,  make  a  down  payment  of  $600  instead  of  $6,000,  and
    make  monthly  payments  of  $57.80,  for  interest  and  principal,  instead
    of  $116  per  month.  Is  this  the  kind  of  private  enterprise  which  is
    being  advocated  for  the  control  of  atomic  power  production?

    Representing  the  workers  who  have  contributed  to  the  safety  of
    this  country  by  making  what  might  be  thousands  of  bombs,  we  pro-
    test this  ballyhoo  campaign,  we  urge  this  committee  to  reject  it,  and
    hope  you  Avill  instruct  the  Commission  to  remove  power  reactor  proj-
    ects from  the  bottom  of  the  priority  list  and  place  them  instead  on  an
    equal  footing  with  the  weapons  programs.

    Chairman  Cole.  Thank  you,  Mr.  Swisher.

    Are  there  any  questions?

    ATOMIC    POWER    DEVELOPMENT  503

    Representative  Holifield.  This  matter  that  you  brought  in  here  at
    the  last  is  certainly  news  to  us.  Is  this  the  Government-owned  houses
    at  Oak  Ridge  which  Congress  authorized  the  Atomic  Energy  Commis-
    sion to  sell  to  the  occupants?

    Mr.  Swisher.  No.  This  is  the  start  of  a  new  program.  They  are
    allowing  families  to  lease,  on  a  55-year  basis,  I  believe,  property  to
    build  their  own  homes  on.  The  houses  already  built  are  not  ali'ected
    by  this  program.

    Representative  Holifield.  Do  you  mean  the  AEC  is  allowing  them
    to  come  in  and  lease  a  piece  of  ground  ?

    Mr.  Swisher.  That  is  right.

    Representative  Holifield.  But  there  is  no  provision  for  financing
    the  houses?

    ]Mr.  Swisher.  None.    They  are  having  considerable  difficulty.

    Representative  Holifield.  What  about  the  houses  that  are  built,
    which  the  Congress  authorized  them  to  sell  ?

    Mr.  Swisher.  I  might  say  there  had  never  been  anything  concrete
    on  that  until  last  night.    I  see  that  a  bill

    Chairman  Cole.  Mr.  Swislier — if  the  gentleman  will  defer — that
    subject  is  somewhat  foreign  to  our  meeting  today,  and  I  hope  we
    will  not  get  into  a  prolonged  discussion  of  it.

    Representative  Holifield.  I  do  not  intend  to.  I  just  wondered
    about  this  statement  here.

    Mr,  Swisher.  I  would  like  to  say,  Mr.  Chairman,  if  you  will  per-
    mit me,  this  housing  situation  is  of  vital  concern  at  the  present  time
    in  Oak  Ridge.

    Chairman  Cole.  I  realize  that,  but  this  is  not  the  time  or  place  to
    discuss  it.

    Mr.  Swisher.  I  recognize  I  am  possibly  out  of  order,  but  I  would
    like  to  make  the  plea  that  the  necessity  of  it  warrants,  I  thinlv,  spe-
    cial consideration  of  the  committee,  whether  today  or  at  a  special
    session  or  something  on  that  order,  to  bring  to  the  committee's  atten-
    tion some  of  the  ramifications  that  may,  shall  we  say,  erupt  down
    there  over  tlie  question  of  rent  increase.

    Chairman  Cole.  The  JNIember  of  Congress  in  the  House  from  that
    district,  Mr.  Baker,  has  introduced  a  bill  to  authorize  the  Commission
    to  sell  Government-built  houses  to  the  workers  with  a  formula  for
    determining  the  price.  That  bill  will  be  considered  by  the  House  as
    quickly  as  possible.

    Representative  Hglifield.  I  assume  tliis  is  the  bill  ]ust  handed  to
    me  by  a  member  of  the  staff.  I  see  that  a  bill  by  Mr.  Baker  of  Ten-
    nessee has  been  introduced.  It  has  been  referred  to  our  connnittee.
    So  on  that  basis,  I  will  withhold  my  questions,  because  the  chairman
    is  right,  it  is  out  of  order  at  this  time  to  discuss  that,  because  it  has
    nothing  to  do  with  atomic  power.

    Chairman  Cole.  If  there  are  no  further  questions,  thank  you  very
    much,  gentlemen,  for  your  statements.

    Mr.  Swisher.  Tliank  you,  gentlemen.

    Chairman  Cole.  Our  conchiding  witnesses  are  Dr.  Guy  Suits,  vice
    president  of  General  Electric  Co.,  wlio  will  appear  for  and  in  belialf
    of  the  National  Association  of  ^Manufacturers,  and  Mr.  William
    Steiger,  who  is  vice  chairman  of  the  National  Association  of  Manu-
    facturers Patents  Committee.

    Are  vou  Dr.  Suits?

    504  ATOMIC    POWER    DEVELOPMENT

    Dr.  Suits.  Yes.

    Chairman  Cole.  Are  you  going  to  speak  first,  Dr.  Suits  ?
    Dr.  Suits.  Yes,  sir.

    Chairman  Cole.  First  let  me  express  my  regret  at  not  being  able
    to  accommodate  you  to  better  advantage  this  afternoon.
    Dr.  Suits.  Thank  you  very  much.

    STATEMENT  OF  DR.  C.  G.  SUITS,  CHAIRMAN,  SUBCOMMITTEE  ON
    ATOMIC  ENERGY  OF  THE  COMMITTEE  AN  RESEARCH  OF  THE
    NATIONAL  ASSOCIATION  OF  MANUFACTURERS

    Dr.  Suits.  Mr.  Chairman  and  members  of  the  committee,  my  name
    is  C.  G.  Suits.  I  am  vice  president  and  director  of  research  of  the
    General  Electric  Co.,  and  chairman  of  the  Subcommittee  on  Atomic
    Energy  of  the  Committee  on  Research  of  the  National  Association  of
    Manufacturers,  and  I  am  speaking  today  for  that  association.

    The  NAM  is  a  voluntary  organization  of  more  than  19,500  manu-
    facturers, 83  percent  of  whose  members  have  less  than  500  employees-
    each.  As  you  may  know,  the  National  Association  of  Manufacturers,
    as  a  cross-section  of  American  industry,  includes  in  its  membership
    a  host  of  manufacturing  companies,  both  large  and  small,  that  are
    participating  in  many  phases  of  the  country's  atomic  energy  program.
    In  some  cases  the  company's  role  is  that  of  a  supplier  of  conventional
    industrial  equipment  required  in  the  operation  of  AEC  plants.  In
    other  cases  our  members  are  contractors  to  the  AEC,  or  to  its  con-
    tractors, for  the  development  and  production  of  the  many  special
    materials  and  components  which  are  required  by  the  vast  AEC  activ-
    ity concerned  with  the  military  applications  of  atomic  energy.  Fi-
    nally, some  members  of  the  National  Association  of  ]\Ianufacturers
    are  major  contractors  of  the  AEC  for  the  operation  of  its  largest  re-
    search, development  and  production  facilities.  In  this  category  of
    major  contractors  to  the  AEC,  the  NAM  includes  some  70  companies
    in  its  membership.  In  all  of  the  above  categories,  there  are  over
    1,000  participating  companies  in  the  National  Association  of  Manu-
    facturers.

    Thus  the  National  Association  of  Manufacturers  is  in  an  excellent
    position  to  present  a  point  of  view  wdiich  reflects  the  many  diversified
    interests  of  industry  in  the  future  legal,  patent,  and  competitive
    framework  of  atomic  power  development.

    My  own  company  is  engaged  in  the  operation  of  the  Hanford
    Works,  the  Knolls  Atomic  Power  Laboratory,  and  the  aircraft  nuclear
    propulsion  project.  It  was  my  responsibility  to  plan,  build,  staff,
    and  initially  operate  the  Knolls'  Atomic  Power  Laboratory,  which
    has  since  grown  to  a  separate  operating  division  of  the  company,  and
    I  liave  had  an  opportunity  to  observe  intimately  the  postwar  opera-
    tion of  the  Hanford  Works.  The  large  participation  of  American
    industry,  as  in  the  case  of  my  own  company,  in  the  work  of  the  AEC,
    is  motivated  primarily  by  the  hope  that  from  knowledge  gained  in  the
    military  applications  of  atomic  energy  will  come  a  future  industry
    based  on  atomic  power.

    The  shape  of  atomic  powerplants  to  come  has  been  the  subject  of
    speculation  and  prediction  on  the  part  of  many  of  the  people  who
    have  participated  in  these  hearings.  If  the  choice  between  helium-
    cooled    reactors,    light-water-    or   heavy-water-cooled   reactors,    and

    ATOMIC    POWER    DEVELOPMENT  505.

    liquid-metal-cooled  reactors,  is  still  in  some  doubt,  and  if  there  re-
    main some  unresolved  questions  concerning  natural  or  enriched  fuel
    and  a  homogeneous  versus  a  heterogeneous  core  design  as  well  as  the
    choice  of  neutron  spectrum,  there  should  be  no  reasonable  doubt  that
    cheap  atomic  power  is  not  just  around  the  corner.  Carbonaceous  fuels
    are  so  cheap  and  abundant  that  their  contribution  to  the  cost  of  elec-
    tricity in  present-day  plants'  is  generally  much  less  than  the  contri-
    bution of  plant  investment  and  operation.

    For  this  reason  the  saving  in  the  cost  of  the  fuel  required  in  con-
    ventional plants,  although  an  ultimate  possibility  in  atomic  power-
    plants,  does  not  present  an  immediate  objective  of  vital  consequence.
    Hence,  the  problem  of  building  an  atomic  powerplant  which  will  com-
    pete economically  with  a  powerplant  burning  conventional  fuel  re-
    duces to  the  problem  of  designing  and  building  a  nuclear  boiler  which
    will  compete  in  investment  and  operation  expense  with  a  conventional
    steam  boiler.  This  nuclear  boiler,  or  nuclear  reactor,  is  presently  en-
    crusted with  stainless  steels,  semirare  metals,  and  expensive  alloys,
    and  is  surrounded  with  complex  associated  gear,  and  is  the  most  ex-
    pensive part  of  the  atomic  powerplant.  One  must  anticipate  that  a
    vast  program  of  research,  engineering  investigation,  and  pilot  plant
    construction  and  operation  extending  many  years  into  the  future  and
    costing  Imndreds  of  millions  of  dollars  will  be  required  before  the
    goal  of  economical  atomic  power  can  be  said  to  be  in  sight.

    If  this  be  true,  as  I  believe,  it  is  pertinent  to  ask  why  any  changes
    in  the  Atomic  Eneigy  Act  should  be  contemplated  at  this  time.  I
    think  a  persuasive  answer  can  be  given  to  tliis  question.  First,  in
    spite  of  the  great  technical  difficulty  and  exceptional  cost  of  develop-
    ing economical  atomic  powerplants,  our  most  capable  scientists  and
    engineers  believe  that  this  goal  is  ultimately  attainable.  Second,  the
    great  rate  at  which  we  are  using  up  fossil  fuels,  and  particularly  the
    great  rate  at  which  this  usage  is  increasing  each  decade,  indicates  that,
    although  our  fuel  supplies  will  last  well  into  the  future,  we  will  prob-
    ably begin  to  experience  a  fuel  shortage  within  the  life  span  of  people
    now]  living.

    Third,  the  experience  of  industry  in  designing,  building,  and  oper-
    ating the  gi'eat  American  power  systems  must  be  brought  to  bear  upon
    this  problem  if  the  project  is  to  succeed  ultimately.

    There  is  every  indication  that  industry  is  willing  and  anxious  to
    participate  to  an  increasing  extent  in  the  development  of  atomic  power.
    If  private  capital  is  to  be  invested  in  this  great  enterprise,  some  of
    the  provisions  of  the  present  Atomic  Energy  Act  pertaining  to  own-
    ership, patent,  legal,  and  competitive  matters  should  be  revised.  The
    Atomic  Energy  Act  of  1946  was  the  result  of  careful  and  thoughtful
    deliberations  on  the  problems  imposed  by  the  advent  of  atomic  energy,
    primarily  with  respect  to  its  military  applications.  The  nonmilitary
    uses  of  atomic  energy  were  foreseen,  but  not  provided  for  specifically
    in  the  act.  If  the  great  resources  of  our  free  enterprise  system  are  to
    play  a  responsible  role  in  this  development,  some  of  the  elements  of
    complete  government  monopoly  must  be  changed  in  recognition  of  this
    participation.  We  believe  that  changes  may  be  made  in  the  act  which
    will  greatly  encourage  the  participation  of  private  industry  without
    in  any  way  compromising  "the  paramount  objective  of  assuring  the
    common  defense  and  security."  For  example,  under  the  present  act
    the  ownership  of  all  fissionable  material  is  vested  in  the  Government.

    506  ATOMIC    POWER    DEVELOPMENT

    We  believe  that  with  proper  provisions  for  licensing  by  the  Govern-
    ment and  under  security  regulations  established  by  the  Government,
    private  ownership  of  fissionable  materials  should  be  permitted.

    Furthermore,  under  such  conditions  of  security  a  licensee  should
    not  be  limited  in  the  amount  of  fissionable  material  which  he  may  own.
    We  believe  that  the  Government  should  also  license  private  industry
    to  manufacture  and  use  equipment  or  facilities  for  nonmilitary  appli-
    cations of  fissionable  materials  which  ma}^  be  developed  by  private
    industry,  and  with  private  capital  should  be  allowed  to  grow  and
    progress  in  a  competitive  fraraework.  Consistent  with  this  objective,
    a  licensee  should  not  be  required  to  make  available  to  all  others  infor-
    mation which  he  has  developed  by  the  expenditure  of  his  own  capital.

    Since  substantial  investments  may  ultimately  be  involved,  the  pro-
    visions of  the  amended  act  should  not  permit  the  capricious  or  arbi-
    trary cancellation  of  such  licenses,  providing,  of  course,  that  the  licen-
    see is  not  in  violation  of  regulations  concerning  health,  safety,  or  na-
    tional security.

    The  patent  provisions  of  the  Atomic  Energy  Act  of  1946  are  very
    special  and  clearly  did  not  provide  for  the  participation  of  competi-
    tive industry  in  atomic  energy  developments  except  as  a  contractor
    of  the  Government.  Upon  this  question  Mr.  W.  A.  Steiger  of  the
    NAM  committee  on  patents  will  comment  in  detail.

    A  brief  summary  of  the  principles  which  the  NAM  believes  should
    be  incorporated  in  any  law  relating  to  atomic  energy  follows :

    The  first  and  foremost  objective  should  be  to  assure  the  common  defense  and
    security  of  the  United  States.

    Subject  to  the  above,  we  believe  the  following  principles  should  be  embodied :

    (1)  The  law  should  be  directed  toward  the  development  and  utilization  of
    atomic  energy,  to  improve  the  public  welfare,  increase  the  standard  of  living,
    strengthen  free  competition  in  private  enterprise,  and  promote  world  peace.

    (2)  The  Government  should  control  the  development  and  manufacture  of
    military  weapons  employing  fissionable  materials.

    (3)  An  agency  of  the  Government  should  be  empowered  to  i>ermit  ownership
    of  fissionable  materials  by  operators  of  facilities  of  a  nonmilitary  nature  licensed
    by  the  Government  and  operating  under  safety  and  security  regulations  estab-
    lished by  the  Government.

    (4)  There  should  be  no  limitation  on  the  amount  of  fissionable  material  which
    the  Government  may  sell  or  distribute  to  a  licensee  for  nonmilitary  use  after
    military  needs  have  been  met.

    (5)  The  Government  agency  should  be  empowered  to  license  applicants  to
    develop,  manufacture,  use,  or  own  apparatus  or  facilities  for  industrial,  com-
    mercial, or  other  nonmilitary  uses  wherein  fissionable  material  Is  used  or
    produced.

    (6)  No  person  should  be  required,  as  a  condition  of  his  license,  to  provide
    the  Government  aa:ency  with  technical  information  and  data,  except  as  may
    be  reasonably  necessary  to  administer  health,  safety,  or  national  security  laws
    or  regulations.

    (7)  No  license  granted  by  the  Government  should  be  terminable  by  the  Gov-
    ernment except  for  deliberate  violation  by  the  licensee  of  health,  safety,  or
    national  security  regulations  established  by  the  Government.

    (8)  All  patentable  inventions  relating  to  the  field  of  atomic  energy  should
    be  patentable  by  the  inventor  under  the  patent  laws  of  the  United  States  subject
    to  the  procedures  followed  on  other  items  of  national  defense.

    (9)  That,  in  contracts  granted  by  the  Government  to  private  contractors,  the
    patent  clauses  in  such  contracts  should  conform  to  the  practice  prevailing  in
    the  armed  services  procurement  regulation  for  products  of  a  nonatomic  nature.

    Mr.  Chairman,  I  would  like  to  suggest,  if  I  may,  that  Mr.  Steiger
    present  his  testimony,  which  is  continguous  to  my  own.

    Chairman  Cole.  Very  well,  unless  some  member

    Representative  Holifielu.  You  mean  before  questioning  occurs?

    ATOMIC    POWER    DEVELOPMENT  507

    Dr.  Suits.  Yes,  if  you  please,  because  I  suspect  that  some  of  the
    questions  may  bear  upon  the  testimony  of  both  of  us.
    Chairman  Cole.  We  will  hear  from  Mr.  Steiger  now.

    STATEMENT  OF  WILLIAM  A.  STEIGER,  VICE  CHAIRMAN,  COM-
    MITTEE ON  PATENTS,  NATIONAL  ASSOCIATION  OE  MANUFAC-
    TURERS

    Mr.  Steiger.  Mr.  Chairman  and  members  of  the  committee,  my
    name  is  William  A.  Steiger.  I  am  vice  chairman  of  the  committee
    on  patents  of  the  National  Association  of  Manufacturers,  and  I  am
    speaking  for  that  association.

    The  National  Association  of  Manufacturers  has  adopted  a  state-
    ment of  principles,  including  two  principles  relating  to  patents  in
    the  atomic-energy  field,  which  principles  have  been  referred  to  by
    Dr.  Suits.  ^  These  principles  are  in  accord  with  our  American  patent
    system  which  was  established  when  our  Constitution  delegated  power
    to  the  Congress  to  authorize  the  granting  of  patents.  Since  the  first
    Congress,  this  country  of  ours  has  been  blessed  with  patent  laws  which
    have  stimulated  individuals  and  corporations  to  invest  their  time
    and  money  in  the  creation  of  new  or  better  products.  As  President
    Lincoln  said :

    The  patent  system  added  the  fuel  of  interest  to  the  fire  of  genius.

    In  the  words  of  the  National  Patent  Planning  Commission,  ap-
    pointed by  the  late  President  Roosevelt :

    Our  patent  system  has  contributed  to  the  achievement  of  the  highest  stand-
    ard of  living  that  any  nation  has  ever  enjoyed.

    Now,  in  view  of  the  proven  success  of  our  patent  S3'Stem,  do  we
    need  a  different  patent  law  for  atomic  energy  than  for  radar,  jet
    engines,  or  clothes- washing  machines  ?

    SECURITY

    Well,  first  of  all,  there  is  the  question  of  security.  I  wish  to  repeat
    what  Dr.  Suits  has  said :  that  NAM  believes  that  security  is  paramount
    and  that  all  other  considerations  are  secondary.  However,  we  have
    this  very  same  question  of  security  in  nonatomic  weapons  and  many
    other  national  defense  items  of  a  classified  nature.  We  already  have
    the  Espionage  Act,  we  have  provisions  in  title  35  of  the  United  States
    Code  on  Patents — sections  181-188 — prohibiting  the  issuance  of  any
    patent  detrimental  to  national  securit}^,  and  we  have  the  armed  serv-
    ices procurement  regulations  on  classified  contracts.

    Under  existing  law,  an  inventor  may  file  a  patent  application  in  the
    United  States  Patent  Office  but  that  patent  application  cannot  issue
    as  a  patent  if,  in  the  opinion  of  the  Government  authorities,  its
    issuance  would  be  detrimental  to  national  security.  Such  a  patent
    application  remains  in  secrecy  in  the  Patent  Ofiice  until  such  time  as
    the  Government  authorities  declassify  it.  However,  when  the  patent
    issues,  it  is  the  prerogative  of  the  inventor  to  exploit  his  patent  in  the
    normal  commercial  way.  The  security  laws  with  respect  to  patents
    generally  have  proven  adequate,  so  where  is  the  necessity  for  a  dif-
    ferent law  with  respect  to  patents  in  the  atomic  field?

    36740—53 33

    508  ATOMIC    POWER    DEVELOPMENT

    Just  suppose  we  had  one  security  law  for  guns,  another  for  elec-
    tronics, another  for  jet  engines.  The  result  would  be  utter  confusion.
    So  it  appears  to  us  that  the  security  aspects  are  already  taken  care  of
    by  existing  legislation.

    The  next  question  is :  Wliat  inventions  should  be  patentable  ?

    The  Atomic  Energy  Act  provides  that  many  inventions  relating  to
    atomic  energy  cannot  be  patented.  Furthermore,  patents  granted  on
    inventions  useful  in  both  the  atomic  and  nonatomic  fields  have  no  force
    or  effect  in  the  atomic  field.  The  act  also  provides  that  the  Govern-
    ment might,  if  it  sees  fit,  compensate  inventors  who  have  been  denied
    their  patent  rights.

    We  say  that  Congress  should  make  all  such  inventions  patentable,
    if  they  meet  the  existing  statutory  requirements  and  thus  afford  the
    inventor  an  opportunity  to  seek  his  reward  in  the  normal  way.  This
    is  the  democratic  way.  No  offer  of  reward  by  any  Government  agency
    in  lieu  of  a  patent  will  ever  provide  a  satisfactory  inducement  for  sub-
    stantial investment  of  private  risk  capital.  No  man  or  group  of  men,
    either  in  industry  or  in  government,  can  appraise  the  potential  value
    of  an  invention  for  the  next  17  years  with  any  degree  of  accuracy.

    Next  we  come  to  ownership  of  patents.

    The  present  act  prevents  ownership  of  patents  on  certain  activities
    in  the  atomic  field.  NAM  believes  that,  subject  to  existing  security
    regulations,  any  inventor  should  have  the  right  to  apply  for  and  own
    patents  in  any  phase  of  the  atomic  field.  This  is  in  accordance  with
    our  established  patent  laws  and  in  accordance  with  the  practices  pre-
    vailing on  other  items  of  national  defense  which  affect  national  secu-
    rity. However,  with  respect  to  atomic  weapons,  NAM  believes  that
    the  Government  should  control  their  development  and  manufacture,
    but  if  someone  should,  with  his  own  resources,  invent  something  which
    is  of  importance  to  the  military,  that  invention  should  be  patentable  by
    him  subject  again,  of  course,  to  existing  security  regulations.  The
    committee  should  keep  in  mind  that  we  already  have  on  the  statute
    books  a  law— act  of  June  25,  1948  (28  U.  S.  Code  1498)— whereby  the
    owner  of  a  patent  cannot  prevent  the  Government  from  utilizing  his
    invention,  the  owner's  only  remedy  being  a  suit  for  damages  for  patent
    infringement  in  the  United  States  Court  of  Claims.

    The  present  Atomic  Energy  Act  also  provides  that  any  invention
    which  utilizes  or  is  essential  in  the  utilization  of  fissionable  material
    or  atomic  energy  may  be  declared  affected  with  tlie  public  interest,
    whereupon  the  Commission  is  licensed  and  the  owner  of  the  patent
    is  required  to  license  others,  the  owner  of  the  patent  being  entitled
    to  a  reasonable  royalty.  This  provision,  of  course,  is  directed  to
    inventions  made  at  the  individual's  expense  and  is  generally  known  as
    compulsory  licensing.

    This  means  that,  until  the  present  act  is  amended  or  superseded,
    any  patented  invention  is  available  to  anyone  in  the  discretion  of  the
    Commission.  Legislation  for  general  compulsory  licensing  of  patents
    has  been  proposed  many  times  and  considered  by  committees  of  Con-
    gress. However,  no  such  law  has  ever  been  enacted.  The  reason
    for  not  enacting  such  a  law  is  that  it  lessens  the  value  of  patents
    and  the  incentive  to  invent,  and  has  been  opposed  always  by  small
    manufacturers.  Many  small  manufacturers  ovre  their  existence  to
    their  patent  position,  and  it  is  unquestionably  true  tliat  such  a  law,

    ATOMIC    POWER    DEVELOPMENT  509

    whether  it  be  in  atomic  energy  or  applicable  generally,  is  in  favor
    of  the  manufacturer  who  does  not  spend  money  on  new  developments.
    Compulsory  licensing  eliminates  the  need  for  making  new  inventions,
    since  it  does  not  make  it  necessary  to  carry  on  research  and  develop-
    ment in  order  to  avoid  the  patents  of  a  competitor.  Atomic  energy
    will  develop  at  the  fastest  rate  if  privately  owned  patents  prohibit
    the  copying  of  the  work  of  others,  and  require  original  development
    by  each  company  in  the  field.

    From  now  on,  it  is  not  likely  that  any  individual  or  company  can
    monopolize  atomic  power  by  a  basic  patent,  as  the  basic  information
    has  already  been  published  or  is  in  the  control  of  the  Commission.
    The  advances  in  the  art  from  now  on  will  be  confined  to  improvement
    inventions,  such  as  those  for  increasing  efficiency  and  reducing  cost.
    If  private  industry  is  encouraged  through  the  vehicle  of  normal  patent
    practice  to  contribute  its  own  money  in  this  effort,  more  inventions
    will  be  made,  the  art  will  advance  at  a  more  rapid  rate,  and  Govern-
    ment participation  and  expense  should  ultimately  become  less.  Dif-
    ferent manufacturers  will  assume  different  approaches  to  the  problem,
    and  there  will  ultimately  emerge  competitive  systems  different  in  de-
    tailed aspects,  one  from  the  other,  with  each  manufacturer  probably
    having  some  patent  protection  on  his  specific  contribution,  each  manu-
    facturer striving  to  have  the  lowest  cost  and  each  manufacturer  con-
    tending that  his  system  is  the  best.  Private  ownership  of  patents
    within  the  framework  of  the  antitrust  laws  has,  historically,  never
    had  a  tendency  to  impede  the  advancement  of  an  art  or  to  restrict
    competition.  This  is  free  enterprise  with  its  resultant  benefits  to  the
    public.  It  is  a  proven  system.  It  has  been  successful  in  all  other
    arts ;  why  should  it  not  work  in  atomic  power  ?  NAM  believes,  there-
    fore, that  the  time  has  come  when  no  manufacturer  can  monopolize
    this  art  through  patents  and,  therefore,  that  this  compulsory  licensing
    provision  of  the  present  act  should  be  terminated.

    The  next  question  is  patent  provisions  of  contracts  between  the
    Government  and  private  contractors.

    First,  let  us  take  the  case  where  the  Government  finances  the
    development.

    Under  the  armed-services  procurement  regulations,  it  has  been  the
    prevailing  practice  for  the  armed  services  to  grant  research  or  devel-
    opment contracts  with  a  provision  that  the  contractor  gi'ant  the  Gov-
    ernment a  royalty- free,  nonexclusive  license  under  any  patent  cover-
    ing inventions  made  in  the  course  of  performing  the  work  under  the
    contract.  With  this  type  of  patent  provision,  the  armed  services  have
    been  highly  successful  in  attracting  the  most  competent  people  in  in-
    dustry to  undertake  their  research  and  development  problems,  many
    of  a  classified  nature.

    It  should  be  remembered  that  there  is  little  or  no  profit  motive  in
    such  contracts.  Leaving  aside  patriotic  responsibility,  such  contracts
    are  attractive  to  the  manufacturer  only  because  they  may  increase  liis
    technical  knowledge  and  because  he  may  obtain  patents  of  value  in
    the  non-Government  field.  Because  of  these  inducements,  it  is  gen-
    erally agreed  that  the  armed  services  have  been  very  successful  in
    attracting  the  most  competent  people  to  assume  these  contracts,  with
    consequent  saving  in  cost  to  the  taxpayer  and  with  a  material  decrease
    in  the  time  required  to  attain  the  objective.    It  is  recommended,  there-

    510  ATOMIC    POWER    DEVELOPMENT

    fore,  that  in  granting  research  and  development  contracts,  as  distin-
    guished from  supply  contracts — contracts  for  standard  commercial
    supplies — the  Government  follow  this  same  proven  procedure  in  the
    atomic-energy  field.  It  has  worked  successfully  in  many  projects
    of  a  highly  classified  nature,  and  it  is,  therefore,  urged  that  this  pol-
    icy be  adopted  jjy  the  Commission  in  its  future  contracts  of  this  na-
    ture. NAM  fails  to  see  any  real  difference  between  Government  con-
    tracts pertaining  to  atomic  energy  and  those  dealing  with  other  items
    of  national  defense.  Both  may  be  subject  to  top  security  classifica-
    tion and  both  involve  expenditure  of  public  funds  for  research  and
    development,  and,  therefore  both  should  be  treated  in  the  same
    manner.

    Now  we  have  the  other  problem  where  the  contractor  himself
    finances  the  development.

    As  stated  heretofore,  NAM  believes  that,  if  an  individual  or  manu-
    facturer, with  his  own  money,  invents  or  develops  in  the  atomic  field,
    he  should,  subject  to  security  regulations,  own  the  patents  covering
    the  same  in  no  different  way  than  if  he  invested  time  and  money  in
    the  nonatomic  field.  However,  if  such  a  manufacturer  should  obtain
    technical  or  scientific  assistance  from  the  Government,  he  should,  as
    consideration  for  such  assistance,  be  required  to  grant  to  the  Govern-
    ment a  royalty-free,  nonexclusive  license  under  any  invention  made
    in  the  course  of  his  work  on  the  project.  The  licenses  granted  would
    give  the  Government  all  of  the  patent  rights  it  requires  or  can  pos-
    sibly use,  and  such  a  policy  would  stimulate  private  endeavor  in
    this  field.

    Summing  up  the  patent  aspects,  NAM  believes  that,  in  the  future,
    patent  procedure  should  be  in  accordance  with  established  patent
    practice  and  established  security  and  procurement  regulations  of  the
    armed  services;  that  is:

    (a)  All  patent  activities  should  be  subject  to  existing  security
    regulations ;

    (h)  Every  invention  meeting  the  prevailing  statutory  provisions
    of  our  patent  laws  should  be  patentable ;

    (c)  Where  an  invention  is  made  without  direct  assistance  from  the
    Government,  either  financial  or  scientific,  the  inventor  should  be
    entitled  to  complete  ownership  of  the  patent;

    (d)  Where  the  Government  finances  a  research  or  development
    project,  the  contractor  should  own  the  patents  subject  to  a  free,  non-
    exclusive license  to  the  Government  for  governmental  purposes;  and

    (e)  AVliere  a  manufacturer  or  individual  spends  his  own  time  and
    money  in  research  or  development  but  requests  and  obtains  technical
    or  scientific  assistance  from  the  Government,  he  should  be  required
    to  grant  to  the  Government  a  free,  nonexclusive  license  for  govern-
    mental purposes.

    In  addition  to  this  report,  I  would  just  like  to  add  a  personal  com-
    ment at  this  time,  and  that  is,  I  think  as  far  as  the  present  Atomic
    Energy  Act  is  concerned  in  its  patent  aspects,  those  patent  aspects
    liave  been  to  date  very  ably  administered  by  the  Atomic  Energy
    Commission.

    In  conclusion,  I  would  like  to  thank  the  committee  for  giving  the
    NAM  an  opportunity  to  present  its  views.  We  appreciate  it  very
    much.

    ATOMIC    POWER    DEVELOPMENT  511

    Chairman  Cole.  Do  tlie  members  have  any  questions  of  either  of
    these  gentlemen?     Mr.  Holilield?

    liepresentative  Holifield.  Dr.  Suits,  I  atouUI  like  to  address  a
    question,  on  page  5  of  your  statement.  You  state  there  that  the
    Government  should  control  tlie  development  and  manufacture  of
    military  weapons  employing  fissionable  material,  but  you  do  not  say
    that  they  should  control  the  fissionable  material  which  makes  those
    w^eapons  explosive  and  destructive.

    Is  that  your  meaning?  Do  you  mean  to  restrict  control  of  the
    development  and  manufacture  of  military  weapons,  without  giving  the
    same  coiitrol  to  the  Goveinment  on  the  fissionable  materials  which
    make  them  a  weapon?

    Dr.  Suits.  I  am  not  certain  I  understand  your  question,  Mr.  Holi-
    field.

    Representative  Holifield.  Let  us  go  over  it  again.  This  is  para-
    graph No.  2,  on  page  5  :

    The  Government  should  control  the  development  and  manufacture  of  military
    weapons  employing  fissionable  materials.

    Let  us  make  it  very  simple.  Let  us  compare  it  to  a  gun  and  to  the
    bullet  or  the  cartridge  in  the  gun.  You  advocate  that  the  Government
    shall  control  the  gun,  but  shall  not  control  the  cartridge  that  goes  in  it ;
    is  that  right  ?

    Dr.  Suits.  "Wliat  we  advocate  is  that  fissionable  materials  should  be
    made  subject  to  private  ownership  under  proper  conditions  of  security
    and  safety.

    Representative  Holifield.  But  not  with  Government  control  ?

    Dr.  Suits.  Without  Government  control  except  in  matters  pertain-
    ing to  security  and  safety.

    Representative  Holifield.  I  just  want  to  know  what  you  mean.

    In  section  (4)  you  say :

    There  should  be  no  limitation  on  the  amount  of  fissionable  material  which  the
    Gvernment  may  sell  or  distribute  to  a  licensee  for  uonmilitary  use  after  military
    needs  have  been  met.

    Do  you  mean  by  that  that  there  should  not  be  a  fair  allocation  of  the
    available  surplus  to  industrial  users  after  the  military  needs  have
    been  met  ?

    Dr.  Suits.  No.  What  we  mean  is  that  the  limitation  embodied  in
    the  present  act  which  would  make  it  impossible  to  acquire  enough
    fissionable  material  to  run  a  reactor,  should  be  removed.

    Representative  Holifield.  But  replacement  materials  or  the  original
    materials  would,  of  course,  be  subject  to  fair  allocation  by  the
    Government  ?

    Dr.  Suits.  Certainly.

    Representative  Holifield.  So  you  do  not  mean  that  a  limitation
    should  be  applied  in  that  sense.

    Dr.  Suits.  No.     That  is  right.

    Representative  Holifield.  No.  (6)  :

    No  persons  should  be  required,  as  a  condition  of  his  license,  to  provide  the
    Government  agency  with  technical  information  and  data,  except  as  may  be
    reasonably  necessary  to  administer  health,  safety,  or  national  security  laws  or
    regulations.

    Recognizing  the  fact  that  any  patent  that  might  be  obtained  or  any
    information  that  might  be  developed  from  this  point  onward  rests

    512  ATOMIC    POWER    DEVELOPMENT

    on  the  great  body  of  technical  information,  the  use  of  machinery  and
    processes  which  have  been  developed  at  Government  expense,  you  yet
    feel  that  there  is  no  obligation  on  the  part  of  any  person  who  uses
    all  that  great  body  of  information  to  give  to  the  Government  knowledge
    which  he  may  develop,  even  for  national  defense  ?

    Dr.  Suits.  Yes ;  that  is  exactly  the  way  I  feel.

    Let  me  explain  it  in  these  terms :  The  $12  billion  investment  which
    has  been  made  in  the  atomic  establishment  has  been  made  for  the
    purpose  of  developing  the  military  position  and  acquiring  a  stockpile
    of  atomic  bombs,  and,  in  our  feeling,  has  been  well  spent.  The  by-
    product technology  and  scientific  knowledge  that  we  are  concerned
    with  here  may  have  an  application  to  the  development  of  atomic  power-
    plants,  and  the  improvements  and  inventions  based  on  developments
    which  have  been  made  by  the  Government,  if  they  are  developed  with
    private  funds  and  private  investment,  we  feel  the  title  to  those  inven-
    tions should  rest  with  the  individuals  or  companies  who  make  the
    investment.

    Representative  Holifield.  Then  you  are  taking  the  position  that
    the  Government,  which  has  paid  for  this  investment  with  tax  money,
    shall  derive  no  other  benefit  out  of  this  project  except  that  of  the
    military.  In  other  words,  correlated  with  the  development  of  mili-
    tary weapons,  there  also  has  been  developed  knowledge  which  is  of
    benefit  in  the  field  of  health,  biology,  and  public  power;  and  the
    Government  should  give  all  of  that  freely  away  at  this  time  without
    any  obligation  on  the  part  of  the  favored  few  who  receive  it  to  pass
    such  information  on  to  the  people  ?

    Dr.  Suits.  Let  me  give  you  the  analogy  of  this  situation  which  is
    found  in  present  practice  of  the  Government  when  contracting  with
    industry  for  research  and  development.

    If  an  industrial  firm  at  present  undertakes  a  development  contract
    for  the  Government,  it  receives,  as  Mr.  Steiger  has  indicated,  the  right
    to  the  nonmilitary  or  nongovernmental  uses  of  any  resulting  inven-
    tions, and  the  Government  receives  a  free  license  for  governmental
    a  pplications.  Such  contracts  take  no  cognizance  whatever  of  the  know-
    how  that  may  have  been  developed  by  the  industrial  contractor  prior
    to  this  contract.

    Representative  HoLiFi:eLD.  But  he  developed  that  at  his  own  expense.

    Dr.  Suits.  That  is  right,  but  he  gets  no  credit  for  that.  We  think
    tliat  situation  is  entirely  analogous  to  the  situation  here.  The  indi-
    vidual company  has  developed  that  knowledge  for  previous  purposes,
    and  has  put  it  to  use  in  a  regular  line  of  products  which  presum-
    ably justified  the  development  in  the  first  instance.

    In  the  case  of  the  atomic  field,  we  think  that  the  military  applica-
    tions of  atomic  energy  have  been  the  justification  of  the  Government's
    investment,  and  that  the  byproduct  knowledge  must  be  greatly  ex-
    panded and  further  developed  before  it  has  application  to  atomic
    power;  to  the  extent  that  private  investment  furthers  that  develop-
    ment, the  private  company  should  have  title  to  the  resulting  patents.

    Representative  Holifield.  Your  position,  if  I  understand  it,  then,
    is  that  all  knowledge  and  technical  information  that  has  been  devel-
    oped, outside  that  of  military  application,  shall  now  be  made  available
    to  those  who  have  the  funds  to  participate — and  there  must  of  neces-
    sity be  a  limited  number  in  the  power  field  particularly,  because  of
    the  amount  of  money  necessary  to  build  these  reactors — that  all  this

    ATOMIC    POWER    DEVELOPMENT  513

    inforaiation  should  be  given  to  these  people  without  any  obligation
    on  their  part  to  the  Government  to  recompense,  either  through  pay-
    ment for  that  information  or  through  obligation  to  transfer  resultant
    benefits  which  there  may  be,  to  the  people  who  paid  for  the  original
    basic  store  of  knowledge  ?

    Dr.  Surrs.  Let  me  give  this  additional  explanation.  One  can
    imagine  that  in  the  future  development  of  atomic  power  there  will  be
    requests  upon  Government  laboratories  for  additional  information
    and  data  and  reports.

    Representative  Holifield.  That  is  another  subject.  Let  us  confine
    ourselves  to  my  question,  please.

    Dr.  Suits.  We  feel  that  such  additional  burdens  that  may  be  placed
    on  govermnental  laboratories  could  properly  be  paid  for  and  charged
    for  at  cost.

    Representative  Holifield.  But  why  should  you  not  pay  for  the  past
    burdens  that  have  been  put  upon  laboratories?

    Dr.  Suits.  Because  we  feel  that  the  past  burden  has  been  already
    paid  for  in  the  military  development,  and  that  the  public  has  been
    the  beneficiary  in  the  atomic  weapons  stockpile.

    Representative  Holifield.  Of  course,  that  would  be  true  in  the
    future ;  any  future  burdens  paid  for  by  the  Government  would  prob-
    ably inure  to  the  military  protection  of  the  people.

    Dr.  Suits.  Yes.

    Representative  Holifield.  In  the  same  way.  I  suppose  you  would
    want  those  passed  on  to  the  industrial  users  on  the  same  basis,  without
    any  recompense  to  the  Government.

    Dr.  Suits.  Only  to  the  extent  to  which  they  have  been  paid  for  by
    private  investment.  If  they  have  been  developed  for  governmental
    purposes,  the  Government  should  make  the  first  and  primar}'  use  of
    them..

    Representative  Holifield.  Why  do  you  draw  the  line  between  the
    knowledge  which  has  been  produced  to  the  present  time,  and  knowl-
    edge which  may  be  produced  in  the  future  from  governmental  expendi-
    tures ?

    Dr.  Suits.  I  draw  no  such  line.

    Representative  Holifield.  Then  you  are  readv  to  pay  for  this  inci-
    dental knowledge  or  byproduct  Imowledge  obtained  in  the  past  ?  You
    are  ready  now  to  go  in  and  pay  the  Government  for  that,  are  you?

    Dr.  Suits.  Only  to  the  extent  to  which  a  proper  burden  is  imposed
    upon  Government  laboratories  for  requests  for  additional  specific
    information.

    Representative  Holifield.  But  the  information  which  already  has
    been  obtained,  the  processes,  the  metallurgical  development,  and  all
    that  sort  of  thing — you  want  that  free  at  this  time?

    Dr.  Suits.  I  think  they  should  be  made  available  to  those  citizens
    who  have  it  in  their  power  to  put  it  to  use  for  the  ultimate  benefit  of
    the  country.

    Representative  Holifield.  I  just  wanted  to  know  where  j^ou  stood
    on  it.

    In  No.  (7),  you  say:

    No  license  granted  by  the  Government  should  be  terminable  by  the  Govern-
    ment except  for  deliberate  violation  by  the  licensee  of  health,  safety,  or  national
    security  regulations  established  by  the  Government.

    514  ATOMIC    POWER    DEVELOPMENT

    Would  you  preclude  that  license  from  termination  by  the  Gov-
    ernment for  emergency  military  use  in  case  it  were  necessary  to  have
    the  product  of  that  factory?

    Dr.  Suits.  No.  I  think  a  military  emergency  would  be  an  over-
    riding consideration.

    Representative  Holifield.  Mr.  Steiger,  in  your  statement,  at  the
    bottom  of  page  2  and  the  top  of  page  3,  you  say :

    Just  suppose  we  had  one  security  law  for  guns,  another  for  electronics,
    another  for  jet  engines.  The  result  would  be  utter  confusion.  So  it  appears
    to  us  that  the  security  aspects  are  already  taken  care  of  by  existing  legisla-
    tion.

    Do  you  mean  by  that  that  there  is  no  basic  factor  or  consideration
    in  your  mind  between,  let  us  say,  a  machinegun  and  a  power  or  a
    gadget  that  is  as  destructive,  potentially  or  actually  destructive,  as  the
    atomic  bomb?

    Mr.  Steiger.  Yes,  Congressman.  Of  course,  I  am  talking  only  of
    the  patent  aspects.

    Representative  Holifield.  You  want  the  same  principles  of  patent
    to  apply  to  a  force  as  destructive  as  the  atomic  bomb  as  you  would
    to  a  revolver?

    Mr.  Steiger.  No.  In  other  words,  we  have  developments  today  for
    national  defense  which  are  in  the  top  security  classification.  Those
    inventions  are  handled  under  our  existing  security  laws.  So  far  as
    all  of  us  know,  the  security  laws  have  been  adequate  to  protect  those
    highly  classified  developments.  There  are  just  as  highly  classified
    or  just  as  important  from  the  classification  standpoint  and  from  the
    security  standpoint  as  atomic  energy.  They  have  been  protected
    throuffh  the  existing  security  laws,  so  far  as  we  know.

    Representative  Holifield.  Would  you  say  any  of  these  inventions
    are  as  capable  of  mass  destruction  as  atomic  weapons  are  capable  of?

    Mr.  Steiger.  That  is  a  diffcult  question  to  answer,  Congressman.
    You  take  the  radar-si ffhting  equipment  for  the  bomb,  take  the  air-
    plane which  has  to  deliver  the  bomb,  the  jet  engines  that  drive  the
    airplane.  Wouldn't  you  consider  that  many  of  those  things  were  as
    important  as  the  bomb  from  the  national  defense  standpoint?

    Representative  Holifield.  No  ;  I  would  not  consider  them  so,  from
    the  standpoint  of  security.  We  loiow  every  country  in  the  world
    has  airplanes.  We  know  that  every  country  in  the  world — I  am
    sneaking  now  of  the  larger  countries — has  jet  planes.  We  know
    they  have  radar.  But  there  are  areas  within  the  atomic  field  which
    we  believe  as  yet  have  not  been  entered  bv  other  countries.  Maybe
    we  are  wrong.  Certainly  we  should  consider  that  point  in  the  releas-
    ing of  information  and  making  known  to  the  public  information  on
    that,  on  anything  which  has  to  do  with  the  production  of  atomic
    weapons.  In  other  words,  it  seems  to  me  that  it  should  be  in  a  field
    pretty  much  by  itself  because  of  its  degree  of  destructiveness,  and
    that  we  must  consider  it  more  carefully  than  we  would  some  of  these
    other  industrial  secrets  which  we  know  are  known  to  other  countries.

    Mr.  Steiger.  T  see  your  viewpoint.  I  think  we  all  agree  we  want
    the  best  security  we  can  get.

    Representative  Holifield.  The  same  question  on  page  5.  You  speak
    there  of  compulsory  licensing  of  patents.  It  has  been  proposed  many
    times,  and  you  say  that  no  such  law  has  ever  been  enacted.  My  same
    line  of  reasoning  would  be,  is  not  this  an  unusual  case?     The  develop-

    ATOMIC    POWER    DEVELOPMENT  515

    ment  of  the  atomic  bomb,  with  its  tremendous  destructive  power,
    is  such  an  unusual  case,  and  the  difficulty  of  dividing  or  compart-
    mentalizing the  civilian  type  of  information  from  the  military  type
    of  information,  and  the  difficulty  of  handling  the  material  on  the
    one  hand  for  a  reactor  and  on  the  other  hand  for  a  bomb — in  other
    words,  because  of  the  duality  of  its  use,  it  seems  that  we  have  an  unusual
    case  here,  just  as  miusual  today  as  it  was  in  1946  when  we  made  some
    unusual  patent  legislation.

    Mr.  Stetger.  It  always  has  been  opposed  by  small  manufacturers,
    because  small  manufacturers  make  specialty  items.

    Representative  Holifield.  I  realize  that,  sir,  and  in  my  own  heart
    I  have  opposed  it,  too.  But  I  am  looking  at  this  with  my  knowledge
    of  the  importance  of  the  matter  which  we  are  handling.  To  ask  for
    compulsory  patenting  on  a  vacuum  sweeper  or  any  of  the  other  normal
    gadgets  we  use  in  civilian  life,  is  one  thing.  But  to  ask  for  compulsory
    licensing  on  a  new  development  which  can  be  used  for  a  duality  of
    purposes,  it  seems  to  me  other  factors  enter  into  it.

    Mr.  Steiger.  I  am  sympathetic  with  you  on  your  previous  question,
    but  on  this,  of  course,  it  doesn't  involve  security.  If  you  have  com-
    pulsory licensing  you  won't  have  the  amount  of  inventing.  We  all
    have  a  tendency  to  copy  the  other  fellow  if  we  can  do  it,  so  we  won't
    invent  our  own  or  better  ones.  We  w^ould  all  have  the  same  kind  of
    washing  machine  or  the  same  kind  of  automobile.

    Representative  Hoofteld.  Let  us  consider  that  for  a  minute.  There
    are  two  kinds  of  benefits  that  may  come  from  patents.  One  benefit  is
    that  of  a  monopoly  use  or  restricted  use  of  what  you  patent,  and  that
    is  the  practice  throughout  industry.  The  other  is  the  royalty  income
    that  is  involved  by  cross-licensing  and  bringing  it  to  the  people  as  a
    whole  by  a  multitude  of  manufacturers  using  that  patent  and  paying
    a  royalty  for  it,  but  at  the  same  time  spreading  throughout  our  Nation
    a  widespread  base  of  free  competition  in  the  manufacturing  of  articles
    which  may  or  may  not  depend  upon  this  particular  new  invention.

    So  you  have  royalties  in  either  case,  but  in  one  case  you  have  a  re-
    stricted right  to  use  solely  that  patent,  which  gives  a  monopoly  advan-
    tage to  the  owner  and  user ;  and  in  the  other  case  you  have  a  widespread
    use  of  it  for  the  benefit  of  society,  but  still  retaining  ample  royalty
    rights  on  it,  a  reasonable  royalty  right  on  it,  so  the  inventor  is  com-
    pensated and  repaid  for  his  contribution  to  the  advance  of  the  par-
    ticular technology.

    It  seems  to  me  that  that  type  of  licensing,  because  of  the  fact  that
    it  is  based  on  billions  of  dollars'  worth  of  tax  moneys  expended  by  all
    of  the  people,  would  be  an  equitable  way  of  transferring  some  of  that
    basic  investment,  equity  investment,  you  might  call  it,  to  the  people
    in  as  widespread  a  manner  as  possible,  and  at  the  same  time  protect
    the  right  of  free  enterprise  to  receive  compensation  for  their  initiative
    and  their  inventive  genius.

    Mr.  Stetger.  I  see  your  viewpoint.  Of  course,  under  those  condi-
    tions you  have  less  inventing,  less  development  and  research.

    Representative  Hoiafiei.d.  That  is  a  statement  on  your  part  whicli
    I  may  or  may  not  accept.  You  may  be  right  on  it.  I  am  not  sure.  We
    do  have  an  equity  here  which  has  been  established,  something  very
    unusual  which  has  been  established  in  a  new  scientific  field  which  the
    Congress  has  to  consider.

    516  ATOMIC    POWER    DEVELOPMENT

    At  tlie  bottom  of  page  5  you  predict  that  there  will  be  no  basic  im-
    provements or  that  there  is  little  likelihood  of  it,  and  I  question  your
    ability  or  my  ability  to  predict  that  within  the  next  year  there  may
    not  be  a  startling  and  radical  new  development  in  the  field  of  reactor
    development  which  may  make  atomic  power  half  the  cost  of  the  aver-
    age cost  of  conventional  power.  That  may  occur  within  a  year.  We
    cannot  say.

    The  development  in  this  new  field  has  been  so  rapid  that  I  think  you
    or  I,  either  one,  could  not  predict  that  such  a  thing  will  not  occur.  If
    it  does  occur,  and  if  one  company  has  the  individual  right  or  restricted
    use  of  that,  then,  again,  you  see  we  are  not  guarding  the  public  interest.

    Mr.  Steiger.  Congressman,  we  are  going  through  the  first  power
    system,  and,  of  course,  we  found  nothing  basic  or  fundamental.

    Representative  Holifield,  That  is  something  that,  of  course,  neither
    one  of  us  can  tell.

    Mr.  Steiger.  Of  course,  the  records  are  in  the  Atomic  Energy  Com-
    mission files,  which  contains  all  of  the  patent  disclosures  made  to  date.

    Representative  Holifield.  I  notice  on  page  7,  at  the  top,  that  you
    recognize  the  right  of  the  Government  to  a  royalty-free  use  of  any
    patents  which  have  been  developed  by  Government  expense.

    Mr.  Steiger.  Yes.

    Representative  Holifield.  Of  course,  there  have  been  other  com-
    pensatory factors  involved  in  this  development,  which  has  given  to
    industry  know-how,  organizational  and  scientific  knowledge  which
    they  did  not  have  before,  which  by  the  very  nature  of  it,  not  being
    exclusively  adaptable  to  atomic  energy — I  am  speaking  now  of  the
    field  of  development  of  pumps  and  certain  very  high-tolerance  ma-
    chinery, new  metals  which  have  other  uses,  and  so  forth — that  knowl-
    edge is  available  to  industry.  So  they  have  had  compensation  in
    addition  to  their  satisfaction  from  doing  their  patriotic  duty.

    Dr.  Suits.  I  would  like  to  comment  on  that,  if  I  may.  I  think
    there  have  been  relatively  few  examples  of  byproducts  of  atomic-
    energy  developments  which  have  had  other  uses.  I  recall  few,  if
    any.

    Representative  Holifield.  You  feel  that  the  chemical  processes  and
    the  high-tolerance  processes,  the  development  of  zirconium  and  other
    metals,  bringing  them  down  from  extremely  high  cost  to  low  cost,
    has  no  commercial  application  at  all?

    Dr.  Suits.  That  is  certainly  true  up  to  the  present.

    Representative  Holifield.  You  see  no  benefit  that  will  accrue  from
    that  type  of  thing  in  the  future?

    Dr.  Suits.  It  is  conceivable  that  there  will  be  such  a  benefit,  but  it
    is  surprising  that  to  date  in  spite  of  the  great  expenditures  in  research
    and  development  in  the  specialized  field  of  atomic  science  and  engi-
    neering, there  has  been  none.

    Representative  Holifield.  I  think  private  industry  has  done  a  mag-
    nificent job  under  the  AEC,  Government  contracting  with  private  in-
    dustry, and  my  hat  is  certainly  off  to  them  for  the  job  they  have  done
    in  this  great  development.

    I  can  hardly  conceive  that  out  of  the  tremendous  amount  of  money
    that  has  been  spent  on  metallurgical  and  chemical  research  and  de-
    velopment that  there  are  not  appreciable  advantages  which  will  accrue
    to  our  country.

    ATOMIC    POWER    DEVELOPMENT  517

    Dr.  Suits.  Mr.  Holifield,  of  course  that  was  part  of  the  motivation
    of  contractors  of  the  AEC,  but  I  can  say  for  certain  that  as  far  as
    the  industrial  area  in  which  my  acquaintance  lies  they  have  been
    almost  no  nonmilitary  applications  of  atomic  technology.  I  do  not
    know  of  a  single  application  which  has  come  as  a  byproduct  of  re-
    search and  development  in  this  area  in  my  company.

    For  example,  you  mention  the  development  of  high-purity  zir-
    conium. But  the  primary  interest  in  the  metal,  in  fact,  the  sole  inter-
    est, as  far  as  I  know,  is  in  atomic  reactors.  Even  the  reduction  in
    cost  that  you  refer  to  is  still  a  reduction  which  only  puts  it  in  the
    class  of  rare  metals,  and  not  commercial  alloys  and  metallic  materials.
    So  I  think  one  has  to  say  in  honesty  that  the  great  developments  of
    atomic  technology  have  been  almost  solely  applicable  to  the  field  of
    specialized  atomic  processes  and  equipment.

    Representative  Holifield.  This  committee  has  been  informed  that
    radioactive  isotopes  have  been  used  and  are  being  used  by  industry  in
    quite  a  number  of  fields,  in  the  detection  of  flaws,  concealed  articles,
    and  that  sort  of  thing.     Is  that  true  ?

    Dr.  Suits.  That  is  true,  but  the  fact  is  that  the  principal  applica-
    tion of  isotopes  has  not  been  to  industrial  processes,  but  has  been  pri-
    marily to  research.  Isotopes  have  been  a  valuable  research  tool,  but
    even  there  the  primary  use  has  been  in  the  fields  of  biology  and  medi-
    cine.    There  it  has  been  very  important.

    In  industrial  research  isotopes  have  been  of  very  minor  importance,
    and  in  industrial  process  and  manufacturing  applications,  almost  of
    negligible  importance.

    Representative  Holifield.  Thank  you,  sir,  for  your  appearance
    here  today  and  your  statement.

    Chairman  Cole.  Mr.  Price.

    Representative  Price.  Mr.  Chairman,  I  have  just  one  question:  I
    would  like  to  get  down  to  the  fundamental  reason  for  these  hearings.
    In  the  statement  of  policy  issued  by  the  Commission  they  say  this :

    We  believe  the  attainment  of  an  economically  competitive  nuclear  power  to
    be  a  goal  of  national  importance.  It  would  be  a  major  setback  to  the  position
    of  this  country  and  the  world  to  allow  its  present  leadership  in  nuclear  power
    development  to  pass  out  of  its  hands.

    In  your  statement  on  page  3  you  say  this :

    One  miist  anticipate  that  a  vast  program  of  research,  engineering  investiga-
    tion, and  pilot-plant  construction  and  operation  extending  many  years  into  the
    future  and  costing  hundreds  of  millions  O'f  dollars  will  be  required  before  the
    goal  of  economical  atomic  power  can  be  said  to  be  in  sight.

    That  has  been  the  gist  of  much  of  the  testimony  here,  wliich  would
    indicate  a  great  financial  burden  on  industry  if  it  attempts  to  do  this
    job  alone.

    In  view  of  the  fact  that  it  is  of  great  importance  to  us  to  hold  pre-
    eminence in  the  development  of  nuclear  power,  does  the  NAM  have
    any  recommendation  as  to  what  the  Commission  should  do  ?

    Dr.  Suits.  This  is  a  broader  question  than  I  think  we  are  prepared
    to  comment  on  today,  but  I  would  be  glad  to  say  the  following:

    It  seems  to  me  that  there  should  not  be  doubt  at  this  point — no  one
    in  industry  is  prepared  to  propose  that  private  industry  can  now
    undertake  the  atomic  power  development  in  its  entirety.  That  is  out
    of  the  question.

    518  ATOMIC    POWER    DEVELOPMENT

    Eepresentative  Price.  That  is  the  gist  of  most  of  the  testimony
    before  the  committee.

    Dr.  Suits.  It  seems  to  me  that  what  we  should  contemplate  is  that
    there  will  be  an  increasing  participation  on  the  part  of  private
    industry  in  the  development  of  atomic  power  and  that  the  participa-
    tion will  increase  as  the  goal  comes  nearer  to  fruition.  Atomic  power
    is  not  now  economic.  It  is  our  hope  that  someday  it  will  become
    economic  and  that  progressively,  as  an  investment  of  stockholders'
    money  can  be  justified,  increasing  funds  will  be  available  for  that
    purpose.  But  to  encourage  such  private  investment  we  feel  that  here
    should  be  a  framework  of  free  enterprise.

    Representative  Price.  Do  you  feel  that  it  is  too  early  at  this  time
    for  the  AEC  to  divorce  itself  and  let  industry  go  it  alone?

    Dr.  Suits.  Yes ;  I  think  it  is  definitely  too  early  for  that.

    Representative  Price.  Do  you  think  it  would  be  wise  on  the  part  of
    the  Commission  to  sponsor  a  pilot  plant  ?

    Dr.  Suits.  I  think  the  Commission  should  sponsor  not  only  one  but
    many  pilot  plants.  Some  pilot  plants  can  be  built  in  small  size  and
    for  moderate  expenditures  that  will  answer  many  important  questions,
    such  as  the  feasibility  of  a  process,  the  durability  of  a  material,  the
    feasibility  of  a  type  of  control.  Those  things  can  be  answered  by
    small  pilot  plants  costing  from  a  few  to  $10  million  or  $20  million.

    Other  questions  on  this  problem  of  economic  atomic  power  will
    require  the  building  of  very  large  plants.  The  real  inventorying  of
    the  performance  of  a  very  large  reactor  will  finally  be  required  before
    a  real  answer  can  be  given  to  the  question  of  its  economy.

    Representative  Price.  You  think  until  that  real  answer  comes  the
    Commission  and  industry  should  continue  on  a  cooperative  basis  and
    work  together  ?

    Dr.  Suits.  I  think  they  should  continue  on  a  cooperative  basis  and
    work  together,  but  there  should  be  provision  made  in  the  law — and
    now  is  not  too  early — to  recognize  private  investment,  in  addition  to
    present  provisions  for  contracting  with  the  AEC  for  development  at
    its  expense.

    Representative  Price.  The  Commission  has  encouraged  private
    investment  to  come  into  the  program  ?

    Dr.  Suits.  Right.

    Representative  Price.  That  is  all  I  have,  Mr.  Chairman.

    Chairman  Cole.  Mr.  Steiger,  for  how  long  has  the  life  of  a  patent
    been  fixed  at  17  years?

    Mr.  Steiger.  I  can't  answer.  It  has  been  fixed  ever  since  I  can
    remember.  I  don't  know  just  what  the  original  grant  was.  I  think
    the  original  grant  was  less  than  that.  There  has  been  considerable
    debate  in  the  past.  In  some  inventions  17  years  is  too  short  and  in
    some  it  is  too  long,  but  on  the  average  17  years  seems  to  have  been  a
    happy  period.

    Chairman  Cole.  I  realize  that  has  been  the  yardstick  which  has  been
    used  for  a  great  many  years,  but  I  had  hoped  that  you  might  give  us
    a  brief  history  of  the  law  of  the  patents  with  respect  to  the  duration
    of  an  exclusive  right.

    Mr.  Steiger.  I  am  sorry  I  cannot  do  that.  I  can  say  that  in  most
    foreign  systems  it  is  not  always  17  years,  but  always  approximately
    that.  In  other  words,  it  has  been  found  by  foreign  countries  that  that
    is  approximately  correct.

    ATOMIC    POWER    DEVELOPMENT  519

    Chairman  Cole.  I  wish  you  would  comment  on  this :  How  far  wrong
    am  I  in  this  line  of  thinking  ?  That  the  goal  of  patent  laws  has  always
    been  to  make  an  invention  available  for  public  use  without  payment
    of  royalty,  just  as  soon  as  possible  consistent  with  preservation  of  the
    spirit  of  incentive.

    Mr.  Steiger.  The  fundamental  inducement  of  our  patent  system
    has  been  that  a  patent  is  more  or  less  a  contract  between  the  Govern-
    ment and  the  inventor.  In  consideration  for  the  inventor's  disclosing
    his  invention  to  the  public,  the  Government  gives  him  the  right  to
    prevent  others  from  making,  using,  or  selling  it  for  17  years.

    Chairman  Cole.  That  is  predicated  upon  the  basic  principle  that
    knowledge  is  not  a  private  monopoly.

    Mr.  Steiger.    That  is  right.

    Chairman  Cole.  That  it  must  be  shared  and  made  available  to  any-
    body who  wants  to  take  advantage  of  it.

    Mr.  Steiger.  Yes.

    Chairman  Cole.  Now,  there  are  various  ways  that  can  be  achieved.
    I  would  like  to  have  my  colleague  hear  this  line  of  thinking  because
    he  was  not  here  at  another  meeting  where  I  explored  this  thought.  To
    repeat  mj^self :

    Mr.  Steiger  has  agreed  that  the  objective  of  our  patent  laws  has
    been  to  make  available  for  public  use  as  early  as  our  economics  will
    allow  the  the  use  of  any  patentable  idea.

    Mr.  Steiger.  Public  kiiowledge.

    Chairman  Cole.  Public  knowledge  and  public  use  of  it.

    When  I  say  public  use,  I  mean  any  individual  can  pick  up  that  idea
    and  adapt  it  to  his  own  use  for  his  own  purpose  and  to  his  own  profit
    without  payment  of  royalty  to  anyone.

    Representative  Holifield.  At  the  end  of  the  l7-year  period.

    Chairman  Cole.  The  goal  is  for  everj^body  to  use  3'our  idea  just  as
    soon  as  he  can.

    Mr.  Steiger.  No.

    Chairman  Cole.  That  is  the  goal.  That  is  the  objective.  Ex-
    perience has  found  that  it  is  wiser  to  allow  a  monopoly  in  the  hands
    of  the  individual  inventor  for  a  reasonable  period  of  time  in  order  to
    provide  the  incentive  to

    Mr.  Steiger.  Disclose  his  ideas.

    Chairman  Cole.  To  disclose  his  idea.

    Then,  too,  by  giving  an  exclusive  monopolistic  right  to  one  inventor
    you  require  other  people  who  are  denied  the  use  of  that  to  go  out  and
    find  an  alternative,  which  makes  for  progress.

    Mr.  Steiger.  And  frequently  the  second  one  is  better.

    Chairman  Cole.  At  any  rate,  the  ultimate  goal  is  to  make  available
    this  knowledge  by  all  the  public,  individuals,  as  quickly  as  possible.

    Mr.  Steiger.  That  is  right.

    Chairman  Cole.  That  is  achieved  by  cutting  off  the  monopoly  any
    private  inventor  has  at  the  end  of  17  years.

    Mr.  Steiger.  That  is  right.

    Chairman  Cole.  After  that,  it  is  public  property.

    Mr.  Steiger.  That  is  right.

    Chairman  Cole.  But  there  are  other  ways  that  goal  might  be  accom-
    plished and  accelerated.  One  is  that  the  Government  tlirougli  public
    funds  might  buy  the  invention  and  release  it  for  public  use.

    Mr.  Steiger.  Yes.

    520  ATOMIC    POWER    DEVELOPMENT

    Chairman  Cole.  Another  is  if  the  inventor  refuses  to  sell  the  Gov-
    ernment can  confiscate  it  if  it  feels  that  it  is  in  the  public  interest
    that  that  should  be  made  available.  Or  still  another  course  is  that
    the  Government  with  its  own  funds  might  hire  scientists  and  inventors
    to  develop  these  ideas  on  their  own.

    Mr.  Steiger.  Yes.

    Chairman  Cole.  As  soon  as  those  ideas  have  been  learned,  then
    they  become  public  property.

    Mr.  Steiger.  Yes.

    Chairman  Cole.  It  occurs  to  me  that  that  same  reasoning  can  be
    applied  to  the  knowledge  and  the  art  of  atomic  energy  that  has  been
    developed  under  Government  auspices,  with  Government  funds,  up
    to  this  time.  That  is,  all  we  have  done  is  to  accelerate  the  time  when
    the  public  might  use  it.  If  that  is  the  goal  of  the  patent  system,  then
    I  see  no  reason  to  argue  that  because  public  funds  have  been  used  in
    learning  this  information,  therefore  the  Public  Treasury  should  be
    compensated  for  the  use  of  it  by  the  payment  of  a  royalty  on  the  part
    of  the  user,  because  the  purpose  of  this  atomic  program  outside  of  the
    military  aspect  has  been  to  gain  this  information  as  quickly  as  possible.

    For  the  same  reasoning,  it  cannot  be  argued  with  persuasive  force,
    that  since  public  funds  were  used  to  invent  and  develop  an  idea,  there-
    fore any  subsequent  improvements  on  that  idea  made  by  a  private
    person  should  immediately  become  public  property,  or  at  least  subject
    to  compulsory  cross  licensing.

    Mr.  Steiger.  I  think  that  is  right,  Mr.  Chairman,  because  when  a
    patent  issues,  copies  of  it  are  purchased  by  all  people  who  are  inter-
    ested in  that  art.  If  it  is  a  washing-machine  patent,  everybody  in
    the  washing-machine  art  buys  a  copy  of  that  patent.  They  look  at
    that  patent  and  frequently  say  it  is  a  pretty  good  idea,  but  here  is  a
    better  way  of  doing  it.     So  that  is  one  way  it  stimulates  invention.

    One  idea  superimposed  upon  the  other.  That  is  the  way  the  arts
    progress  as  a  rule  until  eventually  the  present  model  bears  little
    resemblance  to  its  original  counterpart.  It  has  resulted  from  a  series
    of  inventions,  one  superimposed  on  the  other,  step  by  step.

    Representative  Holifield.  Mr.  Chairman,  may  I  say  I  am  not  quite
    sure  that  I  understand  exactly  what  the  chairman  has  enunciated  as
    the  principle,  but  I  would  like  to  comment  that  there  is  nothing  par-
    ticularly sacred  in  the  time  of  17  years  which  runs  for  a  basic  patent.

    Mr.  Steiger.  No.

    Representative  Holifield.  I  think  it  is  the  custom  and  is  accepted
    and  has  been  found  to  be  workable  and  all  that.  However,  my  con-
    tention is  that  in  this  instance  we  are  concerned  with  a  new  develop-
    ment, many  of  the  basic  principles  of  which  have  been  established
    and  brought  to  the  present  far-advanced  point  of  development  by
    the  expenditure  of  Government  money.  Therefore,  we  are  in  a  little
    different  position  than  Henry  Ford  was  when  he  was  out  in  his
    garage  working  on  one  of  the  first  automobiles.  We  are  in  a  little
    different  position  and  therefore  it  may  be  that  a  certain  type  of  change
    in  patent  legislation  may  be  equitable  in  the  public  interest  at  this
    time.

    I  am  not  sure  what  that  might  be.

    I  call  to  your  attention,  however,  that  there  is  a  quite  widely  accepted
    principle  of  wide  cross  licensing  today  in  industry,  which  heretofore
    did  not  exist.    The  history  of  patents,  I  believe,  will  show  that  in

    ATOMIC    POWER    DEVELOPMENT  521

    times  gone  by  the  monopoly  use  of  a  certain  device  was  considered
    to  be  more  valuable  to  the  owner  than  a  widespread  licensing  and  a
    quick  collection  of  royalties  from  a  gi-eat  many  sources,  but  there  has
    been  a  gradual  inclination  on  the  part  of  inventors — and  maybe  this
    is  the  law  of  self-preservation  because  they  feel  that  they  should  get
    as  much  in  royalties  as  possible  before  a  competitor  invents  something
    which  will  make  their  invention  obsolete.

    Maybe  that  is  the  kind  of  society  we  are  evolving  into,  where  ideas
    come  so  thick  and  fast  and  development  is  so  fast  that  the  old  idea  of
    restricted  use  is  not  any  longer  as  valuable  as  it  was  in  the  past.

    I  am  exploring  in  my  own  mind  the  peculiar  background  of  this
    case  and  wondering  if  new  ideas  could  not  be  equitably  compensated
    for  on  the  basis  of  an  evaluation  of  reasonable  royalty  by  an  independ-
    ent board,  such  as  the  board  which  now  functions  in  atomic  energy,
    the  patent  advisory  board,  but  with  the  provision  that  once  that  com-
    pany was  given  a  patent  and  a  reasonable  royalty  for  the  use  of  it,
    compulsory  cross  licensing  should  be  made  available  to  all  segments
    of  American  industry  and  all  municipal  and  State  political  subdi-
    visions that  might  be  interested  in  the  power  field.

    Mr.  Steiger.  Congressman,  you  are  right  that  in  this  country  there
    is  a  tremendous  amount  of  licensing  by  companies.

    Representative  Holifielu.  Cross  licensing?

    Mr.  Steiger.  Or  just  straight  licensing.  Of  course,  that  is  for  two
    reasons :  In  the  first  place,  when  somebody  comes  to  you  for  a  license,
    they  are  behind  you.  You  are  ahead  of  them.  You  license  them
    and  then  get  something  better,  is  the  motto.

    Chairman  Cole.  The  day  may  come  when  you  might  be  behind  him,
    though.

    Mr.  Steiger.  That  is  right.  You  might  have  to  go  back  to  that
    fellow  and  get  a  license  because  he  may  be  smart  some  day,  too,  and
    make  a  very  good  invention.  So  there  is  a  great  tendency  in  this
    country  as  distinguished  from  foreign  countries  for  corporations  to
    license  each  other.  Frequently  in  that  case  a  company  will  inverit
    something  and  haA^e  a  patent  protection  on  it  and  w^ill  not  license  for
    a  few  years  at  the  start.  He  wants  to  get  his  invention  seated.  He
    wants  the  public  to  know  that  that  was  his  contribution.  Tlien  after
    it  is  seated  in  the  public  mind  that  a  certain  company  pioneered  the
    thing,  they  will  license  all  competition  at  a  reasonable  royalty.  ]\Ianu-
    facturers  don't  believe  in  Government  boards  setting  royalties.  A
    manufacturer  is  scared  to  death  of  that.  He  wants  to  sit  across  the
    table  from  his  competitor  and  battle  it  back  and  forth  and  settle  on
    same  royalty.

    Representative  Holifield.  That  is  right.  It  is  that  line  of  thinking
    which  I  have  been  gradually  developing  in  my  own  mind,  with  full
    regard  for  the  fact  that  I  thiidc  thei'e  should  be  a  just  compensation  for
    new  ideas.  That  is  the  American  way  and  I  think  that  should  be
    followed.

    One  of  the  staff  brought  to  my  attention  that  if  the  synthetic-rubber
    plants  had  been  sold  G  or  8  years  ago  they  would  lisivo  been  worth  a
    great  deal  more  than  they  are  today  because  the  Goodrich  Co.  recently
    announced  they  have  a  new  process  which  costs  only  one-sixth  as  much
    as  the  Government's  synthetic-rubber  plant  process.

    522  ATOMIC    POWER    DEVELOPMENT

    There  is  an  indication  of  what  I  mean,  of  how  quickly  our  tech-
    nology is  increasing  and  developing.  I  do  not  know  the  answer,  I
    might  say,  but  I  am  seeking  one.

    Mr.  Steiger.  Yes.

    Dr.  Suits.  Mr.  Holifiekl,  may  I  comment  on  that  same  question
    because  it  seems  to  me  that  it  bears  on  a  question  your  raised  earlier,
    namely,  the  equity  of  turning  over  to  private  industry  knowledge
    which  has  been  gained  by  the  Government  in  the  atomic-energ}'  devel-
    opment. As  you  have  indicated,  this  $12  billion  that  we  think  of  has
    depreciated.  It  depreciates  daily.  Not  only  do  the  manufacturing
    plants  depreciate,  as  is  well  known,  but  the  technical  knowledge  depre-
    ciates. The  knowledge  that  we  gained  5  years  ago  in  many  cases  is
    now  outmoded  by  recent  knowledge.  Although  there  is  a  great  equity
    here  in  technical  knowledge  and  know-how  and  scientific  data,  it  is
    much  less  than  one  commonly  believes,  a.nd  the  developments  that  are
    going  to  take  place  in  the  next  10  years  will  be  probably  comparable
    to  everything  that  has  happened  in  the  past  in  the  atomic  era.  So  the
    real  value  of  this  technical  knowledge  and  know-how  is,  I  feel,  much
    less  than  commonly  believed.  Much  of  it  is  already  in  the  public
    domain.  Despite  security  considerations,  a  tremendous  amount  of
    valuable  data  has  already  been  released.

    Representative  Holifield.  I  think  this  committee  wants  as  much
    of  that  information  released  as  is  possible,  keeping  in  mind  national
    security.  In  fact,  I  think  the  Atomic  Energy  Commission  at  this
    time  should  reevaluate  their  whole  body  of  information  and  make
    available  as  much  of  it  as  can  be  done  safely  or  as  much,  even,  as  we
    have  knowledge  that  other  countries,  such  as  France  and  England,
    have,  because  I  am  sure  that  what  they  have  is  available  to  the  Soviets
    in  one  way  or  another.

    Chairman  Cole.  Let  me  ask  what  your  opinion  is  regarding  a  provi-
    sion that  might  be  in  the  law  which  would  require  any  inventor  in  the
    atomic  field  to  surrender  to  the  Government  their  foreign  rights  on
    that  patent.

    Mr.  Steiger.  I  think  we  have  to  have  a  provision  like  that,  Mr.
    Chairman,  as  long  as  we  keep  the  information  in  this  country.

    Chairman  Cole.  I  am  thinking  of  the  economic  end  of  the  thing
    as  well  as  the  military  phase.

    Mr.  Steiger.  I  returned  from  England  not  long  ago  and  the  British
    manufacturer,  of  course,  feels  that  he  has  been  sort  of  left  out  of  the
    program  over  there.  He  gives  great  credit,  and  we  do,  too,  to  how  the
    Commission  has  operated  in  this  country  so  that  manufacturers  have
    been  in  on  the  thing  and  learned  something  and  have  acquired  some
    experience.  Of  course,  the  foreign  manufacturer  would  like  to  have
    access  to  some  of  that  information  some  day.

    Chairman  Cole.  Would  such  a  limitatron  as  that,  which  is  to  deny
    the  foreign  use  of  a  patent,  still  provide  sufficient  incentive  for  the
    genius  of  this  country  to  experiment  ?

    Mr.  Steiger.  Yes,  I  would  say  so,  because  if  he  can  get  a  United
    States  patent  and  he  has  hopes  of  recovering  something  from  that
    United  States  patent,  that  is  his  main  objective,  that  is  his  main  source
    of  revenue.  He  could  be  denied  his  foreign  rights,  and  I  do  not  think
    it  would  affect  the  incentive  one  iota.

    Ch ail-man  Cole.  It  occurs  to  me  that  that  idea  might  provide  the
    Government  with  some  degree  of  recompense  for  the  investment  which

    ATOMIC    POWER    DEVELOPMENT  523

    has  been  made  in  the  program  np  to  now  and  might  have  some  appeal
    to  those  who  feel  that  the  Government  should  derive  some  recompense
    from  it.  But  it  also  has  a  further  aspect,  that  it  would  strengthen
    the  hand  of  our  Government  in  dealing  with  foreign  governments,  and
    also  we  must  remember  that  any  improvement  or  refinement  in  this
    process  of  splitting  the  atom  has  a  direct  benefit  and  value  in  manu-
    facturing weapons  and  materials.  So  as  this  information  is  devel-
    oped in  this  country  and  eventually  goes  abroad,  we  are  indirectly
    improving  the  war  potential  of  the  foreign  countries  of  the  world.

    So  it  is  highly  important  that  our  Government  retain  a  high  degree
    of  control  on  foreign  uses  of  those  improvements.

    Mr.  Steiger.  You  see,  Mr.  Chairman,  we  have  a  law  today  on  the
    books  that  if  3'ou  file  a  patent  application  in  the  United  States,  no
    corresponding  application  can  be  filed  in  any  foreign  country  without
    a  license  from  tlie  Commissioner  of  Patents.  We  have  a  law  like  that
    today,  aside  from  atomic  energy.

    Representative  Holifield.  I  am  not  going  into  detail  on  this  subject
    of  foreign  patents,  but  we  have  a  rather  sordid  story  of  some  of  the
    dealings  between  the  German  firms  and  some  of  our  big  United  States
    firms  in  the  exchange  of  patents  and  the  restriction  of  patents  by
    restrictive  patent  agreements  to  prevent,  for  instance,  the  use  of
    synthetic  rubber  in  the  United  States,  to  prevent  the  manufacturer  of
    aspirin,  and  so  forth.

    There  are  a  few  other  international  patent  agreements  that  we  could
    go  into  in  great  detail  and  talk  about,  which  were  highly  in  the  interest
    of  the  individual  business  firms  both  in  Germany  and  in  the  United
    States,  but  proved  not  to  be  in  the  interest  of  the  American  people
    when  war  came.

    So  there  is  this  international  consideration  involved,  particularly
    when  we  are  dealing  with  a  weapon  potential  that  can  destroy  a  city
    the  size  of  Washington  with  a  very  limited  application  of  such
    weapons.

    Dr.  Suits.  Mr.  Cole,  there  is  one  point  that  I  would  like  to  comment
    on  with  reference  to  your  question  of  foreign  patents.  One  of  the
    objectives  of  filing  a  foreign  patent  application  is.  not  to  make  pro-
    vision for  the  manufacture  of  the  patented  device  in  the  foreign
    country,  but  to  prevent  impediments  to  its  sale  in  the  foreign  country.
    If  the  United  States  patent  application  is  not  filed  in  the  foreign
    country,  it  may  be  filed  and  reissued  in  the  name  of  a  foreigner,  ^yho
    could  then  ])revent  the  sale  of  the  patented  article  in  the  foreign
    country.  Since  atomic  equipment  presumably  would  not  be  offered
    for  foreign  sale,  this  reason  for  filing  foreign  patents  would  not  exist.

    Representative  Houfield.  May  I  ask  the  question,  if  that  is  filed  in
    the  foreign  country,  are  not  the  drawings  and  specifications  made
    available  to  that  foreign  country?

    Dr.  Suits.  Yes.

    Representative  Hoofteld.  Then  from  the  standpoint  of  security
    we  have  defeated  our  purpose.

    Dr.  Suits.  Surely.  I  am  not  supporting  the  suggestion  of  foreign
    patent  filing.  I  am  pointing  out  that  inherent  in  the  atomic-power
    development,  one  of  the  principal  reasons  for  filing  a  foreign  patent
    application  does  not  exist.  In  other  words,  since  we  presumably  do
    not  intend  to  sell  atomic-power  equipment  to  foreign  countries,  we
    don't  have  to  protect  the  market  by  taking  out  foreign  patents.

    S6740— 53 34

    524  ATOMIC    POWER    DEVELOPMENT

    Representative  Holifield.  And  it  would  be  dangerous  to  do  so  if
    it  happened  to  be  related  to  military  production  of  weapons  or  fission-
    able material.

    Chairman  Cole.  How  would  you  deal  with  a  situation  where  an  in-
    ventor discovers  a  very  valuable  idea  but  fails  to  file  for  a  patent  ?

    Mr.  Steiger.  Of  course  that  is  a  situation  which  you  are  always
    going  to  have,  Mr.  Chairman.

    Chairman  Coi^.  Tell  me,  how  common  is  that ;  how  prevalent  is  it  ?

    Mr.  Steiger.  It  is  not  very  prevalent.

    Chairman  Cole.  Would  you  say  it  is  very  rare  ?

    Mr.  Steiger.  Yes.  That  is,  usually  a  man  who  makes  a  worthwhile
    invention  knows  of  our  patent  system  and  he  would  usually  try  to  get
    a  patent  in  the  first  place.  Usually  that  is  his  incentive  in  working  on
    the  thing.  Usually  he  doesn't  get  just  an  idea.  He  has  to  do  some
    work  on  it.  He  has  to  make  drawings  and  think  about  it.  Usually  all
    through  that  he  is  hoping  to  get  a  new  idea  for  which  he  can  get  a
    patent.  So  Ave  say  let  him  apply  and  get  a  patent  because  when  he
    sends  that  patent  application  to  the  Patent  Office  under  our  existing
    law  the  Government  can  put  that  under  secrecy  if  it  affects  national  se-
    curity. The  idea  is  to  encourage  him  to  send  it  in.  The  only  other
    way  to  do,  he  can  make  a  report  to  the  Atomic  Energy  Commission
    today.  He  can  file  a  report  with  the  Commission,  and  he  is  supposed
    to  do  that  if  it  affects  national  defense,  but  he  might  not  know  that.

    Chairman  Cole.  I  had  in  mind  more  competition  among  companies,
    where  one  company  conceives  an  idea  but  in  order  to  withhold  it  from
    competitors  or  anybody  else,  he  won't  even  file  for  it ;  a  situation  re-
    ferred to  as  a  trade  secret.

    Mr.  Steiger.  There  is  very  little  of  that  in  this  country  on
    apparatus.

    Chairman  Cole.  At  any  rate,  that  problem  would  be  no  more  ag-
    gravated by  relaxing  the  patent  provisions  of  the  law  as  to  atomic,
    energy  than  exists  today.    It  would  not  be  any  worse.

    Mr.  Steiger.  No.  Some  people  even  today  try  to  keep  things  in
    secrecy  instead  of  applying  for  a  patent.  Some  people  today  in  indus-
    try try  to  keep  processes  and  formulas  and  so  forth  secret,  but  I  think
    there  is  a  small  amount  of  that  compared  with  the  number  of  people
    who  apply  for  a  patent.

    Chairman  Cole.  There  is  one  other  point  I  wanted  to  clarify  in  my
    own  mind,  Mr.  Steiger.  You  said  the  present  practice  is  that  the
    Government  has  the  right  to  use  an  invention  derived  through  the  use
    of  public  funds  royalty-free.  That  means  that  the  Government  may
    license  another  company  to  manufacture  a  product  for  the  Govern-
    ment without  the  requirement  of  that  company  having  to  pay  a
    royalty  ?

    Mr.  Steiger.  I  said  two  things,  Mr.  Chairman.  One  is,  if  I  own  a
    patent  and  the  Government  wants  to  use  my  patent,  it  can  go  right
    ahead  and  use  my  patent  or  it  can  have  it  manufactured  and  made  for
    it  and  I  cannot  stop  the  Government  and  I  cannot  stop  that
    manufacturer.

    My  only  redress  would  be  to  sue  the  Government  in  the  United
    States  Court  of  Claims  for  patent  infringement  and  try  to  get  some
    damages  out  of  it.  That  is  wliere  I  made  the  invention  and  had  noth-
    ing to  do  with  the  Government.  It  is  my  own  patent.  The  Govern-
    ment decides  it  needs  it  so  it  goes  ahead  and  uses  it.  I  cannot  stop  it.
    That  is  No.  1.

    ATOMIC    POWER    DEVELOPMENT  525

    No.  2  is  in  these  development  contracts  of  the  armed  services  the
    contractor  grants  the  Government  a  nonexclusive  license  for  the  Gov-
    ernment to  make  it  itself  or  the  Government  can  go  out  and  have
    anybody  make  it  for  it.

    Eepresentative  Holifield.  Mr.  Chairman,  I  would  just  like  to  bring
    up  a  point  that  came  to  my  personal  attention  recently.  A  man  in-
    vented a  device  which  is  being  used  by  the  Navy.  He  invented  it  and
    filed  for  a  patent  on  it.  The  Navy  wanted  this  device  manufactured
    in  quantities  of  thousands.  It  is  strictly  a  defense  item.  Before  they
    would  give  this  plant  a  contract  they  made  that  man  give  the  right  to
    manufacture  to  other  sources.  In  other  words,  they  would  not  con-
    fine themselves  to  one  source,  on  the  very  good  argument,  I  thought,
    that  in  case  of  hostilities  if  that  one  plant  was  bombed,  they  would
    have  no  other  source.  They  just  the  same  as  blackjacked  that  indi-
    vidual into  making  that  process  available  to  several  other  people  to
    use,  and  then  they  tried  to  beat  him  out  of  his  original  contract  for
    the  manufacture  of  these  items.

    This  occurred  in  my  own  district,  and  a  small  manufacturer  was
    the  man  involved.  When  you  go  to  dealing  with  the  Government  on
    patents  it  is  pretty  tough.     I  know  that.

    Chairman  Cole.  Any  further  questions?

    Thank  you  very  much,  gentlemen.

    The  next  meeting  of  the  committee  on  this  subject  will  be  Monday,
    "when  we  will  hear  representatives  of  Sylvania  Electric  Co.,  the  NACA,
    the  Research  and  Development  Board  of  the  Department  of  Defense,
    the  Engineers  Joint  Council,  and  the  Institute  of  Radio  Engineers.

    I  might  at  this  time  announce  that  Mr.  Strauss,  the  Chairman  of
    the  Commission,  will  appear  on  this  subject  on  August  3.

    The  meeting  is  adjourned.

    (Whereupon,  at  5  p.  m.,  Thursday,  July  23, 1953,  the  committee  was
    recessed,  to  reconvene  Monday,  July  27, 1953.)

    (

    ATOMIC  POWEE  DEVELOPMENT  AND  PEIYATE
    ENTEEPKISE

    MONDAY,  JULY  27,   1953

    Congress  of  the  United  States,
    Joint  Committee  on  Atomic  Energy,

    Washington^  D.  C.

    The  joint  committee  met  at  2  p.  m.,  pursuant  to  recess,  in  the  Old
    Supreme  Court  room,  the  Capitol,  Hon.  W.  Sterling  Cole  (chairman
    of  the  joint  committee)  presiding.

    Present :  Representatives  Cole,  Van  Zandt,  Patterson,  and  Holifield.

    Professional  staff  members  present :  Corbin  C.  Allardice,  executive
    director ;  "Wayne  P.  Brobeck  and  Walter  A.  Hamilton  of  the  profes-
    sional staff  of  the  joint  committee.

    Chairman  Cole.  The  meeting  will  come  to  order.

    The  first  witness  this  afternoon  will  be  Mr.  Walter  Kingston.  Will
    Mr.  Kingston  come  to  the  witness  table?

    Mr.  Kingston  is  the  director  of  the  atomic  energy  division  of
    Sylvania  Electric  Products  Co.  This  company  requested  an  oppor-
    tunity early  last  spring  to  present  its  views  on  atomic-power-develop-
    ment problems  before  the  joint  committee.     Their  letter,  in  part,  said :

    Our  work  for  the  Atomic  Energy  Commission  over  the  past  several  years  has
    been  concentrated  on  developing,  for  production,  new  and  advanced  types  of
    nuclear  fuels  and  components  for  the  atomic-energy  program.  One  of  the  major
    reasons  why  we  are  actively  interested  in  such  a  program  is  our  earnest  hope
    and  belief  that  the  way  will  soon  be  clear  for  our  company  to  produce  and  sell,
    on  a  competitive  open  market,  nuclear  fuels  and  components.  We  believe  that
    this  is  but  one  of  many  important  phases  of  the  atomic-energy  program  which
    might  be  opened  to  industrial  participation  on  a  competitive  basis,  and  which,
    at  the  same  time,  might  stimulate  and  expedite  the  atomic-energy  program  for
    this  country  as  a  whole.

    Mr.  Kingston,  we  welcome  you,  this  afternoon,  to  amplify  in  any
    way  you  wish  the  contents  of  that  letter  and  the  thinking  of  your
    division  and  your  company  on  the  problem  facing  this  committee.
    You  may  proceed  in  your  own  way.

    STATEMENT  OF  WALTER  E.  KINGSTON,  GENERAL  MANAGER,
    ATOMIC  ENERGY  DIVISION,  SYLVANIA  ELECTRIC  PRODUCTS,
    INC.,  BAYSIDE,  N.  Y.

    Mr.  Kingston.  Thank  you,  sir.

    Gentlemen,  my  presentation  will  be  brief  and,  I  hope,  to  the  po^int.

    My  name  is  Walter  Kingston,  and  I  am  general  manager  of  Syl-
    vania's  atomic  energy  division,  an  outgrowth  of  Sylvania's  metal-
    lurgical laboratories,  with  which  I  have  been  associated  for  the  past
    23  years.  During  this  year,  tlie  metalhirgical  laboratories  have  been
    active  in  carrying  out  research  and  development  in  the  fields  of  physi-

    527

    528  ATOMIC    POWER    DEVELOPMENT

    cal  metallurgy  and  physical  chemistry,  with  special  emphasis  on
    improvement  in  quality,  reduction  in  cost,  and  new  product  develop-
    ment. These  activities  have  been  primarily  associated  with  the  prod-
    ucts manufactured  by  Sylvania  Electric  Products,  Inc.,  including"
    certain  Government  defense  requirements.

    Some  7  years  ago,  our  laboratories  became  involved,  in  a  modest  way,
    in  research  and  development  on  certain  metals,  alloys,  and  com-
    pounds, which  were  of  interest  to  the  Atomic  Energy  Commission.
    Throughout  this  period,  our  participation  in  atomic-energy  programs
    has  increased  markedly,  and  our  base  of  operations  widened  consider-
    ably. Actually,  for  the  past  5  years,  our  efforts  have  been  chiefly
    concentrated  on  the  design,  development,  and  construction  of  fuel
    elements  of  many  types,  as  well  as  other  nuclear  reactor  components,
    for  use  with  practically  all  types  of  reactors  in  use  or  being  considered.
    It  could  be  truly  stated  that  we  have  become  nuclear  component
    specialists,  and  are  probably  the  largest  single  group  in  this  country
    exclusively  involved  in  such  work.

    From  the  beginning,  it  was  apparent  to  us  that  there  was  a  real
    opportunity  for  an  industrial  engineering  group  to  demonstrate  to
    the  Commission  that  sound  engineering  principles,  applied  within
    the  framework  of  aggressive  industrial  thinking  and  application,
    could  pay  dividends  in  improved  devices  or  products,  and  lower  cost
    of  such  products,  in  the  fields  of  reactor  components,  in  the  same  way
    that  similar  principles  have  been  applied  to  other  fields  in  which  the
    Atomic  Energy  Commission  and  its  contractors  are  involved.  We
    believe  we  have  been  successful,  in  a  modest  way,  in  attaining  these
    objectives.

    With  the  above  in  mind,  and  as  a  result  of  serious  study  and  deliber-
    ation on  the  part  of  our  management,  we  have  evolved  the  following
    philosophy  of  operation :

    (1)  That  fuel  elements  and  reactor  components  were  an  important
    and  critical  part  of  any  reactor,  whether  it  be  for  defense  or  civilian
    use.

    (2)  That  such  components  could  be  effectively  manufactured  by  an
    industrial  organization  using  its  own  capital,  and  sold  to  the  Govern-
    ment or  authorized  private  industry  at  a  unit,  competitive  price.

    (3)  That,  by  bringing  to  bear  on  such  operations  the  democratic
    principle  of  profit  or  loss,  the  results  would  certainly  show  up  as  a
    lower  cost,  higher  quality,  competitive  product.

    (4)  That,  in  order  to  bring  this  situation  about,  the  industrial
    organization  would  have  to  be  in  a  position  to  purchase  certain  raw
    materials  from  the  Government  or  private  sources,  and  to  obtain
    certain  patent  protection.  This  would  require  revisions  or  amend-
    ments of  the  McMahon  Act  or  Atomic  Energy  Act  of  1946.

    Since  the  attitude  of  the  Atomic  Energy  Commission  has  always
    been  to  encourage  increased  participation  of  industry  in  its  pro-
    grams, it  was  understandable  that  our  operational  philosophy  was  of
    interest  to  them,  although  it  was  obvious  that  certain  factors  could
    only  apply  as  a  result  of  modification  of  the  Atomic  Enerby  Act.

    On  the  basis  that  there  was  a  real  need  for  industrial  participation
    of  this  kind,  and  the  feeling  that  an  important  opportunity  would
    exist  for  an  industry  which  could  "produce  the  goods,"  Sylvania's
    management,  about  18  months  ago,  decided  to  establish  an  Atomic
    Energy  Division,  whose  objectives  were  to  work  with  the  Commis-

    ATOMIC    POWER    DEVELOPMENT  529

    sion  and  other  authorized  industries  toward  the  previously  outlined
    goals.

    To  date,  Sylvania  has  invested  between  $3  million  and  $4  million
    of  capital  in  this  venture,  chiefly  in  building  and  plant  facilities,  as
    well  as  working  capital.  Up  to  this  time,  substantially  all  of  our
    activities  have  been  devoted  to  research,  engineering,  and  pilot  plant
    manufacture  under  contract  to  the  Atomic  Energy  Commission  and
    its  contractors.  It  is  our  definite  objective  that,  when  a  given  type
    of  fuel  element,  or  other  reactor  component,  has  been  demonstrated
    to  be  of  value,  and  the  requirements  established,  Sylvania  will  be  in
    a  position  to  invest  cajntal  to  set  up  and  operate  manufacturing
    plants  to  produce  such  fuel  elements  or  reactor  components  at  unit,
    competitive  prices,  taking  all  the  normal  risks  of  manufacture.  Obvi-
    ously, there  would  have  to  be  certain  guaranties  insofar  as  volume  or
    number  of  components  is  concerned.  Otherwise,  large  capital  in-
    vestments could  be  obsoleted  overnight  by  changes  in  reactor  design,
    requirements,  et  cetera.

    Eventually,  when  the  need  has  developed,  S}dvania's  Atomic  Energy
    Division  expects  to  be  in  a  position  to  contribute  to  the  requirements
    of  industrial  nuclear  power  generation.  Until  that  time  arises,  we
    are  cooperating  with  Government  approval,  by  using  Sylvania's  funds,
    with  the  various  industrial  groups  operating  in  this  field.  It  is  our
    firm  conviction  that,  if  atomic  energy  is  to  be  made  attractive  for  non-
    defense  purposes,  and  indeed  if  we  are  to  utilize  it  to  best  advantage
    for  purposes  of  defense,  it  must  be  made  considerably  less  costly.
    It  is  our  strong  opinion  that  private  industry,  aggressively  competing
    in  such  programs,  risking  its  own  capital  and  that  of  its  stockholders,
    with  the  profit  incentive  or  loss  deterrent,  will  do  much  to  bring  atomic
    energy  and  its  products  and  byproducts  much  closer  to  earth  eco-
    nomically. There  is  no  reason  w4iy  such  participation  could  not  be
    carried  out  within  any  framework  of  security  or  accountability  estab-
    lished by  the  Atomic  Energy  Commission.

    In  order  for  industry  to  participate  effectively  in  such  a  program,
    certain  fundamental  changes  must  be  made  in  the  Atomic  Energy  Act
    of  1946.  In  our  opinion,  there  are  two  major  modifications  required.
    These  are :

    1.  The  Atomic  Energy  Act  should  be  changed  to  permit  licensed
    private  ownership  and  operation  of  plants  for  the  recovery,  manu-
    facture, and  sale,  to  Government-licensed  reactor  owners  or  operators,
    of  nuclear  fuels  and  components  containing  source  or  fissionable  ma-
    terial. The  act  must  also  permit  licensed  fuel  or  component  manu-
    facturers— who  are  not  necessarily  reactor  owners  or  operators — to
    buy  source  and  fissionable  materials  from  either  the  Govenmient  itself
    or  from  private  sources  which  have  been  licensed  to  sell  such  raw
    materials.

    2.  The  Atomic  Energy  Act  should  make  provision  whereby  inven-
    tions and  discoveries,  arising  from  activities  sponsored  with  private
    capital,  shall  remain,  by  patent,  the  property  of  the  sponsoring  party.
    The  law  should  provide  for  an  irrevocable  license  to  the  United  States
    Government  on  any  patentable  invention  or  discovery  where  such
    license  is  required  by  the  Government  for  the  national  security.  In
    order  that  organizations  who  have  been  a  part  of  the  atomic  energy
    program  for  the  past  several  years  do  not  gain  an  unfair  advantage
    over  those  companies  wishing  to  enter  the  field  when  the  act  is  changed,

    530  ATOMIC    POWER    DEVELOPMENT

    it  is  suggested  that  a  1-  or  2-year  interim  period  be  provided  in  the
    act  whereby  a  license  to  all  patentable  discoveries  and  inventions  is
    made  available  to  the  Government  which,  in  turn,  can  sublicense
    qualified  firms  wishing  to  enter  the  field  during  the  interim  period.
    After  the  1-  or  2-year  interim  period,  standard  patent  law  should
    apply.

    Thank  you.

    Chairman  Cole.  Thank  you,  Mr.  Kingston.  You  have  given  us
    some  new  suggestions  and  thoughts  on  this  subject.

    First,  I  want  to  make  sure  that  I  understand  just  what  your  testi-
    money  was  with  respect  to  the  amount  of  capital  that  Sylvania  has
    already  spent  in  this  venture,  in  this  field.

    You  indicated  that  the  company  had  spent  between  3  and  4  million
    dollars  of  capital ;  does  that  mean  that  that  represents  an  expenditure
    of  Sylvania  funds  ?

    Mr.  Kingston.  Yes.

    Chairman  Cole.  Entirely?

    Mr.  Kingston.  Yes.

    Chairman  Cole.  It  is  my  recollection  that  there  has  been  no  other
    company  that  has  invested  as  much  of  its  own  funds  in  these  studies
    as  your  company  has  apparently  spent.

    Mr.  Kingston.  I  think  that  is  my  recollection,  too.

    Chairman  Cole.  Now,  how  much  has  been  spent  by  your  company
    through  arrangements  with  the  Commission  ?

    Mr.  Kingston.  I  can  only  give  you  an  approximate  figure,  but  I
    would  say  that  it  is  in  the  range  of  4  to  6  million  dollars.

    Chairman  Cole.  Has  that  been  by  a  direct  arrangement  with  the
    Commission  ?

    Mr.  Kingston.  That  is  under  subcontract  to  the  Commission.

    Chairman  Cole.  Subcontract?

    Mr.  Kingston.  Well,  subcontract  to  the  Commission's  contractors.

    Chairman  Cole.  Do  you  have  a  single  contractor,  or  are  you  a  sub-
    contractor to  several  of  the  Commission's  contractors?

    Mr.  Kingston.  The  latter  is  true.  We  contract  directly  with  the
    Commission,  and  also  we  subcontract  with  certain  of  the  Commission's
    contractors.

    Chairman  Cole.  What  has  been  the  nature  of  your  direct  contract
    with  the  Commission?

    Mr.  Kingston.  You  mean  in  terms  of  the  nature  of  the  work?

    Chairman  Cole.  The  nature  of  the  work  and  the  dollar  cost  of  it.

    Mr.  Kingston.  Substantially  all  of  the  major  part  of  the  figure  that
    I  gave  you  is  under  direct  contract  to  the  Commission.  *

    Chairman  Cole.  You  did  not  give  me  any  figure.

    Mr.  Kingston.  I  said  between

    Chairman  Cole.  Six  and  seven  million  dollars?  Oh,  that  figure.
    Most  of  that  figure  was  a  direct  contract  with  the  Commission  ?

    Mr.  Kingston.  A  direct  contract  with  the  Commission.

    Chairman  Cole.  And  the  nature  of  the  work  was  what  ?

    Mr.  Kingston.  Research  and  development  in  the  area  of  fuel  ele-
    ments and  materials  involved.

    Chairman  Cole.  What  do  you  mean  when  you  use  the  expression
    "fuel  elements"?

    Mr.  Kingston.  Well,  the  fuel  element  in  a  reactor  is  that  portion
    containins:  the  fissionable  materials.

    ATOMIC    POWER    DEVELOPMENT  531

    Chairman  Cole.  I  still  do  not  understand  the  nature  of  your  study.
    Was  it  for  the  purpose  of  devising  combinations,  devising  ways  in
    which  the  fissionable  material  miglit  be  mixed  with  some  other  ele-
    ment or  commodity,  to  the  point  where  it  can  be  burned  more
    efficiently  ?

    Mr.  Kingston.  That  is  correct,  and  also  from  the  standpoint  of
    costs,  lower  costs,  more  effective  designs,  and  so  forth.

    Chairman  Cole.  "Where  has  this  operation  been  carried  on?

    Mr.  Kingston.  This  has  been  carried  on  in  two  locations,  both  lo-
    cated in  eastern  Long  Island,  Bayside,  Long  Island,  and  Hicksville,
    Long  Island.

    Chairman  Cole.  Has  Sylvania  actually  made  a  pilot  reactor  for  the
    Commission  ?

    Mr.  Kingston.  Not  a  pilot  reactor.  They  have  a  pilot  plant,  in
    which  pilot  operations  on  fuel  elements  are  being  carried  out.

    Kepresentative  Van  Zandt.  Where  is  that  plant  ?

    Mr.  Kingston.  At  Hicksville.

    Chairman  Cole.  You  say  obviously  there  would  have  to  be  certain
    guaranties  insofar  as  volume  of  components  is  concerned.

    Would  you  amplify  that  in  order  that  we  may  understand  just  what
    you  meant?

    Mr.  Kjngston.  Yes,  I  would  be  glad  to.

    By  "guaranties,"  here,  I  mean  guaranties  in  terms  of  numbers.

    Chairman  Cole.  Numbers  of  what  ?

    IVIr.  Kingston.  Numbers  of  components.  If  a  manufacturer  is  asked
    to  quote  on  1,000  new  type  spark  plugs  for  a  car,  be  obviously  might
    give  one  figure.  If  we  were  quoting  on  a  hundred  thousand  spark
    plugs,  he  could  give  a  figure  which  could,  of  course,  be  considerably
    lower;  or  if  he  were  quoting  on  10  spark  plugs,  the  figure  would
    have  to  be  very  high  because  of  the  capital  investment  that  Avould  be
    required  in  this  case  to  make  new  kinds  of  spark  plugs,  assuming  that
    the  spark  plugs  could  not  be  made  by  conventional  techniques.

    Chairman  Cole.  Then  you  mean  that  the  conventional  jiractice
    would  have  to  be  followed  by  the  Government  in  solociting  bids  from
    any  company  that  might  manufacture  the  particular  item  the  Govern-
    ment wanted  ?

    Mr.  Kingston.  That  is  correct.

    Chairman  Cole.  And  that  is  the  extent  of  the  guaranty  that  you  had
    in  mind  ?

    Mr.  Kingston.  That  is  all.

    Chairman  Cole.  In  your  first  item  of  recommendation,  on  page  5,
    you  indicate  that  the  law  should  be  changed  to  permit  licensed  fuel  or
    component  manufacturers  to  buy  source  or  fissionable  materials  from
    either  the  Government  itself  or  from  private  sources  which  have  been
    licensed  to  sell  such  raw  materials.

    I  take  it  from  that,  then,  that  you  do  not  fear  that  there  would
    be  any  undue  advantage  or  competition  by  continuing  the  Government
    in  the  business  of  making  fuel  elements  and  having  those  available  to
    any  licensed  purchaser?

    Mr.  Kingston.  Well,  I  believe  that  certainly  the  Government  should
    buy  such  components  on  a  competitive  basis,  considering  all  qualified
    manufacturers.  If  the  Government  itself  could  make  such  a  ])roduct
    at  a  lower  cost,  or  a  higher  quality,  or  both,  than  anv  industrial  organ-
    izations, naturally,  the  Government  should  carry  tlie  work  out  itself.

    532  ATOMIC    POWER    DEVELOPMENT

    However,  one  of  the  points  that  I  believe  is  important  here  is  that
    -on  this  basis,  if  a  private  enterprise  was  to  purchase  such  materials
    from  the  Government  and  incorporate  them  into  fuels,  it  would  not
    only  have  to  do  so  at  a  unit  competitive  cost,  but  any  losses  of  materials
    would  naturally  result  in  a  loss  to  the  manufacturing  organization.
    And  when  one  deals  with  materials  that  are  of  considerable  inherent
    value,  such  a  loss  deterrent  would  unquestionably,  or  should  unciues-
    tionably,  result  in  a  lower  cost,  higher  efficiency,  higher  quality  opera-
    tion and  product.

    Chairman  Cole.  This  particular  sentence  to  which  I  directed  your
    attention  anticipates  that  the  users  of  fissionable  material  will  have
    two  sources  to  get  it,  either  from  the  Government  or  from  private
    producers  of  the  fissionable  material.

    Now,  from  that,  I  take  it  that  you  do  not  fear  that  there  would  be
    any  danger  from  competition  on  the  part  of  the  Government  with
    those  private  people  who  make  the  fissionable  material  ?

    Mr.  KiNGSTOisr.  Well,  frankly,  I  am  not  qualified  to  give  an  opinion
    on  that  particular  aspect.     I  have  no  studied  it.

    The  raw  material  I  was  referring  to  here  was  not  fissionable  mate-
    rial as  produced  in  a  reactor.  What  I,  rather,  referred  to  here  was  the
    source  material,  as  produced  in  mines  and  refined.

    Chairman  Cole.  Are  there  other  questions  of  Mr.  Kingston  that
    the  members  of  the  committee  may  wish  to  ask  ?

    Representative  Holifield.  Mr.  Kingston,  as  to  this  three  or  four
    million  dollar  investment,  which  I  believe  you  stated  is  chiefly  in
    building  and  plant  facilities,  was  that  invested  under  a  certificate  of
    necessity,  in  view  of  the  fact  that  you  were  handling  this  six  or  seven
    million  dollar  contract  with  the  Atomic  Energy  Commission?

    Mr.  Kingston.  We  did  obtain  certificates  of  necessity.

    Representative  Holifield.  Does  that  allow  you  amortization  in  5
    years  ?

    Mr.  Kingston.  It  does  from  a  tax  standpoint  only.

    Representative  Holifield.  And  charging  that  amortization  up  to
    the  expense  of  operations?

    Mr.  Kingston.  Rapid  amortization  is  not  charged  as  an  expense
    to  the  contract.

    Representative  Holifield.  The  amortization  of  plant  cost,  I  asked,
    was  it  allowed  in  the  computation  of  profits  ?  The  amortization  of  the
    cost  of  building  these  buildings  was  allowed  in  your  accounting,  20
    percent  of  it  per  year,  if  it  was  on  a  5-year  amortization  basis,  and
    most  certificates  of  necessity  carry  that.

    Mr.  Kingston.  The  rapid  amortization  of  plant  was  only  allowed
    from  a  tax  standpoint.  Contract  operations  are  charged  standard
    depreciation  only.

    Representative  Holifield.  So  actually  the  Government  was  charged
    for  that  three  or  four  million  dollars?

    Mr.  Kingston.  The  Government  was  charged  only  normal  depre-
    ciation on  the  capital  investments  involved.  Rapid  amortization  as
    allowed  by  certificates  of  necessity  applied  only  for  tax  purposes.
    Actually,  the  certificates  were  not  100  percent,  even  for  tax  purposes.

    Representative  Holifield.  What  was  it?

    Mr.  Kingston.  One  was  of  60  and  one  of  75.

    Representative  Holifield.  On  a  5-year  amortization  period?

    Mr.  Kingston.  That  is  correct,  sir.

    ATOMIC    POWER    DEVELOPMENT  533

    Eepresentative  Holifield.  So  that  cuts  down  your  net  capital
    investment  ?

    Mr.  Kingston.  As  I  see  this,  the  rapid  amortization  allowed  for  tax
    purposes  by  the  certificates  of  necessity  does  not  cut  down  our  capital
    investment.

    Representative  Holifield.  Now,  in  the  second  recommendation  you
    made,  you  suo-gested  that  1-  or  2-year  interim  period  be  provided  in
    the  act,  in  which  all  patentable  inventions  or  discoveries  are  made
    available  to  the  Government.

    Did  you  refer  to  those  patentable  inventions  and  discoveries  that
    had  been  made  up  to  date?

    Mr.  Kingston.  Oh,  no ;  just  those  that  would  be  made.

    Representative  Holifield.  In  this  interim  period  ?

    Mr.  Kingston.  This  refers  only  to  those  that  are  made  from  the
    period  of  the  change  in  the  act,  and  made  with  private  capital,  or
    under  private  sponsorship.

    Representative  Holifield.  Well,  here  is  what  you  say :

    In  order  that  organizations  which  have  been  a  part  of  the  atomic-energy  program
    for  the  past  several  years  do  not  gain  an  unfair  advantage  over  those  companies
    wishing-  to  enter  the  field  when  the  act  is  changed,  it  is  suggested  that  a  1-  or
    2-year  interim  period  be  provided  in  the  act  whereby  a  license  to  all  patentable
    discoveries  and  inventions  is  made  available  to  the  Government,  who  in  turn,  can
    sublicense  qualified  firms  wishing  to  enter  the  field  during  the  interim  period.
    After  the  1-  or  2-year  interim  period,  standard  patent  law  should  apply.

    Now,  seeking  the  meaning  of  that,  do  you  mean  to  say  that  just
    those  licenses  which  are  taken  out  in  this  2-year  interim  period  shall
    be  made  available  to  the  Government?  Or  is  the  license  to  all  patent-
    able discoveries  and  inventions  made  prior  to  the  2-year  period  also
    to  be  made  available,  through  the  Government,  to  those  who  wish  to
    participate?

    Mr.  Kingston.  The  latter.

    Chairman  Cole.  You  mean  both  of  them  ?

    Mr.  Kingston.  Both  of  them.

    Chairman  Cole.  You  mean  the  licenses  that  have  been  developed
    over  tliQ  last  10  or  15  years  shall  be  available  for  public  use  without
    royalty,  and  in  addition  those  patents  which  might  develop  in  the
    next  2  years  after  the  law  has  been  changed  ?

    Mr.  Kingston.  Yes.

    Representative  Holifield.  That  is  the  point  I  wanted  to  make,  be-
    cause I  wanted  to  clear  that  up.

    If  that  be  true,  you  say  they  shall  be  made  available  to  qualified
    firms  wishing  to  enter  tlie  field  during  the  interim  ])eriod.  Let  us
    assume  that  we  set  the  period  1954  and  1955  as  the  interim  period,
    and  let  us  assume  that  in  that  period  10  firms  enter  the  field.  Now,
    if  firms  who  are  not  yet  financially  able  wish  to  enter  the  field  in
    1956,  thev  would  not  have  access  to  this  information  which  has  been
    made  available  to  that  favored  few  that  have  participated,  or  signified
    their  willingness  to  participate,  in  the  interim  period ;  is  that  true  ?

    Is  that  what  you  mean  ?

    Mr.  Kingston.  No;  I  mean  that  this  information  should  be  made
    available  to  all  firms  who  had  a  logical  and  reasonable  interest  in
    such  a  program.

    Representative  Holifield.  Does  that  mean  during  this  interim  pe-
    riod ?     Or  from  now  on  ?

    534  ATOMIC    POWER    DEVELOPMENT

    Mr.  Kingston.  I  would  say  from  now  on.

    Representative  Holefield.  I  see  what  you  mean.  In  other  words,
    you  would  not  confine  access  to  that  information  only  to  those  com-
    panies that  were  able  to  participate  in  the  interim  period,  but  you
    would  make  it  available  to  any  company  that  wanted  to  come  into  the
    program  in  the  future?

    Mr.  Kingston.  I  would  say  so,  as  long  as  they  had  a  realistic
    interest.

    Representative  Holifield.  Providing  they  could  qualify  ?

    Mr.  Kingston.  From  all  standpoints,  including  security,  of  course.

    Representative  Holifield.  Yes.  And  then,  after  that  interim  pe-
    riod, you  say  standard  patent  law  should  apply.  That  would  be  on
    future  developments  ?

    Mr.  Kingston.  That  is  correct.

    Representative  Holifield.  That  is  all,  Mr.  Chairman.

    Chairman  Cole.  Of  course,  your  suggestion  might  cause  an  inventor
    to  withhold  applying  for  a  patent  until  the  2  years  had  expired,  and
    then  make  application  for  it,  so  that  he  could  get  a  permanent  patent.

    Mr.  Kingston.  I  would  be  afraid  he  might  suffer  if  he  would  hold
    up.  With  the  aggressive  competition  which  I  would  envisage  along
    these  lines,  I  am  quite  sure  that  it  would  be  quite  dangerous  to  hold
    up  over  a  long  period  of  time.

    Chairman  Cole.  That  is  true.

    Mr,  Kingston.  Otherwise  the  inventor  might  find  that  his  invention
    had  been  anticipated  by  someone  else.

    Chairman  Cole.  Mr.  Van  Zandt  ?

    Representative  Van  Zandt.  Mr.  Kingston,  I  am  impressed,  as  are
    the  other  members  of  the  committee,  with  the  fact  that  Sylvania  was
    actually  at  work  in  setting  up  this  development  some  years  ago,  and
    the  fact  that  you  have  spent  $3  million  or  $4  million.

    How  many  people  do  you  employ  on  that  project  at  the  present
    time?

    Mr.  Kingston.  On  the  order  of  430,  sir.

    Representative  Van  Zandt.  Have  you  any  scientists  working  for

    you

    Mr.  Kingston.  Yes;  roughly  40  percent  would  be  highly  qualified
    scientists;  in  many  cases  specialists  in  their  field.

    Representative  Van  Zandt.  Are  these  specialists  you  refer  to  re-
    cently acquired  employees?

    Mr.  Kingston.  No.  Many  of  these  we  brought  along  from  our
    parent  organization.

    Representative  Van  Zandt.  They  have  grown  up  with  this  new
    division  of  Sylvania?

    Mr.  Kingston.  That  is  right.

    Representative  Van  Zandt.  Are  you  actually  in  the  process  of  man-
    ufacturing component  parts  ?

    Mr.  Kingston.  Yes ;  we  are,  sir.

    Representative  Van  Zandt.  That  is,  on  a  pilot-plant  basis?

    Mr.  Kingston.  On  a  pilot-plant  scale.

    Representative  Van  Zandt.  Have  you  had  any  inquiries  from  in-
    dustry in  general,  who  are  interested  in  building  reactors?

    Mr.  Kingston.  Well,  groups  in  the  public-utility  field  have  ap-
    proached us,  and  we  are  working  together  with  them,  with  the  Gov-
    ernment's consent.

    ATOMIC    POWER    DEVELOPMENT  535

    Representative  Van  Zandt.  You  have  in  mind  those  utilities  who
    are  members  of  study  groups  ?

    Mr.  Kingston.  Yes.

    Representative  Van  Zandt.  In  jour  opinion,  how  far  off  are  we
    from  actually  building  a  reactor?

    Mr.  Kingston.  A  power  reactor?

    Representative  Van  Zandt,  Yes.

    Mr.  Kingston.  First  of  all,  I  am  not  qualified  to  answer  that.

    Representative  Van  Zandt.  I  mean  in  your  opinion.

    Mr.  Kingston.  My  own  opinion  would  be  certainly  between  5  and
    10  years.

    Representative  Van  Zandt.  Have  you  any  ideas  as  to  the  cost  ?

    Mr.  Kingston.  Well,  I  have  heard  many  figures.  I  am  not  quali-
    fied, sir,  on  that.

    Representative  Van  Zandt.  We,  too,  have  had  figures  ranging  from
    $50  million  to  $100  million  or  more.

    Mr.  Kingston.  Well,  I  would  say  this :  With  the  present  cost  of
    making  component  parts,  the  cost  I  would  think  would  be  quite  high.
    But  I  am  sure  that  all  of  these  costs  can  be  lowered  considerably,  and
    will  be.

    Representative  Van  Zandt.  That  is  all,  Mr.  Chairman.

    Chairman  Cole.  With  reference  to  the  3  or  4  million  you  say  your
    company  has  invested  of  its  own  funds  in  plant  construction,  are
    those  plants  usable  only  for  studies  and  research  and  inquiries  in  the
    nuclear  field,  or  are  they  also  adaptable  or  usable  in  other  areas  of
    interest  to  the  Sylvania  Co.  ?

    Mr.  Kingston.  I  think  I  can  answer  that  question  best  by  pointing
    out  that  a  metallurgical  group  of  this  size  is  far  too  large  for  the
    activities  that  Sylvania  normally  carries  out.  We  would  not  have
    built  these  buildings  or  set  up  the  working  capital  that  is  involved  if
    it  was  not  for  the  atomic-energy  operations.

    Chairman  Cole.  So  that  the  interest  in  the  atomic  field  was  what
    prompted  you  to  make  this  expenditure?

    Mr.  Kingston.  Yes,  sir.

    Chairman  Cole.  But  in  doing  so,  you  realized  that  your  company
    could  take  advantage  of  other  lessons  that  might  be  learned,  which
    would  be  usable  by  the  company  in  a  field  other  than  the  nuclear
    field?

    Mr.  Kingston.  Well,  of  course,  there  are  always  certain  byproducts
    from  any  program  of  research  and  development,  but  in  this  particular
    case,  since  our  parent  company's  interests  are  primarily  in  the  elec-
    tronic and  lighting  industries,  it  is  not  easy  to  see  the  tie-in,  there,
    with  such  byproducts.     It  is  conceivable,  of  course.

    Let  me  put  it  tliis  way.  If  something  should  happen  tomorrow  with
    the  result  that  there  was  no  more  work  of  this  type,  we  would  be
    forced  to  dispose  of  the  buildings.

    Chairman  Cole.  If  there  are  no  further  questions,  IMr.  Kingston,
    thank  you  for  coming  down,  and  especially  for  the  suggestions  which
    you  have  made  as  to  one  possible  method  of  handling  a  phase  of  this
    problem  that  is  very  bothersome  to  the  committee;  and  I  refer  to  the
    1-  or  2-year  free  period  of  inventions.

    Thank  you  very  much,  Mr.  Kingston.

    Mr.  Kingston.  Thank  you,  gentlemen.

    536  ATOMIC    POWER    DEVELOPMENT

    Chairman  Cole.  The  next  witness  is  Dr.  Walker,  who  is  a  personal
    friend  and  neighbor  of  our  colleague  on  the  committee,  Mr.  Van  Zandt,
    and  I  will  ask  Mr.  Van  Zandt  to  introduce  Dr.  Walker.

    Representative  Van  Zandt.  Dr.  Eric  Walker,  dean,  School  of  En-
    gineering, Pennsylvania  State  College,  will  be  our  next  witness.

    Pennsylvania  State  College  is  among  those  universities  and  colleges
    which  have  begun  active  plans  for  construction  of  atomic  reactors  as
    research  tools  for  the  use  of  their  students  and  faculties.  In  addition
    to  discussing  the  prospects  and  problems  involved  in  this  venture,  Dr.
    Walker  has  also  followed  closely  the  work  of  the  nuclear  science  group
    of  the  Institute  of  Radio  Engineers.  A  member  of  that  group.  Dr.
    William  Breazeale,  also  of  Pennsylvania  State  College,  is  with  Dr.
    Walker  this  afternoon.  The  Institute  of  Radio  Engineers  is  a  pro-
    fessional society  which  abstains  from  anything  remotely  resembling
    lobbying.  Drs.  Walker  and  Breazeale  have  been  invited  to  testify  on
    their  own  work,  and  it  is,  of  course,  understood  that  they  are  not
    representing,  but  only  reflecting  the  views  of  the  organizations  with
    which  they  are  associated.

    Pennsylvania  State  College  entered  into  a  no-fund  contract  with  the
    Atomic  Energy  Commisison  last  year  to  design  a  research  reactor.
    The  board  of  trustees  appropriated  $250,000  for  the  project.  The
    modified  swimming  pool  reactor  which  it  is  estimated  can  be  built
    for  this  amount  is  based  on  a  reactor  at  Oak  Ridge.  The  Pennsyl-
    vania State  design  is  due  to  come  up  for  safety  review  this  September.

    Dr.  Walker,  in  addition  to  being  dean  of  the  School  of  Egineering  at
    Pennsylvania  State  College,  has  been  involved  for  many  years  with
    research  work  in  the  Department  of  Defense,  and  many  of  the  weapons
    that  we  employ  today  in  warfare,  represent  some  thinking  and  engi-
    neering ability  of  Dr.  Walker.

    Doctor,  we  are  pleased  to  have  you  here  this  afternoon,  and  you  may
    now  proceed  with  your  statement.

    STATEMENT  OF  DR.  ERIC  WALKER,  DEAN,  SCHOOL  OF  ENGINEER-
    ING, THE  PENNSYLVANIA  STATE  COLLEGE

    Dr.  Walicer.  Thank  you.

    Mr.  Cole,  I  have  given  the  committee  a  written  statement,  but  I  think
    I  can  save  your  time  and  that  of  Mr.  Holifield  and  Mr.  Van  Zandt  if
    I  extemporize  on  that  and  thus  avoid  repeating  some  of  the  things
    which  the  previous  speaker  said.  So  if  it  is  satisfactory  to  you,  I  will
    deviate  from  the  written  statement  and  just  talk  what  I  have  to  say.

    Chairman  Cole.  That  is  agreeable  with  us,  so  long  as  you  do  not
    omit  any  thought  of  importance  that  you  have  contained  in  your
    statement.

    Dr.  Walker.  I  will  try  not  to.     I  think  I  have  the  notes  covered.

    I  am  speaking  to  you  this  afternoon  not  only  as  dean  of  engineering
    at  the  Pennsylvania  State  College,  but  also  as  chairman  of  the  En-
    gineering College  Research  Council.  This  is  a  council  consisting  in
    membership  of  about  100  engineering  colleges,  all  of  whom  are  accred-
    ited by  the  Engineers  Council  for  professional  development,  and  all
    of  whom  do  research  in  the  field  of  engineering.

    Therefore,  I  should  like  to  speak  to  you  as  a  representative  of  en-
    gineering education,  primarily.

    ATOMIC    POWER    DEVELOPMENT  537

    In  this  country  traditionally  we  have  looked  to  the  engineering
    schools  and  colleges  to  provide  engineers.  If  industry  wants  engineers,
    it  goes  to  the  engineering  schools  to  get  them.  If  the  Government
    needs  engineers,  it  goes  to  the  engineering  schools  to  get  them.  And
    this  year  the  military  is  taking  just  about  half  of  our  graduate-
    engineers.

    I  do  not  need  to  tell  you  gentlemen  anything  about  the  shortage  of
    engineers  in  this  country.  It  is  estimated  we  need  about  40,000  a.
    year.

    A  couple  of  years  after  World  War  II,  we  graduated  50,000  engi-
    neering students  per  year.  Then  the  number  started  to  go  down  to
    38,000,  26,000,  this  year  about  23,000,  and  next  year  we  will  produce
    about  19,000  engineering  graduates  in  this  countr}'.

    There  was  a  little  newspaper  article  the  other  day  that  said  the
    Russians  were  turning  out  50,000  engineers  this  year.

    The  reasons  for  this  I  do  not  think  are  important  to  this  committee^
    but  the  point  I  want  to  make  is  that  we  are  going  to  have  a  tough
    time  getting  engineers,  not  only  for  our  normal  peacetime  lives,  but
    also  for  anything  we  do  in  the  atomic-energy  field ;  that  we  must  start
    right  at  the  college  educating  atomic-energy  engineers.  Industry  is
    going  to  need  them,  the  Government  is  going  to  need  them,  and  the
    military  is  going  to  need  them.

    Now,  in  addition  to  the  overall  shortage  of  engineers,  what  is  not
    known  generally  is  that  in  some  fields  the  shortage  is  a  loss  worse  than
    in  others.  And  this  is  because  you  cannot  persuade  the  young  men
    to  go  into  some  fields.

    The  railroads  complain  to  us  continually:  "You  don't  teach  rail-
    road engineering.  Wliere  can  we  get  our  railroad  engineers?"  And
    the  public  utilities  complain  that  they  do  not  get  the  best  men  any-
    more.

    Well,  to  engineering  educators,  the  reason  for  this  is  fairly  obvious.
    We  do  not  teach  these  things  in  the  schools  because  the  boys  do  not
    w^ant  them,  and  the  reason  they  do  not  want  them  is  that  they  do  not
    find  them  interesting.  There  is  no  way  that  they  can  go  into  the
    laboratory  and  actually  do  railway  engineering  or  do  utility  engineer-
    ing. They  can  go  into  the  laboratory  and  try  out  their  ideas  in  radio
    engineering  and  in  many  other  fields  of  engineering,  and  so  they  go
    into  these  fields.  And  although  Mr.  Kingston,  from  Sylvania,  would
    say  there  is  a  shortage  of  radio  engineers,  I  will  say  there  is  a  much
    greater  shortage  in  the  utility  fields.

    Now,  what  are  we  to  teach  in  atomic-energ}'  engineering,  if  we  are
    to  get  the  boys  to  go  into  it?  We  have  to  allow  them  to  be  creative,
    This  is  what  we  say  engineering  is,  that  "We  give  you  a  chance  to
    create  something  the  people  want."  And  so  in  some  way  we  must
    get  atomic-engineering  laboratories  in  our  colleges.  A  few  colleges
    are  beginning  to  worry  about  this  and  wonder  how  to  get  atomic-
    engineering  laboratories.

    From  the  figures  you  people  deal  in,  money  figures,  you  know  tliat
    this  is  pretty  expensive.  Yet  most  of  our  colleges  operate  on  a  shoe-
    string. We  do  not  get  support  from  the  Federal  Government  for
    education  in  any  great  degree.  Many  of  us  do  not  want  it.  We  get
    along  with  our  tuition,  our  endowmonts,  our  State  funds,  and  any-
    thing else  we  can  get.

    538  ATOMIC    POWER    DEVELOPMENT

    For  instance,  at  Pennsylvania  State,  we  hope  to  build  a  nuclear
    reactor,  to  use  as  the  basis  for  our  atomic  engineering  education,  for
    a  quarter  of  a  million  dollars.  Why  a  quarter  of  a  million  dollars?
    This  is  all  I  dare  ask  the  board  of  trustees  to  give  me.  My  board
    of  trustees  is  made  up  of  a  group  of  farmers  and  small-business  men,
    and  they  have  to  worry  about  where  the  college  gets  its  money.  ^  I
    asked  them  for  a  quarter  of  a  million  dollars  to  set  up  an  atomic-
    engineering  laboratory,  and  they  responded  enthusiastically.

    The  farmers  said :  "Here  is  a  chance  for  us  to  get  something  new
    in  farming."

    The  coal  miners,  the  small-business  men,  did  not  know  what  atomic
    energy  might  give  them,  but  they  thought  the  college  might  help
    them  out  if  we  did  this.

    So  we  are  trying  to  build,  as  Mr.  Van  Zandt  says,  a  nuclear  reactor
    to  be  used  for  educational  purposes  for  students  in  their  senior  year,
    the  graduate  year,  on  $250,000.

    We  have  reached  the  point  in  this  building  of  having  my  own  staff
    draw  up  the  designs.

    Dr.  Breazeale,  who  is  here  with  me,  is  in  charge  of  the  nuclear
    design.  We  are  ready  to  build  the  electronic  equipment  that  is  needed.
    But  now  the  board  asks  me  this  question :  "If  you  build  it,  are  you
    going  to  get  the  fissionable  material  to  run  it  with?"  And  we  have
    asked  the  Atomic  Energy  Commission :  "If  we  do  these  things,  will
    you  loan  us  the  fissionable  material  to  put  in  this  reactor  to  make  it
    a  workable  laboratory  instrument?"

    If  the  Atomic  Energy  Commission  says  "Yes,"  then  we  will  build
    it.  If  they  say  "No,"  we  cannot  build  it.  If  they  say  "maybe,"  it
    is  a  matter  of  whether  I  dare  stick  my  neck  out  far  enough  to  have
    the  college  risk  its  money  on  this  building,  and  then  perhaps  have
    it  sit  there  when  we  get  through.

    Representative  Holifield.  At  that  point,  may  I  ask  if  it  is  a  matter
    of  primary  importance  whether  you  own  that  material,  or  whether
    it  is  put  in  your  care  under  a  lease  basis,  a  use  basis  ?

    Dr.  Walker.  I  do  not  think  it  is  of  any  importance,  Mr.  Holifield,
    just  so  long  as  we  can  have  it.

    Representative  Holifield.  Under  the  research  section  of  the  act,
    private  laboratories  are  allowed  to  do  research  and  development  up
    to  a  certain  point.  Now,  that  is  where  the  material  becomes  in  such
    quantities  that  it  is  available  for  making  a  bomb.  And  I  submit
    that,  of  course,  without  going  into  security  matters,  that  may  have
    changed  as  the  years  have  gone  by.  So  that  I  can  certainly  see  your
    point,  that  that  section  of  the  act  needs  looking  into.

    Dr.  Walker.  Yes,  that  is  one  of  the  problems  that  we  have  before
    us.  And  what  we  would  like  to  see  is  a  revision  of  the  act  which
    would  allow  us  to  have  enough  material  to  run  this  reactor  the  way
    we  had  intended  to  run  it.

    There  are  1  or  2  other  recommendations  I  would  like  to  make:

    One  is  this  business  of  dechissification.  If  the  colleges  are  to  teach
    nuclear  engineering,  we  must  have  a  body  of  declassified  information
    to  teach  from.  I  do  not  think  we  need  to  know  anything  about  what
    goes  in  a  bomb,  or  how  you  make  a  bomb.  All  this  military  informa-
    tion can  be  segregated,  but  there  is  still  a  great  deal  of  material  which
    is  still  classified  that  I  personally  do  not  think  needs  to  be  classified.

    ATOMIC    POWER    DEVELOPMENT  539

    People  know  it  anyway.  They  can  figure  it  out  anyway.  A  careful
    study  has  to  be  made  to  find  out  what  additional  atomic-energy  litera-
    ture and  knowledge  can  be  declassified  and  taught  in  the  ordinary
    engineering  schools.

    I  have  already  mentioned  the  release  of  sufficient  nuiterial  to  make
    this  thing  work.  The  third  thing  I  wish  to  mention  is  the  subject  of
    patents,  which  the  previous  speaker  mentioned.

    Representative  Holifield.  Excuse  me,  please.

    Mr.  Chairman,  beginning  on  page  4,  paragraph  1,  I  would  like  to
    have  Dr.  Walker  take  that  in  his  formal  presentation  so  that  we  can
    have  a  little  chance  to  discuss  it,  paragraph  by  paragraph.

    Dr.  Walker.  Beginning  at  the  top  of  the  page  ?

    Representative  Holifield.  No;  at  No.  1,  there.

    Chairman  Cole.  Where  you  refer  to  the  specific  suggestions  for
    modifying  the  act.

    Dr.  Walker.  Would  you  like  me  to  read  that  ?

    Chairman  Cole.  Yes;  I  think  you  had  better  start  there.

    Dr.  Walker.  We  would  like  to  recommend  some  declassification.

    The  suggestion  has  already  been  made  that  tlie  act  be  amended  to
    separate  weapons  information  from  reactor  information  and  that  the
    latter  be  declassified  to  a  much  greater  degree  than  it  is  now.  At
    present,  only  information  relative  to  low-power  researcli  reactors
    is  declassified.  In  other  words,  w^e  can  teach  little  about  power  reactors
    and  it  is  evident  these  are  becoming  the  most  important  branch  of  the
    business.

    The  question  of  release  of  classified  technical  information  always
    balances  the  cost  of  allowing  potential  enemies  to  have  the  informa-
    tion against  the  advantage  of  permitting  a  more  widespread  attack
    on  technical  problems  in  our  own  country.  In  my  opinion,  the  ad-
    vantages of  declassifying  information  relative  to  power  reactors  far
    outweighs  the  disadvantages.

    Representative  Van  Zandt.  Doctor,  in  that  suggestion  do  you  have
    in  mind  making  this  information  available  to  the  student  body,  who
    would  use  the  facilities  of  this  laboratory?

    Dr.  Walker.  That  is  correct,  to  the  students  who  take  courses  in
    nuclear  engineering.

    Representative  Van  Zandt.  You  feel  that  the  chance  you  take  with
    the  individual  student  or  the  group  of  students  in  disseminating  this
    information  and  the  possibility  of  it  reaching  the  enemy  is  something
    that  cannot  be  compared  with  the  good  we  can  get  out  of  it?

    Dr.  Walker.  Yes ;  and  I  am  always  emphasizing  the  fact  that  re-
    actor technology  has  little  to  do  with  the  making  of  wars.

    Representative  Holifield.  The  fact  that  plutonium  can  be  made  in
    recators  is  of  no  particular  significance  to  you  ?

    Dr.  Walker.  In  what  w\ay,  Mr.  Holifield?

    Representative  Holifield.  Well,  you  made  the  statement  that  re-
    actor technology  had  little  relation  to  weapons,  notwithstanding  the
    fact  that  reactors  make  plutonium,  which  is  the  heart  of  the  weapon.
    So  if  we  make  available  to  the  student  body,  which  means  making
    available  to  everybody

    Dr.  Walker.  That  is  right.

    Representative  Holifield.  Nuclear  technology  in  reactors,  in  the
    high-speed  reactors,  we  are  thereby  making  known  to  the  world

    36740-^3 35

    540  ATOMIC    POWER    DEVELOPMENT

    information  as  to  how  to  more  efficiently  produce  plutonium ;  are  we
    not?

    Dr.  Walker,  That  is  correct.

    Representative  Holitield.  That  is  where  the  problem  comes  in,  of
    separating  this  information  from  the  civilian  reactor  use  to  the  mili-
    tary use.  That  is  where  that  line  of  demarkation  becomes  very
    difficult.

    Dr.  Walker.  And  it  requires  the  wisdom  of  Solomon  to  find  it,  too.

    Representative  Van  Zandt.  Doctor,  does  it  not  mean  that  if  a  de-
    cision is  not  favorable,  the  country  will  be  denied  a  reservoir  of  trained
    specialists  in  this  field  ?

    Dr.  Walker.  Yes;  I  think  what  we  are  thinking  of  primarily  is:
    What  is  going  to  happen  20  yeai-s  from  now  ?  Where  are  you  to  get
    the  people  to  run  this  thing?  And  if  atomic  energy  is  to  become  a
    big  part  of  American  life,  we  have  to  train  the  men  and  women  to
    run  it  20  years  from  now.

    Representative  Holifield.  I  am  certainlj'^  sympathetic  to  that  view-
    point. I  am  just  wondering  how  we  can  do  it  with  the  security  prob-
    lems involved.

    Dr.  Walker.  Dr.  Breazeale  and  I  and  quite  a  few  others,  as  you
    know,  do  have  access  to  this  information,  and  it  is  our  opinion  that  a
    pretty  clear-cut  line  can  be  drawn.  It  might  be  debatable  at  times.
    We  make  some  mistakes.  But  I  think  we  do  more  good  than  the
    mistakes  we  make.

    Chairman  Cole.  You  may  proceed  with  your  second  item.

    Dr.  Walker.  I  wanted  to  say  something  about  patents.

    Now,  this  is  not  a  big  thing  to  the  colleges,  because  very  few  colleges
    get  much  income  from  patents.  We  do  have  contracts  with  the  Fed-
    eral Government,  nearly  all  colleges  do,  through  the  military,  in
    which  we  agree  to  give  the  Government  a  royalty-free  license  on  any
    invention  we  shall  make.

    As  you  know,  this  is  not  the  condition  when  we  deal  with  the  Atomic
    Energy  Commission.

    Now,  we  have  with  the  Atomic  Energy  Commission  a  no-cost  con-
    wact.  In  other  words,  the  Commission  gives  us  no  money.  Tliis  is  a
    mechanism  by  which  we  will  present  our  designs  to  the  Commission,
    get  their  approval,  and  later  ask  for  the  loan  of  material.  Neverthe-
    less, we  had  to  sign  this  patent  agreement,  which  I  would  like  to  read,
    because  it  is  quite  irksome  to  us  and  I  am  sure  would  be  irksome  to
    other  colleges  that  had  similar  no-cost  agreements.

    Whenever  any  invention  or  discovery  is  made  or  conceived  by  the  contractor
    or  its  employees  in  the  course  of  the  vpork  under  this  contract,  the  contractor
    shall  furnish  the  Commission  with  complete  information  thereon ;  and  the  Com-
    mission shall  have  the  sole  power  to  determine  whether  or  not  and  where  a
    patent  a]>plication  shall  be  filed,  and  to  determine  the  disposition  of  the  title
    to  and  rights  under  any  application  or  patent  that  may  result.  The  judgment
    of  the  Commission  on  these  matters  shall  be  accepted  as  final ;  and  the  con-
    tractor, for  itself  and  for  its  employees,  agrees  that  the  inventor  or  inventors
    will  execute  all  documents  and  do  all  things  necessary  or  proper  to  carry  out  the
    judgment  of  the  Commission.

    No  claim  for  pecuniary  award  or  compensation  under  the  provisions  of  the
    Atomic  Energy  Act  of  1946  shall  be  asserted  by  the  contractor  or  its  employees
    with  respect  to  any  invention  or  discovery  made  or  conceived  in  the  course  of  any
    of  the  work  under  this  contract.

    The  point  I  want  to  make  is  that  this  is  a  dreadfully  one-sided  agree-
    ment in  which  we,  without  receiving  any  recompense  under  this  con-
    tract, agree  to  give  up  for  patent  purposes  any  ideas  whatever.

    i

    ATOMIC    POWER    DEVELOPMENT  541

    Tliere  is  some  question  as  to  what  is  meant  by  "in  the  course  of  work
    under  this  contract."  Since  the  contract  carries  no  money,  is  anybody
    doing  any  work  under  it  ?  But  I  think  we  would  have  to  say  that  if  we
    sign  this  agreement,  which  we  have  done  in  good  faith,  we  will  have  to
    deliver  up  any  idea  that  comes  along.  This  is  hardly  in  keeping  with
    the  whole  idea  that  a  man  should  be  able  to  be  recompensed  for  the
    results  of  his  work.  If  a  man  comes  up  with  a'brilliant  idea  he  should
    not  be  forced  to  give  it  up  for  nothing  at  all.

    So  I  would  strongly  suggest  that  something  be  done  to  liberalize  this
    patent  agreement,  especially  in  cases  where  there  are  no-cost  contracts^

    Representative  Van  Zaxdt.  Doctor,  Pennsylvania  State  College  is
    involved  in  a  lot  of  work  for  the  Department  of  Defense.  How  does
    the  provision  of  this  contract  compare  with  the  contracts  you  have  with
    the  Department  of  Defense  regarding  production  ?

    Dr.  Walker.  We  agi'ee  to  give  the  Department  a  royalty-free  non-
    divisible,  nontransferrable  license  to  manufacture.  In  other  words,
    we  cannot  hold  up  the  Government  for  royalties  on  work  done  for
    them.  But  the  college  can  still  own  the  patent.  And  if  there  were
    any  profits  coming  from  it,  or  any  rewards  coming  from  it,  the  college
    could  receive  that  reward.

    Representative  Vax  Zandt.  Do  you  not  handle  top-secret  informa-
    tion in  the  field  of  weapons  ?

    Dr.  Walker.  Yes,  we  do.

    Representative  Van  Zandt.  Do  you  permit  your  student  body  to
    become  part  of  your  effort  in  this  defense  field  ?

    Dr.  Walker.  In  classified  contracts?

    Representative  Van  Zandt.  Yes.

    Dr.  Walker.  Not  in  general.  But  there  are  occasions  when  we  take
    seniors  who  are  getting  near  to  graduation,  and  we  put  them  through
    the  proper  security  clearances,  because  we  are  expecting  them  to  go  to
    work  for  us  after  they  gi'aduate.  xVnd  it  takes  about  6  montlis  to  get
    a  security  clearance.

    Representative  Van  Zandt.  In  other  words,  you  train  your  own
    emi^loyees  ?

    Dr.  Walker.  We  manage  to  get  some  of  the  best  men  that  way,  Mr.
    Van  Zandt.

    Representative  Holifield.  It  speaks  well  for  your  training.

    Dr.  Walker.  There  is  one  more  point  I  wish  to  make,  and  this  does
    not  have  to  do  so  much  with  tiie  act  itself  as  with  the  administration
    of  the  act.

    I  mentioned  once  before  that  colleges  really  are  shoestring  opera-
    tions ;  that  we  do  not  have  sales  offices,  and  we  do  not  have  Washington
    representatives,  and  we  do  not  have  people  who  can  go  around  and
    expedite  things,  such  as  is  necessary  and  useful  in  business.

    We  have  to  do  thiiigs  by  letter  instead  of  by  phone.  And  we  find
    it  much  more  difficult  to  do  business  with  the  Atomic  Energy  Com-
    mission than  we  do  with  some  other  Government  organizations.

    When  we  do  work,  let  us  say,  with  the  Bureau  of  Ordnance  of  the
    Navy,  we  expect  to  go  through  a  routine  very  similar  to  that  an  indus-
    trial organization  would  use,  because  this  is  more  of  a  devolopuiont
    and  engineering  type  of  work  and  has  little  to  do  with  research.  But
    when  we  are  doing  research,  we  do  it,  as  I  say,  on  a  shoestring.  We
    are  used  to  trying  to  do  everything  ourselves,  and  we  are  not  used  to
    having  to  do  all  the  expediting  that  seems  to  be  necessary.

    542  ATOMIC    POWER    DEVELOPMENT

    To  cite  an  example,  if  we  want  to  communicate  with  the  Atomic
    Energy  Commission,  we  deal  through  the  New  York  office.  This  is
    200  miles  from  State  college.  The  New  York  office  writes  to  Wash-
    ington, which  is  180  miles  from  State  College.  The  Washington  office
    might  write  to  Oak  Kidge.  And  we  have  to  wait  considerable  time  not
    knowing  what  the  status  of  our  request  is  or  where  we  stand.  And  we
    cannot  send  someone  down  to  find  out.

    The  Navy  and  the  Army  and  Air  Force  have  found  a  way  out  of  this
    difficulty  by  setting  up  special  groups  to  deal  with  colleges.  The  Office
    of  Naval  Kesearch  of  the  Navy  lias  been  a  pioneer  in  this  regard.  They
    know  that  college  contracts  are  small,  that  you  do  things  differently
    in  colleges ;  that  you  often  do  things  in  a  very  unbusinesslike  way  in
    colleges,  because  professors  just  are  not  very  businesslike  in  general.
    And  it  would  be  extremely  desirable,  if  the  colleges  are  to  get  into
    engineering  education  in  the  atomic  energy  field  that  instead  of  seem-
    ingly blocking  us  the  Commission  would  do  something  to  help  us  get
    started.  This  has  nothing  to  do  with  the  act  itself,  but  merely  the
    administration  of  the  act.

    Representative  Holifiei.d.  You  are,  in  effect,  suggesting  that  an
    expediter  be  given  the  job  by  the  Commission  of  liaison  with  the  colr
    leges  to  "get  on  with  the  job"  so  that  he  can  call  on  the  colleges  and
    make  the  necessary  arrangements,  and  shortcuts,  so  that  you  would
    not  have  to  go  through  all  the  redtape  that  is  involved.

    Dr.  Walker.  That  is  correct,  sir.

    Representative  Holifield.  And  is  that  the  method  which  the  Navy^
    Army,  and  Air  Force  follow?

    Dr.  Walker.  In  some  respects.

    Admiral  Bolster,  who  is  the  Chief  of  the  Office  of  Naval  Research,  is
    sitting  in  the  l)ack  of  the  room,  and  he  can  tell  you  better  than  I.  But
    we  can  tell  you  full  well  that  someone  will  drop  around  from  the
    Office  of  Naval  Research  and  see  what  we  are  doing  on  the  projects
    and  listen  to  what  we  have  to  say  and  make  helpful  suggestions.  In
    other  words,  we  feel  it  is  a  sort  of  partnership.  And  we  would  like
    to  have  a  partnership  with  the  Atomic  Energy  Commission.

    Representative  Holifield.  I  think  that  is  a  valuable  suggestion  on
    administrative  procedure.  I  do  not  know  that  the  committee  is  aware
    of  this  difference  that  you  brought  out.

    Dr.  Walkek.  I  think,  Mr.  Chairman,  I  have  covered  everything  I
    have  in  the  written  statement.

    Chairman  Cole.  Would  you  mind  taking  just  a  minute,  Doctor,
    to  tell  us  the  benefit  of  your  observations,  as  to  the  reasons  why  the
    supply  of  the  annual  crop  of  engineers  in  this  country  has  dropped
    approximately  50  ]3ercent  in  the  last  5  years?

    Dr.  Walker.  Yes.  I  must  restrain  myself  on  this,  because  this  is
    very  close  to  my  heart.

    It  is  my  impression  that  the  supply  of  engineers  is  not  going  to
    come  up  to  our  needs  for  many,  many  years,  and  the  reasons  are
    something  like  this:  Engineering  is  getting  to  be  nnich  more  difficult
    than  it  used  to  be,  science  is  going  ahead  by  leaps  and  bounds,  and
    therefore  we  have  to  call  upon  a  higher-intelligence-quotient  person.
    In  other  words,  instead  of  dipping  so  deeply  into  the  population,  we
    have  to  take  just  the  bright  boys.  And  I  claim  that  I  can  tell  at  the
    end  of  a  freshman  year  whether  a  man  is  going  to  be  a  good  engineer,
    because  I  just  ask  what  is  his  intelligence  quotient.    If  it  is  120,  he

    ATOMiC    POWER    DEVELOPMENT  543

    might  make  it.  Tliis  means  he  is  in  tlie  upper  10  percent  of  the  popu-
    lation, you  see.  He  has  to  be  good  in  mathematics,  English,  and
    physics,  and  not  many  boys  are  good  in  these  three  things.

    And  then,  lastly,  he  must  want  to  be  an  engineer.  This  means  he
    wants  to  be,  not  his  grandfather  or  his  uncle.

    We  have  done  some  arithmetic  on  tliis,  and  we  hiul  that  there  are
    only  about  160,000  boys  graduating  each  year  who  fulfill  these  first
    four  requirements.  Now,  of  this  160,000,  about  half  of  them  do  not
    want  to  go  to  college  anyway.  This  cuts  you  to  80,000.  About  half
    of  those  who  ^ant  to  go  to  college  cannot  afford  it.  This  cuts  you  to
    40,000.  And  out  of  this  40,000,  Ave  engineers  want  all  of  them.  The
    ministry,  the  law,  the  medical  profession,  all  want  this  same  type  of
    boy.  And  so  we  just  do  not  have  50,000  young  boys  coming  out  every
    year  who  can  be  engineers.  Obviously  we  have  to  find  some  way  out
    of  this  dilemma.  And  I  think  it  is  going  to  mean  that  we  will  start
    not  only  training  engineers,  the  creative  people  who  are  to  come  up
    with  the  new  ideas  of  what  people  want,  but  we  have  to  train  a  whole
    body  of  technicians  to  back  up  the  engineers  and  do  the  work  which
    many  engineers  are  called  upon  to  do,  which  really  is  below  their
    highest  skill.

    What  it  means,  Mr.  Cole,  is  that  we  have  to  be  very,  very  careful
    in  our  use  of  this  talented  manpower.  And  coming  back  to  atomic
    energy,  if  atomic  energ}^  is  going  to  get  its  share,  we  as  educators  and
    you  people  in  Congress  have  to  Avork  hard  to  make  sure  that  we  do
    get  our  share  for  atomic  engineering.

    Chairman  Cole.  With  reference  to  the  fact  that  Kussia  is  grad-
    uating, did  you  say,  50,000  a  year,  you  do  not  mean  that  those  50,000
    are  all  highly  skilled,  highly  qualified,  120  IQ  people?

    Dr.  Walker.  I  would  doubt  it,  INIr.  Cole.  But  we  do  know  they
    have  more  people  to  start  Avith.  They  have  a  bigger  basic  population
    than  we  have.

    Chairman  Cole.  Are  there  any  further  questions  of  Dr.  Walker  ?

    RepresentatiA^e  Vax  Zaxdt.  Doctor,  hoAV  far  along  are  you  Avith
    the  reactor?

    Dr.  Walker.  We  have  all  the  engineering  designs  completed  for
    the  building,  the  electronic  equipment,  the  reactor  itself.  We  haA^e
    sent  a  report  to  the  Atomic  Energy  Commission,  Avhich  is  noAV,  I
    believe,  before  the  Safeguard  Committee,  and  Ave  are  aAvaiting  Avord.
    And  this  Avord  we  hope  Avill  be  "Yes;  if  you  build  this  we  Avill  loan
    you  the  necessary  material.""  And  until  Ave  get  that  word,  we  cannot
    move  much  further.

    RepresentatiA-e  Vax  Zaxdt.  If  you  get  something  aflirmatiA-e  from
    the  AEC  from  the  safety  standpoint,  what  is  your  target  date  as  to
    completion  ?

    Dr.  Walker.  We  Avould  let  the  contract  to  build  Avithin  a  month
    of  getting  Avord  from  the  AEC,  and  Avould  probably  be  tuning  the
    reactor  up  within  10  months.

    Representative  Vax  Zaxdt.  If  your  planning  Avorked  out  to  the
    point  where  the  building  is  complete  and  the  reactor  is  functioning,
    what  Avould  be  the  size  of  your  classes?

    Dr.  Walker.  We  do  not  knoAv.  Di-.  Brcazenle  aud  I  have  talked
    about  starting  a  pilot  class  of  about  15  this  coming  fall.  This  would
    be  15  boys  who  would  have  to  Avork  Avith  pencils  alone.    They  would

    544  ATOMIC    POWER    DEVELOPMENT

    have  no  laboratory  to  work  in.  I  think  we  might  move  up  to  30  or  40
    engineers  a  year  eventually.

    Representative  Van  Zandt.  You  would  increase  progressively,
    would  you  not?

    Dr.  Walker.  As  industry  and  the  Government  demanded  such.

    Representative  Van  Zandt.  Say  with  5  years  of  experience,  then
    what  would  be  the  size  of  your  clas&?

    Dr.  Walker.  I  do  not  think  it  would  be  more  than  50.  I  do  not
    think  we  could  find  50  bright  boys  who  wanted  this.

    Representative  Van  Zandt.  Would  that  50  represent  1  year's  pro-
    duction ?

    Dr.  Walker.  One  year's  production;  yes.

    Representative  Van  Zandt.  Since  the  Pennsylvania  State  College
    is  located  in  the  geogi'aphical  center  of  Pennsylvania,  is  it  not  true
    that  the  benefits  from  tlie  reactor  will  greatly  assist  the  coal,  chemical,
    and  possibly  other  industries  ?

    Dr.  Walker.  Well,  we  have  thought  of  coal,  the  oil  industry,  the
    farmers.  I  think  many  manufacturers  would  find  use  for  tracer
    materials.    And  we  might  eventually  go  much  further  ahead.

    I  know  one  vice  president  of  the  Pennsylvania  Railroad  who  calls
    me  up  occasionally  and  asks:  "How  are  we  coming  on  this  nuclear
    ■energy  business?     When  should  the  railroads  be  interested?"

    Now,  this  may  be  a  short  time  or  it  may  be  a  long  time.  We  have
    been  in  this  onl}^  10  years.    Where  we  are  going  nobody  can  tell.

    Representative  Van  Zandt.  Is  it  not  true  that  the  success  of  your
    efforts  at  the  Pennsylvania  State  College  depends  primarily  upon
    declassification  of  classified  information?

    Dr.  Walker.  Declassification  and  getting  the  loan  of  the  material.
    If  we  do  not  get  these  two  things,  there  is  no  ])oint  in  our  trying  any
    more.

    Representative  Van  Zandt.  Is  it  not  true  that  there  is  need  for  the
    establishment  of  a  policy  of  administrative  shortcuts  ?

    Dr.  Walker.  That  is  right.

    Chairman  Cole.  Thank  you,  Dr.  Walker.

    Our  next  witness  is  the  president  of  the  Engineers  Joint  Council,
    Joint  Council,  Mr.  R.  J.  S.  Pigott.

    Mr.  Pigott  is  here  to  give  us  the  views  of  the  Engineers  Joint  Council,
    which  includes  many  of  the  outstanding  engineering  societies  of  the
    country.

    STATEMENT  OF  R.  J.  S.  PIGOTT,  PRESIDENT,  ENGINEERS
    JOINT  COUNCIL

    Mr.  PiGOi'r.  Engineers  Joint  Council  was  founded  originally  by  the
    four  largest,  Mr.  Chairman,  the  civil,  the  mining  and  metallurgical,
    the  mechanical,  and  the  electrical.  It  is  now  enlarged,  and  is  growing
    rather  rapidly,  because  it  is  one  of  the  few  organizations  in  w^liich  the
    engineers  each  devoted  to  a  particular  branch  of  engineering  can  pool
    their  problems.

    Chairman  Cole.  I  have  glanced  quickly  at  your  statement,  and  I
    note  that  you  identify  the  composition  of  the  council.

    Mr.  PiGO'rr,  You  will  find  it  is  identified  at  the  bottom  of  page  1,
    by  title.

    Chairman  Cole.  Go  ahead.

    ATOMIC    POWER    DE\ELOPMENT  545

    Mr.  PiGOTT.  Should  I  read  this  to  you  (

    I  will  brief  it  as  much  as  I  can.

    Your  own  response  to  our  letter  of  May  20,  expressing  interest  in
    the  establishment  of  policy  in  this  connei'tion,  that  is,  the  peacetime
    applications  of  atomic  energy,  has  requested  our  recommendations  be
    submitted  in  a  prepared  statement.

    Now,  since  many  of  the  achievements  which  will  be  necessary  to
    bring  atomic  power  to  fruition  are  engineering  in  nature,  engineers
    have  a  great  interest  in  the  development  of  policy  which  will  permit
    them  to  be  most  etfective.  Engineers  Joint  Council  differs  from  the
    individual  societies  in  that  it  is  an  overall  organization  formed  by-
    leading  national  engineering  societies  representing  the  basic  branches
    of  the  profession.  Two  of  the  council's  objectives  are  appropriate
    to  the  problem  you  are  now  considering:

    To  advance  the  general  welfare  of  mankind  through  the  avail-
    able resources  and  creative  ability  of  the  engineering  profession ;

    To  develop  sound  public  policies  respecting  national  and  inter-
    national affairs  wherein  the  engineerinor  profession  can  be  helpful
    through  the  services  of  the  members  of  the  engineering  profession.

    There  weie  something  over  a  half-million  engineers  in  the  1950
    census,  about  80  percent  of  whom  were  working  in  private  industry,
    and  most  of  the  rest  in  Government.

    Engineers  Joint  Council's  principal  recommendations  have  been  de-
    veloped by  an  atomic  energy  panel.  This  panel  contains  representa-
    tives selected  by  its  member  societies:  American  Society  of  Civil
    Engineers,  American  Institute  of  Mining  and  MetallurgicarEngineers,
    the  American  Society  of  Mechanical  Engineers,  American  Water
    Works  Association,  American  Institute  of  Electrical  Engineers,  the
    Society  of  Naval  Architects  and  IMarine  Engineers,  American  Society
    for  Engineering  Education,  and  American  Institute  of  Chemical
    Engineers.  These  representatives  have  used  available  channels  within
    their  respective  societies  to  aid  in  consolidating  the  opinions  of  engi-
    neers and  engineering  groups  informed  in  atomic  enero;y  matters.
    This  statement  has  been  approved  by  the  executive  committee  of  the
    council.

    Wliere  and  how  engineers  get  their  work  done  is  important.  Almost
    all  of  us  work  in  organizations  and  roughly  80  percent  in  private
    industry.  The  organizations  referred  to  in  what  follows  are  industrial
    companies,  universities,  and  nonprofit  research  groups.  Activities
    referred  to  do  not  include  contract  operations  for  the  Commission.
    If  law  permits  and  these  organizations  see  attractive  opportunities,
    they  will  provide  conditions  engineers  find  most  essential  to  rapid  and
    realistic  progi^ess.  Facilities  to  test  and  prove,  reduction  of  ideas  to
    actual  machinery,  freedom  to  initiate  and  try,  wide  association  and
    exchange  of  ideas  and  information  with  others — these  are  some  of  the
    conditions  engineers  treasure  most  highly.  Engineers'  greatest  incen-
    tives are  to  be  able  to  contribute  to  progress  most  effectively,  and  for
    that  to  get  warranted  recognition  and  pay.

    Some  provisions  of  the  present  law  prevent  or  discourage  organiza-
    tions from  providing  such  conditions  for  engineering  progress.  We
    believe  the  following  principal  recommendations  will  provide  a  frame-
    work within  which  engineers  can  become  effective  toward  such
    objectives :

    546  ATOMIC    POWER    DEVELOPMENT

    1.  The  law  should  provide  for  issuance  of  appropriate  licenses
    under  conditions  defined  later  to  organizations  to  develop,  manufac-
    ture, own,  and  use  facilities  for  producing  or  using  heat  and  radiant
    energy  from  atomic  fuels,  together  with  production  and  sale  of  radio-
    active products  such  as  atomic  fuel  produced  therein.

    2.  A  workable  system  of  making  source,  fissionable,  and  feed  ma-
    terials available  at  a  price  to  all  licensed  organizations  is  needed.  It
    is  doubtful  that  actual  requests  will  become  large  soon  enough  to  affect
    the  Nation's  defense  requirements.

    3.  One  of  the  traditional  American  incentives,  patents,  should  be
    revitalized.  This  is  one  kind  of  incentive  motivating  individual  en-
    gineers and  engineering  groups.

    Such  recommendations  are  basic  to  provide  engineers  with  places
    in  which  to  develop,  for  business  to  have  the  incentive  to  manufacture
    what  they  develop,  for  feed  materials  to  be  available  to  operate  and
    prove  equipment,  so  that  results  can  be  determined  and  then  improved
    upon.  Engineers  are  practical  people.  Their  nature  is  to  look  ahead
    to  results.  You  will  seldom  find  engineei-s  happy  to  develop  f  oraiulas
    or  drawings  for  which  there  appears  no  effective  channel  leading  to
    end  use.

    The  definition  of  "appropriate  license"  in  recommendation  No.  1
    above  is  important.  The  administrative  agency  should  be  required  to
    issue  licenses  to  all  who  apply  unless  there  are  valid  reasons  prevent-
    ing issuance.  All  licenses  should  be  issued  subject  to  regulations  pro-
    tecting the  security  of  classified  information  and  preventing  the  di-
    version or  use  of  fissionable  materials  for  unlawful  purposes.  It  is
    possible  that  Federal  regulations,  establishing  some  safety  codes  and
    standards,  may  be  required  for  the  time  being.  However,  as  the  atomic
    industry  grows,  safety  codes  and  standards  would  normally  be  estab-
    lished through  such  channels  as  engineering  societies,  the  American
    Standards  Association,  and  others,  and  enforced  by  the  States.  The
    ASME  boiler  code  is  an  example.  Standards  for  safe  radiation  con-
    ditions are  already  being  established  by  the  National  Committee  for
    Radiation  Protection.  Practical  procedures  implementing  standards
    are  best  established  by  operating  organizations.  Final  responsibility
    for  industrial-owned  plant  safety  normally  is  the  operator's  and
    should  not  be  assumed  by  the  Government.

    Licenses  should  be  revocable  only  if  organizations  fail  to  comply
    with  the  law.  The  administrative  agency  should  require  such  organi-
    zations  to  supply  all  information  necessary  to  demonstrate  compliance
    and  may  need  to  conduct  inspections.  Information  beyond  this  should
    not  be  required.  Maximum  engineering  advances  will  be  obtained  by
    establishing  in  the  atomic  energy  field  the  normal  freedom  for  an
    engineer  to  publish  information  or  not  as  best  suits  his  interest  and
    that  of  his  organization.    Both  interests  are  generally  the  same.

    Freedom  of  choice  to  release  information  or  not  raises  questions  of
    security.  But  laying  security  aside  for  the  moment,  we  wish  to  dis-
    cuss with  you  the  vital  effect  of  such  freedom  on  incentives  and  on
    the  availability  of  engineering  data.

    The  right  to  hold  and  use  certain  knowledge  for  a  time  is  a  vital
    incentive  in  competitive  engineering  achievement.  Industrial  appli-
    cations of  atomic  energy  will  benefit  the  public  sooner  and  better  if
    the  pattern  of  centralizing  technical  information  in  the  present  mili-
    tary phase  is  not  carried  over  into  the  industrial  phase.    At  the  same

    ATOMIC    POWER    DE\ELOPMENT  547

    time  the  publication  and  general  a vai lability'  of  the  bulk  of  tech-
    nical information  to  all  who  wish  to  use  it  is  just  as  important  to
    engineering  progress.  There  are  normal  balances  between  published
    and  retained  information.  Over  the  years  in  America,  individuals
    and  organizations  have  established  balances  appropriate  to  their
    lines  of  endeavor  which  have  resulted  in  a  rate  of  engineering  prog-
    ress equaled  by  no  other  sj^stem.

    We  have  emphasized  these  two  aspects  of  information  because  at
    present  neither  retaining  nor  releasing  can  be  done  in  the  Way  and
    amount  necessary  for  maximum  progress.  Present  security  imple-
    mentation interferes  with  progress  in  both  military  and  industrial
    atomic  applications  in  a  degree  which  we  feel  warrants  reexamina-
    tion of  this  problem  by  the  Congress.  The  vital  problem  of  national
    security  is  to  weigh  the  gain  to  America's  progress  through  the  re-
    lease of  information  versus  the  detrimental  effect  on  the  enemy's  prog-
    ress of  not  releasing  it.

    It  was  clearly  the  intent  of  the  Congress  to  promise  latitude  in  the
    present  law  toward  obtaining  the  best  balance.  The  Atomic  Energy
    Act,  Public  Law  585,  79th  Congress,  states  as  follows  concerning  the
    control  of  information :

    Sec.  10.  (a)  Policy:  It  shall  be  the  policy  of  the  Commission  to  control  the
    dissemination  of  restricted  data  in  such  a  manner  as  to  assure  the  commf)n
    defense  and  security.  Consistent  with  such  policy,  the  Commission  shall  be
    guided  by  the  following;  principles  :

    (j^)   *  *  *

    <2)  That  the  dissemination  of  scientific  and  technical  information  relating  to
    atomic  energy  should  be  permitted  and  encouraged  so  as  to  provide  that  free
    interoliange  of  ideas  and  criticisms  which  is  essential  to  scientific  progress.

    However,  in  defining  "restricted  data,"  the  law  states :

    Sec.  10.  (b)  Restrictions:  (1)  The  term  "restricted  data"  as  used  in  this
    section  means  all  data  concerning  the  manufacture  or  utilization  of  atomic
    weapons,  the  production  of  fissionable  material  or  the  use  of  fissionable  material
    in  the  production  of  power  but  shall  not  include  any  data  wliich  the  Commission
    from  time  to  time  determines  may  be  published  without  adversely  affecting  the
    common  defense  and  security.

    In  practice  the  effects  of  these  two  clauses  are  directly  opposite.

    The  aggregate  result  is  clear.  The  vast  body  of  important  atomic
    energy  information  is  classified.  As  early  as  1948  outstanding  engi-
    neers examined  the  Government's  atomic  activities  for  AEC  as  the
    Industrial  xVdvisory  Group,  chairmaned  by  James  W.  Parker.  Their
    report  emphasized  the  need  of  industry  for  more  and  better  infor-
    mation and  the  loss  to  general  industrial  progress  of  classified  tech-
    nology. Kepresentatives  of  engineers  have  contributed  to  work  on
    declassification  in  the  Advisory  Committee  on  Industrial  Information
    to  AEC.  This  problem  is  so  vital  and  the  considerations  so  difficult
    to  balance  that  we  believe  a  thorough  reexamination  is  imperative.

    This  statement  is  concluded  with  a  few  connnents  on  the  importance
    of  the  basic  reconnnended  changes  in  the  law.  The  present  law  was
    conceived  with  excellent  perception  of  the  situation  then  facing  this
    country  and  recognition  of  the  special  problems  of  atomic  fission  and
    materials.  Basically,  however,  atomic  energy  problems  differ  from
    those  in  other  fields  only  in  degree  and  not  in  kind.  "We  believe  the
    public  will  benefit  if  the  legal  ground  lules  are  changed  toward  those
    proven  by  experience  as  most  pi'oductivo  while  consistent  ivith  national
    security.    We  belieAe  the  changed  ground  rules  proposed  to  encourage

    548  ATOMIC    POWER    DEVELOPMENT

    engineering  advance  toward  nonmilitary  benefits  are  compatible  with
    the  Government's  program.  The  development  of  sufficient  weapons
    and  atomic  propulsion  of  ships  and  planes  can  proceed  effectively
    through  present  contracting  methods  under  either  the  present  law
    or  as  modified,  and  each  program  will  substantially  benefit  the  other.
    An  investigation  of  the  effect  of  security  has  been  suggested  relative  to
    both  military  and  other  progress;  our  other  recommendations  are
    relative  to  engineering  progress  under  private  auspices.  We  feel  the
    recommendations  are  essential  to  a  healthy  atomic  industry  effectively
    utilizing  the  country's  engineering  talent.

    Chairman  Cole.  Thank  you,  Mr.  Pigott.

    Are  there  any  questions  from  members  of  the  committee?

    Apparently  the  committee  has  no  questions  to  ask  of  you,  Mr.  Pigott.
    We  are  letting  you  off  easy.

    Mr.  Pigott.  I  am  very  happy  to  be  afforded  this  opportunity  of
    telling  you  our  views.

    Chairman  Cole.  Some  time  ago  it  appeared  advisable  to  members  of
    the  committee  that  the  committee  hear  from  the  National  Advisory
    Committee  for  Aeronautics  with  respect  to  the  system  which  that
    agency  has  in  dealing  with  patents.  References  were  made  from  time
    to  time  during  the  testimony  to  the  procedures  of  the  NACA,  So,
    at  the  suggestion  of  the  Chair,  the  NACA  has  very  kindly  cooperated,
    and  Dr.  James  Hootman,  who  handles  the  patent  phase  of  NACA,.
    has  been  scheduled  to  appear  this  afternoon.  If  he  is  in  the  room,
    I  will  ask  that  he  come  up  to  the  witness  table.

    I  appreciate  your  appearing  this  afternoon,  Dr.  Hootman.

    STATEMENT  OF  JAMES  A.  HOOTMAN,  TECHNICAL  ASSISTANT  TO
    THE  DIRECTOR,  NATIONAL  ADVISORY  COMMITTEE  FOR  AERO-
    NAUTICS

    Dr.  Hootman.  Thank  you,  sir.

    Chairman  Cole.  You  may  proceed.

    Dr.  Hootman.  Mr.  Chairman,  my  name  is  James  A.  Hootman,  and
    I  am  appearing  in  response  to  the  request  of  your  letter  of  July  21
    addressed  to  Dr.  Hugh  L.  Dryden,  Director  of  the  National  Advisory
    Committee  for  Aeronautics.  I  am  a  technical  assistant  to  the  Director,
    and  have  been  with  the  NACA  for  17  years,  first  as  project  engineer
    at  our  Langley  Laboratory,  and  for  the  past  12  years  as  a  member
    of  the  headquarters  staff  in  Washington.  I  hold  the  master  of  science
    and  doctor  of  philosophy  degrees  in  physics.

    I  believe  that  you  have  stated  the  reason  that  the  NACA  was  called
    upon,  so  I  will  pass  over  that  part.

    The  National  Advisory  Committee  for  Aeronautics  was  created  by
    act  of  Congi-ess  in  1915  to  supervise  and  direct  the  scientific  study  of
    the  problems  of  flight.  From  a  modest  beginning,  it  has  grown  with
    the  growing  importance  of  aeronautics  to  industry  and  to  national
    defense  until  today  it  operates  3  major  laboratories  and  two  auxiliary
    flight  research  stations,  employing  in  all  somewhat  more  than  7,000
    people.     Some  2,000  of  these  are  professional  scientists  and  engineers.

    Representative  Van  Zandt.  May  I  interrupt  there,  Mr.  Chairman  ?

    Doctor,  do  you  have  any  of  these  so-called  tunnels  on  college  cam-
    puses now  that  you  operate,  or  are  they  strictly  operated  by  the
    colleges?

    ATOMIC  POWER  DEVELOPMENT  549

    Dr.  HooTMAN.  Tliey  are  operated  by  the  colleges.

    Representative  Van  Zandt.  How  many  of  them  are  there  ?  Do  you
    have  any  idea  ?

    Dr.  HooTM an.  I  wouldn't  know  offhand.

    Within  recent  years  there  has  been  an  increasing  awareness  on  the
    part  of  NACA  officials  of  the  responsibilities  of  our  agency  with
    regard  to  the  patentable  inventions  of  our  employees,  and  in  1944  a
    statement  of  policy  in  such  matters  Avas  drawn  up  at  NACA  head-
    quarters and  approved  by  the  chairman.  Copies  of  this  policy  were
    made  available  to  the  laboratory  heads,  but  the  matter  was  given  no
    publicity  at  that  time  because  of  the  fear  in  some  quarters  that  circu-
    lation of  the  policy  among  all  employees  would  encourage  them  to  be
    overly  patent  conscious,  to  the  detriment  of  their  work  on  basic
    problems.

    The  original  policy  statement  was  revised  in  1949,  and  its  essentials
    were  thereafter  incorporated  in  the  information  booklet  handed  each
    new  employee  when  he  came  to  work  for  the  NACA.  The  1944  and
    1949  patent  policy  statements  represented  an  attempt  to  state  in  simple
    terms  the  rights  and  privileges  of  the  Government  and  of  its  employees
    as  they  existed  under  the  law  and  decisions  of  the  courts.  If  the  idea
    upon  which  the  patentable  invention  was  based  was  integrally  con-
    nected with  work  specifically  assigned  to  the  employee — that  is,  if  it
    constituted  the  solution  of  either  all  or  a  part  of  a  problem  presented
    by  the  work  to  which  he  was  assigned — and  if  it  was  deemed  in  the
    public  interest  to  do  so,  a  patent  was  to  be  obtained  and  the  Govern-
    ment was  to  be  entitled  to  all  rights  thereunder.

    If  the  invention  was  conceived  incidentally  in  the  course  of  the  in-
    ventor's regular  or  general  employment,  but  was  not  integrally  con-
    nected with  work  specifically  assigned  him,  a  patent  was  obtained  at
    Government  expense  under  the  provisions  of  35  United  States  Code
    45  if  deemed  in  the  public  interest  to  do  so.  In  such  case,  the  rights
    of  the  Government  in  the  invention  were  fully  protected  by  the  reten-
    tion of  a  nonexclusive,  irrevocable,  royalty-free  license  for  manufac-
    ture and  use  for  all  governmental  purposes.  If  the  employee  wished,
    he  was  permitted,  on  request  to  NACA  headquarters,  to  patent  the
    invention  at  his  own  expense  through  private  counsel,  this  in  no  way
    altering  his  obligation  to  grant  a  license  to  the  Government.

    If  it  was  found  that  the  idea  upon  which  the  invention  was  based
    was  outside  the  general  scope  of  the  employee's  duties,  and  that  he
    had  not  used  Government  time,  facilities,  or  other  Government  em-
    ployees in  the  development  of  the  invention,  he  was  permitted  to  take
    any  action  he  deemed  advisable.  If,  however,  it  was  deemed  in  the
    public  interest  to  do  so,  opportunity  was  offered  the  employee  to  have
    the  invention  patented  at  Government  expense  under  the  provisions
    of  35  United  States  Code  45,  in  return  for  a  nonexclusive,  irrevocable,
    royalty-free  license.

    Chairman  Cole.  Doctor,  would  you  tell  us  just  briefly  what  the
    provisions  of  35  United  States  Code  45  are  ?

    Dr.  Hooi^MAN.  Under  the  provisions  of  that  legislation,  an  em-
    ployee of  the  Government  has  a  patent  obtained  in  his  name  at  no
    expense  to  him.  The  Government  pays  the  fees,  prepares,  files,  and
    processes  the  application.

    550  ATOMIC    POWER    DEVELOPMENT

    Chairman  Cole.  And,  in  return,  the  Government  has  the  right  xo
    use  that  license  without  payment  of  royalty  for  its  own  direct  use  or
    for  assij^nment  to  produce  the  item  for  Government  use.

    Dr.  HooTMAN.  To  produce  the  item  for  Government  use ;  yes,  sir.

    Inasmuch  as  the  NACA  is  an  organization  concerned  primarily  with
    fundamental  research  rather  than  with  engineering  development,  9,5-
    signment  of  an  employee  to  invent  is  quite  rare  except  within  those
    groups  which  devise  new  instruments  to  be  used  in  our  own  research
    programs.  Consequently,  almost  all  of  the  inventions  of  our  em-
    ployees fall  within  the  second  and  third  of  the  categories  just
    described.

    The  NACA  has  never  employed  a  staff  of  patent  attorneys.  In  the
    early  days  of  its  existence,  the  number  of  patentable  inventions  its
    employees  reported  was  quite  small,  and  the  practice  developed  of  re-
    ferring those  few  which  were  reported  to  the  Army  Air  Corps  or  to
    the  Bureau  of  Aeronautics,  Navy  Department,  for  patent  action.  This
    arrangement  was  logucal  because  these  were  the  services  which  stood
    to  profit  most  by  utilizing  Government  patent  rights  in  their  develop-
    ment and  procurement  contracts,  thus  reducing  the  necessary  royalty
    payments  to  private  concerns  and  individuals.

    NACA  policy  has  always  required  that  our  employees  report
    through  proper  channels  to  NACA  headquarters  all  of  their  inven-
    tions which  they  believed  to  be  patentable.  Disclosures  made  at  the
    laboratories  are  forwarded  to  the  headquarters  office  by  the  laboratory
    directors  with  their  recommendations  and  with  full  information  con-
    cerning the  inventor's  employment  status  and  the  circumstances  under
    which  the  invention  was  made.  NACA  head  quarters  then  reviews
    the  case  and  decides  whether  or  not  patent  protection  will  be  sought,
    and  how  the  rights  in  the  invention  will  be  divided  between  the  Gov-
    ernment and  the  employee.  If  it  appears  that  the  Government  has
    rights  in  the  invention  and  that  these  rights  should  be  protected,  a  full
    disclosure  is  made  to  the  Navy  Department  with  a  request  that  patent
    action  be  initiated.  The  Office  of  Naval  Research  thereupon  takes
    over  the  responsibility  of  preparing,  filing,  and  prosecuting  the  patent
    application.

    The  procedure  up  to  this  point  is  essentially  the  same  today  as  it  has
    been  for  the  past  10  years ;  howevei-,  the  creation  of  the  Government
    Patents  Board  by  the  issuance  of  Executive  Order  lOOOG  on  January
    23, 1950,  has  established,  in  the  person  of  the  Chairman  of  the  Board,
    an  authority  for  the  review  of  agency  decisions  concerning  the  dispo-
    sition of  rights  of  Government  employees  in  their  patentable
    inventions.

    Chairman  Cole.  Now,  let  me  ask,  Doctor:  Is  that  the  Board  of
    which  Admiral  Bolster  is  the  Chairman  ?  ;

    Dr.  HooTMAN.  No,  sir.

    Chairman  Cole.  Who  is  the  Chairman?

    Dr.  HooTMAN.  The  Chairman  is  Dr.  Archie  M.  Palmer.

    Chairman  Cole.  And  who  are  the  other  members  of  the  Board?       ;

    Dr.  HooTMAN.  There  are  10  agencies,  sir ;  that  have  representation
    on  the  Board.    I  happen  to  be  the  member  for  NACA.

    Representative  Van  Zandt.  What  is  Dr.  Palmer's  background?  .  '

    Dr.  HooTMAN.  He  has  been  with  different  branches  of  the  Govern-
    ment, with  the  National  Science  Foundation,  and  is  a  former  univer-
    sity president  and  a  scientist.

    ,  ATOMIC    POWER    DEVELOPMENT  551

    Representative  Van  Zandt.  Is  he  employed  by  Government  today  ?
    '.Dr.  Hggtman.  Yes,  he  is.

    The  Chairman  of  the  Government  Patents  Board  also  acts  as  a
    referee  in  disputes  regarding  rights  between  agencies  and  their  em-
    ployees. The  Executive  order,  which  established  a  uniform  patent
    policy  for  all  branches  of  the  Government,  subject  to  specific  exemp-
    tion of  the  Atomic  Energy  Commission,  specifies  certain  criteria  to  be
    observed  in  the  disposition  of  the  rights  in  employee  inventions.
    These  criteria,  although  notably  different  in  their  approach  from
    those  of  the  NACA  policy  of  1949,  are  not  essentially  different  in  fact
    as  presently  interpreted  by  the  Chairman  of  the  Government  Patents
    Board.  The  Executive  order  and  administrative  orders  issued  by
    the  Chainnan  under  its  authority,  outline  uniform  procedure  to  be
    followed  by  all  agencies.  After  a  preliminary  pi-ior  art  search  indi-
    cates that  a  device  or  process  pro]3osed  by  one  of  our  employees  is
    patentable,  a  report  is  made  to  the  Chairman  of  the  Board  describing
    the  invention,  the  circumstances  under  which  it  was  made,  and  the
    decision  of  the  NACA  regarding  the  disposition  of  rights.  The
    Chairman  may  concur  in,  or  reverse  this  decision,  and  subsequent'
    handling  of  the  case  will  depend  upon  his  ruling.  Otherwise,  the
    establishment  of  the  Government  Patents  Board  has  had  little  effect
    upon  our  processing  of  the  inventions  of  our  employees.

    Chairman  Cole.  Doctor,  my  recollection  of  the  original  charter
    creating  the  XACA  tells  me  that  it  was  a  rather  sketchy,  ambiguous,
    indefinite  kind  of  a  beginning,  and  that  there  has  been  very  little
    legislation,  and  Congress  has  done  verv  little  by  wav  of  passing  laws
    affecting  NACA.  ^

    You  folks  have  just  sort  of  grown  up  by  yourself.

    Your  statement  did  not  cover  the  situation  where  private  com-
    panies used  the  facilities  of  Government  laboratories  under  NACA
    sponsorship.  What  is  the  practice  concerning  patents  flowing  from
    such  use  as  that  ?

    Dr.  HooTMAN.  Well,  Mr.  Cole,  there  is  practically  no  use,  no  use
    that  I  can  recall,  of  that  type,  made  by  private  concerns,  unless  the
    private  concerns  are  contractors  of  the  Government,  in  which  case
    the  Government  agency  involved  requests  the  NACA  to  do  the
    research.

    Then  we  are  doing  the  work  for  the  Air  Force  or  the  Bureau  of
    Aeronautics,  Navy  Department,  or  one  of  the  other  branches  of  the
    Government.

    Chairman  Cole.  Then  the  only  time  a  private  aircraft  company,
    either  engine  or  plane,  can  use  NACA  is  if  the  private  company  is  a
    contractor  of  the  Govermnent,  and  then  in  that  case  the  contractor
    applies  to  NACA  for  NACA  to  make  this  study?

    Dr.  HooTMAx.  It  does  not  work  exactly  that  way,  sir.  The  con-
    tractor, working  with  the  Air  Force,  we  will  say,  or  the  Bureau  of
    Aeronautics,  decides  that  certain  experimental  work  is  required  in
    the  development  of  his  model.  Then  the  Bureau  of  Aeronautics  or
    the  Air  Force,  as  the  case  may  be,  will  request  certain  specific  research
    to  be  done  by  the  NACA,  which  we  will  then  perform.

    Chairman  Cole.  And  all  of  the  work  the  NACA  does  is  Govern-
    ment work.

    552  ATOMIC    POWER    DEVELOPMENT

    Dr.  HooTMAN,  It  works  out  that  way  at  present.  Theoretically  it
    is  possible  for  a  private  concern  or  even  a  private  individual  to  have
    work  done  by  the  NACA  by  paying  the  necessary  cost  of  research.
    Actually,  that  has  not  been  done  for  a  long  time.

    Representative  Van  Zandt,  Mr.  Chairman  ?

    Chairman  Cole.  Mr.  Van  Zandt.

    Representative  Van  Zandt.  Suppose  that  you  have  a  model  in  a
    wind  tunnel,  and  you  experiment  with  it  over  a  period  of  months.
    You  develop  a  new  feature,  and  you  think  it  will  be  acceptable  to
    commercial  aviation.  How  will  the  information  concerning  this
    feature  be  disseminated  to  the  industry  itself  ?

    Dr.  HooTMAN.  The  information  would  go  to  the  particular  branch
    of  the  Government  for  which  the  work  was  being  done,  if  it  were  that
    type  of  research.

    I  should  make  it  clear  that  a  great  deal  of  the  research  the  NACA
    has  done  is  basic  research  and  is  initiated  by  the  Committee  itself.
    It  is  initiated  by  the  various  committees  and  subcommittees  working
    under  the  main  NACA  organization.

    However,  as  to  the  work  that  we  do  specifically  for  the  agencies,
    the  information  would  go  to  the  agency  involved  immediately,  and
    it  would  also  go  to  the  manufacturer  whose  design  was  being  investi-
    gated, and  steps  would  be  taken  to  protect  it  by  patent  if  it  were  con-
    sidered desirable.  But  the  information  would  not  be  withheld  in  the
    slightest.

    I  might  say  that  the  NACA  does  have  some  research  carried  out
    under  contract.

    Mention  was  made  by  an  earlier  witness  of  that  type  of  work.  We
    have  work  done  by  universities  which  are  equipped  with  special  facil-
    ities and  personnel  capable  of  carrying  out  work  that  is  necessary  in
    the  field  of  aeronautics.  Research  contracts  are  let  for  that  type
    of  work,  and  the  clause  in  the  contract  relating  to  patents  states  that
    as  to  any  patents  obtained  as  a  result  of  the  contract,  the  Government
    will  obtain  a  nonexclusive,  irrevocable,  royalty-free  license  under  the
    patent.

    Chairman  Cole.  I  do  not  understand  that.  Doctor.  If  NACA
    makes  a  direct  contract  for  conduct  of  research  in  a  particular  field
    for  which  the  Government  pays  the  expense,  the  patents  that  might
    result  from  that  contract  are  treated  as  though  the  contractor  had  been
    an  employee  of  the  Government  and  had  developed  this  patent  inci-
    dental to  his  principal  work.  Is  that  correct?  Why  would  not  the
    patent  that  followed  from  that  contract  be  owned  exclusively  by  the
    Government  ?

    Dr.  HooTMAN.  That  is  a  question  that  is  a  rather  far-reaching  one,
    sir.  The  practice  of  taking  a  license  rather  than  title  to  the  patent
    has  been  in  effect,  I  think,  within  Government  circles,  for  a  long
    time ;  the  theory  being  that  when  you  let  a  contract,  you  buy  services.

    Now,  if  you  should  contract  for  the  title  to  patents  which  might
    develop,  you  would  necessarily  expect  to  pay  more  than  if  you  con-
    tracted merely  for  the  free  license,  which  is  all  the  Government  actu-
    ally needs  anyhow.     That  is  one  line  of  thinking.

    ATOMIC    POWER    DEVELOPMENT  553

    Chairman  Cole.  But  where  an  idea,  an  invention,  is  discovered  by
    a  direct  employee  of  NACA,  in  the  course  of  his  work,  the  Government
    is  given  the  exchisive  license  to  that  patent,  is  it  not  ?

    Dr.  HooTMAN.  If  the  man  was  specifically  assigned  to  that  particu-
    lar job,  and  he  does  it,  then  the  Government  takes  title;  yes,  sir.

    Chairman  Cole.  Now,  if  you  contract  for  a  laboratory  to  do  that
    same  sort  of  study,  the  Government  does  not  get  an  exclusive  title  or
    license?

    Dr.  HooTMAN.  The  terms  of  the  contract  would  not  be  as  specific
    in  that  case  as  the  terms  of  the  direct  assignment  of  an  employee.
    The  contracts  are  not  so  specifically  worded  as  that.  If  we  should
    let  a  contract  to  develop  a  specific  instrument,  for  example,  it  would
    be  a  good  parallel  to  the  case  of  assigning  our  own  employee  to  devel-
    oping an  instrument  or  an  improved  process.

    Chairman  Cole.  Well,  we  asked  you  to  come  down  and  explain  your
    system,  not  to  find  fault  with  the  system  you  have,  so  I  will  not  argue
    with  you  about  that.

    Do  you  have  any  questions  ?

    Representative  Van  Zandt.  Doctor,  can  you  tell  us  in  dollars  and
    cents  what  the  NACA  represents  today  in  the  way  of  investment?

    Dr.  HooTMAN.  Something  like  $200  million,  sir.

    Representative  Van  Zandt.  How  long  has  it  been  in  existence?

    Dr.  Hootman.  Since  1915.

    Representative  Van  Zandt.  How  many  employees  do  you  have  ?

    Dr.  HooTMAN.  Just  a  little  over  7,000  at  present,  of  whom  a  little
    over  2,000  are  actually  research  people.

    Chairman  Cole.  On  the  question  that  Mr.  Van  Zandt  has  raised,  the
    amount  of  Federal  money  invested  in  NACA  is  very  interesting,  be-
    cause $200  million  represents  a  little  less  than  half  of  what  the  Fed-
    eral Government  has  invested  in  the  atomic-energy  research  program.

    Dr.  HooTMAN.  They  have  made  better  time  than  the  NACA  did.

    Chairman  Cole.  I  think  the  record  will  show,  and  if  not  it  should
    show,  in  the  record  of  this  hearing,  that  that  part  of  the  10  or  12
    billion  dollars  overall  program  of  money  spent  by  the  Atomic  Energy
    Commission  which  has  been  spent  for  research  and  development  in
    the  atomic-energy  field  related  to  reactors  has  been  about  five  or  six
    hundred  million  dollars.

    Mr.  Hamilton  now  tells  me  it  is  $554  million  on  reactor  research.

    Representative  Holifield.  Now,  who  gets  the  benefit  of  that?  All
    of  the  private  and  Government  Air  Force  facilities  ?

    Dr.  HooTMAN.  That  is  correct.  Our  research  results  are  reported
    very  promptly  to  Government  agencies  and  the  industry,  through  sev-
    eral different  types  of  publication.

    Representative  Holifield.  What  is  the  theory  involved?  That  in
    the  interest  of  the  general  welfare  the  Government  is  justified  in
    spending  this  sum  primarily  for  military  use  in  aircraft,  and  sec-
    ondarily from  the  standpoint  of  the  aircraft  transportation,  manu-
    facturing, and  transportation  service,  to  the  people?

    554  ATOMIC    POWER    DEVELOPMENT

    Dr.  HooTMAN.  Of  course,  for  some  years  the  emphasis  has  been  on
    the  development  of  higher  performance  military  craft,  and  we  feel
    that  perhaps  that  is  our  chief  function  and  means  of  serving  the
    country.

    However,  there  is  very  little  that  can  be  applied  to  military  air-
    craft that  cannot  eventually  be  applied  to  civil  aircraft  as  well.

    Representative  Holifield.  So  the  Government  has  to  a  great  extent,
    subsidized  the  development  of  the  aircraft  industry,  not  only  through
    your  service  but  also  through  the  assistance  in  developing  military-
    type  aviation,  which  is  also  developing  civilian-type  aviation.

    Dr.  HooTMAN.  It  has  at  least  provided  the  basis  on  which  the  air-
    craft industry  can  build  and  go  forward.

    Representative  Holifield.  I  was  rather  amazed  to  find  that  you
    have  about  7,000  people  in  your  organization.  That  does  not  include
    the  Civil  Aeronautics  Board,  which  operates  all  the  weather  stations
    and  the  airfield  landing  towers,  and  so  forth.

    Dr.  HooTMAN.  That  is  correct.  They  are  under  the  Department
    of  Commerce,  and  we  are  an  independent  agency.

    Repi'esentative  Holifield.  That  is  an  additional  subsidy  for  private
    aircraft  as  well  as  for  military  aircrft,  is  it  not'^

    Dr.  HooTMAN.  That  is  mostly  operative,  however,  rather  than  re-
    search.

    Representative  Holifield.  Regulatory   and   operative,   is  it  not?

    Dr;  HooTMAN.  I  beg  your  pardon,  sir?
    <■  Representative  Holifield.  I  say  that  is  in  the  field  of  both  regula-
    tion and  operation.

    Dr.  HooTMAN.  Regulatory  and  operative;  yes,  sir.

    Representative  Van  Zandt.  "V^Hiat  does  the  original  charter  of  your
    group  establisli  in  the  way  of  an  objective  for  the  Committee?

    Dr.  HooTMAN.  The  purpose  for  which  the  NACA  was  established
    was  to  investigate  the  problems  of  fliglit  with  a  view  to  their  practical
    solution.     It  was  a  pretty  broad  charter.

    Chairman  Cole.  It  could  not  have  been  very  much  broader.

    Dr.  HooTMAN.  And  it  has  broadened  as  time  has  gone  on.

    Chairman  Cole.  By  the  initiative  of  those  responsible  for  running
    NACA  and  not  by  Congress,  except  that  Congress  provides  the  funds.

    Dr.  HooTMAN.  That  is  probably  pretty  largely  true.  We  find  that
    we  now  have  to  examine  such  things  as  high  temperature  materials,
    which  are  needed  in  jet  engines.  This,  of  course,  is  one  of  many  new
    problems  which  weren't  even  thought  of  even  15  years  ago.

    Chairman  Cole.  Thank  you  very  much.  Dr.  Hootman,  for  com-
    ing up  this  afternoon.

    Anotlier  group  from  whom  the  committee  has  sought  counsel  and
    information  on  the  procedures  to  be  followed  dealing  with  patent
    phases  of  our  military  program,  where  Federal  money  is  used  to
    develop  new  ideas  and  inventions,  is  the  Armed  Services  Patent
    Advisory  Board,  who  are  represented  today  by  Admiral  Bolster  and
    General  Brannon.

    Admiral,  I  do  not  know  whether  you  speak  for  the  Board,  as
    Cliairman,  or  whether  we  will  hear  from  General  Brannon  later.

    General  Brannon,  do  you  have  a  statement?

    1

    ATOMIC    POWER    DEVELOPMENT  555.

    STATEMENT  OF  ADM.  CALVIN  M.  BOLSTER,  CHIEF  OF  NAVAL
    RESEARCH,  ACCOMPANIED  BY  MAJ.  GEN.  ERNEST  M.  BRANNON,
    JUDGE  ADVOCATE  GENERAL  OF  THE  ARMY,  AND  COMDR.  D.  H..
    DICKEY,  PATENT  COUNSEL  FOR  THE  NAVY

    (Teneral  Bkannon.  No,  sir.

    Admiral  Bolster.  I  liave  tlie  only  statement.

    My  name  is  Calvin  M.  Bolster,  Chief  of  Naval  Eesearch.  I  have
    been  asked  to  explain  briefly-  some  of  the  highlights  ox  current  patent
    policy  of  the  Armed  Forces.  I  would  like  to  state  that  within  the
    Navy  patents  come  under  the  C'hief  of  Naval  Research  due  to  their
    impact  on  our  research  and  development  programs.  In  the  Army
    and  the  Air  Force  patent  work  is  administered  by  the  Judge  Advo-
    cates General.  Since  I  am  not  a  patent  lawyer,  I  have  asked  Maj.  Gen.
    Ernest  M.  Brannon,  Judge  Advocate  General  of  the  Army,  to  accom-
    pany me  here.  I  also  have  with  me  Comdr.  D.  H.  Dickey,  patent
    counsel  for  the  Navy,  to  hel])  answer  any  questions  you  may  have.

    In  examining  the  current  patent  policy  of  the  Armed  Forces,  it  is
    necessary  to  realize  that  this  policy  is  the  result  of  a  long  and  com-
    plicated history  of  recommendations,  reports,  and  legal  decisions,,
    each  of  which  has  accumulatively  affected  the  current  interpretation
    of  patent  policy  by  the  depai-tments  and  the  present  Armed  Forces
    procurement  regulations  insofar  as  patents  are  concerned.  One  im-
    portant aspect  of  this  historical  background  is  that  there  has  been
    repeatedly  strong  evidence  that  Government  policy  should,  insofar  as
    practicable,  recognize  the  need  for  an  incentive  for  industry  and  the
    public  to  work  on  military  matters  and  to  provide  them  with  adequate
    patent  protection  where  appropriate.

    In  order  to  understand  our  interest  in  patents  and  the  necessity
    for  a  clear-cut  patent  policy  it  is  desirable  to  explain  what  we  are
    talking  about.  Actually,  the  whole  need  for  patent  policy  arises  over
    the  recognition  by  the  Government  of  the  existence  of  private  rights
    in  what  have  legally  been  termed  "proprietary  items."  Existence  of
    the  ])roprietary  item  has  long  been  recognized  and  is  actually  covered
    )}i  the  Navy  regulations.  A  proprietary  item  is  defined  as  one  in
    which  the  owner  has  a  property  right  or  interest,  enabling  him  to  ex-
    clude others  fi'om  its  use  without  consent  or  at  least  subject  to  such
    restrictions  as  he  may  place  thereon.  Such  proprietary  items  have
    normally  been  divided  into  the  following  categories:

    (a)  Patents,  which  include  machines,  articles,  substances,  processes,
    and  methods  on  which  a  patent  is  issued.

    (h)  Copyrights,  which  are  normally  issued  on  drawings  of  a  sci-
    entific or  technical  nature,  books,  periodicals,  musical  compositions,
    maps,  and  so  on.

    (r)  Trade  secrets,  which  are  secret  processes  peculiarly  known  only
    to  the  owner  and  on  which  a  patent  has  not  been  issued.  Others  may
    produce  this  unpatented  article  but  under  the  philosophy  of  trade
    secrets  they  do  not  have  the  right  to  use  the  drawings  of  the  specific
    manufacturing  equipment  developed  by  the  producer.

    (d)  Trademarks,  trade  names.  These  are  priuiarily  to  protect  the
    association  of  a  product  with  its  source  of  manufacture.

    As  would  be  expected,  patents  are,  by  far,  the  most  important  and
    the  most  troublesome  type  of  proprietary  items.

    36740—53 36

    556  ATOMIC    POWER    DEVELOPMENT

    As  I  stated  above,  the  Navy  has  long  had  a  specific  regulation  with
    regard  to  such  items.  Last  year  the  Army,  Navy,  and  Air  Force
    conducted  a  review  of  patent  policy,  and  among  other  things  recom-
    mended that  all  the  services  adopt  the  following  regulation  regarding
    proprietary  items :

    It  is  the  policy  of  the  armed  services  not  knowingly  to  adopt  or  use  or  author-
    ize the  adoption  or  use  for  or  on  behalf  of  the  Government  of  that  in  which
    another  has  a  proprietary  right  or  interest  without  authorization  of  the  owner
    or  unless  such  use  has  been  authorized  by  the  Secretary  of  the  service  adopting
    it,  except  that  adoption  or  use  without  prior  consent  is  authorized  when  the
    exigencies  of  the  service  so  demand  but  in  any  such  instance  a  full  and  complete
    report  of  all  facts  and  circumstances  relevant  thereto  shall  be  made  promptly
    to  the  Secretary  of  the  using  service.

    Actually  the  interest  of  the  Armed  Forces  in  patents  and  inven-
    tions is  necessarily  very  great,  and  it  is  important  that  they  be  ad-
    ministered soundly  because  of  their  intimate  relationship  to  our  con-
    tracting problems.  It  could  well  be  said  that  the  lifeblood  of  the
    Armed  Forces  is  invention,  when  this  word  is  used  in  its  broadest  terms
    to  mean  anything  that  is  new  and  useful  and  which  will  improve  the
    efficiency  of  the  services.  However,  it  should  be  noted  that  the  value
    resides  primarily  in  the  invention  itself.  On  the  other  hand,  industry
    is  primarily  interested  in  patentable  inventions  and  in  retaining  their
    industrial  know-how.  Both  the  ownership  of  the  patent  itself  and
    the  retention  of  know-how  are  of  great  importance  to  industry  in  main-
    taining their  competitive  position.

    In  studying  all  of  this  material  it  becomes  apparent  that  the  Govern-
    ment obtains  patents  primarily  to  maintain  a  sound  defensive  position.
    I  believe  in  no  instance  has  the  Government  ever  sued  an  infringer
    and  certainly  would  not  do  so  under  present  policies  because,  in  ac-
    cordance with  a  listing  of  Government-owned  patents  recently  pub-
    lished by  the  Chairman  of  the  Government  Patents  Board,  such  pat-
    ents are  free  to  all.

    In  summary,  we  may  briefly  state  that  the  Government-industry
    philosophy  is :

    1.  That  the  Government  acquires  patents  primarily  and  solely  for
    protective  reasons.

    2.  The  Government  does  not  exploit  patents.

    3.  The  leaving  of  proprietary  rights  with  contractors  while  assur-
    ing proper  protection  to  the  Government  establishes  incentive  for
    Government  contractors.

    4.  That  additional  sources  for  procurement  sliould  only  be  estab-
    lished when  essential  to  meet  Armed  Forces  needs.

    Unless  we  are  to  get  into  a  detailed  legal  discussion  which  is  very
    involved,  I  believe  for  the  purposes  of  this  committee  a  very  brief  but
    concise  statement  of  our  policy  regarding  contracts  would  give  you  the
    clearest  understanding  of  the  current  situation.  These  policies  are,  in
    fact,  extremely  simple  and  have  as  their  primary  philosophy  the
    premise  that  the  Government  will  normally  obtain  a  royalty-free
    license  for  work  performed  when  appropriate.  However,  in  order  to
    maintain  the  very  necessary  incentive  to  industry,  the  Government
    does  not  under  Armed  Forces  policies  acquire  the  complete  rights  of
    an  invention,  except  under  unusual  circumstances.

    With  this  introductory  statement,  our  contracts  may  be  grouped
    under  three  general  types :  {a)  research  and  development ;  (b)  a  type

    ATOMIC    POWER    DEVELOPMENT  557

    which  involves  supplies,  including  some  research  and  development;
    and  (c)  an  outright  supply  contract.

    Wlien  the  esesntial  purpose  of  a  contract  is  to  conduct  research
    and  development  or  when  research  and  development  is  to  be  accom-
    plished in  specific  areas  under  a  contract  for  supplies,  our  regulations
    require  that  the  Government  receive  a  royaltj'-free  license  under  any
    invention,  improvement  or  discovery — whether  or  not  patentable —
    conceived  or  first  actually  reduced  to  practice  in  the  performance  of
    this  contract.

    Wlien  the  essential  purpose  of  a  contract  is  to  furnish  supplies
    only,  such  royalty-free  licenses  are  not  normally  required  but  are
    subject  to  acquisition  through  negotiation  when  appropriate.  In  all
    of  this  work  the  question  of  so-called  background  patents  has  always
    been  a  difficult  one,  and  it  should  be  noted  that  in  general  the  granting
    of  a  license  or  title  to  the  Govermnent  as  a  result  of  work  performed
    under  a  research  and  development  contract  as  outlined  above  does  not
    necessarily  or  normally  give  the  Government  license  under  so-called
    background  patents  or  inventions.  Here  again,  this  type  of  problem
    would  normally  be  handled  in  the  negotiation  phase  of  the  contract.

    Lastly,  the  problem  of  providing  patents  for  a  classified  project  has
    always  been  a  difficult  one.  This  is  normally  handled  by  holding  the
    patent  application  in  a  secret  status  for  the  duration  of  the  Govern-
    ment's interest  in  protecting  the  classified  nature  of  the  material
    covered  by  the  invention.  Such  a  patent  would  normally  only  be  per-
    mitted to  issue  after  the  security  restrictions  by  the  Department  con-
    cerned had  been  removed.

    The  policy  of  the  division  of  patent  rights  between  the  Armed
    Forces  and  their  employees  is  in  general  that  the  Government  obtains
    at  least  a  free  license  and  frequently  obtains  outright  title  to  such
    inventions  depending  upon  the  circumstances  under  which  this  in-
    vention was  made.  These  matters  are  all  governed  by  the  administra-
    tion of  Executive  Order  No.  10096.

    And,  in  general,  this  is  the  same  material  that  you  covered  with  the
    last  witness.

    Chairman  Cole.  Executive  Order  No.  10096  is  the  one  to  which  Dr.
    Hootman  referred  a  while  ago.

    Admiral  Bolstee.  Yes,  sir.

    Chairman  Cole.  Setting  up  what  ?

    Admiral  Bolster.  The  Government  Patent  Board.

    Chairman  Cole.  General  Brannon,  do  you  have  anything  you  want
    to  add  at  this  time  to  Admiral  Bolster's  statement?

    General  Brannox.  No,  sir.

    Chairman  Cole.  Are  there  any  questions  from  members  of  the
    committee  ?

    Representative  Holifield.  Mr.  Chairman,  on  page  4,  No.  4 :

    That  additional  sources  for  procurement  should  only  be  established  when
    essential  to  meet  Armed  Forces  needs.

    Will  you  please  elaborate  on  that  ?

    Admiral  Bolster.  Yes,  sir.  This  is  essentially  saying — and  this
    came  up  essentially  after  the  Korean  incident  began,  when  we  were
    broadening  the  base  rapidly — that  you  do  not  necessarily  go  out  and
    hand  somebody's  drawing  to  somebody  else  to  make  an  automobile
    or  an  airplane,  the  airplane  industry  being  one  of  the  most  difficult,

    558  ATOMIC    POWER    DEVELOPMENT

    unless  the  country  really  needs  them.  In  other  words,  the  generation
    of  new  sources  of  material  of  this  type  rests  with  the  need,  and  is  not
    done  under  other  conditions.

    Representative  Holifield,  I  assume  this  applies  only  to  the  pro-
    curement oi  items  which  are  needed  ?  If  an  inventor  develops  a  pat-
    entable item  under  his  own  financing,  and  it  is  an  item  which  the  Navy
    wishes  to  purchase,  and  he  comes  to  the  Navy  to  sell  it  to  the  Navy,
    and  let  us  assume  that  the  Navy  wants  to  buy  that  article :  Do  they,
    in  their  negotiations  with  him,  insist  upon  other  sources  manufactur-
    ing that  same  article  ?

    Admiral  Bolster.  Not  normally,  no  sir.  If  he  has  adequate  fa-
    cilities and  is  able  to  i^roduce  the  item  and  has  the  patent  rights  on  it,
    it  normalljr  would  be  procured  from  him,  and  he  would  receive  a  rea-
    sonable royalty  from  it.  It  only  comes  up  when  we  have  tremendous
    needs,  and  this  one  manufacturer  can't  produce  enough  of  the  item.
    Then  you  have  to  somehow  get  the  other  people  in  the  act  and  have
    more  made.  And  in  that  case,  if  he  had  the  actual  patent,  he  would
    probably  have  to  license  the  other  source  to  do  it.

    This  is  covering  the  cases  where  the  Government  has  acquired  the
    license.

    Representative  Holifield.  I  see.  In  other  words,  you  would  insist
    on  him  making  that  available  so  that  you  would  have  other  sources,
    so  that  if  something  happened  to  his  particular  facility,  others  would
    be  available^

    Admiral  Bolster,  Yes,  sir;  we  frequently  have  to  do  that.  Th©
    Secretaries  have  that  right.

    Representative  Holifield.  Do  3'ou  force  him  to  give  that  right  to
    other  companies  without  recompense  to  him?

    Admiral  Bolsit:r.  No,  sir ;  not  normally.

    Representative  Holifield.  If  he  has  the  patent  applied  for,  how
    do  you  handle  that,  if  it  is  the  case  of  an  item  you  want  to  buy  where
    he  has  filed  an  application  for  a  patent?

    Admiral  Bolster.  Well,  actually,  these  things  are  the  subject  of
    very  long,  drawn  out  negotiations.  Frequently,  if  a  man  has  a  clear-
    cut  patent,  it  is  easy.  If  he  hasn't,  you  sometimes,  after  much  review,
    decide  he  doesn't  luxve  a  good  case.  And  then  we  might  get  into  a  suit.
    Some  of  these  suits  actually  go  to  the  Court  of  Claims.  Up  until
    recently  we  have  liad  a  Patent  Royalty  Adjustment  Board,  where,
    in  cases  where  it  looked  tliat  the  Government  had  infringed  on  his
    patents,  we  could  adjust  this  by  mutual  agreement.

    I  should  let  these  lawyers  talk  about  this  sir.  This  is  out  of  my
    field.     But  I  have  been  working  on  it.

    Representative  Holifield.  Woidd  you  care  to  add  to  that?

    Connnander  Dickey.  The  Patent  Royalty  Adjustment  Board  was
    used  in  cases  where  there  were  other  parties  involved,  ordinarily  where
    there  was  a  license  arrangement  between  a  manufacturer  and  an
    inventor,  if  you  want  to  say  that.  Where  the  manufacturer  was
    to  pay  a  certain  royalty  to  the  inventor,  on  the  ordinary  peacetime
    procurement,  I'oyalties  were  considered  reasonable  and  proper.  But
    wlien  you  swldenly  stepped  up  procurement,  royalties  would  go  to  an
    unconscionable  height.  A  man  getting  $40,000  a  year  royalty  would,
    suddenly  be  getting  $40,000  or  $45,000  a  month  royalty  on  the  ?ame^
    item.     That  ))ermit(ed  us  to  review  that  and  to  issue  a  notice  to  cut

    ATOMIC    POWER    DEVELOPMENT  559

    the.  percentage  royalties  back  to  what  was  considered  a  reasonable
    return  on  his  investment  or  on  his  invention.

    Representative  Holifield.  That  is  where  a  man  has  acquired  a  pri-
    vate patent;  and  let  us  assume  that  he  is  charging  50  cents  royalty
    on  an  item.  When  he  starts  making  it  in  great  quantities,  you  can
    go  in  and  force  him  to  reduce  tliat  50-cent  royalty  per  item  to  a  lower
    amount  ?

    Commander  Dickey.  That  is  right,  sir.

    Representative  Holifield.  Now,  that  is  not  true  in  civilian  life.
    On  what  theory  do  you  force  that?  That  is,  you  just  withhold  the
    contract  from  liim?

    Commander  Dickey.  No;  ordinarily  it  arises  primarily  when  there
    is  a  license  agreement  between  two  parties,  the  inventoi-  and  the  manu-
    facturer. We  are  buying  from  the  manufactui-er,  who  has  to  pay  the
    royalties  to  the  inventor.  The  inventor  is  really  a  third  party,  and
    our  primary  contract  is  with  the  manufacturer.

    Then,  nnder  this  Royalty  Readjustment  Act — which  was  not  re-
    newed on  the  1st  of  July,  so  it  no  longer  is  applicable — we  had  the
    right  -to  adjust  the  ro^^alties  wliicli  the  manufacturer  would  pay  to
    the  inventor,  to  get  him  a  proper  return  on  his  investment,  but  not  an
    exaggerated  retuin  based  on  the  stepped-up  prociiremenit.

    RepresentatiA'e  Holifield.  I  am  not  arguing  the  proposition,  I  am
    just  tr3"ing  to  ascertain  t]ie  facts.  What  you,  in  effect,  did,  then,  was
    to  say  to  the  manufacturer :  "We  will  not  give  you  a  contract  in  which
    you  will  have  as  an  item  of  cost  a  royalty  that  high.  You  nuist  obtain
    it  for  less"  ?

    Commander  Dickey.  Well,  occasionally,  sir.  But  it  happened
    more  frequently  after  the  contract  had  been  let  earlier.  In  other
    words,  there  was  a  manufacturer  who  manufactured  for  us  during
    peacetime,  say  up  until  tlie  1st  of  June,  and  he  was  still  manufacturing
    for  us  in  the  stepped-up  procurement.

    And  then  is  when  we  take  a  look  at  tlie  royalties  he  is  paying.

    Representative  Hoi.ifiki.d.  I  cannot  see  where  you  would  have  the
    legal  right,  though,  to  force  the  numufacturer  to  pay  a  lesser  royalty
    than  that  covered  in  his  agreement  with  the  inventor.

    Commander  Dickey.  Your  Congress  gave  us  that  right,  sir.

    General  Bkannon.  It  is  essentially  a  matter  of  eminent  domain.
    We  could  seize  the  patent,  but  in  order  that  we  might  do  it  more
    quickly,  the  Congress  authorized  us  to  limit  the  payment  we  would
    make  to  the  liolder  of  a  patent.

    Representative  Holifield.  Are  you  speaking  of  items  of  defense,  or
    icommon-use  items  ?

    Commander  Dickey.  No;  it  is  items  of  defense.

    Representative  Holifield.  I  certainly  am  not  complaining  about
    it,  but  I  just  was  exploring  the  methods  in  which  you  Avork.

    Chairman  Cole.  Any  further  questions?

    If  not,  let  me  thank  you,  gentlemen,  for  coming  down  and  giving
    us  the  benefit  of  your  knowledge.

    This  concludes  the  hearings  on  this  subject  with  one  exception.

    There  is  one  further  witness  to  appear  before  the  connnittee,  and
    that  is  Mr.  Strauss,  the  new  Chairman  of  the  Conunission,  who  is
    presently  scheduled  to  appear  befoi'e  tlie  connnittee  on  August  '■">,  a
    week  from  today.  It  is  possible  that  we  may  arrange,  at  the  con-
    venience of  Mr.  Strauss,  to  hear  him  at  an  earlier  time.

    if-rr:-

    560  ATOMIC    POWER'  DiEVELdPMfeiNrT

    In  addition,  the  committee  has  invited  other  interested  individuals,
    groups,  organizations,  and  companies  to  submit  statements  of  their
    views  on  this  subject  for  inclusion  in  our  published  transcript.  These
    statements  will  continue  to  be  received  over  the  next  2  weeks  and  will
    be  made  a  part  of  the  record  insofar  as  possible.

    If  there  are  others  w^hom  we  have  not  contacted,  it  is  entirely
    through  inadvertence.

    Unsolicited  statements  of  views  will  be  welcomed  up  to  the  10th  of
    August,  since  it  is  our  intention  to  provide  oureelves,  the  Congress,
    and  all  interested  parties  with  the  maximum  opportunity  to  examine
    these  problems  and  familiarize  themselves  with  the  views  concerning
    them.

    The  meeting  will  be  adjourned  with  the  understanding  that  the  next
    hearing  on  the  subject  will  be  August  3,  unless  the  Chair  advises  the
    committee  of  an  earlier  date.

    (Whereupon,  at  4 :  10  p.  m.,  Monday,  July  27,  1953,  the  hearing
    was  recessed  until  Monday,  August  3,  1953.)

    l^?Slff«^-"

    ATOMIC  POWER  DEVELOPMENT  AND  PRIVATE
    ENTERPRISE

    FBIDAY,  JULY  31,   1953

    Congress  of  the  United  States,
    Joint  Committee  on  Atomic  Energy,

    Washington^  D.  C.

    Tlie  joint  committee  met  at  2  p.  m.,  pursuant  to  recess,  in  the
    Old  Supreme  Court  room,  the  Capitol,  Hon.  W.  Sterling  Cole  (chair-
    man of  the  joint  committee)  presiding.

    Present:  Representative  Cole,  Senators  Hickenlooper  (vice  chair-
    man), Bricker,  Edwin  C.  Johnson;  and  Eepresentatives  Hinshaw,
    Durham,  Holifield,  and  Price.

    Professional  staff  members  present :  Corbin  C.  Allardice,  executive
    director ;  Walter  A.  Hamilton ;  and  Wayne  P.  Brobeck.

    Chairman  Cole.  The  meeting  will  come  to  order.  The  Chair  feels
    that  it  might  be  appropriate  to  take  a  very  brief  minute  to  give  an
    inadequate  expression  of  the  feeling  that  is  felt  by  the  members  of
    this  committee  and  I  am  assured  by  not  only  the  witnesses  but  by
    all  the  persons  in  attendance  at  this  meeting,  over  our  sadness  in  the
    death  of  Senator  Robert  A.  Taft,  who  was  probably  one  of  the  greatest
    statesmen  in  our  lifetime  and  whose  absence  in  the  Halls  of  Congress
    and  in  the  machinery  of  Govermnent  will  be  sorely  missed,  and  who
    cannot  be  ever  fully  and  adequately  replaced.  Some  thought  was
    given  to  canceling  this  meeting  today  in  respect  to  the  memory  of
    this  gi'eat  person.  But  after  consultation  with  the  witnesses,  and  a
    feeling  that  it  would  be  his  wish,  it  has  been  determined  that  we
    should  carry  on.

    Before  calling  on  the  witnesses  who  are  scheduled  to  appear  today,
    the  Chair  would  like  to  refer  to  two  letters  which  have  been  received
    from  prominent  persons  in  this  field.  One  is  from  Dr.  Kenneth
    Pitzer.  The  other  is  from  Dr.  Edward  Teller,  who  is  one  of  the
    outstanding,  the  most  outstanding,  nuclear  physicist,  a  man  of  very
    great  imagination,  a  man  who  has  contributed  as  much  as  any  other
    one  person  to  the  success  of  this  Government  in  tliis  important  field.
    Both  are  very  important  letters  and  will  be  placed  in  the  api>endix.

    (The  letters  referred  to  will  be  found  on  pp.  623  and  632,  respec-
    tively.)

    Chairman  Cole.  The  witnesses  to  appear  today  are  ^Mr.  Lewis  L.
    Strauss,  tlie  new  Chairman  of  the  Commission,  and  Mr.  Campbell,
    I  see,  is  with  him,  who  is  also  a  new  member  of  the  Commission.

    561

    562  ATOMIC    POWER    DEVELOPMENT

    STATEMENTS  OF  LEWIS  L.  STRAUSS,  CHAIRMAN;  JOSEPH  CAMP-
    BELL, COMMISSIONER;  DR.  HENRY  D.  SMYTH,  COMMISSIONER;
    AND  MARION  BOYER,  GENERAL  MANAGER,  UNITED  STATES
    ATOMIC  ENERGY  COMMISSION

    Chairman  Cole.  Whether  it  is  the  plan  of  the  Chairman,  Mr.
    Strauss,  to  speak  alone  for  the  Commission  today,  or  to  share  the
    presentation  with  his  colleagues  on  the  Commission,  Mr.  Campbell,
    or  his  associates

    Mr.  Strauss.  Another  gentleman  and  member  of  the  Commission,
    Dr.  Smyth,  is  also  here  with  me,  Mr.  Chairman.  In  view  of  my
    novelty,  I  would  appreciate  it  if  I  might  have  the  privilege  of  calling
    on  my  colleagues  and  members  of  the  staff.

    Chairman  Cole.  Of  course.  If  you  wish,  have  them  come  up  and
    surround  you,  or  have  them  sit  in  back  of  you.  The  only  reason  the
    Chair  did  not  recognize  the  presence  of  Dr.  Smyth  is  that  he  had
    appeared  with  the  Commission  at  the  opening  session  of  these  hear-
    ings. Of  course,  he  is  Avelcome  at  all  times,  and  we  are  glad  to
    acknowledge  his  presence.

    Mr.  Strauss,  this  is  the  first  time  that  you  have  appeared  before  the
    committee,  certainly  in  open  session,  since  your  designation  and  accept-
    ance of  the  chairmansliip  of  the  Commission.

    Let  me  reiterate  very  briefly  what  was  expressed  at  your  first
    appearance  as  Chairman  at  the  closed  session.  I  bespoke  the  complete
    and  implicit  confidence  that  every  member  of  this  committee,  irrespec-
    tive of  party  or  the  House  of  Congress  to  which  he  belongs,  has  in  you
    and  your  capacity.

    When  we  first  learned  of  your  nomination,  it  was  accepted  with
    unrestrained  and  unreserved  joy  and  delight.  Having  observed  your
    work  on  the  Connnission  during  your  previous  service,  we  felt  com-
    pletely justified  in  having  an  implicit  reliance  upon  your  capacity  to
    render  an  outstanding  service  to  our  country  in  this  most  important
    field.  In  some  respects  your  nomination  as  Chairman  eases  some  of
    the  responsibilities  of  this  committee  to  keep  such  a  constant  check
    over  the  Commission's  operation.  I  do  not  mean  by  that  expression
    to  indicate  that  we  have  lacked  confidence  in  your  ^predecessors,  but
    because  of  our  personal  acquaintance  Avith  you  we  feel  very  safe  in
    the  knowledge  that  the  chairmanship  of  the  Commission  is  in  com-
    petent hands  and  extend  to  you  a  very  cordial  welcome  today.

    Representative  Durham.  Mr.  Chairman,  this  is  one  time  that  I  feel
    confident  in  having  a  Republican  express  my  views  fully.

    Mr.  Strauss.  Mr.  Chairman,  I  am  naturally  very  proud  to  have
    those  remarks  on  the  record.  I  feel  very  humble  in  the  face  of  these
    responsibilities,  and  I  am  grateful  for  that  encouragement.

    I  also  appreciated  your  remarks  in  connection  with  Senator  Taft
    in  opening  this  session.  You  know,  I  am  sure,  that  the  relationship
    between  us  was  a  close  one  that  has  existed  over  many  years.  His
    encouragement  lias  meant  a  great  deal  to  me,  and  I  feel  his  death  as  a
    very  profound  personal  loss.

    With  your  permission,  Mr,  Chairman,  I  should  like  to  limit  my  testi-
    mony at  what  I  understand  is  the  close  of  these  hearings  to  a  surmna-
    tion  of  the  present  position  of  the  Atomic  Energy  Commission  in
    respect  to  industrial  power;  is  that  your  ])]easure?

    ATOMIC    POWER    DEVELOPMENT  563

    Chairman  Cole.  It  is,  sir.

    Mr.  Strauss.  To  the  extent  possible  for  me,  consistent  with  the  pre-
    occupation of  operating  as  Chairman  of  the  Commission,  becoming
    reacquainted  with  its  personnel,  trying  to  settle  recent  work  stoppages
    at  Oak  Ridge  and  Los  Alamos,  and  other  necessary  diversions,  I  have
    ])een  reading  the  testimonj^  taken  by  your  committee.  It  is  already
    clear  that  the  hearings  have  been  of  enormous  value.  The  idea  of
    staging  them  at  this  particular  juncture  is  a  fortunate  one  and  a  great
    deal  of  material  and  opinion  has  been  elicited  which  warrants  the
    careful  study  of  the  Commission.

    To  the  extent  that  I  came  to  my  new  responsibilities  with  certain
    more  or  less  fixed  ideas  concerning  the  application  of  atomic  energy
    to  power,  I  would  say  that  exposure  even  to  those  parts  of  the  testi-
    mony which  I  have  already  read,  and  that  is  only  a  part  of  it,  has
    shown  me  aspects  of  the  case  that  had  not  previously  been  presented,
    and  I  go  into  the  coming  months  with  a  much  more  open  mind.

    I  am  in  general  accord  with  the  Commission's  statement  of  power
    policy.  However,  as  of  this  moment,  I  am  not  prepared  to  rule  out
    the  possibility  of  plants  which  are  designed  to  produce  weapons  grade
    plutonium  as  a  byproduct  of  power.  I  am  aware  that  such  plants
    inight  involve  compromises  in  design  which  would  qualify  the  use-
    fulness of  power  cost  derived  from  them.  I  am  assured,  however,  that
    the  Commission's  power  policy  statement  was  not  intended  to  pre-
    clude such  dual-purpose  plants  as  a  possibility,  so  much  as  to  empha-
    size the  greater  desirability  of  plants  which  are  economically  justified
    in  terms  of  power  production  alone.

    I  would  be  glad  at  a  later  date,  and  in  executive  session,  to  discuss
    parts  of  this  question  more  fully.  With  this  reservation  noted,  it  may
    be  appropriate  here  at  the  close  of  the  hearings  to  restate  the  Com-
    mission's position  on  nuclear  power  development.  This  position  was
    adopted  on  the  basis  of  three  fundamental  determinations:

    First,  that  the  weight  of  scientific  and  engineering  opinion  holds
    ihat  the  goal  is  attainable.  Second,  that  industry  has  indicated  inter-
    est, and  demonstrated  it  by  contributions  of  talent  and  money.  And,
    third,  that  hydrocarbon  fuels  are  a  diminishing  natural  resource,  and
    that  steps  should  not  be  longer  deferred  in  developing  so  great  a  new
    source  of  power  with  its  promise  of  compactness  and  eventual  cheap-
    ness as  a  factor  in  our  national  strength.

    Upon  these  premises,  the  Commission  formulated  the  following
    policy  statement :

    First,  we  believe  the  attainment  of  economically  C()mi:)etitive  nu-
    clear power  to  be  a  goal  of  national  importance.  Reactor  technology
    has  progressed  to  the  point  where  realization  of  this  goal  seems  achiev-
    able in  the  foreseeable  future  if  the  Nation  continues  to  support  a
    strong  development  effort.  It  would  be  a  major  setback  to  the  posi-
    tion of  this  country  to  allow  its  present  leadership  in  the  world  in
    nuclear  power  development  to  pass  out  of  its  hands.

    Second,  accordingly,  we  recognize  it  as  a  responsibility  of  the  Com-
    mission to  continue  researcli  and  development  in  this  field  and  to
    promote  the  construction  of  experimental  reactors  which  appear  to
    contribute  substantially  to  the  power  reactor  art  and  constitute  use-
    ful contributions  to  the  design  of  economics.

    Third,  in  addition,  it  is  the  conviction  of  the  Commission  that
    progress  toward  economic  nuclear  power  can  be  further  advanced

    564  ATOMIC    POWER    DEVELOPMENT

    through  participation  in  the  development  program  by  qualified  and
    interested  groups  outside  the  Commission.

    Fourth,  we  recognize  the  need  for  reasonable  incentives  to  en-
    courage wider  participation  in  power  reactor  development,  and  pro-
    pose the  following  moves  to  attain  this  end :

    (a)  Interim  legislation  to  permit  ownership  and  operation  of  nu-
    clear power  facilities  by  groups  other  than  the  Commission.

    (h)  Interim  legislation  to  permit  lease  or  sale  of  fissionable  ma-
    terial under  safeguards  adequate  to  assure  national  security.

    (c)  Interim  legislation  which  would  permit  owners  of  reactors  to
    use  and  transfer  fissionable  and  byproduct  materials  not  purchased
    by  the  Commission  subject  to  regulation  by  the  Commission  in  the
    interest  of  security  and  public  safety.

    (d)  The  performance  of  such  research  and  development  work  in
    Commission  laboratories  relevant  to  specific  power  projects  as  the
    Commission  deems  warranted  in  the  national  interest.

    (e)  More  liberal  patent  rights  than  are  presently  granted  to  out-
    side groups  as  may  seem  appropriate  to  the  Commission  and  con-
    sistent with  existing  law.

    (/)  Consideration  of  a  progressively  adjusted  code  for  safety,  and
    exclusionary  requirements  as  may  appear  reasonable  in  the  light  of
    operational  experience  with  reactors.  Competent  State  authorities
    will  be  encouraged  to  assume  increasing  responsibility  for  safety  as-
    pects of  reactor  operation.  Financial  responsibility  associated  with
    reactor  operation  will  be  assigned  to  the  owners  in  keeping  with
    normal  industrial  practice.

    (g)  Giving  full  recognition  to  the  importance  of  reactor  tech-
    nology to  our  national  security,  a  progressively  liberalized  informa-
    tion policy  in  the  power  reactor  field  as  increasing  activity  justifies.

    Paragraph  5 :  It  is  the  objective  of  this  policy  to  further  the  de-
    velopment of  nuclear  plants  which  are  economically  independent  of
    Government  commitments  to  purchase  weapons-grade  plutonium.

    That  is  the  paragraph  to  which  I  noted  a  minor  reservation.

    Paragraph  6 :  We  view  the  next  few  j^ears  as  a  period  of  develop-
    ment, looking  toward  the  realization  of  practical  nuclear  power.  On
    this  basis,  we  conclude  that  the  time  is  not  yet  at  hand  for  the  report
    called  for  in  section  7  (b)  of  the  Atomic  Energy  Act  of  1946,  as
    amended.

    I  would  hope,  Mr.  Chairman,  by  the  end  of  this  year  that  we  will
    have  been  able  to  draft  a  series  of  proposed  amenclments  to  the  act
    to  give  effect  to  this  policy,  to  this  policy  statement.  And  by  that
    date  also,  to  carry  them  through  the  administrative  procedures  re-
    quired to  ascertain  that  they  are  compatible  with  the  policy  of  the
    Government.

    Difficulty  in  this  area  will  be  the  modifications  to  be  recommended
    in  patent  legislation.  The  spectrum  of  choice  here  lies  all  the  way
    from  complete  Government  monopoly  at  one  extreme,  to  a  return
    to  our  traditional  free-enterprise  system  at  the  other.

    We  liave  the  assistance  of  an  advisory  panel  composed  of  experi-
    enced and  public-spirited  men,  intimately  familiar  with  the  theory
    and  the  practice  in  this  field,  and  as  a  Commission  we  are  actively
    engaged  in  study  and  debate  on  this  question.  In  the  last  analysis,
    of  course,  it  will  be  settled  in  the  legislative  chambers  on  this  floor.
    We  will  nevertheless  present  our  best  judgment  to  you.

    ATOMIC    POWER    DEVELOPMENT  565

    I  do  not  think  that  we  should  request  or  that  you  should  consider
    amending  the  law  to  facilitate  the  development  of  industrial  nuclear
    power  in  other  respects  without  simultaneous  action  in  the  patent
    field.

    •  Now,  I  realize  that  the  statement  of  the  Commission's  present  posi-
    tion is  interim  in  character.  It  suggests  many  questions  which  have
    not  before  been  raised,  questions  which  derive  from  such  considera-
    tions as  the  broad  use  or  avoidance  of  subsidies,  the  demands  of  secu-
    rity, the  problems  of  international  cooperation,  and  the  like.

    For  instance,  if  the  Commission  is  to  buy  fissionable  byproduct
    material,  would  the  price  be  its  weapon  or  its  fuel  value  ?  How  will
    the  Commission  select  from  among  perhaps  many  applicants  the
    ■contractors  to  build  and  operate  reactors?  Will  the  Commission  at-
    tempt to  recoup  to  the  Government  the  cost  of  the  fuel  sold  or  leased,
    and,  if  so,  what  elements  are  to  be  included  in  that  cost?

    What  kind  of  charge,  if  any,  will  the  Commission  make  for  the
    research  and  development  work  to  be  done  in  its  laboratories?  Will
    the  Commission  charge,  and  if  so  on  what  basis,  for  the  chemical
    processing  of  the  fuel  elements  that  have  been  through  the  reactor
    •cycle?  Will  industry  or  Government  be  expected  to  bear  the  cost
    of  compliance  with  security  regulations  and  with  the  Commission's
    safety  regulations  ?

    What  are  the  minimum  patent  rights  that  would  be  required  to
    insure  industrial  participation?  What  does  the  Commission  mean
    in  its  statement  of  policy  by  the  phrase,  "More  liberal  patent  rights
    than  are  presently  granted"  ?

    Should  the  patent-protection  period  be  abbreviated  ?  Should  any-
    one have  the  right  to  exclude  others  from  using  an  important  inven-
    tion in  the  nuclear-power  field?  Wliat  are  the  arguments  pro  and
    con  for  the  outright  sale  or  leasing  of  fuel  elements  ?

    Is  a  subsidy  for  atomic  power  comparable  with  the  system  by  which
    the  aviation  industry  was  encouraged?  AVhat  is  the  proper  period
    in  which  to  amortize  the  first  power  reactors  ?

    These  and  many  other  questions  come  to  my  mind  and  no  doubt
    to  yours.  I  am  hopeful  that  you  will  not  ask  me  these  questions  or
    others  like  them  this  afternoon.  Some  are  just  not  presently  answer-
    able. Some  are  not  properly  answerable  by  me  after  only  3  weeks
    on  this  job.  Some  have  never  as  yet,  so  far  as  I  know,  engaged  the
    Commission's  attention  although  eventually  they  must  do  so.

    My  own  general  position,  however,  for  whatever  interest  it  may
    have  for  you,  was  pretty  well  forecast  by  a  question  addressed  to  me
    by  Senator  Vandenberg,  I  believe,  in  late  1916  or  early  1947.  I  do
    not  recall  the  verbatim  question,  but  the  general  tenor  of  it  was  about
    this :

    "Q.uestion:  Will  you  tell  this  committee  your  general  attitude
    toward  the  rather  socialistic  provisions  of  this  act?

    "Answer:  Well,  Senator,  T  tliink  that  under  conditions  as  they  exist
    in  the  world,  and  until  the  military  requirements  for  weapons  are  fully
    met,  there  is  no  way  to  administer  a  force  so  powerful  and  so  little
    known  other  than  as  provided  in  the  law.  It  is  my  hope  that  in  our
    lifetimes  conditions  will  improve  to  the  point  where  atomic  energy
    can  be  freed  of  Government  monopoly  and  placed  in  the  framework
    of  American  system  of  free,  competitive  enterprise."

    566  ATOMIC    POWER    DEVELOPMENT

    These,  as  I  said,  are  not  the  precise  words  of  the  query,  nor  the  reply,
    but  as  nearly  as  I  can  recall  them.  Nothing  has  given  me  cause  to
    alter  the  viewpoint  then  expressed.

    Thank  you,  Mr.  Chairman.

    Chairman  Cole.  Thank  you,  Mr.  Strauss.

    As  was  to  be  expected,  you  have  given  a  very  clear  and  concise  and
    cogent  statement.

    Do  anj^  members  of  the  committee  wish  to  raise  a  question  to  Mr.
    Strauss  ?

    Representative  Holifield.  Mr.  Chairman  ?

    Chairman  Cole.  Mr.  Holifield.

    Representative  Holifield.  Mr.  Strauss,  I,  too,  want  to  express  my
    satisfaction  and  pleasure  in  the  fact  that  you  are  now  back  with  the
    Atomic  Energy  Commission.

    Mr.  Strauss.  Tliank  you,  Mr.  Holifield.

    Representative  Holifield.  I  have  listened  to  your  presentation  care-
    fully and  I  am  going  to  refrain  from  asking  many  questions  which  are
    in  my  mind.  I  think  you  have  probably  read  some  of  the  transcripts
    of  the  hearing  and  you  know  the  general  line  of  questioning  that  is  in
    my  mind.  I  agree  with  you  that  I  do  not  have  the  answer,  and  I  do
    not  expect  you  to  have  the  answers  on  such  short  notice.  There  are
    one  or  two  questions,  however,  that  I  want  to  ask  you.

    In  presenting  a  future  legislative  draft,  you  would  favor  presenting
    it  in  the  form  of  amendments  to  the  basic  Atomic  Energy  Act  rather
    than  in  separate  legislation ;  would  you  not  ?

    Mr.  Strauss.  That  would  be  my  personal  view,  sir.  I  obviously
    could  not  commit  my  colleagues.

    Representative  Holifield.  That  is  right.  Now,  I  want  to  commend
    you  for  a  statement  where  you  said  that  simultaneous  presentation  of
    patent  amendments  with  the  other  amendments  would  be  in  order.

    Mr.  Strauss.  That  is  also  my  personal  view.  I  think  that  my  col-
    leagues share  that  view.

    Representative  Holifield.  I  want  to  say  that  I  certainly  agree  with
    that  position  also,  and  I  am  pleased  to  hear  you  make  that  statement.

    The  last  question  I  think  I  shall  ask  you  is  this :  Do  you  contemplate,
    prior  to  the  submission  of  a  legislative  draft,  the  submission  of  a  report
    to  the  President  and  the  Congress  as  required  in  section  7  (b)  ?

    Mr.  Strauss.  Not  at  the  present  time,  Mr.  Holifield.

    Representative  Holifield.  I  would  hope  that  you  would  consider
    that  point.  I  believe  that  it  is  important.  I  believe  that  the  presen-
    tation of  drastic  amendments  to  the  act  without  taking  into  considera-
    tion some  of  those  factors  that  7  (b)  enunciates  in  its  request  of  the
    report  to  the  President  and  to  the  Congress,  would  be  unwise,  in  my
    opinion,  and  I  hope  you  will  study  that  point.

    Mr.  Strauss.  May  I  say  in  answer  to  that  question,  Mr.  Holifield,
    that  that  bridge  had  been  crossed  by  my  colleagues  in  the  course  of  the
    preparation  of  the  statement  of  policy  which  I  read.  I  will  familiar-
    ize myself  with  the  arguments  which  are  presented  pro  and  con  on  the
    point.  While  I  am  inclined  to  believe  that  the  decision  that  was
    reached  was  sound,  as  I  stated,  I  have  an  open  mind.

    Representative  Holifield.  That  is  all,  Mr.  Chairman.

    Chairman  Cole.  Are  there  any  other  questions?

    Senator  Hickenlooper.  Mr.  Chairman,  I  would  like  to  ask  Mr.
    Strauss  to  amplify  the  situation  so  far  as  the  patent  controversy  is

    ATOMIC    POWER    DEVELOPMENT  567

    concerned.  As  I  understand  it,  I  think,  as  we  have  appreciated  for  a
    number  of  years,  the  proper  treatment  of  patent  matters  in  inventions
    and  development  has  always  been  a  troublesome  thing,  that  is,  the
    preemption  of  patents  by  the  Commission.  Do  you  think  that  matter
    presents  any  insurmountable  problems  in  connection  with  the  enhirge-
    ment  of  this  field  for  private  enterprise  activities  ?

    Mr.  Strauss.  No,  Senator,  I  do  not  believe  that  the  problem  is  in-
    surmountable. I  think  it  is  very  difficult.  The  extreme  views  on  both
    ends  of  the  spectrum  are  maintained  with  great  tenacity  and  force  by
    their  proponents.  I  suspect  that  the  answer  will  lie  somewhere  be-
    tween them.

    Senator  Higkenlooper.  Like  the  conference  committee  on  the  ap-
    propriation bills  between  the  two  Houses,  about  halfway  between  ?

    Mr.  Strauss.  Yes,  sir.  I  would  not  want  to  commit  myself  to  half-
    way.

    Senator  Hickenloofer.  That  is  all,  Mr.  Chairman.
    Chairman  Cole.  Are  there  any  further  questions  ?  If  not,  the  com-
    mittee would  like  to  express  a  word  of  welcome  to  the  other  new  mem-
    ber of  the  Commission,  Mr.  Joseph  Campbell,  who  of  course,  is  not
    nearly  as  well  known  to  us  as  Mr.  Strauss  is,  but  who  is  equall}'^  wel-
    come, and  who  I  am  sure  will  bring  to  the  Commission  a  fresh  view-
    point and  make  a  valuable  contribution  to  the  work  of  the  Commission
    out  of  the  wealth  of  his  long  and  constructive  experience.  We  wel-
    come you  today,  sir.

    Mr.  Campbell,  do  you  care  to  add  anything  to  Mr.  Strauss'  statement,
    or  to  express  your  thoughts  on  this  or  any  other  subject  ?

    Mr.  Campbell.  Mr.  Chairman,  I  am  delighted  to  be  with  the  Com-
    mission, particularly  under  our  Chairman.  I  have  l)een  here  long
    enough  to  realize  how  valuable  your  joint  committee  has  been  to  the
    Government.  In  a  few  months  I  will  probably  know  more  about  it.
    Thank  you  very  much.

    Chairman  Coi>e.  That  concludes  the  witnesses,  but  before  closing
    this  last  hearing  on  the  public  participation  of  atomic  power,  I  think
    it  appropriate  to  mention  a  press  release  made  today  by  the  Atomic
    Energy  Commission.

    The  announcement  states  that  payment  has  been  approved  of  $300,-
    000  as  compensation  for  the  partial  revocation  of  a  patent  granted  to
    7  atomic  scientists  in  1940.  The  patent  is  entitled  "Process  for  the
    Production  of  Radioactive  Substances."

    The  discovery  involved  in  the  patent  was  that  radioactive  isotopes  of
    a  number  of  elements  can  be  produced  by  exposing  the  eleirients  to
    neutrons  which  have  been  slowed  down  by  passage  through  different
    types  of  moderating  material.

    The  original  ideas  of  this  group  of  7  scientists  and  the  techniques
    they  developed  during  their  experimentation  in  Konie  during  1934
    which  resulted  in  patent  being  granted  in  1940,  is  truly  basic  to  tlie
    production  of  atomic  fuels  and  weapon  materials,  as  well  as  to  tlu>
    operation  of  practically  all  reactors.

    I  make  mention  of  this  matter  for  two  reasons :

    Enrico  Fermi,  who  was  a  member  of  this  group,  is  now,  and  has
    been  for  a  decade,  one  of  the  great  contributors  to  advancement  of  the
    United  States  atomic-energy  progi-am.  His  theoretical  contributions
    in  the  field  of  reactor  desigii,  in  a  large  measure,  assure  him  a  prom-
    inent place  in  the  annals  of  atomic  energy.

    568  ATOMIC    POWER    DEVELOPMENT

    The  second  reason  why  I  mention  this  award  is  that  it  is  the  out-
    standing example  of  a  patent  disclosing  basic  discoveries  in  the  field
    of  atomic  energy,  which  has  been  handled  under  the  present  United
    States  patent  law,  and  the  patent  provisions  of  the  Atomic  Energy  Act.

    Mr.  Strauss'  testimony  today  comprises  the  last  of  14  open  hearings
    before  the  Joint  Committee  on  Atomic  Energy  on  some  of  the  prob-
    lems incident  to  definition  of  a  Federal  policy  on  atomic-power  devel-
    opment and  private  enterprise.  In  6  weeks  we  have  heard  from  over
    50  individuals  representing  46  separate  companies,  groups,  organiza-
    tions, and  governmental  bodies.  In  addition,  we  have  invited  60  others
    to  submit  any  comments,  views,  or  statements  they  may  care  to  make-
    for  inclusion  in  the  record  of  these  hearings.  I  would  like  to  insert  at
    this  point  a  list  of  all  those  whom  we  have  contacted  in  our  quest  for
    advice  and  assistance  during  this  period  and  renew  our  invitation  ta
    all  others  who  may  care  to  do  so  to  join  in  helping  us  explore  the  com^
    plex  and  vital  problems.

    (The  list  referred  to  follows:)

    Witnesses  Who  Have  Testified  at  Open  Hearings  on  Atomic  Power
    Development  Policy

    June  24

    Gordon  Dean,  AEC  Chairman

    Lawrence  Hafstad,  AEC  Reactor  Director

    James  Beckerley,  AEC  Classification  Director

    John  Biigher,  AEC  Director  of  Biology  and  Medicine

    William  Davidson,  AEC  Industrial  Development

    June  25

    Robert  LeBaron,  assistant  to  the  Secretary  of  Defense
    Isador  Rabi,  Chairman,  General  Advisory  Committee
    Walter  B.  Smith,  Under  Secretary  of  State

    June  29

    Walter  Williams,  Under  Secretary  of  Commerce

    Douglas  McKay,  Secretary  of  the  Interior

    Dale  Doty,  Commissioner,  Federal  Power  Commission

    July  1  :

    Walker  Cisler,  president,  Detroit  Edison  Co.

    Tyrone  Gillespie,  counsel,  Dow  Chemical  Co.

    Edwin  Putzell,  secretary,  Monsanto  Chemical  Co.

    Earle  Mills,  president,  Foster  Wheeler  Co.

    Fred  Kellogg,  president,  Pioneer  Services  &  Engineering  Co.

    Willis  Gale,  president,  Commonwealth  Edison  Co.

    July  6

    Walter  Zinn,  director,  Argonne  National  Laboratory

    Alvin  Weinberg,  technical  director.  Oak  Ridge  National  Laboratory

    Chauncey  Starr,  atomic  research  department.  North  American  Aviation  Co.

    Karl  Cohen,  vice  president,  Walter  Kidde  Nuclear  Laboratories,  Inc.

    John  Menke,  president,  Nuclear  Development  Associates,  Inc.

    July  9

    Gwilym  Price,  president,  Westinghouse  Electric  Co.

    Cliarles  Weaver,  general  manager,  Atomic  Power  Division,  Westinghouse  Electric

    Corp.
    Francis  McCune,  general  manager,  Atomic  Products  Division,  General  Electric  Co.
    Arnold  Brown,  vice  president,  American  Machine  &  Foundry  Co.
    Eugene  Wigner,  physicist  and  professor,  Princeton  University

    July  13

    J.  Lee  Atwood,  president.  North  American  Aviation  Co.

    Robert  Stevenson,  vice  president,  Allis-Chalmers  Manufacturing  Co.

    ATOMIC    POWER    DEVELOPMENT  569

    July  15

    George  Weil,  atomic  power  consultant

    Clyde  Ellis,  National  Rural  Electric  Cooperatives  Association

    July  16

    Alfred  Iddles,  president,  Babcock  &  Wilcox  Co.

    L.  R.  Rowley,  production  Manager,  National  Lead  Co.

    July  20

    Malcolm  Ferguson,  president,  Bendix  Aviation  Co.
    Walter  Raleigh,  vice  president.  New  England  Council

    Samuel  Morris,  chairman,  atomic  power  committee,  American  Public  Power  Asso-
    ciation
    Edgar  Dixon,  chairman,  atomic  power  committee,  Edison  Electric  Institute

    July  22

    Senator  George  Malone  (Nevada)

    Oscar  Ruebhausen,  New  York  City  Bar  Association

    Casper  Ooms,  patent  consultant

    July  23

    Ben  Sigal,  Congress  of  Industrial  Organizations

    Elwood  Swisher,  United  Coke,  Gas  &  Chemical  Workers  Union

    A.  H,  Biemiller,  American  Federation  of  Labor

    William  Steiger,  Westinghouse  Electric  Co.  for  NAM

    Guy  Suits,  General  Electric  Co.  for  NAM

    July  27

    Eric  Walker,  dean  of  engineering,  Pennsylvania  State  College,  for  the  Institute

    of  Radio  Engineers
    T.  A.  Marshall,  secretary.  Engineers  Joint  Council
    Walter,  Kingston,  director,  atomic  energy,  Sylvania  Electric  Co.
    Rear  Adm.  Calvin  Bolster,  Chief,  Office  of  Naval  Research
    Maj.  Gen.  Ernest  M.  Brannon,  Army  Judge  Advocate  General

    July  31

    Lewis  Strauss,  AEC  chairman

    Invitees  Who  Have  Declined  To  Testify  but  Have  Submitted  Letters  ok
    Statements  fob  the  Record

    American  Cyauamid  Co.

    Bechtel  Corp.

    Carbide  &  Carbon  Chemical  Co.

    Combustion  Engineering — Superheater  Co.

    E.  I.  du  Pont  de  Nemours  &  Co.

    T.  Keith  Glennan,  president.  Case  Institute  of  Technology

    Kaiser  Engineers  Co.

    David  E.  Lilienthal,  former  AEC  Chairman

    Pacific  Gas  &  Electric  Co.

    Phillips  Petroleum  Co.

    Sumner  T.  Pike,  former  AEC  Commissioner

    Companies,  Groups,  and  Individuals  Invited  ix)  Submit  Statements  for  the

    Record

    Aircraft  Industries  Association  of  America,  Inc.

    American  Gas  &  Electric  Co.

    American  Patent  Law  Association

    Atomic  Committee  of  American  Society  of  Mechanical  Engineers

    Association  of  Ameiican  Railroads

    Association  of  Railroad  and  Public  Utility  Commissions

    Atomic  Power  Utilization  Committee,  Reno,  Nev.

    Dr.  Manson  Benedict,  MIT

    Dr.  Rol)ert  Blum,  atomic  power  consultant

    California  Research  &  Development  Co.

    Dir.  Edward  Condon,  Corning  Glass  Works

    570  ATOMIC    POWER    DEVELOPMENT

    Consolidated  Edison  Co.,  of  New  York

    Cooperative  League  of  America  (Jerry  Voorhis)

    Bt.  Lee  duBridge,  president,  California  Institute  of  Technology

    Dr.  John  R.  Dunning,  dean  of  engineering,  Columbia  University

    Duquesne  Light  Co.

    Fairbanks,  Morse  &  Co.

    Dr.  Enrico  Fermi,  University  of  Chicago

    Gibbs  &  Cox,  Inc.

    The  Kuljian  Corp.

    Dr.  J.  B.  H.  Kuper,  Institute  of  Radio  Engineers

    Dr.  E.  O.  Lawrence,  Radiation  Laboratory,  University  of  California

    Los  Angeles  County  Board  of  Supervisors

    Dr.  Edward  McMillan,  Radiation  Laboratory,  University  of  California

    University  of  Michigan  Engineering  Research  Institute

    Minneapolis  Honeywell  Regulator  Co.

    Dr.  James  Newman,  attorney

    Nuclear  Instrument  &  Chemical  Corp.

    B.  E.  Proctor,  MIT

    D'r.  Kenneth  Pitzer,  dean  of  chemistry.  University  of  California

    Public  Affairs  Institute  (Leland  Olds)

    Radioactive  Products,  Inc.

    Rand  Corp.,  Santa  Monica,  Calif.

    Dr.  Glenn  T.  Seaborg,  University  of  California

    Carleton  Shugg,  general  manager.  Electric  Boat  Division,  General  Dynamics  Co.

    South  Carolina  Electric  &  Gas  Co.

    Standard  Oil  Development  Co.

    Stanford  Research  Institute

    E.  Blythe  Stason,  dean.  University  of  Michigan  Law  School

    Dr.  Edward  Teller,  Radiation  Laboratory,  University  of  California

    Tracerlab,  Inc.

    Vitro  Corp.  of  America

    United  States  Commissioner  of  Patents

    Companies,  Groups,  and  Individuals  Who  Have  Submitted  Unsolicited  Letters
    OR  Statements  for  the  Record

    Chamber  of  Commerce  of  the  United  States
    Chester  L.  Davis,  patent  attorney.  Perry,  Mo.

    Chairman  Cole.  The  opinions  and  conckisions  which  have  been  ex-
    pressed have  run  the  gamut  from  encouragement  of  all-out  private
    atomic-power  development  on  the  one  hand  to  allowing  only  Govern-
    ment development  on  the  other.  The  opinions  have  been  competently
    expressed  so  as  to  emphasize  the  particular  peculiarities  of  each
    view.

    A  careful  analysis  of  this  testimony  along  with  other  information
    will  be  necessary  as  preparation  for  consideration  of  possible  legis-
    lation on  this  subject  next  year.  Such  an  analysis  will  be  prepared
    before  next  January,

    But  some  points  of  common  agreement  among  our  witnesses  might
    well  be  noted  now.

    No  one  has  indicated  that  any  company,  group,  association,  or  indi-
    vidual is  prepared  at  this  time  to  undertake  alone  the  entire  invest-
    ment which  is  necessary  to  develop  and  build  a  full-scale  atomic
    powerplant.

    Every  witness  has  urged  that  the  Atomic  Energy  Commission  con-
    tinue a  vigorous  reactor  research  and  development  program.

    No  one  has  suggested  that  private  industry  is  ready  today  to  finance
    all  of  the  research  and  development  still  needed  to  make  commercial
    atomic  power  a  reality.

    Everyone  has  noted  the  necessity  for  indefinite  continuation  of  Fed-
    eral regulation  of  atomic  energy;  national  health,  safety,  welfare,

    I

    ATOMIC    POWER    DEVELOPMENT  571

    and — most  important  of  all — defense  and  security  will  obviously  re-
    quire such  regulation.

    Ownership  of  fissionable  material  has  been  identified  by  our  wit-
    nesses as  less  important  than  the  opportunity  to  use  fissionable  material
    on  clearly  defined  terms.

    The  patent  problem  is  central  to  industrial  participation  and  will
    have  to  be  resolved  before  large  private  investment  is  likely  to  be
    forthcoming.

    A  strong  plea  has  been  made  by  almost  every  witness  for  a  clear
    statement  of  Federal  policy  on  atomic-power  development  and  a  clear
    outline  of  the  plans  and  programs  for  its  accomplishment ;  everyone
    needs  such  clear  statements  in  order  to  plan  efficiently  and  act  wisely
    and  with  dispatch.

    And  finally,  all  of  our  witnesses  have  seemed  to  agree  that  atomic
    power  is  important  to  the  future  economy  of  the  United  States  and
    of  the  entire  world ;  the  social,  political,  and  economic  importance  of
    atomic-power  development  is  generally  recognized.

    I  have  therefore  addressed  a  request  to  the  Commission  today  which,
    in  part,  is  as  follows :

    1.  Even  though  the  Commission  has  concluded  that  the  time  has  not  yet  arrived
    when  "any  industrial,  counnercial,  or  other  nonmilitary  uses  of  fissionable  mate-
    rial of  atomic  energy  has  been  sufficiently  developed  to  be  of  practical  value,"
    as  set  forth  in  section  7  (b)  of  the  act,  it  might,  nevertheless.  V)e  of  considerable
    assistance  if  the  Commission  were  to  prepare  an  estimate  of  the  "social,  ijolitical,
    economic,  and  international  effects  of  such  use"  as  now  appear.  This  estimate
    would  be  helpful  in  our  further  consideration  of  the  problems  even  though  it  is
    appreciate  that  such  an  estimate  might  be  of  an  interim  nature  if  the  circum-
    stances envisioned  by  the  act  have  not,  in  fact,  fully  developed  at  this  time.

    2.  There  have  been  a  substantial  number  of  references  by  witnesses  during  our
    hearings  to  the  indefiniteness  of  Commission  plans  for  research  and  develop-
    ment in  the  field  of  atomic  power  components,  pilot  plants,  and  prototypes.  It
    would  seem  appropriate  that  plans  for  Commission  activity  should  be  set  forth
    in  a  concise  manner  so  that  all  interested  companies,  groups,  organizations,  or
    individuals  can  henceforth  have  no  doubt  about  the  Federal  program  under  the
    existing  act.  I  have  in  mind  here  that  a  3-  to  5-year  program  consisting  of  speci-
    fic research  and  development  projects — perhaps  including  construction  items —
    might  be  set  forth  so  that  others  could  adjust  their  plans  accordingly.  Even
    though  appropriations  are  determined  on  a  year-to-year  basis,  it  should  be  possi-
    ble to  carry  out  planning  and  programing  over  a  longer  term.

    The  transcript  of  these  hearings  will  be  publi.shed  within  2  or  3
    weeks.  All  in  all,  we  have  some  hard  thinking  to  do  before  next  Janu-
    ary, when,  it  is  hoped,  we  will  resume  open  hearings  on  specific  legis-
    lative proposals.

    Senator  Hickenlooper.  Mr.  Chairman,  I  want  to  say  for  the  record
    that  I  want  to  congratulate  Representative  Cole,  the  chairman  of  this
    joint  committee,  for  his  foresight  and  his  diligent  attention  to  this
    subject  in  generating  this  series  of  hearings  on  this  very  important
    matter.  There  can  be  no  question,  as  a  result  of  these  hearings,  but
    what  commercial  power  and,  we  hope,  of  course,  competitive  power,
    will  be  a  most  important  factor  in  the  years  to  come.  At  least  up  un-
    til the  time  of  these  hearings,  whether  or  not  tliat  competitive  ]-)Ower
    would  be  feasible  or  available  within  the  foreseeable  future  has  been
    very  much  in  doubt  in  the  public  mind.

    As  far  as  I  am  concerned,  it  may  not  liave  been  fully  clarified  in
    these  hearings,  but  certainly  the  chairman  has  laid  the  basis  for  an
    understanding  of  the  problem  and  has  explored  the  various  ways  and
    means  by  which  the  private-enterprise  system  can  participate.    He

    36740^53-— 37

    572  ATOMIC    POWER    DEVELOPMENT

    has,  with  enviable  success,  I  think,  secured  the  cooperation  of  private
    <2jroups  and  public  groups,  and  especially  the  cooperation  of  the
    Atomic  Energy  Commission  in  attempting  to  make  these  hearings  a
    better  picture  of  the  problem,  and  lay  the  oasis  for  work  in  this  field
    which  can  go  on  in  the  future.

    These  hearings,  I  think,  will  go  down  as  the  first  public  exploration
    of  a  field  which  no  doubt  will,  in  the  future,  be  of  equal  or  greater
    importance  to  our  economy  and  such  as  electricity,  although  compari-
    sons are  difficult  at  this  time.

    But  I  do  want  to  sincerely  congratulate  the  chairman  on  his  fore-
    sight and  in  the  breadth  of  the  hearings  which  he  has  conducted  and
    his  pa,tience,  and  success  of  these  hearings,  in  the  face  of  very  difficult
    legislative  situations  on  both  sides  of  the  Capitol  during  these  weeks
    that  he  has  labored  with  this  problem.

    Senator  Bricker.  Mr.  Chairman  ?

    Chairman  Cole.  Senator  Bricker,

    Senator  Bricker.  May  I  join  with  Senator  Hickenlooper  in  my
    expression  of  appreciation,  also,  and  may  I  ask  a  question  as  to  how
    soon  the  chairman  thinks  that  the  record  will  be  printed  so  it  will  be
    available  for  us  for  study.

    Chairman  Cole.  Certainly  by  the  1st  of  September,  and  we  hope
    sooner.  We  expect  a  digest  of  the  hearings  will  be  available,  perhaps,
    for  you  to  read  after  your  Thanksgiving  dinner.

    Permit  the  Chair  to  express  his  appreciation  for  the  generous  state-
    ments of  both  Senators.  Of  course  he  cannot  assume  credit  for  the
    success  of  these  hearings.  Ihe  credit  is  due  to  the  members  of  the
    committee  themselves  who  have  attended,  as  well  as  to  the  members
    of  our  staff  who  have  worked  so  long  and  faithfully  on  this  program.
    I  would  like,  in  particular,  to  make  public  acknowledgment  of  two
    staff  individuals  who  have  worked  on  this  program;  one.  Dr.  James
    G.  Beckerley,  the  classification  officer  of  the  Commission,  who  was
    assigned  by  the  Commission  to  sit  at  these  hearings,  day  after  day,
    in  order  to  warn  us  in  case  we  should  invade  a  field  involving  security
    and  sensitive  information.

    The  hearings  were  started  by  us  with  some  misgivings  as  to  whether
    it  would  be  possible  to  explore  this  very  important  field  without  neces-
    sarily invading  some  phases  of  the  progi'am  which  were  colored  with
    security  implications.  However,  fortunately  we  have  been  able  to
    conduct  this  entire  series  of  hearings  without  a  single  instance  of  Dr.
    Beckerley  being  required  to  flag  us  down.

    It  is  true  that  we  did  have  a  false  alarm  at  our  opening  hearing,
    but  that  was  not  because  we  were  approaching  anything  of  a  sensitive
    nature.  Dr.  Beckerley,  thank  you,  very,  very  much  for  your  faithful
    though  perhaps  tedious  attendance  to  your  assigned  task.

    Finally,  I  want  to  pay  particular  thanks  and  acknowledgment  to
    the  work  that  has  been  done  on  this  entire  venture,  if  I  may  call  it
    that,  by  a  member  of  our  staff,  Walter  Hamilton,  who  has  been  en-
    gaged in  this  phase  of  our  studies  in  the  atomic  reactor  program  for
    well  over  a  year,  studying  reports,  interviewing  people,  working  day
    and  night,  traveling  all  over  the  country.  If  credit  is  due  to  any  one
    individual  for  the  success  of  these  hearings,  that  credit  should  go  to
    ^Valter  Hamilton.  I  think  he  has  done  a  splendid  job  and  I  want  to
    make  public  acknowledgment  of  that.

    Representative  Durham.  Mr.  Chairman?

    ATOMIC    POWER    DEVELOPMENT  573

    Chairman  Cole.  Mr.  Durham.

    Representative  Durham.  I  want  to  also  congratulate  the  chairman
    lor  the  hearings  now  being  closed.  I  think  certainly  it  has  been  called
    to  the  attention  of  the  country  at  large  more  fully.  It  has  been  ex-
    plored here  in  the  open,  and  I  feel  that  the  Commission,  the  committee,
    and  all  the  country  will  gain  a  lot  from  the  hearings  which  have  been
    going  on  now  for  something  like  6  or  8  weeks,  as  the  chairman  said,
    under  very  difficult  circumstances.  It  required  a  lot  of  patience,  when
    the  temperature  was  around  90  degrees  and  above,  to  attend  meetings
    all  day  long,  morning  and  afternoon,  and  Mr.  Cole  has  been  very
    diligent.     I  congratulate  him  on  the  hearings.

    Reprasentative  Holifield.  Mr.  Chairman  ?

    Chairman  Cole.  Mr.  Holifield.

    Representative  Holifield.  Mr.  Chairman,  I  just  want  to  add  my
    word  of  appreciation  to  the  way  these  hearings  have  been  conducted
    by  you  as  chairman,  and  to  express  my  own  personal  appreciation  for
    the  patience  with  which  you  have  allowed  me  to  question  witnesses.  I
    realize  that  I  have  indulged  in  more  questioning,  probably,  than  some
    of  the  others,  but  I  thought  it  was  a  very  important  matter,  and  I
    have  very  strong  views  on  these  subjects.  You  have  been  at  all  times
    patient  with  me  in  my  questioning,  and  you  have  handled  the  affairs
    of  the  committee  with  dignity  and  the  way  I  think  a  congressional
    committee  should  be  handled.  I  express  my  own  personal  commenda-
    tion and  appreciation.

    The  Chairman.  It  should  be  said  that  all  of  the  questions  which  you
    raised,  Mr.  Holifield,  were  pertinent,  penetrating,  and  entirely  appro-
    priate. So  far  as  I  can  recall  only  in  one  instance,  when  you  sought
    to  inquire  into  the  housing  situation  down  at  one  of  the  plants,  did
    I  feel  it  necessary  to  get  you  back  on  the  track.  But  all  in  all,  your
    questions  were  entirely  proper  and  appropriate,  and  very,  very
    helpful.

    Representative  Price.  Mr.  Chairman,  I  join  my  colleagues,  both
    from  the  House  and  Senate,  in  full  support  of  the  statements  they
    have  made  here,  in  the  matter  of  the  conduct  of  the  meetings,  and  the
    benefit  the  meetings  have  been  to  the  atomic  energy  program  and  to
    the  public  at  large.

    Chairman  Cole.  The  record  is  not  complete  unless  it  shows  that  this
    series  of  hearings  during  the  last  month  or  so  represents  the  culmina-
    tion of  an  effort  started  by  the  staff  of  the  joint  committee  well  over  a
    year  ago,  under  the  guidance,  at  the  suggestion,  and  under  the  leader-
    ship of  Mr.  Durham,  who  was  then  acting  chairman  of  the  committee.
    Credit  should  be  given  to  him  for  his  vision  and  for  his  efforts  in  get-
    ting the  ball  started  in  its  momentum.

    Mr.  Holifield.  Mr.  Cliairman,  I  ask  that  a  copy  of  a  resolution  in
    the  House  of  Re])resentatives,  sponsored  by  my  colleague,  Mr.  Price,
    and  me  on  this  subject  and  a  statement  submitted  by  me,  both  of  which
    were  made  a  part  of  the  Congressional  Record  on  July  29,  1953,  be
    made  a  part  of  this  record.

    Chairman  Cole.  Without  objection  it  is  so  ordered.

    As  a  member  of  the  Joint  Committee  on  Atomic  Energy.  I  wish  to  call  to  the
    attention  of  the  House  membership  the  fact  that  onr  committee  has  held  com-
    prehensive hearings  on  a  subject  of  vital  national  importance — the  development
    of  atomic  power.  These  hearings  commenced  June  24  and  continued  to  the
    close  of  the  present  .session  of  Congress.  In  all,  the  connnittee  met  20  times  in
    closed  and  open  sessions  and  heard  more  than  50  witnesses  from  all  walks  of

    574  ATOMIC    POWER    DEVELOPMENT

    life,  including  business  executives,  labor  representatives.  Government  adminis-
    trators, university  scientists,  public  and  private  power  spokesmen,  and  others.
    The  hearings  will  be  printed  shortly,  and  I  believe  the  Members  will  find  them
    Instructive  and  interesting ;  they  should  make  a  valuable  contribution  to  the
    clarification  of  the  complex  and  diflScult  issues  implicit  in  the  development  of
    atomic  power.

    Chairman  Cole  deserves  commendation  for  the  systematic  and  orderly  man-
    ner in  which  these  hearings  were  arranged  and  conducted.  He  has  been  always
    patient  and  fair  and  statesmanlike  in  his  demeanor.  The  wide  range  of  views
    presented  to  the  committee  and  the  extensive  nature  of  the  hearings  bear  testi-
    mony to  his  thoroughness  and  his  desire  to  have  the  committee  obtain  a  rounded
    picture  of  this  phase  of  atomic-energy  activities.  I  am  sure  that  the  other
    members  of  the  committee  share  my  appreciation  of  the  chairman's  good  work.
    We  have  put  in  many  long  hours,  despite  the  pressure  of  other  congressional
    duties,  to  work  with  the  chairman  in  making  the  hearings  productive.  I  may
    say  with  a  pardonable  touch  of  pride  that  these  public  hearings  of  the  Joint
    Committee  on  Atomic  Energy  are  a  model  of  committee  action  in  enabling  the
    Congress  and  the  public  to  be  informed  on  a  matter  of  national  and,  indeed,
    worldwide  concern.

    For  some  time  our  committee  has  been  interested  in  the  prosi)ects  for  atomic
    power  development.  The  stage  for  the  present  hearings  was  set  last  summer
    when  the  then  chairman,  the  Honorable  Carl  T.  Durham,  sent  a  letter,  dated
    August  19,  1952,  to  Gordon  Dean,  Chairman  of  the  Atomic  Energy  Commission,
    expressing  the  committee's  interest  in  the  atomic-power  studies  undertaken  by
    a  number  of  private  industrial  firms  under  Commission  auspices.  Chairman
    Durham  also  advised  the  Commission  that  he  would  propose  a  series  of  meet-
    ings on  industrial  participation  in  atomic-power  development  to  be  held  by  the
    joint  committee  in  the  next  session  of  Congress  that  is,  the  first  session  of  the
    83d  Congress.  The  Commission  was  requested  to  submit  a  written  statement  of
    its  policy  views  on  the  subject.

    By  letter  dated  September  4,  1952,  Mr.  Dean  acknowledge  the  chairman's  re-
    quest and  indicated  that  policy  discussions  then  in  process  within  the  Atomic
    Energy  Commission  might  be  crystalized  for  presentation  to  the  committee  at
    the  beginning  of  the  new  year.  In  the  meantime,  toward  the  close  of  1952,  the
    staff  of  the  joint  committee  made  a  survey  of  atomic-power  prospects  and  prob-
    lems, published  as  a  joint  committee  print — December  1952 — under  the  title
    "Atomic  Power  and  Private  Enterprise."  The  information  brought  together
    by  the  committee  staff  provided  extremely  useful  background  material  for  the
    present  hearings.

    Half  of  the  new  year  passed  before  the  Atomic  Energy  Commission  got  around
    to  presenting  the  policy  views  requested  by  Chairman  Durham  in  August  of  the
    preceding  year.  Along  with  a  policy  statement  on  atomic-power  development
    the  Commission  finally  submitted  a  proposed  draft  of  new  legislation  designed
    to  promote  private  investment  in  this  field  by  conferring  the  right  of  private
    ownership  of  fissionable  materials  and  atomic-power  reactors  and  by  making
    other  basic  changes  in  existing  atomic-energy  legislation.  The  legislative  draft
    did  not  receive  clearance  from  the  Budget  Bureau  and  so  was  considered  only
    informally  by  the  committee  without  being  made  public.  However,  the  policy
    statement  in  support  of  the  legislation  was  released  and  became  a  focal  point
    of  discussion  in  the  hearings  subsequently  held.  I  want  to  make  it  clear  that
    the  committee  did  not  direct  its  attention  to  specific  legislation  in  the  hearings
    but  rather  to  the  broad  field  of  atomic-power  problems  and  policies.

    Prior  to  the  time  the  Commission  presented  its  policy  statement  and  draft
    legislation,  I  had  made  a  quite  intensive  study  of  this  subject  matter  and  I  be-
    came convinced  that  basic  changes  in  the  Atomic  Energy  Act  now  would  be
    premature  and  ill-advised.  Although  I  favor  the  fullest  possible  participation
    by  private  enterprise  in  atomic-energy  development,  I  am  strongly  opposed  to
    any  legislative  course  that  would  entail  huge  Government  subsidies  to  private
    firms  or  restrict  the  participation,  through  patent  devices  or  otherwise,  to  a
    small  segment  of  industry.  Since  electrical  power  based  on  nuclear  fission  does
    not  appear  capable  of  competing  in  cost  with  power  from  conventional  sources,
    such  as  coal  and  falling  water,  for  some  years  to  come,  I  took  the  position  that
    the  Government  should  proceed  under  existing  legislation  to  develop  atomic
    power  reactors  and  advance  reactor  technology  until  private  industry  was  willing
    and  able  to  invest  its  own  funds  on  an  independent  footing  and  to  participate
    on  the  basis  of  equal  opportunity  for  all.

    ATOMIC    POWER    DEVELOPMENT  575

    On  June  1,  in  an  hour-long  statement  on  the  floor  of  this  House,  I  set  forth
    in  detail  my  views  with  respect  to  atomic-power  development  and  the  role  of
    private  enterprise  therein.  Later,  when  the  policy  statement  of  the  Atomic
    Energy  Commission  became  available,  I  prepared  a  critical  analysis  of  the
    Commission's  views  which  I  presented  to  the  House  on  June  22.  Gordon  Dean,
    then  Chairman  of  the  Atomic  Energy  Commission,  undertook  to  reply  to  my
    criticism  in  a  letter  to  Chairman  Cole,  which  is  printed  in  the  Congressional
    Record  of  June  30.  Although  Mr.  Dean's  statement  did  not  address  itself  to  all
    the  points  made  in  my  criticism,  I  was  happy  to  note  his  clarification  of  certain
    key  issues  and  his  assurance,  for  the  Commission,  that  the  atomic-energj'  pro-
    gram of  the  Government  would  not  be  curtailed  or  encroached  ujwn  by  anything
    that  private  industry  might  undertake  to  do  in  this  fleld.

    My  own  understanding  of  atomic-power  problems  has  been  enlarged  and  im-
    proved by  the  present  hearings.  It  is  evident  from  the  diversity  of  views  presented
    that  there  is  no  simple  and  easy  solution  to  these  problems.  Further  studies
    by  the  Atomic  Energy  Commission  and  by  our  joint  committee  will  be  necessary
    before  we  arrive  at  the  stage  of  formulating  new  legislation  on  atomic-power
    development.  My  initial  view  that  new  legislation  is  untimely  has  been  con-
    firmed. The  Commission  would  seem  well  advised  to  proceed  with  an  evalua-
    tion of  the  potential  impact  of  atomic-power  production  on  economic,  social,  po-
    litical, and  international  arrangements,  as  contemplated  in  section  7  (b)  of  the
    Atomic  Energy  Act,  as  amended,  and  to  report  in  due  course  to  the  joint  com-
    mittee. With  the  help  of  that  report  and  our  own  studies  and  investigations,
    we  will  be  able  to  judge  more  soundly  the  need  for  additional  legislation  in  the
    future.

    In  the  meantime  it  is  imperative,  and  I  believe  the  Congress  is  of  one  mind  on
    that  score,  that  American  leadership  in  all  phases  of  atomic-energy  development
    be  maintained.  We  have  a  great  and  growing  stockpile  of  atomic  weapons.  We
    have  pioneered  new  strategic  and  tactical  uses  of  atomic  armament.  But  we  can-
    not be  insensitive  to  the  fact  that  the  peoples  of  the  world  yearn  for  peace.  We
    would  enhance  our  position  of  world  leadership  by  demonstrating  our  active  in-
    terest in  the  peacetime  uses  of  atomic  energy  and  in  the  development  of  atomic
    power  for  human  welfare.  As  Gen.  Walter  "Beetle"  Smith,  Under  Secretary  of
    State,  testified  before  the  joint  committee :

    "It  is  of  paramount  importance  to  our  international  relationships  generally  that
    the  United  States  maintain  and  improve  its  leadership  in  atomic-energy  develop-
    ment. It  is  important,  therefore,  that  we  press  ahead  with  tlie  development  of
    nuclear  power.  There  is  every  reason  to  believe  we  will  be  the  first  to  have
    nuclear  power  if  we  are  prepared  to  move  with  vigor  in  this  direction.  It  would
    be  very  damaging  to  the  position  of  the  United  States  if  another  country  were  to
    be  first  in  this  field  of  endeavor.  It  would  be  especially  damaging  if  the  Soviet
    Union  were  to  precede  us  in  the  development  of  atomic  power.  If  this  were  to
    happen,  the  Soviet  Union  would  cite  their  achievement  as  proof  of  their  propa-
    ganda line  that  the  United  States  is  interested  in  atomic  energy  only  for  destruc-
    tive purposes  while  the  Soviets  are  interested  in  developing  it  for  peaceful  pur-
    poses.

    "On  the  positive  side,  by  being  first  to  develop  nuclear  power  we  will  have  fur-
    ther demonstrated  to  all  the  world  that  we  are  intensely  interested  in  the  peace-
    ful aspects  of  atomic  energy  with  all  its  implications  for  the  future  of  manldnd.
    This  achievement  would  provide  additional  and  positive  evidence  of  the  humani-
    tarian policies  of  this  Government,  and  its  desire  to  further  the  economic  well-
    being  of  the  free  world."

    I  know  that  Chairman  Cole  and  the  other  members  of  the  committee  have  been
    very  much  concerned  lest  we  lag  behind  the  Soviet  Union  in  atomic-power  devel-
    opment. The  chairman  communicated  his  views  to  the  Appropriations  Commit-
    tee of  the  House  in  urging  that  funds  be  earmarked  for  the  Atomic  Energy  Com-
    mission to  embark  upon  a  specific  power  project.  I  take  the  recent  action  of  the
    Appropriations  Committee  in  providing  some  $7  million  for  preliminary  work
    in  this  field  as  indicative  of  the  favorable  sentiment  of  the  Congress.  However,
    in  view  of  the  rather  uncertain  language  in  the  appropriation  bill,  I  believe  the
    Congress  should  register  its  positive  interest  in  promoting  the  iK'acetinie  uses  of
    atomic  energy  and  the  development  of  atomic  power  by  adopting  a  joint  resolu-
    tion to  this  effect.  I  am  introducing  such  a  resolution  today,  the  text  of  which
    will  be  presented  at  the  conclusion  of  these  remarks.

    The  adoption  of  this  resolution  will  signify  to  the  world  that  we  are  firm  in
    our  intention  to  put  the  atom  to  work  for  the  welfare  of  mankind.     It  will  serve

    576  ATOMIC    POWER    DEVELOPMENT

    to  clarify  for  the  Atomic  Energy  Commission  tlie  intent  of  Congress  in  certain
    matters  affecting  atomic  power  which  are  within  the  Commission's  area  of
    responsibility.  It  will  constitute  a  congressional  endorsement  of  Gordon  Dean's
    statement  that  private  industrial  interest  in  atomic  power  will  not  slow  down
    the  Government's  program.  And,  finally,  the  resolution  would  obligate  our  com-
    mittee to  submit  recommendations  to  the  Congress,  after  complete  study  and
    investigation,  for  further  legislative  steps  to  be  taken  in  this  field.

    A  resolution  embodying  the  sense  of  Congress  on  atomic  power  development  is
    especially  pertinent  because  there  seems  to  be  a  belief  prevailing  in  the  Depart-
    ment of  I3efense  and  possibly  the  National  Security  Council  that  the  Government
    can  afford  to  relax  its  reactor  programs  on  the  supposition  that  private  industry
    will  take  over  the  greater  part  of  this  work.  It  is  clear  enough  from  our  hear-
    ings and  from  the  industrial  idealities  of  the  situation  that  private  industry  is  not
    prepared  to  assume  such  responsibilities.  We  must  take  care  not  to  let  atomic
    power  progress  disappear  in  a  gap  of  uncertainty  between  Government  responsi-
    bility and  private  interest.  In  the  present,  relatively  limited  state  of  the  art,
    the  Government  has  no  sound  alternative  but  to  forge  ahead  on  all  fronts  in
    reactor  technology.

    Mr.  Speaker,  there  is  a  widespread  and  growing  demand  for  more  public
    information  about  the  atomic-energy  program.  Many  persons  believe  that  the
    release  of  authoritative  information  on  the  size  and  character  of  our  atomic
    bomb  stockpile  will  serve  as  a  powerful  deterrent  to  warlike  adventures  on  the
    part  of  Soviet  Russia.  Also  it  is  believed  that  publicizing  oflScial  information
    about  atomic  activities  in  Russia  will  serve  to  bring  home  to  our  people  the
    reality  of  the  danger  of  Soviet  atomic  aggression  and  the  importance  of  civilian
    defense  measures.  Scientists  are  anxious  to  remove  the  fetters  on  the  free
    exchange  of  ideas  in  atomic  science,  and  industrialists  deem  it  essential  to  have
    readier  and  less  restricted  access  to  atomic  data  if  private  development  is  to
    take  place.

    Mr.  Dean  chose  in  his  last  press  conference  as  Commission  chairman  to  empha-
    size the  importance  of  relaxing  atomic  secrecy  restrictions.  And  just  recently
    President  Eisenhower  agreed  that  such  a  course  ought  to  be  followed.

    Although  the  President  seemed  to  think  that  a  relaxation  of  atomic  secrecy
    depends  on  changes  in  the  Atomic  Energy  Act,  I  believe  that  the  Atomic  Energy
    Commission  has  considerable  latitude  under  existing  law  for  making  more  infor-
    mation publicly  available.  Accordingly,  my  proposed  resolution  would  direct
    the  Commission  to  institute  a  positive  program  of  declassifying  information
    within  the  framework  of  the  present  act.  This  mandate  would  meet  with  the
    approval  of  private  firms  who  are  anxious  to  evaluate  the  possibilities  of  getting
    into  this  new  field  of  endeavor.

    If  time  does  not  permit  action  on  this  resolution  in  the  present  session,  I  trust
    the  Members  will  give  it  earnest  thought  and  be  prepared  to  act  upon  it  early  in
    the  next  session.

    For  the  convenience  of  the  Members,  I  include  the  text  of  House  Joint
    Resolution  317 :

    "House  Joint  Resolution  317

    "Joint  resolution  to  promote  the  peacetime  application  of  atomic  energy  and  the
    early  development  and  practical  use  of  atomic  power

    "Whereas  the  United  States  Government  has  invested  $12  billion  to  date  in  the
    development  of  atomic  energy  ;  and

    "Whereas  the  primary  objective  of  this  investment  has  been  to  strengthen  the
    national  defense  and  security  and  to  further  the  cause  of  freedom  in  the  world ;
    and

    "Whereas  the  American  leadership  must  be  maintained  in  all  phases  of  atomic-
    energy  development ;  and

    "Whereas  it  is  fitting  and  timely  that  we  demonstrate  to  the  world  at  large
    our  sincere  interest  and  constant  endeavor  to  develop  the  peacetime  uses  of
    atomic  energy;  and

    "Whereas  the  technical  feasibility  of  atomic-power  production  has  been  estab-
    lished in  the  course  of  reactor  developments  and  operation  for  atomic  armament ;
    and

    "Whereas  the  economic  availability  of  atomic  power  for  industrial  and  domestic
    consumption  depends  on  further  research,  experimentation,  and  construction  in
    the  reactor  field ;  and

    "Whereas  private  industrial  and  utility  firms  have  manifested  an  active  inter-
    est in  participating  in  the  development  of  atomic  power;  and

    ATOMIC    POWER    DEVELOPMENT  577

    "Whereas  the  interest  and  participation  of  private  industry  in  atomic-power
    development  vrill  be  furthered  by  the  less  restricted  use  and  greater  dissemination
    of  scientific  and  technical  information  relating  to  atomic  energy ;  and

    "Whereas  the  potential  production  and  use  of  atomic  power  present  crucial
    issues  of  public  policy  which  must  be  resolved  in  order  that  the  public  interest
    in  atomic  energy  will  be  fully  protected  while  participation  by  private  enterprise
    is  encouraged  :  Therefore  be  it

    "Resolved,  etc.,  That  it  is  the  sense  of  the  Congi-ess  that  the  peacetime  applica-
    tions of  atomic  energy  shall  be  vigorously  promoted  and  that  the  Atomic  Energy
    Commission  shall  proceed  expeditiously  to  establish  or  advance  reactor  programs
    and  all  related  work  essential  to  the  early  development  and  practical  use  of
    atomic  power,  including  the  development  and  construction  of  reactors  for  sub-
    marine, aircraft  carriers,  and  aircraft  and  for  central  station  production  of
    electricity ;  and  be  it  further

    "Resolved,  That  in  pursuance  of  the  policy  prescribed  in  section  10  of  the
    Atomic  Energy  Act  of  1946,  as  amended,  to  permit  and  encourage  the  dissemina-
    tion of  scientific  and  technical  information  relating  to  atomic  energy,  the  Atomic
    Energy  Commission  shall  screen  all  restricted  data  within  its  control  with  a
    view  to  the  early  declassification  and  public-ation  of  the  maximum  amount  of
    information  useful  for  industrial  and  other  purposes  without  adversely  affecting
    the  common  defense  and  security,  and  shall  take  effective  steps  to  continuously
    declassify  and  disseminate  such  information  ;  and  be  it  further

    "Resolved,  That  before  any  new  legislation  is  enacted  in  respect  of  atomic
    power  development,  the  Atomic  Energy  Commission  shall  submit  to  the  Congress
    in  accord  with  section  7  (b)  of  the  Atomic  Energy  Act  of  1946,  as  amended,  a
    report  stating  all  the  declassified  facts  with  respect  to  atomic  power  use  and
    the  Commission's  estimate  of  the  social,  political,  economic,  and  international
    effects  of  such  use  and  the  Commission's  recommendations  for  necessary  or  desir-
    able supplemental  legislation  ;  and  be  it  further

    "Resolved,  That  the  Joint  Committee  on  Atomic  Energy  shall  continue  its
    studies  and  investigations  and  if  deemed  necessary  shall  hold  further  public
    hearings  on  the  subject  of  atomic  power  development,  such  studies,  investiga-
    tions, and  hearings  to  include  but  not  necessarily  be  limited  to

    "(1)  the  feasibility  of  private  ownership  of  source  and  fissionable  materials,
    nuclear  reactors,  and  processing  facilities,  with  special  attention  to  factors  of
    militai-y  priority  requirements,  security  controls,  safety  and  health  hazards,
    regional  power  needs,  and  international  agreements  ;

    "(2)  the  desirability  of  Government  commitments  to  purchase  plutonium  as
    a  condition  of  private  investment  in  atomic  power,  with  special  attention  to  their
    subsidy  implications  and  the  economic  future  of  atomic  powerplants  upon
    cessation  of  Government  purchases  ;

    "(3)  the  extent  to  which  the  Federal  Government  shall  produce  usable  by-
    product power  as  contemplated  in  section  7  (d)  of  the  Atomic  Energy  Act  of
    1946,  as  amended,  in  conjunction  with  the  production  uf  fissionable  materials  for
    atomic  weapons  ;

    "(4)  the  technical,  economic,  and  accounting  relationships  between  atomic
    power  production  and  production  of  fissionable  material  for  atomic  weapons ;

    "(5)  appropriate  patent  policies  to  encourage  private  investments  in  atomic
    power  while  preventing  the  growth  of  monopoly  or  restrictive  arrangements  ;

    "(6)  appropriate  policies  to  govern  the  production  and  distribution  of  atomic
    power  in  order  that  the  benefits  of  such  power  shall  be  widely  distributed  and
    maximum  revenues  shall  be  returned  to  the  Federal  treasury ;

    "(7)  the  integration  of  atomic  power  policies  and  administration  with  other
    power  activities  of  the  Federal  Government ;

    "(8)  new  problems  in  Federal-State  and   Federal-local  relationships  conse-
    quent upon  the  construction  and  operation  of  atomic  power  plants  ;
    and  be  it  further

    "Resolved,  That  upon  the  conclusion  of  these  studies,  investigations,  and  hear-
    ings the  Joint  Committee  on  Atomic  Energy  sliall  submit  a  report  to  the  Congress
    and  present  recommendations  for  atomic  power  developments  based  upon  its  own
    findings  and  those  submitted  by  the  Atomic  Energy  Commission  in  accordance
    with  section  7  (b)  of  the  Atomic  Energy  Act  of  1946,  as  amended."

    If  there  is  nothing  further,  tlie  meeting  will  adjourn,  with  an  ex-
    pression of  appreciation  by  the  Chair  to  the  members  of  the  committee
    for  their  diligent  attendance.

    (Whereupon,  at  3  p.  m.,  Friday,  July  31,  1953,  the  comm;ittee  was
    adjourned.)

    APPENDIX

    The  following  statements  and  letters  were  received  in  response  to
    specific  invitations  from  the  joint  committee  to  the  organizations  and
    individuals  listed  on  page  569.  In  order  to  publish  the  complete
    testimony  as  early  as  possible,  it  was  necessary  to  establish  a  firm  cutoff
    date  beyond  which  letters  and  statements  could  not  be  accepted  for
    publication  at  this  time.  Receipts  subsequent  to  August  10,  1953,  are
    available  at  the  office  of  the  Joint  Committee  on  Atomic  Energy.  They
    will  be  published  insofar  as  possible  in  connection  with  further  hear-
    ings and  reports  dealing  with  atomic-power  development.     \^EditoT.\

    Statement  by  Charles   S.  Wilson,  Chairman,  Patent  Committb^;,  Aircraft
    Industries  Association  of  America,  Inc.,  July  22,  1953

    Manifestly,  it  is  now  appropriate  to  rationalize  the  Atomic  Energy  Act  of
    194G  (42  U.  S.  C.  sees.  1801  et  seq.)  and  to  consider  amendments  to  liberalize
    this  act  to  remove  atomic  energy  from  its  ivory  tower.  To  do  so,  will  open  the
    atomic-energy  field  to  exploration  and  development  by  individuals  and  corpora-
    tions in  the  exercise  of  traditional  American  competitive  free  enterprise.  This
    would  certainly  encourage  inventions  in  this  field  and  their  application  to  com-
    mercial purposes  for  the  benefit  of  the  general  public.  To  that  end,  section
    1811,  relating  to  patents  and  inventions,  should  be  amended.

    Those  portions  of  the  act  relating  to —

    (a)   Prohibition  against  granting  of  patents;
    (6)   Compusory  licensing  of  patents;  and
    (c)   Right  to  condemn  or  requisition  patents
    have  been  found  to  be  particularly  objectionable  and  unduly  restrictive,  especial-
    ly in  view  of  other  legislative  enactments  designed  to  protect  and  secure  general
    military  inventions  and  developments.

    The  deletion  of  section  1811  (a)  production  and  military  utilization  (1)
    and  (2);  section  1811  (b)  use  of  inventions  for  research;  section  1811  (c)
    nonmilitary  utilization  and  section  1811  (d)  acquisition  of  patents,  as  well  as
    the  revision  of  section  1811  (e)  compensation,  awards,  and  royalties,  would
    conform  the  patent  provisions  of  the  Atomic  Energy  Act  of  1946  with  the
    general  patent  law.

    This  action  is  recommended  and  requested  for  the  following  reasons :

    PROHIBITION    AGAINST  PATENTS

    The  act  in  its  present  form  prohibits  the  gTanting  of  patents  covering  inven-
    tions used  solely  in  the  production  of  fissionable  material  or  the  utilization  of
    fissionable  material  or  atomic  energy  for  a  military  weapon.  Thus,  the  Atomic
    Energy  Act  abrogates  the  basic  patent  laws  of  the  United  States.

    There  is  now  no  need  for  prohibiting  patents  pertaining  to  fissionable  ma-
    terial or  atomic  energy.  The  basic  purpose  of  the  Atomic  Energy  Act  was  to
    protect  the  national  security.  Aside  from  the  Atomic  Energy  Act  of  1946,  ma-
    tional  security  with  respect  to  classified  information  is  protected  by  the  Inven-
    tion Secrecy  Act  of  1901  (Public  Law  2.50,  S2d  Cong.),  which  delays  the  issuance
    of  patents  until  the  matter  contained  therein  is  declassified.

    The  United  States  Patent  Office  has  also  established  a  special  division  for
    the  handling  of  classified  subject  matter,  including  inventions  relating  to  atomic
    energy.

    578

    ATOMIC    POWER    DEVELOPMENT  579

    Rights  of  inventors  should  not  be  denied  by  prohibiting  the  granting  of
    patents  under  the  Atomic  Energy  Act.  Inventors  should  have  the  opportunity
    of  being  rewarded  for  their  inventions  relating  to  atomic  energy  in  the  same
    manner  as  for  other  inventions,  and  patents  should  be  granted  for  all  inventions
    relating  to  atomic  energy.

    COMPULSORY  LICENSING

    The  act  also  provides  for  compulsory  licensing  for  the  use  of  atomic  energy
    for  commercial  purposes.  This  is  repugnant  to  the  United  States  patent  system,
    and  was  not  included  in  the  Patent  Codification  Act  (Public  Law  593,  66  Stat.
    792,  ch.  950),  effective  January  1,  1953.

    The  grant  contained  in  United  States  patents  excludes  others  from  making,
    Tising,  or  selling  the  patented  invention,  and  has  been  regarded  as  a  stimulant
    to  invention.  The  issued  patent  frequently  spurs  others  to  greater  activity
    in  the  field.  The  exclusive  right  of  the  patent  encourages  the  investment  of
    private  capital  without  fear  that  others  will  encroach  upon  the  market  once
    it  is  established  by  the  patent  owner.  This  enables  the  patent  owner  to  have
    the  opportunity  of  being  rewarded  for  the  risks  taken.

    The  compulsory  licensing  provisions  of  the  Atomic  Energy  Act  should  be
    deleted.

    EIGHT  TO  CONDEMN  OE  EEQUISITION  PATENTS

    It  is  not  necessary  for  the  Government  to  acquire  title  to  patents  because
    it  has  the  right  to  use  patented  inventions  under  the  Act  of  1910,  as  amended,
    28  United  States  Code  1498.  Placing  power  in  the  Commission  to  condemn,
    requisition,  or  take  patents  which  the  Commission  believes  should  be  adminis-
    tered by  it  cannot  help  but  have  the  effect  of  destroying  incentive  to  make
    inventions  relating  to  atomic  energy.  Moreover,  since  these  patents  are  issued
    no  useful  purpose  would  be  served  by  their  condemnation  or  requisition  so  far
    as  national  security  is  concerned.     This  provision  of  the  act  should  be  deleted.

    II.  Government  policy  with  respect  to  rights  in  inventions  should  be  clarified.

    ALLOCATION    OF    PATENT    EIGHTS    IN    EESEARCH    AND   DEVELOPMENT    C0NTEACT8

    Present  research  and  development  contracts  with  the  Commission  provide
    that  the  Government  has  the  sole  right  to  allocate  patent  rights  in  inventions
    emanating  from  such  contracts.  A  stated  policy  of  leaving  sole  commercial
    rights  with  the  developing  contractor,  subject  to  a  nonexclusive,  royalty-free
    license  to  the  Government,  would  encourage  research  and  development  work  in
    the  atomic-energy  field  under  Government  sponosorship.  The  possibility  of
    obtaining  valuable  commercial  rights  would  encourage  competent  contractors  to
    take  low-profit  research  and  development  contracts.

    The  Atomic  Energy  Commission  administers  its  research  and  development
    contracts  insofar  as  patent  rights  in  inventions  and  discoveries  are  concerned,
    somewhat  differently  than  the  Department  of  Defense.  The  Department  of
    Defense  leaves  title  to  inventions  with  the  developing  contractor  together  with
    all  commercial  rights.  This  practice  enables  the  benefits  of  the  invention  to  be
    made  available  to  the  using  public  since  it  encourages  the  investment  of  private
    capital  in  the  exploitation  of  the  invention.  If  licenses  were  available  to  every-
    one, or  the  patent  rights  dedicated  to  the  public,  private  capital  may  not  be
    forthcoming  to  take  the  risk  of  marketing  the  new  product  covered  by  the
    invention.

    The  act  should  therefore  be  revised  by  including  therein  under  declaration
    of  policy  as  paragraph  (c)  under  section  1,  the  following  paragraph:

    "(c)  To  insure  that  the  development  and  utilization  of  atomic  energy  shall
    be  directed  toward  improving  the  public  welfare,  increasing  the  standard  of
    living,  and  strengthening  free  competition  in  private  enterprise,  it  shall  be  the
    policy  of  the  Government  to  acquire  only  a  nonexclusive,  royalty-free  license  for
    governmental  purposes  in  inventions  or  discoveries  emanating  from  federally
    sponsored  research  and  development  work."

    III.  General :  The  act  provides  for  a  Patent  Compensation  Board  and  the
    right  for  judicial  review.  These  provisions,  however,  are  believed  to  be  more
    illusory  than  real.  Inventors  in  the  atomic-energy  field  should  iiave  the  right
    to  obtain  patents  according  to  the  established  laws  and  practices  of  the  United
    States  Patent  Office  and  the  right  to  exploit  these  patents  under  the  laws  of
    the  United  States  as  they  existed  prior  to  the  Atomic  Energy  Act.  xVtoinic  energy
    should  not  be  burdened  with  patent  provisions  which  are  untried  in  the  United
    States  and  which  are  fundamentally  contrary  to  our  basic  concept  of  patent  law.

    580  ATOMIC    POWER    DEVELOPMENT

    One  of  the  more  serious  problems  that  has  arisen  in  the  administration  of  the
    patent  provisions  of  the  act  is  the  practice  of  the  Government  taking  title  to>
    inventions  through  the  Atomic  Energy  Commission.  This  raises  a  legal  question
    as  to  whether  the  Government  (the  granting  agency  of  the  temporary  monopoly
    of  the  patent  grant)  can  also  be  the  holder  of  that  monopoly.  Without  going^
    into  this  very  complicated  matter,  the  problem  can  be  eliminated  by  having  the
    Government  take  only  a  nonexclusive,  royalty-free  license  in  inventions  ema-
    nating from  the  Government-sponsored  research  and  devolpment.  This  course
    of  action  is  recommended.

    The  arts  and  sciences  have  flourished  under  our  patent  lavrs.  Industry  ha&
    correspondingly  flourished.  No  special  patent  laws  were  necessary  to  develop
    aeronautics,  radio,  television,  electronics,  and  the  many  advances  in  the  field
    of  chemistry  and  other  sciences.  It  is  strongly  urged  that  atomic-energy
    research  and  development  would  be  encouraged  by  the  changes  recommended
    herein.

    American  Ctanamid  Co.,
    New  York  20,  N.  Y.,  July  9,  1953.
    Hon.  Sterling  Cole,

    Chairman,  Joint  Committee  on  Atom,ic  Energy,

    Washington,  D.  C.
    Dear  Mr.  Cole  :  Answering  your  letter  of  July  2,  we  should  like  very  much
    to  cooperate  with  your  committee  in  discussing  the  problems  incident  to  the
    definition  of  Federal  policy  on  industrial  atomic  power  development ;  but  it  so
    happens  that  Dr.  R.  C.  Swain,  vice  president,  who  is  most  familiar  with  our  ac-
    tivities in  the  atomic-energy  field,  is  away  from  the  office  this  week  on  a  trip
    from  which  he  is  not  expected  to  return  until  early  next  week.  You  will  ap-
    preciate, therefore,  that  it  would  not  be  practicable  for  us  to  prepare  the  unclassi-
    fied statement  in  time  for  the  hearing  on  July  16.

    I  shall  bring  this  exchange  of  correspondence  to  the  attention  of  Dr.  Swain
    immediately  upon  his  return,  with  the  idea  that  he  would  communicate  with  you
    promptly.     Perhaps  you  will  agree  that,  under  the  circumstances,  it  would  be
    better  to  postpone  his  appearance  before  your  committee  until  a  later  date.
    Very  sincerely  yours,

    K.  C.  TowE,  President.

    [Note :  Dr.  Swain  was  unable  to  prepare  a  statement  before  August  10,  the
    closing  date  for  receipt  of  comments.]

    Statement  by  C.  Willard  Hayes,  Chairman,  Committee  on  Laws  and  Rules,
    American  Patent  Law  Association,  July  31,  1953

    The  American  Patent  Law  Association,  which  comprises  over  1,400  lawyers
    engaged  primarily  in  the  practice  of  patent  law  throughout  the  United  States,
    favors  in  principle  revision  of  the  Atomic  Energy  Act  of  1946  to  permit  private
    ownership  of  facilities  for  production  and  utilization  of  fissionable  materials  for
    industrial  purposes  and  to  permit  the  acquisition  of  patent  rights  relating  thereto.

    The  industrial  development  of  the  United  States  has  taken  place  under  a  free-
    enterprise,  competitive  system  which  has  depended  upon  our  patent  laws  to  pro-
    tect and  encourage  private  investment  in  research  and  devolpment.  This  pro-
    tection has  been  the  cornerstone  of  the  phenomenal  advances  made  in  this  country
    in  every  field  of  science  and  the  useful  arts.

    What  may  be  termed  the  atomic-energy  industry  was  born  of  war  and  by  reason
    of  military  necessity  was  initiated  by  Government  under  conditions  of  utmost
    secrecy  and  rigid  control.  The  exigencies  of  the  world  military  and  political
    situation  prolonged  the  necessity  for  emphasis  on  the  military  aspects  of  nuclear
    fission  under  governmental  sponsorship,  and  the  public  and  industry  have  ac-
    cepted this  situation.

    The  authors  of  the  Atomic  Energy  Act  of  1946  recognized  that  future  develop-
    ment of  nuclear  fission  for  peaceful  purposes  would  require  revision  of  the  policies
    established  during  the  war  and  postwar  era,  and  the  American  Patent  Law  As-
    sociation believes  that  the  time  has  arrived  for  such  revision  so  as  to  permit,
    witliin  the  limits  of  the  requirements  of  national  security,  the  entry  of  free
    enterprise  into  this  field.

    ATOMIC    POWER    DEVELOPMENT  581

    Complete  governmental  operation  and  control  of  any  industry  is  foreign  to  the
    concepts  of  our  free-enterprise,  competitive  system.  Except  for  such  controls  as
    may  be  dictated  by  the  requirements  of  the  national  security,  it  is  believed  that
    the  realm  of  nuclear  fission  should  not  be  an  exception  to  this  rule  any  longer
    or  to  any  greater  extent  than  is  absolutely  necessary  to  maintain  that  security.

    There  has  been  some  concern  expressed  that  the  huge  public  expenditure
    already  made  would  in  some  manner  be  jeopardized  or  lost  by  opening  the  field
    to  private  enterprise.  However,  it  is  our  view  that  the  more  rapid  advances
    and  the  broadening  of  tlie  field  of  research  which  might  be  expected  to  ensue
    would  be  in  the  public  interest  and  that  the  ultimate  benefit  to  the  public  and  the
    Nation  would  be  far  greater  and  achieved  at  less  expense  to  the  taxpayers  than
    if  the  program  were  to  be  continued  on  the  present  basis  of  total  governmental
    sponsorship.

    As  to  the  expressed  fears  of  creation  of  monopoly  by  revision  of  the  patent
    sections  of  the  act  to  permit  the  private  holding  of  patent  rights  in  the  field,  it
    should  be  borne  in  mind  that  the  basic  concepts  and  procedures  insofar  as  they  are
    patentable  are  already  known  and  subject  to  governmental  owenrship  and  con-
    trol and  therefore  could  not  form  the  basis  of  any  private  patent  monopoly.  Once
    the  field  is  opened  to  privately  sponsored  research  and  development,  the  fruits
    thereof  should  be  protected  by  the  patent  laws  in  the  same  manner  as  in  any
    other  field,  for  the  same  reasons,  namely  "to  promote  the  progress  of  science  and
    the  useful  arts,  *  *  *."     (Constitution  of  the  United  States,  art.  1,  sec.  8.)

    Accordingly,  it  is  the  view  of  the  American  Patent  Law  Association  that  the
    ultimate  public  interest  will  best  be  served  by  revision  of  the  Atomic  Energy
    Act  of  1946  to  effect  the  opening  of  the  field  of  nuclear  fission  to  research  and
    development  by  private  enterprise  and  by  liberalization  of  the  patent  provisions
    of  the  act  to  permit  the  protection  of  future  inventions  in  this  field  resulting
    therefrom.

    The  American  Society  of  Mechanical  Engineers,

    New  York  18,  August  3,  1953.
    Mr.  Sterling  Cole,

    Chairman,  Joint  Committee  on  Atomic  Enegy,

    Congress  of  the  United  States,  Washington,  D.  C.
    Dear  Mr.  Cole  :  On  behalf  of  this  Society's  Nuclear  Energy  Committee  please
    accept  our  appreciation  for  your  letter  of  July  24,  giving  the  committee  oppor-
    tunity to  present  written  comments  on  the  problems  incident  to  a  broadening
    of  the  Federal  policy  on  industrial  atomic  power  development.

    This  society  is  a  member  body  of  the  Engineers  Joint  Council  and  our  Nuclear
    Energy  Application  Committee  was  represented  on  the  panel  of  the  Engineers
    Joint  Council  whose  recommendations  were  presented  to  your  committee  by
    R.  J.  S.  Pigott  on  July  27,  1953.  Our  committee  joins  whole-heartedly  in  the
    recommendations  made  by  the  panel  of  the  Engineers  Joint  Council.

    This  society  does  have  a  real  interest  in  the  broader  use  in  industry  of  atomic
    energy  application  because  it  will  look  upon  such  broadening  as  increased  oppor-
    tunity for  the  society  to  render  service  such  as  it  has  rendered  for  over  60  years
    through  the  development  of  industrial  safety  codes  and  test  codes  for  various
    types  of  power  apparatus.

    We  regret  to  note  in  your  letter  that  it  will  not  be  possible  to  have  action  by
    the  Congress  on  this  problem  in  this  session.
    Yours  very  truly,

    C.  E.  Davies,  Sccretaj-y.

    Association  of  American  Railroads,
    Operations  and  Maintenance  Department,

    Washington  6,  D.  C,  July  30,  1958.
    Hon.  W.  Sterling  Cole,

    Chairman,  Joint  Committee  on  Atomic  Enei'gy,

    Congress  of  the  United  States,  Washington,  D.  C.
    Dear  Mr.  Cole  :    Further  in  connection  with  our  recent  corrospondonce  on  the
    question  of  a  Federal  policy  regarding  industrial  use  of  atoinic  power:

    Careful  consideration  has  been  given  the  contents  of  your  letter.  AVo  have  a
    committee  in  this  association  which  lias  been  given  the  rosiK)nsihility  of  investi-
    gating the  possibilities  of  nuclear  energy  as  a  source  of  primary  power  for
    locomotives.     This  committee  has  been  in  existence  such  a  short  time  it  has

    582  ATOMIC    POWER    DEVELOPMENT

    not  yet  had  the  opportunity  to  reach  any  decisions  on  the  general  design  of
    equipment  to  be  used.  Manifestly,  however,  material  capable  of  producing
    nuclear  energy  will  be  required  if  such  a  locomotive  is  to  ])e  used  and  release
    of  this  material  by  the  Atomic  Energy  Commission  will  become  necessary  when
    the  locomotive  is  built.  We  would  not  expect  in  the  course  of  ordinary  events
    that  such  a  locomotive  design  would  be  completed  before  10  years  time  elapse.

    While,  for  industrial  development,  it  will  eventually  become  necessary  to
    obtain  the  material  for  nuclear  power  we  do  not  foresee  at  this  time  the  necessity
    of  making  public  any  further  information  on  the  details  of  atomic  energy.  We
    believe  we  can  satisfactorily  progress  our  work  by  using  unclassified  material
    and  having  two  or  three  qualified  men  cleared  for  access  to  such  classified
    material  relevent  to  this  work  which  is  released  for  industrial  use.

    The  foregoing  represents  our  thinking  based  upon  the  development  period  and
    the  stage  during  which  pilot  experience  on  one  or  two  locomotives  would  be
    obtained.  If  circumstances  become  such  that  more  extensive  use  of  this  energy
    would  be  economical,  such  change  in  the  status  of  this  development  may  cause
    us  to  change  our  views  relative  to  the  laws  pertaining  to  methods  of  handling
    this  subject.

    We  wish  to  thank  you  and  your  committee  for  your  thoughtfulness  in  bringing
    this  matter  to  our  attention  and  providing  us  with  an  opportunity  to  express  our
    views.

    Very  truly  yours,

    J.  H.  Aydelott,  Vice  President.

    Statement  of  Eugene  S.  Loughlin,  President,  National  Association  of
    Railroad  and  Utilities  Commissioners,  and  Chairman,  Connecticut  Public
    Utilities  Commission,  July  27,  1953

    My  name  is  Eugene  S.  Loughlin.  I  am  president  of  the  National  Association
    of  Railroad  and  Utilities  Commissioners  and  chairman  of  the  public  utilities
    commission  of  the  State  of  Connecticut.  This  statement  is  made  in  my  capacity
    as  president  of  the  national  association  and  incorporates  my  opinions  as  member
    and  chairman  of  a  State  regulatory  authority.

    The  national  association  is  composed  of  the  regulatory  authorities  having
    jurisdiction  over,  among  other  utilities,  the  electric  utilities  in  most  of  the  48
    States  and  the  District  of  Columbia  and  the  Territories  of  Hawaii  and  Puerto
    Rico.  It  also  numbers,  among  its  members,  four  Federal  regulatory  authorities,
    including  the  Federal  Power  Commission  and  the  Securities  and  Exchange
    Commission.  The  association,  therefore,  has  a  keen  and  vital  interest  in  the
    subject  which  occupies  your  honorable  committee.  This  interest  will  be  briefly
    touched  upon  below  and  is  suflicient,  in  my  opinion  and  in  the  opinion  of
    the  association,  to  justify  the  association's  carefiil  attention  to  the  subject
    of  atomic  power  for  electrical  generation.  Because  of  its  importance,  in  my
    capacity  as  president  of  the  national  association,  I  recently  caused  to  be  formed
    a  special  committee  on  development  and  use  of  atomic  power  in  the  electric
    industry,  which  committee  is  composed  of  five  members  representing  areas
    wherein  the  construction  of  reactor  piles  is  under  consideration.  As  soon  as
    security  clearance  is  given,  it  will  be  engaged  in  the  exploratory  stages  of  the
    problems  which  will  confront  it,  some  of  which  will  be  mentioned  below  and
    many  more  of  which  will  appear  in  the  course  of  the  committee's  study.  It
    is  the  purpose  of  this  committee  to  make  its  report  to  the  association,  which
    report,  to  the  extent  that  security  provisions  allow,  will  be  made  public  and,
    where  classified  information  is  contained,  will  be  made  available  to  this  com-
    mittee and  to  the  Atomic  Energy  Commission  and  to  such  other  places  as  are
    proper  and  necessary.

    Since  all  authorities  are  now  agreed  that  the  generation  of  electricity  from
    atomic  power  is  possible  and  that  only  practical  questions  of  cost  stand  in  the
    way,  the  time  has  now  arrived  for  evaluation  of  the  practical  aspects  of  this
    question  of  generating  electricity  from  atomic  reactors.

    Before  engaging  in  these  practical  questions,  however,  most  of  which  are
    concerned  with  economics  and  costs,  there  are  many  subsidiary  questions  which
    must  be  answered.  These  are  not  entirely  economic  and  appear  only  when
    the  surface  is  scratched  sufficiently  deep  that  the  essential  nature  of  the  electric-
    utility  business  is  disclosed.

    Up  to  the  present  time  in  the  development  of  atomic  power  and  the  genera-
    tion of  electricity  from  such  reactors  as  are  used  in  the  process  of  transmuta-
    tion  of  fissionable  materials,   the  problems   have   been   chiefiy   scientific   and

    ATOMIC    POWER    DEVELOPMENT  583

    physical.  The  first  serious  effort  to  apply  the  fruits  of  this  concentrated  and
    strenuous  period  of  development  to  industrial  processes  has  come  in  the  field
    of  generation  for  electric  energy  for  consumption  by  the  general  public.  Un-
    doubtedly, there  are  many  other  uses  in  the  public  interest  to  which  this  great
    development  will  be  put  in  the  future.  As  a  matter  of  fact,  however,  the  imme-
    diate problems  before  the  Congress  and  the  Atomic  Energy  Commission  result
    from  the  fact  that  the  only  prospective  large-scale  application  of  atomic  energy
    to  date  to  purposes  other  than  providing  tools  of  war  is  in  the  field  of  generation
    of  electricity.

    Actually,  this  fortuitous  circumstance  is  of  considerable  importance  to  the
    general  welfare  since  the  business  of  gearing  and  distributing  electric  energy
    has  been  the  subject  of  active  regulation  in  the  public  interest  for  a  great  many
    years.  The  risk,  therefore,  is  minimized  that  the  purposes  will  not  be  achieved
    which  are  so  ably  set  forth  in  the  Atomic  Energy  Act  of  1946,  wherein  it  is
    stated  that  the  paramount  objective  of  this  country's  atomic-energy  policy
    shall  be  "assui-ance  of  common  defense  and  security,  the  improving  of  public
    welfare,  increasing  the  standard  of  living,  strengthening  free  competition  and
    private  enterprise  and  promoting  world  peace."

    Although  it  is  greatly  to  the  advantage  of  the  general  public  that  atomic
    power  should  find  its  first  practical  application  in  a  regulated  industry,  some
    very  important  characteristics  result  which  require  extensive  study  and  research
    in  resolving  them.  These  are  the  problems  which  I  want  to  point  out  to  you
    briefly  and  which  the  committee  appointed  by  this  association  will  deal  with
    much  more  exhaustively  and  comprehensively.

    The  single  most  important  factor  this  honorable  committee  should  bear  in
    mind  in  considering  possibilities  of  changes  in  Federal  policy  toward  atomic
    energy,  insofar  as  it  affects  the  use  theieof  by  private  enterprise  in  the  gen-
    eration of  electric  energy,  stems  from  the  fact  that  the  electric-utility  business
    (1)  is  a  regulated  industry;  and  (2)  is  of  such  a  nature  that  in  virtually  every
    State  in  the  Union  it  was  deemed  of  sufficient  public  interest  to  be  brought  under
    regulation.  In  other  words,  unlike  other  industries,  the  electric-utility  industry
    is  affected  with  a  pul)lic  interest  or,  as  stated  by  Mr.  Justice  Frankfurter,  in
    the  Hope  Natural  Gas  case,  "For  our  society,  the  needs  that  are  met  by  public
    utilities  are  as  truly  public  service  as  the  traditional  Government  functions  of
    police  and  justice.  They  are  not  less  so  when  these  sei'vices  are  rendered  by
    private  enterprise  under  governmental  regulation."

    A  subsidiary  question  which  stems  from  the  above  two  considerations  is  a  prac-
    tical one  and  arises  by  virtue  of  the  fact  that  many  utilities  are  .subject  to  State
    regulation  alone,  while  others  are  subject  to  both  State  and  Federal  regulation
    by  virtue  of  the  provisions  of  article  I,  section  8  of  the  United  States  Constitution.
    My  purpose  here  then  is  to  discuss  briefly  some  of  the  problems  which,  in  the
    opinion  of  the  association,  must  be  constantly  borne  in  mind  by  your  honorable
    committee  when  it  is  considering  the  business  with  which  it  is  now  occupied.

    This  association  is  not  concerned,  for  the  purposes  of  this  statement,  in  the
    answers  to  the  scientific  question  whether  one  type  of  reactor  is  superior  to  an-
    other or  whether  the  dual-purpose  reactor,  the  so-called  breeder  reactor,  is  the
    answer  to  the  cost  question.  We  assume,  however,  that  some  variaticm  of  the
    breeder  reactor,  which  has  already  been  successful  in  producing  small  quantities
    of  electric  power  at  Arco,  Idaho,  will  be  used.  This  seems  to  provide  the  most
    practical  answer  to  the  cost  question  at  the  present  time.  If  such  a  proposal  is
    carried  out,  commissions  and  regulatory  authorities  generally  will  be  confronted
    with  the  same  problem  which  caused  such  difliculty  with  the  Tennessee  Valley
    Authority  and  other  similar  functions,  namely  a  multiple-purpose  joint-cost
    facility,  with  the  necessity  for  allocation  of  plant  and  expenses  to  the  various
    functions.  This  problem,  however,  does  not  appear  to  be  one  for  legislative  deter-
    mination. The  Congress  may  decide  that  it  ought  to  fix  by  law  the  part  of  the
    cost  of  a  dual-purpose  reactor  which  should  fairly  be  charged  to  the  production
    of  Plutonium  or  other  byproducts.  But  it  appears  to  the  association  that  the
    answers  to  such  a  question  should  be  found  in  a  forum  of  regulatory  authorities
    rather  than  the  legislature.

    As  a  consequence  of  the  possibility  that  dual-purpose  reactors  will  be  used,  how-
    ever, other  problems  do  develop.  For  example,  thero  is  a  question  whether  the
    United  States  Government  should  fix  the  price  of  plutonium  or  other  byproducts,
    such  as  tritium,  U-2.33,  radiological  warfare  weapons,  or  radioactive  isotopes.  If
    so,  how  should  these  prices  be  fixed?  Should  the  Federal  Government  guaranty
    the  fixing  of  the  price  for  this  byproduct  and  what  protection  .should  and  would
    be  afforded  utilities  and  investors  if  the  present  arms  race,  which  seems  the  most
    practical  source  for  consumuption  of  plutonium,  should  slow  down  or  end?    Since

    584  ATOMIC    POWER    DEVELOPMENT

    the  selling  point  of  the  dual  reactor  results  from  the  market  for  the  byproduct
    created  by  the  international  situation,  should  the  Congress  consider  extending
    a  guaranty  or  some  other  protection  against  a  change  in  the  situation  which
    would  eliminate  the  market  for  the  byproducts?

    The  subsidiary  question,  of  course,  of  proper  accounting  for  the  revenue  re-
    ceived from  the  sale  of  these  byproducts  should  be  properly  left  to  the  regulatory
    authorities.

    In  the  same  connection,  a  problem  will  immediately  arise  what  to  do  with  the
    outmoded  equipment  in  the  event  the  present  type  of  reactor  becomes  obsolete,
    either  entirely  or  in  some  part  of  its  production  process.  Should  it  be  written  off
    as  an  expensive  error  or  should  it  be  perpetuated  on  the  company's  books,  even
    though  replaced?  If  it  is  to  be  written  off,  should  the  Federal  Government  bear
    all  or  part  or  any  of  the  loss?

    By  reason  of  the  emphasis  on  dual-purpose  reactors,  the  risk  arises  that  the
    electric-utility  companies  using  such  facilities  will  find  their  economic  well-
    being  keyed  to  sources  outside  of  the  utility  business,  such  as  the  market  for
    Plutonium  or  other  byproducts.  Should  some  approach  be  adopted,  such  as
    charging  against  the  Federal  Government  the  entire  cost  allocated  to  byproduct
    production  and  the  entire  expense  of  so  producing  byproducts,  thereby  relieving
    the  utility  of  any  risk  involved  in  a  change  in  the  market  conditions  for  its
    byproducts,  or  is  this  a  risk  which  should  properly  be  borne  by  the  utility  as  part
    of  its  research  program?

    By  reason  of  the  present  monopoly  on  ownership  of  fissionable  materials  by
    the  Federal  Government,  practically  all  proposals  for  the  generation  of  electricity
    from  atomic  power  contemplate  the  loan  or  lease  of  uranium  or  comparable
    fissionable  material  to  the  utility  with  title  remaining  in  the  Federal  Govern-
    ment. Presumably,  in  the  event  of  the  need  for  this  material  by  reasons  of
    national  emergency,  the  Federal  Government  could  recapture  or  take  possession
    of  the  material  which  had  been  used  by  the  utility.  Two  questions  of  concern
    to  this  association  arise  from  this  contingency.

    First,  should  the  Federal  Government  extend  a  guaranty  to  the  utility  which
    will  indemnify  it  against  any  such  contingency  which  might  destroy  its  ability
    to  generate  electricity,  thereby  impairing  its  financial  status  and  earning
    capacity?  A  similar  provision  appears  in  S.  22.39,  83d  Congress,  where  privately
    owned  utility  companies  provide  energy  to  new  gaseous-diffusion  plants  of  the
    Atomic  Energy  Commission.  They  are  indemnified  against  losses  as  a  conse-
    quence of  reduction  in  the  consumption  by  these  plants  for  a  period  of  25  years.
    The  problems  which  utilities  will  have  in  attracting  capital  when  the  underlying
    earnings  supporting  the  securities  are  subject  to  the  contingencies  of  inter-
    national disputes  are  such  as  practically  to  eliminate  any  possibility  of  large-
    scale  financing  for  purposes  of  constructing  atomic-energy  electric-generating
    plants  without  some  provision  made  for  this  diflaculty.  For  the  same  reason,
    should  customers  of  utilities  be  forced  to  bear  the  capital  costs  of  experimenta-
    tion and  development  when  there  is  a  chance  that  the  whole  productive  heart
    of  the  plant  will  be  repossessed?

    Secondly,  from  the  point  of  view  of  the  regulatory  authority,  any  possibility
    that  generating  facilities  may  be  rendered  inoperative  by  reason  of  repossession
    of  atomic  fuel  by  the  Government  is  of  serious  concern  since  it  raises  the  risk
    that  the  utility  will  be  unable  to  render  eflScient  and  adequate  public  service.
    Should,  therefore,  a  standby  plant  of  sufficient  capacity  to  provide  the  equivalent
    power  to  that  supplied  from  the  reactor  generator  be  maintained  at  Government
    expense  or  should  other  facilities,  such  as  elaborate  transmission  networks,  be
    set  up  to  provide  for  such  a  contingency?  The  economies  from  atomic-power
    electrical  generation  would  largely  disappear  if  utilities  themselves  would  be
    required  to  set  up  their  own  standby  plant.

    It  is  respectfully  urged  that  this  honorable  committee  also  bear  in  mind  the
    possibilities  of  dual  regulation  by  State  or  Federal  agencies  which  can  result
    from  the  introduction  of  atomic-power  electric-generation  plants.  These  can
    arise  from  several  sources.  For  example,  the  extent  of  the  control  of  the  Atomic
    Energy  Commission  over  the  rate  of  output  of  the  particular  utility  must  be
    carefully  evaluated  since  primary  responsibility  for  plant  capability  rests  with
    management  and  the  control  over  the  sufficiency  of  this  capability  has  been  vested
    in  nearly  all  cases  in  State  regulatory  authorities.  Will  there  be  a  possibility  of
    conflict  on  those  points?

    Finally,  what  will  be  the  position  of  State  utilities  and  public-utilities  com-
    missions if  the  Government  decides  to  let  the  United  States  itself  and  not  private
    enterprise  develop  electricity  from  atomic  power?     Would  not  this  place  the

    ATOMIC    POWER    DEVELOPMENT  585

    source  of  generation  and,  hence,  the  greatest  item  of  cost,  which  is  of  funda-
    mental concern  in  fixing  reasonable  rates,  beyond  the  reach  of  State  commissions?
    Moreover,  what  would  be  the  effect  on  State  laws  which  enable  State  commis-
    sions to  order  changes  in  plant,  etc.,  to  meet  deficiencies  and  to  prescribe  safety
    regulations?  Would  power  so  generated  have  to  be  in  such  large  blocks  that  it
    would  have  to  be  transmitted  in  interstate  commerce  to  become  economically
    practical,  thereby  subjecting  the  utility  to  dual  regulation  by  State  and  Federal
    agencies?

    These  and  many  other  more  difiicult  questions  will  be  carefully  considered  by
    the  committee  set  up  by  this  association  during  the  next  year.  It  is  hoped  that
    before  a  definitive  statement  of  Federal  policy  concerning  this  subject  is  reached
    by  your  committee,  it  too  will  give  careful,  cautious  consideration  to  them  and
    that  it  will  bear  in  mind  and  seek  the  opinion  of  the  committee  of  this  association
    established  for  that  purpose.

    The  opportunity  of  making  this  statement  is  appreciated.  No  one  is  more
    keenly  aware  of  the  immeasurable  benefits  from  lower  costs  and  higher  produc-
    tivity which  will  result  from  the  perfection  of  the  process  of  generating  elec-
    tricity by  atomic  powers  than  are  members  of  the  National  Association  of  Rail-
    road and  Utilities  Commissioners.  By  the  same  token,  however,  no  one  is  more
    anxious  that  the  development  be  in  the  public  interest  in  every  sense.  We  are
    engaged  in  the  study  of  the  problem  from  the  point  of  view  of  the  regulator,
    therefore,  to  make  certain  to  the  best  of  our  ability  that  the  problems  uniquely
    within  the  experience  of  men  whose  daily  business  it  is  to  weigh  the  actions  of
    utilities  in  the  scale  of  public  interest  are  thoroughly  considered  before  final
    decisions  are  reached.  We  appreciate  this  chance  to  advise  you  of  our  plans  and
    progress  to  date.

    California  Institute  of  Technology,
    NoKMAN  Bridge  Laboratory  of  Physics,

    Pasadena,  Calif.,  July  31,  1958.
    Hon.  W.  Sterling  Cole,

    Chairman,  Joint  Committee  on  Atomic  Energy,
    House  Office  Building,  Washington,  D  .C.
    Dear  Mr.  Cole  :  Thank  you  very  much  for  your  letter  of  July  24  and  your
    invitation  to  send  any  unclassified  comments  on  the  general  subject  of  a  Federal
    policy  on  industrial  atomic-power  development.

    Although  I  have  been  interested  in  this  subject  for  several  years,  I  do  not
    have  any  unclassified  comments  to  send  to  you  at  this  time.  It  has  been  a  long
    time  since  I  have  seen  you  and  I  hope  some  time  to  have  the  pleasure  of  calling
    on  you  in  Washington.

    My  best  wishes  to  you  for  the  future.
    Sincerely  yours,

    Robert  F.  Bacher.

    Bechtel  Corp.,
    San  Francisco,  July  17,  1953.
    Mr.  Sterling  Cole,

    Chairman,  Joint  Committee  on  Atomic  Energy,

    Congress  of  the  United  States,  Washington,  D.  C.

    Dear  Mr.  Cole  :  Reference :  Your  letter  of  June  24,  subject.  Federal  policy  on
    industrial  atomic-power  development.

    During  my  absence,  my  associate,  Mr.  J.  P.  Yates,  wired  you  that  I  was  out
    of  the  country  and  that,  upon  my  return,  I  would  communicate  with  you  in
    connection  with  this  matter.

    Our  company,  together  with  the  Pacific  Gas  &  Electric  Co.,  is  associated  with
    several  other  companies  who  have  been  studying  the  development  of  nuclear
    energy  for  industrial-power  purposes.

    Mr.  J.  W.  McAfee  is  chairman  of  this  group  and  I  understand  that  Mr.  McAfee
    and  Mr.  Philip  Sporn,  president  of  the  American  Gas  &  Electric  Service  Corp.,
    and  Mr.  Willis  Gale,  chairman  of  Commonwealth  Edison  Co.,  have  all  made
    statements  to  your  committee  which  are  generally  representative  of  the  views
    of  their  companies  and  to  wliicli  we  subscribe  in  general  principles.

    In  view  of  this,  it  is  my  feeling  that  a  statement  from  me  would  really  be
    somewhat  redundant  and  superfluous.

    586  ATOMIC    POWER    DEVELOPMENT

    Furthermore,  I  would  much  prefer  that  Mr.  McAfee,  as  chairman  of  the  group
    with  whom  we  are  working,  be  considered  spokesman  for  our  company  as  part
    of  that  group,  in  this  particular  matter.

    In  view  of  the  above,  I  will  assume  that  it  is  not  essential  for  me  to  come  to
    Washington  or  to  proceed  further  in  this  matter  at  this  time.
    Respectfully  yours,

    S.  D.  Bechtel.

    Massachusetts  Institute  of  Technology,

    Department  of  Ohemicai,  Engineering,

    Cambridge,  Mass.,  August  7,  1953.
    Hon.  W.  Stekxing  Cole,

    Chairman,  Joint  Committee  on  Atomic  Energy,

    Congress  of  the  United  States,  Washington,  D.  C.

    Dear  Mr.  Cole:  I  am  happy  to  be  able  to  reply  to  the  questions  regarding
    national  atomic-power-development  policy,  which  you  raised  in  your  letter  of
    July  13.  I  think  it  is  important  that  our  policy  in  this  field  be  reexamined  be-
    cause the  production  of  useful  power  for  nuclear  fission  has  been  postponed  so
    much  longer  than  was  originally  anticipated.

    Historically,  the  development  of  commercial  nuclear  powerplants  by  the  Atomic
    Energy  Commission  has  been  retarded  because  this  development  has  had  lower
    priority  than  production  of  fissionable  material  for  atomic  weapons  and  develop-
    ment of  reactors  for  propulsion  of  military  vehicles.  In  addition,  a  Government
    agency  is  inherently  a  less  effective  organization  than  a  private  company  for
    undertaking  a  development  in  which  reduction  of  costs  is  the  primary  problem.
    Such  a  development  is  best  undertaken  by  a  group  which  risks  its  own  funds
    and  is  able  to  profit  from  the  economies  it  effects.  I  believe  that  our  national
    policy  should  be  to  remove  the  artificial  restriction  which  now  inhibits  partic-
    ipation of  private  companies  in  the  development  of  nuclear  power.  The  private
    companies,  themselves,  would  then  be  in  the  best  position  to  determine  if  this
    were  the  time  to  push  private  development  of  atomic  power  for  commercial  use.

    There  appears  to  be  greater  interest  in  some  foreign  countries,  notably  Eng-
    land, than  in  the  United  States  in  the  development  of  industrial  atomic  power-
    plants.  This  situation  has  its  explanation  in  the  fact  that  costs  for  the  produc-
    tion of  power  from  conventional  fuel  are  higher  in  England  than  in  the  United
    States  so  that  power  from  nuclear  fission  may  well  be  economically  justified  in
    England,  whereas  it  is  not  yet  economic  in  the  United  States.  I  do  not  believe
    that  this  country  should  seek  to  obtain  a  position  of  leadership  in  the  develop-
    ment of  atomic  powerplants,  solely  for  the  sake  of  being  ahead  of  the  rest  of  the
    world  in  this  development.  There  are  many  processes  which  can  be  justified
    economically  in  other  countries,  which  do  not  pay  their  own  way  in  the  United
    States,  and  nuclear  power  appears  to  be  one  of  these  at  the  present  time.

    The  cost  of  electric  power  produced  in  atomic  powerplants  should  be  figured
    in  the  same  economic  terms  as  power  from  conventional  steam  plants  such  as
    are  owned  and  operated  by  the  private  utility  companies  at  the  present  time.
    The  economic  significance  of  atomic  power  can  be  properly  assessed  only  if
    atomic  powerplants  are  neither  subsidized  nor  penalized  relative  to  competing
    sources  of  power.

    The  security  restrictions,  under  which  development  of  nuclear  reactors  must
    necessarily  proceed  today,  do  retard  the  rate  of  development  of  atomic  power-
    plants.  This  situation,  although  regrettable,  cannot  be  avoided  at  the  present
    time  because  of  the  troubled  international  situation,  and  because  of  the  close
    ties  between  atomic  powerplants  and  plants  for  the  production  of  atomic  wea-
    pons. The  development  and  design  of  the  reactor  part  of  atomic  powerplants
    must  for  the  time  being  be  restricted  to  individuals  with  proper  security  checks,
    as  is  now  the  case.  Nevertheless,  I  believe  that  a  useful  step  in  liberalizing
    security  provisions  could  safely  be  made  by  giving  properly  cleared  individuals
    all  relevant  technical  and  economic  information  needed  for  intelligent  develop-
    ment of  nuclear  reactors.  At  the  present  time,  the  administrative  interpreta-
    tion of  the  security  provisions  of  the  McMahon  Act  still  results  in  undesirable
    compartmentalization  of  information,  particularly  the  withholding  from  indi-
    viduals not  employed  by  the  Atomic  Energy  Commission  of  information  on  costs
    of  uranium  and  other  fission  materials,  and  the  costs  of  building  and  operating
    Covernment-owned  facilities  for  processing  these  materials.  Private  companies
    seeking  to  develop  economic  atomic  powerplants  should  have  all  available  in-
    formation on  the  costs  of  related  Government-controlled  operations.

    ATOMIC    POWER    DEVELOPMENT  587

    I  should  like  to  see  a  number  of  pilot-plant  investigations  made  on  promising
    types  of  nuclear  reactors.  The  homogeneous  reactor  experiment,  which  is  being
    conducted  at  the  Oak  Ridge  National  Laboratory,  and  the  experimental  breeder
    reactor,  which  is  being  tested  by  the  Argonne  National  Laboratory,  are  examples
    of  the  type  of  undertaking  which  should  be  multiplied.  There  are  a  half-dozen
    other  types  of  nuclear  reactors  for  the  production  of  useful  power  which  cannot
    be  evaluated  properly  at  the  present  time  tor  lack  of  pilot-plant  experience,
    which  would  give  us  badly  needed  information  on  the  life  of  equipment,  cost
    of  construction  and  opjeration,  and  eflBciency  of  conversion  of  nuclear  fuels  to
    electric  power.  Private  companies  should  be  encouraged  to  do  this  pilot-plant
    work  with  their  own  funds.  To  this  end,  they  should  be  permitted  to  take  out
    and  use  such  patents  as  might  result  from  a  privately  financed  pilot-plant  pro-
    gram and  to  own  full-scale  atomic  powerplants  which  might  be  built  as  a  result
    of  pilot-plant  findings.

    The  statement  of  policy  on  nuclear  power  development  recently  issued  by  the
    Atomic  Energy  Commission  outlines  a  number  of  desirable  steps  which  should
    be  taken  to  encourage  wider  participation  of  private  companies  in  the  develop-
    ment of  nuclear  power.  I  am  in  agreement  with  all  of  the  measures  proposed
    by  the  Atomic  Energy  Commission,  except  that  their  proposal  to  lib;  raliz'  i  ;tent
    rights  through  a  change  of  administrative  policy  on  the  part  of  the  AEC  rather
    than  by  revision  of  the  Atomic  Energy  Act  does  not  go  far  enough.  I  believe
    that  the  Atomic  Energy  Act  should  be  revised  to  permit  private  companies  to
    own  patents  on  processes  and  equipment  for  the  production  of  fissionable  ma-
    terial or  nuclear  power.  It  is  only  in  this  way  that  private  companies  can  be
    assured  of  an  opportunity  to  profit  from  investment  of  their  own  time  and
    personnel  in  experimental  studies  aimed  at  developing  atomic  powerplants.
    Diligence,  ingenuity,  and  risk  taking  on  the  part  of  private  companies  have  been
    responsible  for  the  industrial  greatness  of  the  United  States.  There  is  every
    reason  to  believe  that  private  industry,  if  given  normal  business  incentives,  will
    make  a  reality  of  atomic  power  as  soon  as  it  is  economically  competitive  with
    power  from  conventional  fuels.
    Sincerely  yours,

    Manson  Benedict,
    Professor  of  Nuclear  Engineering.

    Statement  by  Mr.  Robert  Blum  to  the  Joint  Committee  on  Atomic  Energy,

    August  10,  1953

    (Note. — This  statement  constitutes  exclusively  my  own  personal  view  as  an
    individual  citizen.  It  does  not  represent  the  views  of  any  other  person  or  group
    either  in  or  outside  of  the  Government. )

    In  my  previous  work  for  the  National  Security  Resources  Board  and  other
    agencies,  I  have  given  extensive  consideration  to  atomic  energy  and  related
    national-security  problems.

    On  the  basis  of  that  consideration  and  attendance  at  joint  committee  hear-
    ings, I  wish  to  express  my  very  sincere  admiration  for  the  magnificent  perform-
    ance of  the  joint  committee.

    I  appreciate  the  opportunity  given  to  me  by  the  joint  committee  to  "flag"
    problems  and  suggestions  which  may  warrant  further  analysis.

    In  this  statement  I  will  attempt  to  suegest  integrated  consideration  of—

    I.  National-security  problems  and  national  objectives  which  make  it  very
    important  for  the  United  States  to  move  forward  as  rapidly  as  possible  in
    providing  world  leadership  on  atomic  development ;

    II.  Policies  relating  to  private  participation,  Government  action,  and  for-
    eign-relations problems  which  may  be  suitable  to  meet  national-security
    problems  and  objectives ;

    III.  Programing  desirable  to  provide  maximum  actual  progress;  and

    IV.  Action  by  Congress  and  the  President  to  increase  the  effectiveness  of
    United  States  efforts  to  achieve  world  leadership.

    Although  I  have  had  to  base  my  own  suggestions  in  sections  II.  Ill,  and  IV
    on  my  own  appraisal  of  national-security  needs,  the  joint  committee  will  wish
    to  look  to  the  National  Security  Council  for  better  guidance  and  for  major
    decisions.

    36740— S.*? 38

    588  ATOMIC    POWER    DEVELOPMENT

    I.    NATIONAL    SECTTBITT   PROBLEMS    AND    NATIONAL    OBJECTIVES

    (Note. — ^Although  this  statement  is  confined  to  atomic  power  development  and
    cannot  attempt  to  cover  overall  national-security  problems,  action  on  atomic-
    energy  problems  must  be  balanced  and  fitted  in  the  whole  range  of  overall  na-
    tional-security problems,  policies,  and  programs.)

    The  United  States  superiority  in  atomic  weapons  and  striking  power  has
    been  a  key  factor  helping  to  deter  Soviet  encroachment,  and  to  avert  full-scale
    war.

    But  within  a  few  years  Soviet  Russia's  strength  (including  atomic  weapons
    and  delivery  capabilities)  may  be  sufiicient  to  devastate  European  and  United
    States  centers  of  population  and  strength.

    Increasing  Soviet  atomic  striking  power  increases  enormously  the  difficulty
    and  the  urgency  of  national-security  problems,  and  "telescopes"  the  time  avail-
    able to  meet  those  problems.

    The  risks  and  difficulties  to  be  faced  must  be  given  full  consideration.  Even
    though  the  United  States  and  Soviet  Russia  are  trying  to  avoid  full-scale  atomic
    war,  it  will  be  difficult  to  negotiate  satisfactory  peaceful  solutions  of  major
    problems  if  the  power  and  objectives  of  the  Soviet  Government  do  not  change
    very  significantly.  The  unpredictable  reaction  of  the  Soviet  Government  to  in-
    tensified United  States  pressure,  the  impossibility  of  controlling  chance  develop-
    ment of  many  vast  and  complex  problems  arising  in  all  parts  of  the  world,  the
    difficulties  and  chances  of  miscalculation  involved  in  United  States  and  Russian
    appraisal  of  one  another's  strength  and  intentions,  and  possible  demands  in
    either  country  to  "hit  first,  before  being  hit"  all  increase  seriously  the  risk  of
    future  catastrophe.

    Accordingly,  the  United  States  must  improve  its  intelligence,  must  improve
    its  defensive  measures,  and  must  develop  the  most  effective  national-security
    action  which  it  can  devise.  But  no  outcome  or  solution  will  be  satisfactory  other
    than  peaceful  resolution  of  difficulties  without  full-scale  atomic  war.

    Although  I  believe  that  there  is  a  real  likelihood  that  war  may  be  averted,
    and  although  I  want  to  avoid  discussion  of  military  problems,  I  have  noted  above
    problems  relating  to  increasing  Soviet  atomic  striking  iwwer  and  contingent
    dangers,  because  they  increase  greatly  the  need  for  prompt  development  of
    strength,  political  unity,  and  effective  nonmilitary  action  throughout  the  free
    world  to  cope  with  Soviet  Russia  by  means  short  of  war.

    Accordingly.  I  believe  it  is  imperative  for  the  United  States  to  go  forward
    as  rapidly  as  possible  to  provide  both  the  deterrent  of  military  strength  and
    retaliatory  power  and  vigorous  pursuit  of  the  wide  range  of  national  security
    policies  and  programs  which  might  help  to  avert  ^Soviet  encroachment  without
    war  and  lead  to  premanent  peace  and  freedom.

    Therefore,  it  is  highly  important  to  obtain  the  support  of  countries  in  Europe
    or  elsewhere  faced  by  encroachment  or  under  the  shadow  of  potential  Soviet
    attack,  the  support  of  India  and  many  other  neutral  or  friendly  nations,  and  the
    support  of  peoples  within  Soviet-dominated  areas.

    The  extent  of  that  support  may  be  influenced  significantly  by  the  degree  to
    which  we  develop  world  leadership  in  making  peaceful  uses  of  atomic  energy
    available  for  the  United  States  and  the  free  world.

    Failure  of  the  United  States  to  press  forward  vigorously  on  nonmilitary  bene-
    fits from  atomic  energy  would  dissipate  United  States  prestige  and  leadership,
    enable  the  Soviets  to  gain  propaganda  advantages  from  our  concentration  on
    weapons,  and  jeopardize  support  by  our  allies  and  neutral  nations.  If  the
    United  Kingdom  or  any  other  friendly  nation  were  to  take  the  lead  (as  is
    quite  possible),  the  disadvantage  to  the  United  States  would  be  even  greater.
    If  Soviet  Russia  developed  atomic-power  applications  before  the  United  States — ■
    even  though  small  or  high-cost — it  would  have  a  disastrous  impact  on  United
    States  leadership  and  bargaining  power  and  the  attitude  of  peoples  throughout
    the  world.

    Accordingly,  even  though  the  United  States  economy  can  meet  its  own  electric-
    power  needs  for  decades  to  come  from  conventional  (nonatomic)  energy  sources,
    there  is  an  immediate  and  important  national-security  need  for  the  United
    'States  to  move  forward  as  rapidly  as  possible  without  any  loss  of  momentum  to
    achieve  world  leadership  in  atomic-power  development.

    To  be  effective,  the  United  States  must  achieve  not  only  moderate-cost  nuclear
    power  first,  but  also  provide  a  real  opportunity  for  other  nations  to  benefit  from
    United  States  leadership.

    ATOMIC    POWER    DEVELOPMENT  589

    II.  POLICIES  RELATING  TO  PRIVATE-INDUSTRY  PARTICIPATION,  GOVERNMENT  ACTION,
    RELATIONS  WITH  OTHER  COUNTRIES  AND  INTERNATIONAL-CONTROL  PROBLEMS,  AND
    FUBTHEE  PUBLIC-POLICY  CONSIDERATION

    The  key  goal  of  atomic-development  policies  and  programs  is  to  provide  maxi-
    .mum  actual  development  to  meet  national-security  problems  and  objectives.

    As  part  of  the  democratic  process  of  providing  public  understanding,  public
    debate,  and  congressional  resolution  of  issues,  major  interested  groups  are  now
    being  given  an  opportunity  to  present  their  views.  However,  although  all  par-
    ticii>ants  wish  to  aid  the  Nation,  some  participants  are  quite  naturally  carrying
    into  the  atomic-development  debate  views  which  were  forged  in  earlier  internal
    battles  over  public  and  private  power  and  other  major  domestic  political  issues.

    It  is  hoped  that  all  concerned  will  become  increasingly  aware  of  the  need
    for  resolving  the  problems  of  the  various  groups  and  interests  in  order  to  maxi-
    mize forward  progress  on  United  States  atomic-power  leadership  which  may  be
    of  major  importance  in  averting  Soviet  domination  or  war.

    1.  Participation  hy  private  industry

    More  widespread  private-industry  participation,  benefit  and  competitive  in-
    itiative could  advance  technological  development.

    Accordingly,  development  of  nuclear  power  should  not  be  confined  to  a  Gov-
    ernment monopoly  (especially  one  faced  with  the  impediments  of  secrecy  and
    concentration  on  weapons  problems)  but  instead  should  be  open  for  private
    initiative  and  diversified  competitive  effort.

    However,  because  private  firms  cannot  raise  capital  unless  warranted  by
    prospective  income — especially  on  untried  and  uncertain  large-scale  enterprises —
    only  a  very  few  groups  are  on  the  brink  of  providing  sizable  amounts  of  private
    capital.  Moreover,  considerable  time  may  be  required  to  resolve  questions  regard-
    ing the  terms  and  conditions  for  private  participation.

    As  a  result  private  development  may  not  be  available  in  full  swing  for  several
    years.

    But  if  government  and  industry  were  to  work  together  for  the  next  5  years
    they  could  make  substantial  research  and  development  progress  and  could  clear
    the  way  for  future  large-scale  private  development.

    However,  I  do  not  believe  the  limited  progress  immediately  obtainable  from  the
    proposed  amendments  to  the  act  and  the  present  prospects  for  application  of
    private  capital  will  be  commensurate  with  the  overwhelming  national-security
    needs  for  maximum  progress.

    Greater  immediate  private  participation  should  be  obtained,  not  just  from
    a  few  firms,  but  instead  from  the  vast  and  manifold  resources  and  capabilities
    ■of  the  great  bulk  of  American  industry.

    The  full  scope  of  potential  technological  advance  in  electric  power,  chemical
    processing,  metallurgical  development,  engineering  and  construction,  isotope
    use  and  process  control,  electronic  applications  and  instrumentation,  equipment
    production,  propulsion,  etc.,  could  significantly  increase  United  States  industrial
    strength  and  the  opportunities  for  beneficial  applications  throughout  tlie  world.
    That  would  help  to  counter  Soviet  propaganda  against  United  States  capitalism
    by  demonstrating  that  the  United  States  Government  and  private  enterprise
    •could  together  provide  major  benefits  for  the  rest  of  the  world.

    Therefore,  it  is  not  sufficient  merely  to  amend  the  act  to  confer  rights  on
    private  participants  and  to  permit  a  few  firms  to  provide  an  initial  "trickle"  of
    capital.

    Instead,  it  is  important  to  provide  the  real  incentives  of  an  actual  market,
    a  real  opportunity  to  bid  to  do  a  job  and  a  real  chance  to  make  a  profit— in  order
    to  bring  forth  prompt  private  action.  I  believe  that  it  is  now  possible  to  estab-
    lish a  real  market  for  private  industry  work  on  development  without  sacrificing
    the  public  interest.  ,.  .  »     ,

    Specifically,  I  urge  that  a  joint  Government-industry  program  be  established
    as  outlined  "more  fully  in  part  III  to  call  forth  more  widespread  private  par-
    ticipation and  lead  to  greater  progress.

    Royalties  or  similar  rewards  may  be  justified  to  bring  forth  new  resources
    and  new  efforts  by  private  participants  to  achieve  the  now  technical  develop-
    ment necessary  for  national  security  but  patent  controls  should  not  be  used  to
    exclude  other  "potential  future  participants.

    2.  Government  action

    It  would  be  unwise  to  rest  our  national  security  program  for  world  leadership
    -on  an  uncertain  and  unassured  foundation  of  mere  hopes  for  private  capital,

    590  ATOMIC    POWER    DEVELOPMENT

    or  on  good  prospects  for  private  capital  at  a  time  which  would  be  too  late  to  meet
    national  security  needs.

    If  private  capital  does  not  come  forward  promptly,  preferences  for  private
    ownership,  efforts  to  encourage  private  participation,  or  hopes  for  future  par-
    ticipation should  not  delay  progress.  Instead  the  present  Government-industry
    combination  of  Government  financing,  research  in  and  outside  of  Government,
    and  private  construction  and  operation  of  facilities  should  carry  the  ball.

    In  fact,  whether  private  capital  comes  forward  or  not,  opportunities  for  joint
    Government-industry  development  at  Hanford,  Oak  Ridge,  Portsmouth,  Argonne,
    Arco,  GE's  Knolls  Laboratory,  the  Westinghouse  projects  near  Pittsburgh,  and
    other  activities  should  be  considered  for  their  possible  advantages  of  unified
    operation  with  other  AEC  activities  and  avoidance  of  extra  expenditures  for
    "exclusion  areas."

    Until  private  capital  actually  can  carry  the  ball  it  should  not  oppose,  but
    instead  support,  efforts  and  appropriations  for  combined  Government-industry
    progress.

    S.  Foreign  relations  a'nd  international  control  problems

    (a)  Uranium  suppliers.— It  has  been  of  the  greatest  possible  importance  to
    the  United  States  and  the  free  world  (in  deterring  Soviet  Russia)  that  the
    uranium  supplies  of  the  Belgian  Congo  have  come  to  the  United  States  instead
    of  being  made  available  to  Soviet  Russia.  Presumably,  the  Belgians  made  Congo
    uranium  available  to  the  United  States  for  the  common  interest  in  the  defense
    of  the  free  world.

    In  considering  the  desire  of  domestic  United  States  private  companies  to  own
    and  use  fissionable  materials  (and  to  seek  patents)  for  private  company  objec-
    tives, the  United  States  Government  must  take  into  account  the  very  real  need
    for  full  cooperation  with  the  Belgian  Government  and  producers  in  the  Belgian
    Congo  on  their  power-development  programs  and  for  continuation  of  mutually
    satisfactory  arrangements  relating  to  supply  and  use  of  uranium.

    Similar  consideration  must  be  applied  to  other  potentially  important  foreign,
    sources  of  uranium  or  other  radioactive  materials.

    Therefore,  in  drafting  legislative  provisions  relating  to  United  States  private
    rights,  care  must  be  exercised  to  take  into  account  the  needs  for  foreign  raw
    material  suppliers.

    (ft)  International  control  of  fissionable  materials. — The  current  impasse  ort
    international  control  because  the  Soviet  Government  has  been  unwilling  to  ac-
    cept international  inspection,  etc.,  does  not  justify  our  playing  ostrich  by  de-
    veloping a  United  States  atomic-power  program  which  does  not  give  adequate
    consideration  to  the  terribly  rapid  United  States  and  Soviet  weapons  buildup
    toward  capacity  for  potential  destruction  and  the  importance  of  further  con-
    sideration of  international  control.

    The  United  States  has  consistently  espoused  the  position  in  the  United  Nations
    that  for  International  control  it  is  essential  to  have  international  ownership  of
    fissionable  materials  and  facilities  and  effective  international  inspection.

    The  basic  fact,  which  has  not  changed,  is  that  diversion  of  fissionable  materials-
    in  even  relatively  small  quantities  could,  if  undertaken  by  a  potential  enemy,,
    be  a  serious  threat  to  United  States  security.

    Even  though  the  time  may  not  now  be  ripe  for  international  control,  we  must
    not  jeopardize  in  any  way  our  ability  to  enter  into  an  effective  system  for  inter-
    national control.

    Private  ownership  of  fissionable  materials  could  contribute  to  potentially  seri-
    ous international  difficulties.  Although  control  of  United  States  private  opera-
    tions may  provide  useful  experience  (although  experience  in  leasing  might  be
    even  more  desirable)  private  ownership  of  fissionable  materials  in  the  United
    States  may  make  it  politically  more  difficult  to  compel  centralized  and  foolproof
    control  over  Soviet  fissionable  materials.  Moreover,  Soviet  Russia  could  gain
    propaganda  advantages  by  charges  that  the  United  States  has  taken  a  hypo-
    critical position  in  the  United  Nations  of  demanding  international  ownership
    at  a  time  when  we  are  providing  for  private  ownership  and  diffused  responsi-
    bility within  the  United  States,  and  charges  that  we  have  sacrificed  international
    control  to  private  company  profits.

    Clearly,  the  ordinary  rights  of  private  ownership  would,  in  fact,  be  very  much
    abridged  liecause  the  United  States  Government  must  control  very  extensively
    any  private  use  of  fissionable  materials.  However,  ownership  of  fissionable  ma-
    terials actually  may  not  even  be  an  important  factor  in  the  limited  goal  of  pri-
    vate demonstration  of  private  operating  success  in  obtaining  nuclear  power.

    ATOMIC    POWER    DEVELOPMENT  591

    Accordingly,  I  believe  the  natural  (and  perhaps  primarily  ideological)  urge  of
    the  private  spokesmen  for  ownership  of  fissionable  materials  should  be  recon-
    sidered by  them,  and  should  be  subordinated  to  the  very  important  national
    security  considerations  relating  to  international  control.

    (c)  Exchange  of  information  to  benefit  the  United  States  and  development
    of  peaceful  uses  by  other  friendly  nations. — Further  Atomic  Energy  Commission
    declassification  of  reactor  development  information  to  aid  United  States  private
    participation  will  also  help  foreign  countries.  Accordingly,  the  announcements
    of  declassification  should  state  that  we  mean  to  help  other  friendly  nations
    advance  their  atomic-power  programs.  By  doing  so  we  may  gain  a  small  con-
    tribution to  United  States  world  leadership  obtainable  from  United  States  recog-
    nition of  the  interests  of  other  nations.

    Other  information  may  be  downgraded  for  use  by  security-cleared  individuals
    in  United  States  private  companies.

    It  may  be  unwise  and  impractical  for  the  United  States  Government  to  pro-
    vide information  which  remains  classified  to  United  States  private  companies
    and  to  maintain  at  the  same  time  a  complete  iron  curtain  excluding  uranium
    suppliers  and  friendly  foi'eign  nations  from  any  information  or  benefits  which
    would  not  jeopardize  United  States  security.  To  do  so  may  preclude  United
    States  use  of  foreign  scientific  analyses  and  may  create  antagonisms,  the  exact
    opposite  of  the  United  States  need  for  even  greater  free  world  support  and  co-
    operation on  proposals  relating  to  international  control  of  atomic  weapons.

    Accordingly,  mutual  exchange  of  information  (subject  to  United  States  secu-
    rity controls)  should  be  explored  more  fully.

    (d)  Resulting  need  for  concurrent  action  covering  United  States  domestic
    activities  and  cooperation  tvith  other  countries  and  international  control. —
    Further  analysis  of  problems  relating  to  other  nations  should  be  provided  by
    NSC,  AEC,  or  State  before  executive  or  legislative  action  is  undertaken  which
    might  be  detrimental  to  United  States  national  security  needs.

    Changes  in  the  act  should  take  into  account  at  one  and  the  same  time  both
    United  States  domestic  interests  and  United  States  security  and  foreign  objec-
    tives. Failure  to  do  so  could  lead  to  serious  future  difllculties  and  controver-
    sies. Thus,  if  the  first  round  of  legislative  action  granted  rights  to  United  States
    private  enterprise  which  further  consideration  indicated  were  unwise  and  should
    'be  revoked,  the  result  might  be  to  precipitate  a  violent  battle  on  the  Hill,  in
    the  press,  and  throughout  the  free-world  capitals,  over  the  issue  of  withdrawing
    rights  from  United  States  free  enterprise  to  provide  them  for  international  own-
    ership and  control.

    The  pragmatic  course,  accordingly,  seems  to  be  to  initially  grant  only  such
    rights  to  private  parties  as  clearly  will  not  conflict  with  major  United  States
    obligations  and  objectives  in  relation  to  other  nations  and  international  action.

    4-  Further  public  policy  consideration

    The  chairman  and  members  of  the  joint  committee  have  demonstrated  rare
    courage  and  devotion  to  public  responsibility  in  their  effort  to  assure  full  con-
    sideration of  major  public  policy  questions.  Accordingly,  they  may  wish  to  re-
    ceive further  analyses  of  very  important  national  security  and  public  policy
    problems  and  issues  before  undertaking  legislative  action.

    The  wisdom  and  spirit  of  the  Atomic  Energy  Act  of  1946,  and  the  new  prob-
    lems now  confronting  Congress,  call  for  at  least  the  best  analyses  of  political,
    social,  economic,  and  international  implications  which  can  now  be  made,  even
    though  available  information  may  not  be  adequate  to  provide  the  definitive  re-
    ports envisaged  in  section  7.

    Therefore,  it  is  suggested  that  the  joint  committee  (or  its  chairman)  request
    that  prior  to  further  action  in  January  :

    (o)   The  AEC  present  the  best  response  it  can  to  section  7 ;

    (&)  A  group  of  the  best  qualified  individuals  on  the  National  Security
    Council  staff,  the  AEC,  State,  Defense,  CIA,  FOA,  Budget  (and  possibly  other
    agencies,  including  Interior,  Commerce,  and  the  Federal  Power  Commission,
    as  needed)  work  together  under  Executive  Office  of  NSC  leadership  to  sub-
    mit a  combined  analyses  of  major  policy  problems  and  suggestions  for  a
    comprehensive  program ;  and

    (c)  A  group  of  citizens  outside  of  Government  best  qualified  to  analyze
    both  industry  and  national-security  problems  submit  a  report  covering  com-
    parable broad  issues  and  discuss  particularly  possible  further  action  to
    maximize  early  private  participation.

    592  ATOMIC    POWER    DEVELOPMENT

    The  joint  committee  staff  might  help  significantly  by  suggesting  major  issues
    to  be  covered.

    The  mere  statement  of  the  request  by  the  joint  committee  or  its  chairman  could
    get  this  analytical  effort  moving  forward  immediately  to  a  scheduled  submis-
    sion, would  save  months  by  contrast  to  other  procedures,  and  quite  probably
    would  lead  to  a  far  better  performance  by  all  concerned.

    III.  PKOGRAMING  TO  PROVIDE  MAXIMUM  ACTUAL  PROGRESS

    1.  Hit  or  miss  versus  programing

    There  is  a  real  possibility  that  momentum  may  be  lost  and  progress  reduced
    to  far  less  than  it  could  be  by —

    {a)  Not  recognizing  that  merely  amending  the  act  to  authorize  private
    benefits  does  not  in  itself  assure  actual  development ;

    (6)  Argumentation  over  amendments  delaying  further  participation —
    and  even  delaying  Government  action ;

    (c)  Unpredictability  of  year-by-year  Government  action,  stops  and  starts
    and  shifts  in  emphasis ;

    ((?)  Uncertainty  as  to  the  magnitude  of  Government  effort  (and  expendi-
    ture), and  hence  the  desirability  of  participation  ;  and

    (e)   Reluctance  of  many  potential  private  participants  to  undertake  sub-
    stantial investment  or  effort  until  after  they  have  seen  the  results  gained
    by  a  lead-off  group,
    l^ioreover,  it  seems  to  me  to  be  unwise  to  have  the  scope  of  the  research  and
    Twvelopment  program  and  kinds  of  projects  which  shall  go  forward  influenced
    very  significantly  by  the  chance  preferences  of  whatever  industry  team  may  first
    happen  to  be  ready  to  put  up  capital.

    As  an  alternative,  I  urge  that  a  combined  Government  and  industry  program
    be  worked  out  which  would —

    (a)  Indicate  in  advance  the  objectives  and  period  for  the  program — (5
    years  might  be  desirable)  ;

    ( &)   Specify  what  analyses  and  projects  are  to  be  undertaken  ;
    (c)   Indicate  how  these  projects  a.i'e  to  be  assigned  to  Government  and
    various  industrial  participants ;

    {d)  Set  forth  a  proposed  schedule  for  the  various  stages  from  research
    through  design,  pilot  plant,  and  full-scale  construction  of  various  possible
    projects ;

    (e)  Authorize  Government  programs  and  indicate  private  capital  and
    expenditures  which  may  be  warranted  ;  and

    if)  Provide  an  opportunity  and  a  time  limit  (perhaps  6  months)  for  pri-
    vate companies  and  others  to  submit  proposals  and  bids  on  portions  they
    might  cover,  together  with  freedom  for  Government  to  "carry  the  ball"  if
    private  capital  does  not  make  a  satisfactory  firm  offer  before  the  end  of  the
    time  limit.

    2.  ^Suggestions  for  Oovernment  and  industry  programing

    My  suggestions  for  programing  are  indicated  more  explicitly  below.

    (rt)  The  program  should  provide  for  analysis  and  development  of  various
    desirable  applications  (i.  e.,  ship  propulsion  unit,  multipurpose  power  and  plu-
    tonium  unit,  various  single-purpose  power  units  embodying  various  features  of
    raw  material,  moderator,  coolant,  processing,  etc.).  The  Reactor  Development
    Division  of  AEG,  Argonne  Laboratory,  and  others  could  be  requested  to  block  out
    research  and  development  work  needed  to  meet  particular  needs.  (By  contrast
    to  the  chance  concentration  of  private  capital  on  the  one  power  unit  a  given  group
    wants,  the  program  should  provide  for  a  broad  range  of  research  and  develop-
    ment activities  designed  to  achieve  optimum  total  results.)  Realization  that  a
    5-year  program  is  involved  may  overcome  the  present  tendency  to  try  to  jam  into
    one  initial  unit  a  combination  of  purposes  and  characteristics  whicli  may  seek  to
    combine  weapons,  propulsion,  and  power  justifications ;  and  various  stages  of
    research  through  construction  even  though,  in  fact,  it  may  be  better  to  pursue
    the  different  objectives  by  separate  staj^es  of  single-purpose  units.

    (7>)  The  most  desiralile  next  step  to  carry  forward  each  of  the  desired  appli-
    cations should  be  carefully  considered.  For  some  applications  a  pilot  plant  may
    be  the  most  desirable  next  step.  For  other  purposes,  valuable  information  could
    be  gained  by  preparation  of  designs  without  going  forward  to  the  nuich  greater
    expenditure  for  construction  or  installation  in  end-use  structures  such  as  ships,
    planes,  or  power  plants.  Actual  reduction  and  analysis  of  costs  for  commercial
    power  may  require  actual  construction  of  one  or  more  very  large  pow«r  units.

    ATOMIC    POWER    DEVELOPMENT  593

    But  development  of  certain  processing  improvements  may  call  for  substantial
    initial  research  and  various  small-scale  pilot  projects.

    (c)  A  sensible  sequence  of  research  and  development  should  be  worked  out
    to  permit  desirable  modifications  as  new  information  is  obtainable.  But  apart
    from  that  needed  flexibility,  potential  contractors  and  other  participants  should
    be  given  as  definite  an  indication  of  the  program  as  possible  in  order  to  minimize
    the  hesitation,  delays,  and  waste  involved  in  year-by-year  action,  and  to  maxi-
    mize useful  technical  effort.

    (d)  Selection  of  projects  (and  allocation  of  Government  funds  and  contracts)
    should  take  into  account  (i)  military  needs,  private  utility  and  industrial  needs,,
    and  the  desirability  of  advancing  United  States  world  leadership  in  peaceful
    applications  and  (ii)  the  relation  between  the  funds  requested  for  various  I'nited
    States  budget  items  and  the  importance  of  benefits  which  may  be  obtained.

    (e)  The  Government's  national-security  interests  and  defense  responsibilities
    will  require  some  expenditures  which  may  not  be  reduced  significantly  by  any
    presently  assured  prospects  of  private  participation.  Provision  of  fissionable
    materials  on  the  most  efficient  basis  for  their  extremely  important  national-
    security  function  as  a  deterrent  to  Soviet  Russia  may  require  and  justify  further
    technical  research  and  development  which  may  be  of  use  in  the  nuclear-power
    field.  The  Government  will  also  presumably  have  a  major  responsibility  for
    expenditure  for  development  of  submarine,  carrier,  or  aircraft-propulsion  units,
    and  for  overseas  military  needs.  Therefore,  the  Government  should  undertake  a
    substantial  part  of  the  fundamental  re.search  and  laboratory  activities  which
    will  contribute  both  to  defense  needs  and  the  technological  advances  that  are  a
    prerequisite  for  industrial  progress  and  for  achievement  of  the  national-security
    goal  of  United  States  world  leadership.  Government  and  private  industry  might
    also  consider  joint  development  of  a  large-scale  power  unit  which  could  be  tied
    in  with  Hanford,  Oak  Eidge,  Paducah,  or  other  project  processing  operations
    or  activities  to  meet  their  power  needs,  reduce  i>ower  shortages,  make  other
    blocks  of  power  available  for  electric  utilities  and  industrial  companies,  and
    avoid  the  present  high-cost  exclusion-area  impediments  to  early  development  by
    private  companies.

    While  the  amounts  would  vary  from  year  to  year  (and  must  be  determined
    specifically  by  Congress),  the  Government  might  utilize  on  an  average,  roughly
    $30  million  per  year  for  various  combinations  of  research  and  development  in
    the  fields  noted  above.  It  is  not  unreasonable  to  say  that  in  a  5-year  period  the
    Government  might  devote  $ir)0  million  to  the  stated  purposes.

    if)  Private-industry  consideration  and  participation  should  be  undertaken  on
    a  broader  scale.  It  is  assumed  tliat  private  industry  should  put  up  capital  for
    projects  which  are  intended  primarily  for  private  use  and  benefit.

    The  natural  tendency  of  utility  and  industry  officials,  responsible  to  their  stock-
    holders and  potential  capital  suppliers,  has  been  to  measure  benefits  exclusively  as
    an  alternative  to  doing  the  same  particular  job  (generation  of  electric  power,
    for  example)  by  conventional  means.  Although  that  demonstrates  fine  financial
    integrity,  it  underestimates  the  advantages  to  the  companies,  to  industry  gen-
    erally, and  to  the  Nation  of  carrying  forward  the  technological  development  of
    nuclear  power.  In  this  connection,  it  should  be  noted  that  electric-utility  com-
    panies feel  potential  power  benefits  to  them  justify  allocation  of  company  re-
    sources to  pursue  atomic-power  development :  construction  and  engineering  com-
    panies like  Bechtel  may  feel  justified  by  potential  design  and  construction  bene-
    fits ;  chemical  companies  like  Dow  and  Monsanto  may  feel  justified  by  anticipated
    chemical  processing  and  energy-supply  advantages ;  equipment  manufacturers
    like  General  Electric  and  Westinghouse  may  anticipate  sufficient  benefits  from
    design,  patents,  and  construction  and  sale  of  reactor  equipment  and  auxiliaries;
    instrument  and  control-equipment  manufacturers  and  electronic  suppliers  may
    anticipate  profitable  subcontracts,  etc.  For  companies  with  widely  diversified
    and  integrated  operations  (or  large  groups  of  companies  cutting  across  several
    fields)  many  benefits  in  addition  to  power  can  lie  obtained  from  the  sale  of
    byproducts,  and  from  know-how  and  applications  which  can  be  used  advan-
    tageously by  those  companies  on  their  engineering,  processing,  con.struction,  con-
    trol, equipment,  metallurgical,  and  other  needs  or  activities.  Taken  together,
    the  benefits  may  indeed  be  very  large  for  the  combination  of  participants — and
    would  be  magnified  many  times  by  broad  application  throughout  industry.

    iff)  Close  cooperation  between  Government  and  industry  will  be  indispensable
    because  of  the  many  inherently  inseparable  national-security  and  jwwer-develop-
    ment  factors.  As  a  practical  matter,  there  is  a  continuing  need  for  Government
    work  to  be  carried  out  by  private  contractors  and  for  private  participants  to
    have  access  to  Government  research  laboratories  and  development  possibilities.

    594  ATOMIC    POWER    DEVELOPMENT

    Accordingly,  it  appears  highly  desirable  to  work  out  a  program  for  joint
    development.  Discussion  above  indicates  that  it  might  be  desirable  and  reason-
    able for  the  Government  to  "firm  up"  its  share  of  the  combined  total  5-year  job,
    including  an  advance  authorization  for  expenditures  estimated  at  perhaps  $150
    million,  and  its  advance  anticipation  to  the  private  share  vphich  may  be  vparranted.
    (Perhaps  a  minimum  of  $150  million  of  private  funds  might  be  warranted  by
    Government-programed  activity,  supplemented  to  the  full  extent  of  any  additional
    voluntary  private  effort.)

    (h)  Clear  statement  of  necessary  time  limits  for  analysis,  receipt  of  bids  or
    proposals,  and  work  progress  would  provide  important  advantages  for  national
    security  (and  industry)  in  getting  on  with  the  job  of  "doing  what  ought  to  be
    done."  If  industry  comes  forward  within  the  stipulated  time,  fine  indeed.  If
    not,  the  National  Security  Council  and  others  could  measure  prospects  and  action
    realistically,  instead  of  continuing  to  dangle  on  hopes.

    3.  Advantages  and  effectuation  of  programing

    Advance  indication  of  the  objectives,  magnitude,  projects,  and  time  schedule
    for  research  development,  design,  and  construction  over  a  period  of  5  years  would
    provide  a  much  better  market  target  and  incentive  for  private  industry  to  tackle.

    Private  parties  would  then  be  in  a  better  position  to  decide  upon  the  resources
    they  sliould  devote  to  their  own  preliminary  studies,  and  efforts  to  place  bids,
    provide  professional  skills,  become  contractors,  and  invest  funds.

    Moreover,  while  at  present  secondary  suppliers  of  items  such  as  electronie-
    control  equipment  find  it  almost  impossible  to  judge  from  unpredictable  Govern-
    ment or  private  capital  reactor  development  what  action  they  should  take  to
    enter  the  field  as  suppliers,  the  alternative  of  an  overall  program  worked  out
    in  advance  would  enable  secondary  suppliers  to  move  in  more  rapidly  as  par-
    ticipants and  thus  bring  to  bear  a  great  deal  of  their  very  specialized  know-how
    which  is  especially  needed  for  greater  development.

    Thus,  a  firm  program  of  several  hundred  million  dollars  may  be  a  much  more
    effective  stimulus  to  actual  private  participation  than  a  debate  which  after  con-
    siderable time  might  (or  might  not)  give  private  parties  certain  legal  rights  to
    benefit  from  projects  which  might  (or  might  not)  be  undertaken.

    To  permit  rapid  large-scale  private  participation,  it  is  suggested  that  (if
    competition  is  protected  as  provided  by  the  Atomic  Energy  Act  of  1946,  and
    protection  not  left  to  the  ill-fitting,  cumbersome,  and  time-consuming  antitrust
    laws)  many  kinds  of  industrial  companies  might  be  authorized  to  cooperate  to
    secure  wider  benefits  at  lower  cost  per  company  and  to  subscribe  to  capital  of
    large  unified  corporations,  and  thus  make  feasible  development  which  could  not
    be  handled  by  small  private  units.

    Companies  involved  might  assign  specialized  personnel  to  such  corporations  to
    develop  team  know-how  and  studies  which  would  make  it  possible  to  proceed
    more  rapidly  with  technical  development.  Conceivably,  participating  companies
    might  be  asked  to  subscribe  capital  commensurate  with  the  magnitude  of  activities
    or  contracts  each  particular  company  might  handle.

    The  Government  would  presumably  have  to  protect  the  public  interest  by
    requiring  open  access  to  all  desiring  to  enter  the  field  on  comparable  conditions,
    and  by  handling  the  contracts  on  a  competitive-bid  basis.  But  the  Government
    might  gain  by  having  going  concerns  which  it  could  direct  to  undertake  activities
    clearly  necessary  to  advance  development  progress.  Insofar  as  the  Government
    directed  action  for  security,  it  might  provide  protection  from  antitrust  prosecution
    comparable  to  that  granted  in  World  War  II.

    Within  the  Government,  the  central  focus  for  development  activities  will
    presumably  continue  to  be  the  AEC.  Within  the  AEC  it  would  be  highly
    desirable  to  provide  a  suitable  group  devoted  to  atomic-power  development  which
    would  be  free  from  the  time  demands  and  responsibilities  for  weapons  progress
    and  other  top-priority  activities.  In  the  future  the  AEC  will  presumably  work
    more  closely  with  other  agencies  to  resolve  varied  policy  problems  which  cut
    across  the  entire  executive  branch.

    If  Government  grants  a  really  good  opportunity  for  private  industry  to  par-
    ticipate as  noted  above,  it  should  grant  equal  opportunities  to  Government  agencies
    such  as  municipal  utilities,  TVA,  and  Bonneville  to  prepare  bids  or  proposals  for
    activities  (such  as  power  generation)  which  they  are  authorized  to  conduct  by
    their  basic  legislation  and  on  which  they  can  make  a  real  technical  or  economic
    contribution.  Exclusion  of  the  skills  and  development  possibilities  those  large
    power  systems  could  provide  would  be  analogous  to  (and  as  undesirable  as)
    Government  exclusion  of  private  enterprise.

    ATOMIC    POWER    DEVELOPMENT  595

    Moreover,  pliilanthropic  foundations,  universities,  and  research  institutions
    should  be  given  full  opportunity  and  encouragement  to  participate.  They  could
    be  especially  helpful  in  providing  for  special  studies  and  projects  (such  as
    analysis  of  foreign  development  problems  or  international  implications)  which
    are  not  easily  handled  through  customary  activities  of  private  industry  or
    Government.

    Given  a  concrete  program",  it  might  also  be  easier  to  evolve  over  a  reasonable
    period  of  time  the  modifications  to  the  present  act  which  would  actually  be
    desirable,  and  to  provide  private  benefits  and  incentives  which  would  actually
    be  consistent  with  national-security  needs  and  the  public  interest.

    IV.     ACTION   BY  CONGRESS    AND   THE   PRESIDENT   TO   INCREASE   THE   EFFECTIVENESS   OF
    UNITED    STATES   EFFORTS    TO   ACHIEVE   WORLD   LEADERSHIP

    I  urge  that  forthcoming  legislative  action  provide  a  clear  sense  of  purpose
    which  could  increase  political  acceptability  and  ease  future  action  in  the  United
    States  and  the  rest  of  the  world.  Specifically,  I  believe  that  there  should  be
    a  legislative  declaration  setting  forth  in  broad  terms  and  in  clear  language
    (which  can  be  understood  by  people  throughout  the  world)  the  national  policy
    objective  of  peaceful  use  for  the  benefit  of  mankind.

    It  is  hoped  that  the  executive  branch  and  Joint  Committee  on  Atomic  Energy
    will  formulate  a  bold  program  which  will  gain  the  early  approval  of  Congress.

    The  President  should  then  "kick  off"  the  program  in  a  speech  representing  the
    entire  Nation  which  can  dramatize  to  the  entire  world  America's  firm  and  united
    decision  to  provide  leadership  for  peace  instead  of  war.

    Fission  Products  Laboratory,

    University  of  Michigan,
    Ann  Arbo)-,  Mich.,  August  7,  1953.
    Congressman  W.  Sterling  Cole,

    Chairman,  Congress  of  the  United  States

    Joint  Committee  on  Atomic  Energy,  Washington,  D.  C.

    Dear  Congressman  Cole  :  This  is  a  reply  to  your  letter  of  July  24  requesting
    comments  relating  to  the  definition  of  a  Federal  policy  on  industrial  atomic
    power  development  for  the  consideration  of  the  Joint  Committee  on  Atomic
    Energy.

    It  would  seem  that  the  Federal  policy  on  industrial  atomic  power  development
    should  be  based  on  what  is  considered  best  for  the  entire  country  in  the  years
    to  come.  The  use  of  nuclear  energj'  for  industrial  power  offers  a  positive  and
    beneficial  use  of  this  tremendous  force  which  may  greatly  benefit  our  children
    and  grandchildren,  whereas  the  use  of  nuclear  energy  for  weapons  is  a  negative
    use  which  can  only  serve  to  destroy.  The  real  future  of  atomic  energy  must
    be  in  its  peacetime  applications.

    If  nuclear  energy  is  to  be  used  to  benefit  mankind,  industry  must  be  permitted
    to  build  atomic  power  reactors  and  must  be  encouraged  in  this  regard  by  removing
    some  of  the  bonds  which  presently  exist  that  shackle  industry.  Sooner  or  later
    the  Government  must  cease  its  monopoly  of  refined  lu-anium  and  more  informa-
    tion must  he  made  available  on  the  design  and  use  of  reactors.  Classified
    information  should  be  restricted  to  the  design  of  weapons.  Our  own  research
    on  the  utilization  of  waste  fission  products  jjroduced  by  the  oiieration  of  nuclear
    reactors  has  been  hami)ered  by  the  impossibility  of  disclosing  the  quantity  of
    fission  products  for  fear  that  this  information  could  be  used  to  determine  the
    quantity  of  uranium  processed,  and  thereby  give  information  regarding  the
    quantity  of  A-bombs  which  this  country  has  produced.  The  entire  procedure
    of  classification  should  be  reviewed  and  revised  with  the  idea  of  promoting  the
    development  of  beneficial  uses  of  nuclear  energy  and  restricting  only  the  infor-
    mation relating  directly  to  weapons.

    A  great  amount  of  the  research  at  the  University  of  Michigan  is  devoted  to
    the  investigation  of  ways  in  which  atomic  energy  can  benefit  mankind.  Much
    of  this  work  is  being  supported  by  funds  of  tlie  university  obtained  as  contribu-
    tions to  our  Michigan  Memorial  Phoenix  project,  a  war  memorial  to  tlie  Michigan
    dead  of  World  War  II.  As  part  of  the  program  of  the  Phoenix  project  the
    university  is  building  a  research  laboratory  and  desires  to  l)uild  a  sizable  re-
    search reactor.  Such  a  reactor  could  provide  a  great  amount  of  information
    which  would  be  useful  in  designing  power  reactors.     However,  the  university

    596  ATOMIC    POWER    DEVELOPMENT

    has  already  encountered  some  stumbling  blocks.  First,  I  understand  that  it  is
    against  the  law  for  the  university  to  use  the  amount  of  enriched  uranium  calcu-
    lated as  necessary  for  the  reactor  desired.  Second,  some  designs  of  reactor  fuel
    elements  which  might  be  used  to  advantage  are  classified  with  the  result  that
    it  may  be  necessary  to  use  less  suitable  and  less  safe  fuel  elements.

    One  problem  which  I  encountered  in  our  research  on  uses  of  radiation  from
    waste  fission  products  was  the  question  of  patent  rights.  The  Engineering
    Research  Institute  of  the  University  of  Michigan  has  a  client,  a  manufacturer
    of  chemical  products,  who  desires  to  study  the  promotion  of  chemical  reactions
    with  radiation.  This  client  will  pay  for  the  use  of  radiation  facilities  and  for
    the  research  involved,  but  asks  for  the  usual  patent  rights  on  the  results  of  the
    research.  I  understand  that  the  law  gives  no  patent  rights  to  the  investigator
    in  such  cases,  but  that  all  patent  rights  are  the  property  of  AEG.  As  a  result
    the  client  has  lost  interest  in  the  research.

    It  is  certainly  heartening  to  learn  that  your  committee  is  reviewing  some  of
    these  problems  and  policies.

    Sincerely  yours,

    L.  E.  Brownell,
    Supervisor,  Project  M94S.

    Southwest  Hakbor,  Maine,  August  5,  1953.
    Hon.  W.  Sterling  Cole,

    Joint  Committee  on  Atomic  Energy,

    Congress  of  the  United  States,  Washington,  D.  C.
    Dear  Mr.  Cole  :  This  is  to  acknowledge  your  letter  of  August  1  and  to  thank
    you  for  your  kind  invitation  to  submit  a  statement  on  atomic  power  develop-
    ment problems  for  inclusion  in  the  public  record  of  your  recent  open  hearings.
    Although  I  have  given  this  subject  considerable  thought,  I  would  prefer  not  to
    submit  a  separate  statement  for  the  record  at  this  time.  I  may  remark,  however,
    that  in  general  I  concur  with  the  position  taken  by  Dr.  Rabi  as  I  understand  it,
    and  that  specifically  I  am  in  accord  with  the  Commission's  statement  of  policy
    on  nuclear  power  development.

    I  am  pleased  to  note  that  there  will  be  an  opportunity  later  to  submit  sugges-
    tions for  specific  legislative  revisions.
    Respectfully  yours,

    Oliver  E.  Buckley,
    Member  of  General  Advisory  Comm,ittee.

    Carbide  &  Carbon  Chemicals  Co.,

    Oak  Ridge,  Tenn.,  July  9,  1953.
    Hon.  Sterling  Cole,

    Chairman,  Joint  Committee  on  Atomic  Energy,

    Congress  of  the  United  States,  Washington,  D.  G.
    My  Dear  Congressman  :  We  regret  the  delay  in  replying  to  your  letter  of
    July  2,  1953,  addressed  to  Mr.  Morse  G.  Dial,  president  of  Union  Carbide  &
    Carbon  Corp.,  because  of  Mr.  Dial's  absence  from  the  city.

    As  we  recalled  to  you  on  the  telephone  today.  Dr.  Alvin  Weinberg,  research
    director  of  the  Oak  Ridge  National  Laboratories,  operated  by  the  Union  Carbide  &
    Carbon  Corp.,  appeared  before  your  committee  on  July  6  and  gave  testimony  in
    connection  with  nuclear-power  development.

    In  view  of  that  fact,  it  is  our  opinion  that  any  additional  testimony  that
    might  be  given  pursuant  to  the  request  contained  in  your  letter  would  be  repeti-
    tious of  testimony  already  presented  by  Dr.  Weinberg  and,  therefore,  as  we
    advised  you  on  the  telephone  today,  we  feel  that  it  might  not  be  necessary  to
    take  the  additional  time  of  the  con)mittee.  If,  however,  after  giving  further
    consideration  to  this  matter,  you  desire  us  to  again  appear  before  the  committee,
    and  so  advise  me,  I  will  be  pleased  so  to  do.
    Yours  sincerely,

    Clark  E.  Center.

    ATOMIC    POWER    DEVELOPMENT  597

    Chambeb  of  Commerce  of  the  United  States,

    Washington,  D.  C,  July  6, 1953.
    Hon.  W.  Sterling  Cole,

    Chairman,  Joint  Committee  on  Atomic  Energy,
    The  Capitol,  Washington,  D.  C.

    Dear  Mr.  Cole  :  The  Chamber  of  Commerce  of  the  United  States  strongly  sup-
    ports the  Atomic  Energ.v  Commission's  recommendations  for  greater  industrial
    participation  in  the  development  of  atomic  power.

    We  also  endorse  the  current  efforts  of  the  Joint  Committee  on  Atomic  Energy
    to  give  the  public  "a  more  comprehensive  and  accurate  understanding  of  the
    problems  which  our  Nation  faces  in  developing  atomic  energy  for  peacetime
    purposes."

    Members  of  the  national  chamber  at  this  year's  annual  meeting  adopted  the
    following  policy  statement  on  atomic  energy  and  private  enterprise  :

    "The  chamber  urges  the  continued  cooperation  by  the  Atomic  Energy  Commis-
    sion with  private  enterprise  in  studies  leading  toward  the  development  of  atomic
    energy  for  civilian  use.  Such  studies  and  research,  including  the  construction
    of  the  necessary  pilot  plants,  should  rightly  be  a  joint  responsibility  of  the
    Federal  Government  and  private  enterprise.

    "The  chamber  is  strongly  opposed,  however,  to  the  entry  of  the  Government
    directly  into  the  commercial  exploitation  of  the  use  of  atomic  energy.  Such
    commercial  production  should  be  financed  and  operated  by  private  enterprise,
    subject  only  to  necessary  security  controls,  and  the  Atomic  Energy  Act  of  1946
    should  be  so  amended.  The  Atomic  Energy  Commission  should  make  available
    to  private  enterprise  all  nonclassified  information  bearing  on  atomic  energy."

    The  national  chamber  believes  the  Atomic  Energy-  Act  should  be  amended  to
    permit  the  Government  to  sell,  lease,  or  lend  fissionable  materials  to  industry.
    Former  AEC  Chairman  Gordon  Dean  has  stated  that  the  amounts  of  such  mate-
    rials needed  by  industry  to  expedite  development  of  an  atomic-power  program
    would  be  insignificant  and  would  not  retard  the  vital  atomic-weapons  program.

    The  present  Government  monopoly  on  fissionable  materials  restricts  the  extent
    to  which  private  companies  can  enter  the  nuclear-power  field  to  learn  how  to
    reduce  the  cost  of  atomic  powerplants.  Furthermore,  emphasis  on  the  military
    need  for  atomic  weapons  does  not  permit  adequate  study  of  ways  of  adapting
    atomic  energy  to  industrial  uses.

    The  national  chamber  also  favors  amending  the  Atomic  Energy  Act  to  permit
    the  AEC  to  declassify  more  information  and  make  it  available  to  properly
    c-l eared  industrial  scientists  and  engineers.  The  procedure  for  declassifying  the
    information  and  releasing  it  .should  be  reexamined,  and  study  should  be  given
    to  speeding  the  clearance  of  individuals  who  will  use  the  information,  in  view
    of  the  probability  of  a  large  increase  in  the  numbers  of  such  persons.

    We  agree  that  the  recent  proposals  of  the  AEC  are,  in  the  words  of  former
    Chairman  Dean,  a  "gateway  program — a  gateway  from  a  Government  monopoly
    and  from  the  present  policy  impasse  in  the  field  of  atomic  power."

    The  national  chamber  is  optimistic  about  the  future  applications  of  atomic
    power  to  industrial  and  consumer  use,  and  believes  that  a  continuation  and
    expansion  of  cooperation  between  the  Government  and  private  industry  will
    hasten  the  realization  of  this  objective.

    The  pressures  of  a  world  war  brought  about  the  rapid  development  of  the
    atomic  bomb,  and  the  pressures  for  world  peace  dictate  the  need  for  harnessing,
    at  the  earliest  possible  date,  this  great  source  of  power  for  the  good  of  all  man-
    kind. This  is  a  responsibility  which  the  national  chamber  believes  private
    American  enterpri.se  can  meet  under  the  guidance  of  your  committee  and  the
    Atomic  Energy  Commission.

    We  request  that  this  letter  be  made  a  part  of  the  record  of  the  joint  committee
    hearings.

    Cordially  yours,

    Clarence  R.  Miles.

    598  ATOMIC    POWER    DEVELOPMENT

    Combustion  Engineering,  Inc.,
    New  York  16,  N.  Y.,  August  7,  1953.
    Mr.  Sterling  Cole,

    Chairman,  Joint  Committee  on  Atomic  Energy,

    Washington,  D.  C.
    Dear  Mr.  Cole  :  It  is  a  pleasure  to  acknowledge  receipt  of  your  letters  of  July
    24  and  August  1  with  respect  to  the  opportunity  you  have  accorded  us  to  intro-
    duce a  statement  into  the  record  of  your  current  hearings  relating  to  Federal
    policy  on  industrial  atomic-power  development.

    The  notice  given  to  us  in  your  most  recent  letter  that  any  statement  on  our  part
    must  be  in  your  hands  by  August  10  leaves  us  with  too  short  a  period  adequately
    to  prepare  such  a  statement  that  would  represent  the  considered  judgment  of
    our  organization.  My  associates  are  giving  thought  to  specific  provisions  in  the
    present  legislation,  and  we  expect  now  to  have  suggestions  as  to  amending  the
    law  is  it  now  exists  in  your  hands  during  September.  This  will  be  in  accord
    with  the  suggestion  contained  in  the  second  paragraph  of  your  latest  letter.

    It  is  disturbing  to  read  a  dispatch  out  of  Washington  dated  August  3,  in  which
    Representative  Holifleld  w^as  quoted  as  stating  that  the  committee's  current
    hearings  have  "completely  repudiated"  any  proposal  for  quickly  changing  the
    law  to  let  private  industry  into  the  atomic  field.

    The  newspaper  story  further  attributes  to  Representative  Holifield  an  in-
    ference that  certain  utility  and  manufacturing  interests  are  pressuring  the
    Atomic  Energy  Commission  and  your  committee  to  obtain  hasty  passage  of  legis-
    lation without  due  consideration  for  the  public  interest.  This  is  an  accusation
    that  seems  both  unfortunate  and  unwarranted  and  we  would  be  interested  to
    know  whether  it  is  supported  by  any  general  attitude  within  your  committee.
    Yours  very  sincerely,

    Brodekick  Haskell.

    Consolidated  Edison  Co.  of  New  York,  Inc.,

    New  York  3,  N.  Y.,  July  14,  1953.
    Hon.  W.  Sterling  Cole,

    Chairman,  Joint  Committee  on  Atomic  Energy,

    Congress  of  the  United  States,  Washington,  D.  C.
    Dear  Mr.  Cole  :  Thank  you  for  your  letter  of  July  13  suggesting  that  we  might
    submit  written  comments  for  the  consideration  of  the  Joint  Committee  on  Atomic
    Euergy  with  respect  to  the  definition  of  a  Federal  policy.

    Mr.  James  F.  Fairman,  a  vice  president  of  our  company,  accompanied  Mr.
    Walker  Cisler,  president  of  the  Detroit  Edison  Co.,  at  the  hearing  before  your
    committee  on  July  1.  At  that  hearing  Mr.  Cisler  presented  a  statement  on  behalf
    of  his  company  and  the  Dow  Chemical  Co.  and  the  companies  associated  in  that
    project,  of  which  we  are  one.  This  statement  sets  forth  our  views  on  this  matter.
    Sincerely  yours,

    Hudson  R.  Searing,  President.

    Perry,  Mo.,  July  3,  1953.
    Re  Patent  rights.

    Hon.  W.  Sterling  Cole,

    Chairman,  Joint  Committee  on  Atomic  Energy,

    House  Office  Building,  Washington,  D.  C.

    Sir:  I  desire  that  this  expression  of  my  views  be  incorporated  in  the  record  of
    hearings  before  your  committee.

    For  nearly  20  years  I  was  in  the  active  practice  of  patent  law  in  Washington,
    D.  C,  returning  to  Missouri  some  6  years  ago.  For  several  years  I  was  chairman
    of  the  committee  on  legislation  for  the  patent  section  of  the  American  Bar  Asso-
    ciation, during  which  time  it  was  my  duty  to  appear  before  committees  of  the
    House  and  Senate  and  relate  the  action  taken  by  tbe  association  with  respect  to
    all  proposed  patent  legislation.  I  have  long  been  a  member  of  the  American  Insti-
    tute of  Electrical  Engineers,  a  senior  member  of  the  Institute  of  Radio  Engineers,
    and  formerly  chairman  of  the  Washington,  D.  C,  section,  and,  accordingly,  my

    ATOMIC    POWER    DEVELOPMENT  599

    interest  in  matters  before  the  House  and  Senate  was  not  confined  solely  to  patents,
    but,  more  broadly.  In  all  matters  relating  to  scientific  progress  and  the  industrial
    growth  of  our  country.

    On  many  occasions  it  was  my  duty  to  express  the  emphatic  opposition  of  the
    American  Bar  Association,  which  was  also  my  own  personal  opinion  both  then
    and  now,  to  all  forms  of  compulsory  licensing  of  patents.  Broad  resolutions
    adopted  by  the  association  and  repeated  before  committees  of  both  the  House  and
    the  Senate  on  many  occasions  reaffirmed  that  position  time  and  time  again.

    When  the  patent  provisions  of  the  present  act  establishing  the  AEC  were
    under  consideration  appeal  was  made  to  me  personally,  and  on  behalf  of  the
    American  Bar  Association,  to  relax  our  position,  due  to  the  emergency  of  the  war,
    the  understanding  being  that  the  restrictions  were  then  necessary  as  to  patent
    rights  and  ownership  by  the  Government  solely  because  of  the  emergency.  It  was
    further  the  then  opinion  of  General  Groves  and  others  that  after  the  passing  of
    only  1  or  2  years  the  patent  provisions  of  the  act  would  be  modified  in  accordance
    with  views  of  the  association,  in  brief,  as  follows :

    "Patent  property  is  no  different  from  any  other  type  of  property,  is  entitled  to
    the  same  consideration,  no  greater  and  no  less,  than  other  types  of  property,  the
    acquisition,  ownership,  and  enjoyment  of  which  is  fundamental  to  our  form  of
    government  and  to  continued  industrial  progress  of  our  Nation."
    Respectfully,

    Chester  L.  Davis,  Attorney  at  Law.

    E.  I.  DU  Pont  de  Nemouks  &  Co.,

    Wilmington,  Del.,  July  6,  1953.
    Hon.  Sterling  Cole,

    Chairman,  Joint  Committee  on  Atomic  Energy,

    Congress  of  the  United  States,  Washington  25,  D.  C.

    Dear  Mr.  Cole  :  This  will  acknowledge  your  letter  of  July  2,  in  which  you  sug-
    gest that  I,  or  some  other  representative  of  the  du  Pont  Co.,  join  your  committee
    on  July  15  for  a  discussion  of  some  of  the  problems  incident  to  a  definitiou  of
    Federal  policy  on  industrial  atomic-power  development.  This  is  indeed  an  im-
    portant subject,  and  I  would  like  nothing  better  than  to  be  of  assistance  to  your
    committee,  but  the  fact  is  that  neither  I  nor  the  du  Pont  Co.  has  suflScient  point
    of  view  to  be  able  to  make  a  significant  contribution.

    Toward  the  end  of  our  term  as  contractor  at  the  Hanford  Engineer  Works  we
    gave  most  serious  consideration  to  the  possible  interest  of  the  du  Pont  Co.  in  the
    commercial  future  of  this  new  technology.  We  came  to  the  conclusion  ;it  that
    time  that  the  only  possibility  of  substance  was  the  use  of  atomic  energy  for  the
    generation  of  power.  We  are,  however,  a  chemical  company,  and  have  consist-
    ently devoted  our  energies  to  that  field,  and  we  felt  that  power  generation  was  so
    far  removed  from  our  interests  and  experience  that  its  development  could  lar
    better  be  left  to  other  companies  with  greater  skill  and  commercial  incentive  in
    that  area.

    We  are  still  of  that  disposition,  since  nothing  has  tran.spired  in  the  intervening
    years  to  make  us  feel  that  we  are  any  more  suited  now  than  in  194G  to  assist  in
    the  development  of  atomic  energy  for  power  purposes.  For  these  reasons,  we  have
    quite  literally  given  no  serious  thought  to  the  type  of  Federal  policy  that  would
    implement  industry's  participation  in  atomic-power  development.

    It  seems  obvious  to  me  that  the  exploitation  of  atomic  energy,  whether  for
    power  or  for  other  purposes,  is  not  only  important  but  presents  problems  of  ex-
    traordinary difliculty.  In  forwarding  these  developments  it  could  not  fail  to  be
    helpful  to  have  as  many  teams  of  able  people  working  in  the  field  as  possible,  with
    a  minimum  of  taxpa.ver  subsid.v.  These  considerations  would  make  it  appear
    desirable  to  open  the  field  of  atomic  development  as  widely  as  possible,  always
    with  due  regard  for  the  necessity  of  guarding  the  national  security,  and  with  that
    objective  I  am  in  complete  sympathy.

    I  am  sorry  indeed  that  I  have  no  more  detailed  and  constructive  point  of  view
    to  present.     The  subject  is  an  important  one,  and  I  wish  your  committee  all
    possible  success  in  its  deliberations.
    Sincerely,

    C.  H.  Greenewalt,  President.

    600  ATOMIC    POWER    DEVELOPMENT

    DuQUESNE  Light  Co.,
    Pittsburgh  19,  Pa.,  Augitst  4,  1953.
    Hon.  W.  Sterling  Cole,

    Chairman,  Joint  Committee  on  Atomic  Energy,
    Congress  of  the  United  States,

    House  of  Representatives,  Washington,  D.  C.
    Dear  Mr.  Cole  :  We  are  in  receipt  of  your  letter  of  August  1  stating  that  our
    comments  on  industrial  atomic  power  development  must  be  in  your  hands  by
    August  10  if  they  are  to  be  included  in  the  published  record  of  the  joint  com-
    mittee hearings.  We  will  be  unable  to  complete  our  statement  by  that  date,
    but  we  would  appreciate  the  opportunity  to  submit  it,  together  with  suggestions
    for  specific  legislative  provisions,  prior  to  October  1  to  permit  analysis  and  evalu-
    ation before  the  next  session  of  the  Congress,
    Sincerely  yours,

    Philip  A.  Flegeir,
    Chairman  of  the  Board.

    Fairbanks,  Morse  &  Co.,

    Chicago,  August  3,  1953.
    Hon.  Sterling  Cole,

    Chairman,  Joint  Committee  on  Atomic  Energy,

    Congress  of  the  United  States,  Washington  25,  D.  C.

    I>ear  Mr.  Cole  :  I  appreciate  very  much  the  opportunity  you  have  given  me  to
    present  to  you  and  the  committee  our  thought  with  reference  to  the  problems
    raised  by  the  imminence  of  the  use  of  atomic  power  for  industrial  development.
    1  am  sure  that  you  and  the  members  of  your  committee  are  familiar  with  the  fact
    that  Fairbanks,  Morse  &  Co.  is  at  present  supplying  the  Atomic  Energy  Com-
    mission with  some  of  its  requirements.  This  relationship  has  been  of  the  most
    pleasant  and  I  know  on  our  part,  and  I  believe  on  the  part  of  the  Commission,
    there  exists  a  mutual  respect  that  comes  with  doing  a  job  well.

    For  some  months  past  we  have  been  discussing  with  members  of  the  staff  of
    the  Commission,  at  their  request,  the  desirability  of  our  company  addressing:
    itself  to  an  economic  and  engineering  study  of  the  problems  involved  in  the
    design  and  construction  of  an  atomic-energy  plant  having  a  capacity  of  from
    10,000  to  50,000  kilowatts.

    I  would  like  to  call  to  your  attention,  Mr.  Chairman,  just  why  members  of  the
    staff  of  the  Commission  would  request  this  company  to  become  interested  in  this
    particular  power  plant  capacity  range.

    Fairbanks,  Morse  &  Co.  has  pioneered — perhaps  more  than  any  other  com-
    pany— in  bringing  electric  power  to  municipalities,  towns,  and,  at  a  more  recent
    date,  the  REA  cooperatives.  Fairbanks,  Morse  &  Co.  was  one  of  the  earliest
    builders  in  this  country  of  diesel  engines  and  the  electrical  generating  equip-
    ment to  go  with  it.  Through  Fairbanks,  Morse  &  Co.,  early  in  this  century,  many
    communities  were  able  to  get  electric  current.  Today  these  generating  plants
    serve  these  communities  with  the  same  economy  and  satisfaction  as  when  they
    were  originally  built.  Expansion  and  modernization  of  the  equipment  have  kept
    step  with  new  discoveries  in  the  field  so  that  today  the  most  modern  equipment  of
    this  type  is  manufactured  by  us.  To  many  municipal  officials,  rural  electric
    cooperative  directors,  and  others,  Fairbanks,  Morse  &  Co.  is  synonymous  with
    quality,  efficiency,  and  dependability  in  the  field  of  production  of  electric  power.
    Historically,  therefore,  the  Commission  found  an  American  company  in  this
    field  where  prior  experience  and  relationship  promised  an  opportunity  for  early
    and  fruitful  development.

    In  our  discussions  with  the  members  of  the  staff  of  the  Commission,  we  ex-
    pressed the  view  that  an  atomic  energy  powerplant  of  the  capacities  under  dis-
    cussion would  fall  with  the  projected  requirements  of  many  of  the  REA
    cooperatives.  We  further  expressed  the  view  that  to  construct  such  a  pioneer
    installation  for  the  use  of  a  REA  cooperative  would  be  peculiarly  appropriate  in
    view  of  the  quasi-governmental  nature  of  the  operation  of  these  nonprofit  co-
    operatives and  tlie  complete  governmental  control  of  the  atomic-energy  program
    itself.

    As  a  result  of  these  discussions,  we  have  therefore  proposed,  by  letter,  to  the
    Commission  that  at  tlie  earliest  practical  date  we  be  authorized  to  conduct  a
    study  looking  toward  the  feasibility  of  our  designing  and  constructing  an  atomic
    ]»oworplant  of  approximately  30,000  kilowatts  capacity.  This  capacity,  inci-
    dentally, was  decided  upon  by  the  needs  of  the  locality  which  a  certain  prelim-

    ATOMIC    POWER    DEVELOPMENT  601

    inary  survey  showed  could  benefit  under  the  present  conditions  involved  in  the
    erection  of  such  plant.  A  preliminary  review  of  the  problem  would  indicate  that
    the  Rural  Electric  Cooperatives  for  which  this  plant  would  be  designed  would
    assume  all  costs  for  the  equipment  beyond  the  reactor.  Such  costs,  of  course,
    would  be  the  conventional  costs  for  the  equipment  which  would  be  normally
    used  by  the  cooperative  in  a  generating  plant  of  this  size,  exclusive  of  the  boiler
    itself,  namely,  the  power-generating  equipment,  switchgear,  and  transformer
    and  distribution  equipment.  The  cost  of  the  reactor  itself  could  be  met  in  several
    different  ways,  depending  upon  the  results  of  the  economic  and  engineering  study
    which  we  have  proposed  to  the  Commission.

    The  reactor  itself,  together  with  the  fuel  for  its  operation,  would,  of  course,
    be  under  the  complete  control  of  the  Commission.  It  would  appear  to  be  evident
    that  some  portion  of  the  cost  of  the  reactor  would  of  necessity  be  written  off  to  ex-
    perimental research  and  devolpment  of  such  a  prototype  reactor.  It  would  be  pos-
    sible, however,  for  the  Commission  to  supply  the  heat  energy  from  such  a  reactor
    to  the  Rural  Electric  Cooperative  at  some  mutually  agreed  upon  rate  which  would
    bring  a  certain  amount  of  return  on  the  Commission's  investment.  At  a  later
    date,  and  depending  upon  the  passage  of  appropriate  legislation  by  the  Congress,
    it  would  be  possible  for  the  Commission  to  arranj^e  for  transfer  of  ownership
    of  the  reactor  to  the  cooperative  under  suitable  controls  designed  to  insure  proper
    national  security  and  the  public  safety.  It  is  quite  possible  that  the  Rural
    Electric  Cooperative  Association  itself  would  be  quite  interested  in  this  sug-
    gested study  and  would  come  forth  with  specific  recommendations  of  their  own
    as  to  the  handling  of  such  a  reactor  installation.

    I  wish  to  assure  you,  on  behalf  of  myself  and  our  company,  that  we  stand
    ready  to  cooperate  with  you  and  the  Commission.
    Very  truly  yours,

    R.  H.  Morse,  Jr.,  President.

    Institute  for   Nucixar   Studies,

    THE  University  of  Chicago,

    Chicago,  III.,  July  15,  195S.
    Hon.  Sterung  Cole,

    Joint  Committee  on  Atom,ic  Energy,

    Congress  of  the  United  States,  Washington  25,  D.  C.
    Dear  Mr.  Cole  :  I  have  your  letter  of  July  13  with  a  list  of  questions  concern-
    ing national  policies  in  the  field  of  atomic-power  development.

    You  must  realize  that  for  a  number  of  years  I  have  been  more  a  spectator  than
    an  active  worker  in  this  field  because  my  interest  has  been  taken  more  by  pure
    research  than  by  its  technological  applications.  I  would  hope  that  you  will  keep
    this  in  mind  in  evaluating  my  answers  to  your  questions.

    1.  On  recent  visits  to  the  Argonne  National  Laboratory,  I  had  the  pleasure  to
    discuss  with  Dr.  Zinn  and  his  associates  the  progress  that  has  l)een  made  in
    making  atomic  power  a  possibility  that  can  no  longer  be  disi*egarded,  even
    from  the  economical  point  of  view.  I  concur  with  their  opinion  that  the  time
    may  have  come  to  consider  construction  of  ix)wer  reactors  on  an  industrially
    significant  scale.  Only  in  this  way  could  a  relevant  experience  on  further  pos-
    sibilities be  gathered.  Doubtlessly  it  would  be  desirable  to  have  private  in-
    dustries take  a  major  role  in  this  development.

    2.  As  a  guess,  I  would  say  that  we  probably  are  still  ahead  of  other  coimtries
    in  atomic-power  development,  but  I  do  not  believe  that  our  margin  of  supe-
    riority is  comfortably  large.  In  the  atomic-power  industry,  of  course,  con-
    ditions in  this  country  are  different  from  what  they  might  be  in  other  parts  of
    the  world,  partly  on  account  of  our  greater  resources  of  conventional  fuels.
    On  the  other  hand,  the  atomic-i)ower  industry  has  such  evident  ties  with  weaiions
    production  that  it  seems  to  me  inadvisable  to  lag  behind  other  countries  even
    though  the  need  for  strictly  power  purposes  may  not  be  so  great.

    3.  Atomic  power  from  the  economical  point  of  view  may  l)e  considered  from
    various  angles.  It  may  be  compared  as  a  power  source  with  wh.it  can  be
    obtained  from  conventicmal  fuels.  In  this  respect,  the  unique  advantage  of
    atomic  power  is  the  lightness  of  the  fuel  that  could  potentially  make  large
    sources  of  power  available  very  far  from  coal  or  oil  deposits.  From  a  longer
    range  point  of  view  it  may  be  considered  also  as  a  substitute  for  presc^nt  power
    sources,  even  in  locations  where  they  are  al)undaiitly  availal)le.  This  will  become
    especially  a  possibility  if  the  breeding  process  ultimately  will  become  practical.
    As  you  know.  encoui*aging  progress  has  been  made  along  this  line  but  results
    are  still  far  in  the  future.

    502  ATOMIC    POWER    DEVELOPMENT

    Finally,  atomic-power  economics  may  be  considered  in  connection  with  pro-
    duction of  Plutonium  for  atomic  weapons.  This  consideration  may  help  sup-
    port in  part  the  cost  of  developing  atomic  powerplants,  at  least  through  the
    transition  period.

    4.  I  am  convinced  that  the  development  of  atomic  power  should  not  be  burdened
    with  excessive  security  restrictions.  I  believe  that  this  is  the  case  because
    the  security  apparatus  tends  to  slow  up  progress  by  obstructing  the  free  flow
    of  ideas.  The  practical  result  of  excessive  security  is  that  the  groups  within
    the  fence  are  not  stimulated  by  the  competition  of  ideas  coming  in  from  the
    outside,  and  may  easily  lose  their  alertness.

    5.  As  you  know,  most  of  the  secrecy  labels  on  pure  science  have  been  removed,
    and  this  has  helped  very  greatly  the  development  of  nuclear  science  in  this
    country.  A  situation,  however,  remains  that  operates  adversely  on  our  develop-
    ment, and  this  is  the  excessively  restrictive  policy  on  admission  to  this  country
    of  scientists  from  foreign  nations,  and  mostly  from  Western  Europe.  As  a
    consequence,  our  scientists  lose  the  stimulus  that  comes  not  only  from  exchange
    of  ideas,  but  also  from  a  healthy  sense  of  competition  with  our  western  friends.
    The  actual  losses  to  our  scientific  potential  seem,  to  me  quite  out  of  proportion
    with  the  danger  of  admitting  to  our  shores  an  occasional  person  who  may  not
    share  completely  our  political  views.

    6.  I  read  the  statement  of  policy  of  the  Atomic  Energy  Commission  attached
    to  your  letter  and  I  am  in  full  agreement  with  the  views  there  expressed.

    I  shall  be  very  glad  to  answer  any  further  questions  that  you  may  want
    to  ask  me.

    Sincerely  yours,

    Eneico  Fermi,

    Kaiser  Engineers,
    Division  of  Henry  J.  Kaiser  Co.,

    Oaklmid  12,  Calif.,  July  15,  195S.
    Hon.  W.  Sterling  Cole,

    Chairman,  Joint  Committee  on  Atomic  Energy,

    Congress  of  the  United  states,  Washington,  D.  C.
    Dear  Sir  :   In  reply  to  your  letter  of  July  11  the  management  of  Kaiser  Engi-
    neers is  appreciative  of  the  opportunity  to  discuss  with  your  committee  some
    of  the  problems  incident  to  definition  of  a  Federal  policy  on  industrial  atomic-
    power  development.

    However,  as  this  division  has  only  recently  been  activated,  it  is  not  fully

    prepai'ed  to  present  testimony  at  this  time  and  respectfully  requests  a  deferment.

    When  our  program  is  more  fully  developed  from  its  preliminary  stages,  and

    constructive  opinions  formed,  they  will  be  available  to  your  committee  for  its

    m  I  have  spent
    some  of  the  most  interesting  hours  of  my  public  service.  I  find  that  as  one
    recedes  farther  into  the  pleasant  and  soothing  anonymity  of  private  life,  what  he
    remembers  most  clearly  are  the  friendships  he  made  in  the  strenuous  days  cf
    public  responsibilities.

    I  note  in  your  letter  that  the  present  hearings  are  exploratory,  and  that  legisla-
    tive recommendations  will  not  be  forthcoming  from  the  executive  branch  this
    year.  I  suggest  that  at  some  later  date  if  further  hearings  are  held,  and  it
    seems  to  the  committee  that  an  appearance  before  the  committee  would  be  of
    any  value,  you  may  wish  to  renew  your  invitation,  with  the  hope  on  my  part  that
    my  plans  will  permit  my  being  with  you.

    May  I  extend  to  you  my  congratulations  on  your  selection  as  chairman  of  the
    joint  committee,  and  my  expression  of  personal  esteem  and  respect.
    Sincerely,

    David  E.  Lilienthal.

    New  York,  N.  Y.,  Jnly  29,  1953.
    Hon.  W.  Sterling  Cole,

    Chairman,  Joint  Committee  on  Atomic  Energy,

    Congress  of  the  United  States,  Washington,  D.  C.
    Dear  Chairman  Cole  :  Thank  you  very  much  for  your  letter  of  July  21.  I  am
    enclosing  a  copy  of  an  interview  as  it  appeared  in  the  St.  Louis  Post-Dispatch
    on  January  4,  5,  and  6  of  this  year,  in  which  I  express  views  which  may  not  have
    come  to  the  committee's  attention.  I  will  keep  in  mind  your  kind  suggestion
    that,  if  later  I  have  comments  which  might  be  of  interest  to  the  committee,  I
    come  forward  with  them  on  my  own  initiative.

    I  am  going  to  Corning  for  a  visit  at  the  Corning  Glass  Works  tomorrow,  which
    puts  me  in  mind  of  the  last  time  I  believe  I  had  an  opportunity  to  see  you,  at
    the  time  of  the  Corning  conference.  While  I  am  in  your  bailiwick,  I  will  try  to
    behave  myself  properly.

    With  personal  regards,  I  am
    Sincerely,

    David  E.  Lilienthal.

    [St.  Louis  Post-Dispatch,  January  4,  1953]

    Atomic  Secrecy  Policy  a  Failure,  Lilienthal  Says,  Urges  Citizens'  Commis-
    sion To  Draft  New  Law — Would  Guard  Military  Aspects  But  Permit  Wide
    Dissemination  of  Knowledge  for  Devbxopment  by  Industry — Cites  Dangers
    in  Government  Control  of  Ideas

    (By  Richard  G.  Baumhoff,  a  staff  correspondent  of  the  Post-Dispatch)

    New  York,  January  3 — Creation  of  a  strong  citizens'  commission  by  General
    Eisenhower,  after  he  becomes  President,  to  prepare  recommendations  for  a  new
    atomic-energy  law  was  urged  today  by  David  E.  Lilienthal.  The  purpose  is  to
    open  the  way  for  competitive  private  industrial  development  of  the  vast  storehouse
    of  nuclear  fission.

    Lilienthal,  first  Chairman  of  the  Atomic  Energy  Commission,  made  his  views
    known  in  an  exclusive  interview  with  the  Post-Dispatch.  They  were  sought  in
    the  light  of  his  experience  and  because  of  numerous  recent  statements  from
    ofiicial  and  other  sources  about  the  frustrating  delay  in  applying  atomic  energy
    for  peaceful  purposes,  notably  for  electric  power  production.

    S6740— 53 39

    604  ATOMIC    POWER    DEVELOPMENT

    It  is  Lilienthal's  belief  that  secrecy  in  atomic  matters  has  failed  flatly  and
    that  many  features  of  atomic  knowledge  no  longer  are  atomic  secrets  but  are
    possessed  by  Russia.

    MUST  SEE  WHAT  IS  NOT  SECRET

    "Our  first  step,"  he  declares,  "is  to  realize  that  we  must  take  a  hard,  uncom-
    fortable and  even  painful  look  at  what  is  secret  now  and  what  is  not  secret
    because  the  Russians  already  have  it.  On  that  basis  we  must  write  a  new  law
    on  the  present  state  of  facts.  None  of  this  will  make  sense  to  people  who  believe
    the  Government  ought  to  dominate  this  field,  that  here  is  something  which
    should  be  kept  nationalized  and  under  political  direction.  I  don't  want  to  argue
    against  that  view,  but  want  only  to  say  that  I  don't  agree  with  it."

    Secrecy,  he  insists,  should  be  ended  as  far  as  possiI)le,  in  order  to  permit  wide
    dissemination  of  atomic  knowledge  in  scientific  and  industrial  circles.  This  will
    lead,  he  is  convinced,  to  the  opening  of  great  new  avenues  of  industrial  develop-
    Inent,  not  necessarily  related  directly  to  nuclear  fission,  or  atom  splitting.  Now,
    he  holds,  is  an  appropriate  time  to  make  a  thorough  change  in  American  policy
    on  secrecy.

    His  argument  runs  this  way :

    1.  The  basis  for  existing  policy  is  gone ;  secrecy  in  many  matters  is  fiction,  not
    reality.

    2.  A  new  policy  is  required  because  of  the  great  benefits  to  mankind  from
    private-enterprise  development  of  atomic  energy  and  related  fields.

    3.  It  has  become  more  than  ever  apparent  that  there  are  serious  dangers  in  con-
    tinued governmental  domination  of  ideas  and  of  technical  thinking,  as  is  the
    case  now.

    The  change  in  national  administration  offers  a  timely  opportunity  for  a  sharp
    change  in  atomic  policy,  Lilienthal  points  out.  The  Truman  administration,  he
    notes,  was  committed  to  the  1946  McMahon  Act  that  created  AEC,  the  Atomic
    Commission,  and  laid  the  strictest  sort  of  Federal  secrecy  on  all  atomic  matters.

    NO  EASING  OF  MILITARY  SECRECY

    Emphatically,  Lilienthal  would  not  relax  secrecy  as  to  the  military  aspect  of
    atomic  energy.  He  feels  certain  that  a  means  of  separation  could  be  worked
    out  successfully  by  such  a  citizens'  commission  as  he  recommends.  He  does  not
    attempt  to  spell  out  the  details  of  this  himself,  nor  to  blueprint  precisely  the
    sort  of  new  law  that  should  replace  the  McMahon  Act.

    Lilienthal,  Chairman  of  TEC  from  October  26,  1946,  to  February  15,  1950,  pre-
    viously was  Chairman  of  the  Tennessee  Valley  Authority.  He  was  chairman  of
    the  State  Department  board  of  consultants  on  whose  report  the  Baruch  plan
    for  international  control  of  atomic  energy  was  based,  within  a  year  after  the
    first  atomic  bombs  were  loosed.

    Warnings  by  him  at  the  time  he  retired  from  AEC  and  a  few  months  later
    in  two  articles  in  Collier's  magazine  as  to  the  dangers  of  secrecy  and  the  need
    for  change  have  been  confirmed  in  subsequent  developments,  he  declares.  In
    the  Post-Dispatch  interview  he  has  gone  much  further  than  before  by  proposing
    specific  courses  of  action.

    Current  moves  to  expand  greatly  AEC's  activities,  including  the  huge  new
    plants  under  construction  near  Paducah,  Ky.,  and  Savannah,  Ga.,  emphasize
    the  need  for  early  change  of  policy,  Lilienthal  maintains.  Otherwise,  he  fears,
    this  expansion  carries  grave  implications  of  danger  to  the  democratic  and  free-
    enterprise  systems.

    "I  hope,"  says  Lilienthal,  "that  Eisenhower  as  President  will  appoint  a  citi-
    zens' commission,  directly  responsible  to  him,  to  deal  with  the  whole  subject
    of  atomic  policy.  Here  is  an  opportunity  for  reexamination  of  our  position  by
    fresh  minds.  It  seems  to  me  the  time  is  now  ripe  for  this.  It  certainly  is  time
    for  a  change  in  our  atomic  industrial  policy.  Tlie  report  of  this  coumiissiou
    should  be  made  to  the  American  people."

    FOR   FRESH    VIEWPOINTS

    He  does  not  think  that  anyone  having  past  connections  with  the  subject,  in-
    cluding himself,  should  be  placed  on  the  citizens'  commission.  Consciously  or
    unconsciously,  he  fears,  persons  heretofore  identified  in  this  field  might  tend
    to  have  their  thinking  channeled  by  past  experience  or  restraints,  "vested  in-
    terests" in  ideas  or  pride  of  opinion.

    ATOMIC    POWER    DEVELOPMENT  605

    He  would  exclude  Members  of  Congress  from  the  commission,  because  those
    who  have  dealt  with  the  siibject,  although  able  and  well  intentioned,  cannot
    separate  themselves  from  past  patterns  of  thought.  He  would  include  persons
    in  the  late  thirties  or  the  forties,  to  gain  their  relatively  youthful  viewpoint.

    "We  have  a  great  atomic  industry  that  has  sprung  up  in  a  decade,"  says  Lilien-
    thal.     "It  represents  no  private  investment,  no  risk  of  loss  nor  chance  of  profit.

    "But  even  worse  than  this  unusual  condition  is  the  amazing  situation  that
    in  this  whole  new  field  the  question  of  who  shall  thinlc  about  problems,  how
    much  effort  shall  be  expended  in  certain  directions,  what  ideas  may  be  pursued,
    is  all  a  matter  for  the  Government  to  decide.  It  is  as  bad  to  have  Government
    control  of  thinking  in  this  field  as  in  the  field  of  civil  liberties.

    "What  I  am  proposing  involves  a  very  drastic  rewriting  of  the  law.  The
    present  law  was  not  and  could  not  be  built  on  public  understanding.  It  was
    based  on  ideas  of  secrecy  and  of  the  importance  of  the  atomic  weapon  which  no
    longer  are  valid.

    "The  present  law  represents  Government  monopoly  of  ideas.  Only  a  doc-
    trinaire Socialist  would  have  stood  for  that,  but  for  the  conviction  at  the  time
    of  enactment  that  we  could  rely  on  secrecy  and  that  we  had  in  the  atomic  bomb
    an  absolute  weapon.

    AKMIES,   NAVIES    STILL  NEEDED

    "We  liad  the  notion  then  that  armies,  navies,  and  air  forces  were  outmoded.
    We  have  found,  however,  that  we  need  more  of  those  forces  than  before,  although
    certainly  we  must  possess  a  good  stockpile  of  atomic  weapons.  In  Korea,  it  has
    not  been  feasible  to  employ  atomic  weapons.  We  do  not  have  an  absolute
    weapon.

    "I  would  proceed  now  on  the  foundation  that  what  we  have  is  not  a  weapon,
    but  a  great  discovery.  Its  fullest  development  could  lead  to  many  things,  just
    as  did  the  development  of  electricity  and  of  petrochemicals."

    Lillienthal  does  not  blame  the  Atomic  Energy  Commission,  now  headed  by  Gor-
    don Dean,  for  failure  to  push  atomic-electric  power  and  other  inilustrial  advances.
    He  expresses  the  highest  regard  for  the  Commission  and  its  staff  of  "extraordi-
    narily able,  devoted  men."

    Rather,  he  blames  the  system  that  grew  up  out  of  the  first  excited  period  after
    the  bombing  of  Hiroshima  in  1945.  He  is  convinced,  in  view  of  what  has  hap-
    pened since,  that  the  public  would  be  best  served  by  opening  up  the  atomic  field
    to  the  widest  possible  extent.

    As  to  the  general  procedure  he  envisions  to  carry  out  his  ideas,  Lilicntlial  says  :

    "There  should  be  even  closer  control  on  the  weapons  side,  though  without  being
    silly  about  this.     Military  secrecy  need  only  apply  to  what  really  remains  secret.

    "Government  monopoly  of  ideas  around  the  whole  area  of  manufacture  of
    atomic  materials  should  be  removed.

    "We  should  open  up  the  whole  field  of  electric-power  reactors.  Private  activity
    in  this  field  would  come  after  we  get  the  information  out  in  the  open.  Industry
    cannot  come  halfway  in  this  unless  it  has  a  chance  to  explore  the  profit  possibili-
    ties for  itself  and  find  means  of  dealing  with  atomic  energy  more  cheaply  than
    is  being  done  now.

    "We  should  permit  private  ownership  of  atomic  materials,  under  appropriate
    licensing  and  with  the  owners  accoimtable  for  every  gram.  Of  course,  we  can-
    not permit  the  materials  to  fall  into  the  wrong  hands.  By  materials  I  refer
    particularly  to  uranium,  plutonium,  and  enriched  uranium  (including  the  fission-
    able isotope,  U-2:i5).

    "There  is  a  psychological  bar  in  attempting  to  operate  an  electric  power  reactor
    without  ownership  of  the  atomic  materials.  It  is  true  that  the  contractors  oper-
    ating the  Government  plants  have  full  physical  possession  of  the  atomic  mate-
    rials now,  but  this  differs  materially  from  aers  marked
    'secret,'  many  of  which,  I'm  sure,  need  not  be  so  marked.  I  have  a  definite
    feeling  that  this  unwholesome  and  undemocratic  tendency  has  been  encouraged
    by  the  extremes  of  our  treatment  of  the  atom.  This  statement  implies  that  a
    document  is  sometimes  stamped  'secret'  deliberately  in  order  to  avoid  public
    accountability.    I'm  afraid  that  in  many  cases  this  is  unhappily  the  fact.

    "Yet  the  prying  and  the  probing  of  the  public  is  the  only  safeguard  we  have
    for  our  democracy.     Public  accountability  is  defeated  by  excessive  secrecy."

    [St.  Louis  Post-Dispatch,  January  6,  1953]

    Ltlienthat,  Doubts  Atomic  Energy  Can  Be  Used  Successfttlly  for  ElfxtriO
    Power  Tilt.  Secrecy  Ends — Techniqite  No  Longer  a  Problem.  Bt't  He  S.\y8
    Costs  Must  Be  Slashed  To  Make  Process  Practical — A  Task  for  Best
    Brains  of  Business  and  Enginee:ring

    (By  Richard  G.  Baumhoff,  a  staff  correspondent  of  the  Post-Dispatch)

    New  York,  January  6. — Production  of  electric  power  is  one  of  the  most  fruitful
    fields'  for  industrial'  application  of  atomic  energy  in  the  immediate  future,
    in  the  opinion  of  David  E.  Lilienthal.

    610  ATOMIC    POWER    DEVELOPMENT

    He  believes  that  the  public,  and  the  power  industry,  would  be  greatly  bene-
    fited by  this  development.  However,  be  fears  that  atomic  enei'gy  cannot  be
    successfully  applied  to  the  power  field  until  atomic  secrecy  in  industrial  matters
    is  ended  by  a  new  law.

    Lilienthal,  first  Chairman  of  the  Atomic  Energy  Commission  and  previously
    Chairman  of  the  Tennessee  Valley  Authority,  one  of  the  Nation's  great  public
    electric-power  producers,  gave  his  views  on  the  need  for  a  new  law  in  an  inter-
    view in  last  Sunday's  Post-Dispatch.  He  urged  that  President-elect  Eisenhower
    establish  a  citizens'  commission  to  work  out  a  reversal  of  policy  and  prepare
    for  a  new  law  that  would  permit  industrial  access  to  atomic  information.

    Lacking  such  a  change  in  policy,  the  outlook  is  dim,  in  Lilienthal's  view,  for
    successful  entiT  of  private  industry  into  the  field  of  power  from  the  energy  of
    the  split  atom.

    MONSANTO,  UNION  ELECTEIC

    Several  groups  of  private  concerns  have  been  engaged  for  some  time  in  efforts  to
    work  out  a  feasible  means  of  achieving  this.  One  group  consists  of  Monsanto
    Chemical  Co.  and  Union  Electric  Co.  of  St.  Louis.  Their  preliminary  report,
    pointing  the  way  to  action,  has  been  submitted  to  AEC,  but  nothing  more  has
    been  heard  from  it,  as  far  as  is  publicly  known.

    "To  produce  power  from  the  heat  of  fission  no  longer  is  a  problem,"  Lilienthal
    points  out.  "That  really  hasn't  been  a  problem  since  the  historic  first  demon-
    stration of  nuclear  fission  under  the  grandstand  at  Stagg  Field,  Chicago,  in  1942.

    "In  other  words,  when  heat  is  developed,  as  it  is  in  nuclear  fission,  you  can
    use  that  heat  to  produce  electricity.  However,  that  means  little  except  as  a
    start.  It  is  only  when  the  heat  can  be  had  at  a  fraction  of  the  cost  now  involved
    in  the  atomic  materials  plants  that  this  process  will  become  economically
    justified.

    "Until  industry  can  apply  itself  to  the  task  of  bringing  down  the  present  out'
    rageously  high  costs  to  a  competitive  economic  level,  we  will  never  enjoy  the
    benefits  of  atomic  power  except  for  military  purposes.  If  our  great  industrial
    history  means  anything,  this  simply  won't  happen  until  the  whole  business  man-
    agement, engineering,  and  chemical  profession  and  some  Edison-type  inventors
    have  their  chance  for  a  crack  at  it  in  a  wide-open  competition  of  ideas,  based
    upon  a  wide-open  access  to  knowledge.

    "Building  secret  power  plants  for  submarines,  where  absurdly  high  costs  are
    no  deterrent,  makes  no  sense  so  far  as  the  general  public's  interest  in  atomic
    power  for  their  homes  and  factories  is  concerned.

    "The  people  who  are  now  working  for  the  AEC  and  its  contractors  on  power
    reactors  are  superb  people.  Such  companies  as  Monsanto  Chemical,  Union  Elec-
    tric, and  the  others  are  the  cream  of  the  crop  without  a  doubt.  But  all  of
    them  represent  only  a  tiny  fraction  of  the  minds  of  this  country  that  have  a
    whale  of  a  lot  to  contribute,  and  will,  when  we  get  rid  of  the  fiction  that  these
    things  are  secret  and  return  to  our  proved  competitive  system."

    PEOPOSAL  BY  MONSANTO

    Monsanto's  proposal,  as  urged  originally  in  June  1950  by  its  president,  Charles
    Allen  Thomas,  calls  for  a  plant  where  Government-owned  enriched  uranium
    would  be  used  in  a  reactor  to  produce  plutonium  by  controlled  nuclear  fission.
    The  plutonium  would  go  to  the  Government  for  atomic  weapons,  while  the  heat  of
    fission  would  go  to  the  plant  operator  as  the  fuel  for  ordinary  electric  generating
    operation.  The  sale  of  the  plutonium  would  be  expected  to  cover  the  high  cost
    of  the  atomic  operation.

    This  plan  was  proposed  within  the  framework  of  the  existing  Atomic  Energy
    Act  of  1946.  That  law  makes  stringent  secrecy  requirements  and  limits  atomic
    materials  to  Government  ownership.  Lilienthal  not  only  calls  for  lifting  secrecy
    from  industrial  atomic  matters,  but  for  permitting  private  ownership  of  fission-
    able materials.  He  would  provide  for  private  ownership  under  careful  licensing
    and  accountability  for  the  materials.

    As  to  the  proposal  for  such  a  joint  plutonium-power  operation  Lilienthal  says :

    "Who  knows  whether  the  reactor  might  be  built  for  a  fraction  of  what  it  now
    would  cost,  if  the  whole  of  industry  could  get  at  the  information  on  which  to
    develop  it,  and  could  undertake  to  criticize  and  outdo  each  other?  Just  what
    can  he  accomplished  cannot  even  be  dimly  seen  until  we  get  all  the  information
    out  in  the  open  arena  of  American  competition  of  ideas.

    "The  trouble  so  far  is  that  we  always  get  back  into  the  old  groove  of  thinking

    ATOMIC    POWER    DEVELOPMENT  611

    The  issue  is  not  the  narrow  one  of  what  to  do  about  a  plutonium-power  plant,  but
    of  permitting  the  cost-cutting  ability  of  all  competitive  industry  and  all  in-
    ventors to  bear  on  the  matter."

    KELUCTANCE  BY  AEC

    AEC,  it  is  known,  has  been  unwilling  to  bind  itself  to  a  long  term  of  years
    for  purchase  of  plutonium  at  an  agreed  price.  The  Union  Electric-Monsanto
    discussion  has  been  in  terms  of  about  30  years,  as  an  assurance  that  the  great
    plant  investment  would  pay  out.

    On  the  other  hand,  AEC  obviously  fears  that  changes  in  the  course  of  time
    might  make  the  value  of  plutonium  less,  or  even  make  it  obsolete  as  an  atomic
    material.  A  suggestion  that  an  accelerated  tax  write-off  provision,  say  5  years,
    on  the  plant  might  solve  the  investment  problem  and  shorten  the  term  of  AEC's
    commitment  was  met  by  a  showing  that  the  production  cost  of  power  then  would
    be  too  high  to  be  economically  feasible.

    Asked  by  the  Post-Dispatch  whether,  in  his  opinion,  the  AEC  has  failed  in
    any  way  to  push  the  movement  for  atomic  power,  Lilienthal  says  the  Commis-
    sion and  its  advisory  committee  have  done  an  admirable  job.  He  adds :  "They
    are  a  wonderful  group  of  men,  and  so  are  the  extraordinarily  able  industrial
    contractors  and  those  who  have  proposed  industrial  powerplants."

    He  lays  the  whole  problem  of  power  development  at  the  door  of  secrecy  en-
    joined by  the  1946  Atomic  Energy  Act,  while  he  insists  that  the  need  for  secrecy,
    except  on  strictly  military  phases,  no  longer  exists.

    "If  you  assume  the  necessity  for  secrecy,"  says  Lilienthal,  "then  the  produc-
    tion of  power  must  be  secret  and  military  in  nature.  Hence,  as  long  as  you
    regard  such  atomic  materials  plants  at  AEC's  Oak  Ridge  and  Hanford  as  secret
    and  military,  electric  power  will  remain  in  that  category."

    County  of  Los  Angeles,

    Board  of  Supervisors,
    Los  Angeles  12,  August  6,  1953.
    Hon.  W.  Sterling  Cole,

    Chairman,  Joint  Committee  on  Atomic  Energy,

    Congress  of  the  United  States,  Washington,  D.  C.

    Dear  Congressman  Cole  :  Having  been  one  of  the  persons  selected  to  witness
    the  atomic-bomb  blast  at  Las  Vegas,  March  17,  1953,  and  having  had  occasion
    to  discuss  with  numerous  citizens  the  significance  of  this  and  similar  events  and
    also  the  underlying  issues  involved,  I  feel  there  is  a  strong  sentiment  here  in
    the  West  to  the  effect  that  atomic  energy  is  so  alarmingly  revolutionary  and
    far-reaching  in  its  character  that  Government  controls  must  be  maintained  and
    safeguarded  to  a  high  degree.

    Undoubtedly  the  great  future  of  atomic-energy  development  lies  in  the  peace-
    time fields.  There  is  strong  sentiment  in  support  of  the  principle  that  t.vpical
    American  free  enterprise  will  not  be  interfered  with  by  retaining  the  basic
    initial  development  and  technical  experimentation  within  the  framework  of  the
    Government  itself.  The  alternative  of  leasing  out  atomic-energy  experimenta-
    tion and  granting  to  large  private  concerns  the  seci-et  or  semisecret  findings
    that  have  resulted  from  billions  of  dollars  spent  by  the  Government  in  research,
    is  not  sound  Government  policy  in  that  it  will  promote  monopoly  or  near-
    monopoly  rather  than  further  enhance  and  strengthen  genuine  free  enterprise.

    One  of  many  fields  in  which  the  Government  could  well  afford  to  do  exhaustive
    and  definititve  experimental  work  has  to  do  with  transportation  by  air,  land,
    and  sea.  Probably  the  greatest  single  benefit  which  could  be  derived  from
    atomic  energy  would  be  to  carry  forward  the  exi)eriments  in  the.se  fields  to  the
    point  where  known  principles  and  basic  operandi  could  be  made  available  to  the
    entire  industry  so  that  all  alike  might  engage  in  competitive  application  of  atomic
    energy  to  automobiles,  airplanes,  steamships,  etc.

    Another  field  offering  great  possil>ilities  for  development  has  to  do  with  the
    conversion  of  sea  water  to  fresh  water.  Only  a  great  organization  such  as  a
    department  of  the  Government  can  afford  to  undertake  the  exi)ensive  and  exhaus-
    tive research  entailed  in  such  a  project.  Furthermore,  it  could  not  possibly  be
    assigned  to  private  industry  because  if  and  when  succes.sful  solution  of  sea-
    water  conversion  is  achieved,  no  private  interests  could  rightfully  utilize  such
    discoveries  to  the  exclusion  of  large  areas  of  population  which  could  benefit  by

    612  ATOMIC    POWER    DEVELOPMENT

    such  conversion.  The  entire  Southwest  is  profoundly  concerned  with  the  project
    and  earnestly  hopes  that  the  Federal  Commission  will  do  everything  in  its
    power  to  bring:  these  efforts  to  a  successful  conclusion  at  the  earliest  possible
    date.

    Sincerely,

    John  Anson  Ford,  Chairman.
    Note. — In  reviewing  the  above  I  find  I  have  failed  to  indicate  categorically
    what  I  have  assumed  was  clearly  implied,  namely,  I  am  speaking  only  as  an  in-
    dividual and  not  for  the  board  of  supervisors.

    J.  A.  F.

    MlNNEAPOLIS-HONETTWELL  ReGXTLATOR  CO.,

    Minneapolis,  Minn.,  August  3,  1953.
    Hon.  W.  Sterling  Cole,

    Chairman,  Congress  of  the  United  States
    Joint  Committee  on  Atomic  Energy,

    Washington,  D.  C.
    My  Dear  Mr.  Cole  :  While  the  Minneapolis-Honeywell  Regulator  Co.  has  and
    will  continue  to  have  a  fundamental  corporate  interest  in  the  instrumentation
    and  control  associated  with  the  development  of  atomic  power  by  industry,  it
    believes  that  it  is  in  no  position  at  this  time  to  make  any  specific  or  formal
    comments  regarding  this  subject.  We  do  generally  regard  favorably  the  basic
    idea  of  a  broader  development  of  atomic  power  by  industry  and  other  groups
    outside  the  Atomic  Energy  Commission.  Similarly,  we  recognize  the  enormous
    problem  presented  by  the  security  aspects  associated  with  a  major  transition  of
    the  sponsorship  for  such  development  to  organizations  and  agencies  outside  the
    Federal  Government.

    We  sincerely  appreciate  your  extending  to  us  the  opportunity  to  make  com-
    ment. While  we  do  not  feel  that  at  this  time  we  can  assist  you  in  your  efforts
    to  define  a  Federal  policy  on  this  matter,  we  are  extremely  interested  in  the
    activities  of  your  group  and  would  be  appreciative  of  any  opportunities  in  the
    future  to  be  of  assistance  to  you.
    Sincerely  yours,

    Feed  R.  Haviland,  Jr.,
    Director  of  Market  Development.

    University  of  California,
    Los  Alamos  Scientific  Laboratory,

    Los  Alamos,  N.  Mex.,  July  15, 1953.
    Hon.  W.  Sterling  Cole,

    Chairman,  Joint  Committee  on  Atomic  Energy,

    House  of  Representatives,  Washington,  D.  C.

    Dear  Sir  :  This  letter  is  in  response  to  your  invitation  of  a  statement  in  con-
    nection with  the  hearings  of  the  Joint  Committee  on  Atomic  Energy  on  the  ques-
    tion of  civilian  nuclear  power.

    I  have  received  and  read  the  statment  of  Prof.  I.  I.  Rabi,  the  Chairman  of  the
    General  Advisory  Committee,  United  States  Atomic  Energy  Commission,  as  well
    as  the  Statement  of  Policy  of  the  Atomic  Energy  Commission,  together  with  its
    appendixes.  I  find  myself  in  general  agreement  with  the  views  and  the  philosophy
    expressed  in  these  documents.  There  is  only  one  point  that  I  would  like  to
    elaborate  somewhat  further.

    This  deals  with  possible  Government  commitments  to  purchase  plutonium.
    This  matter  is  referred  to  in  section  5  of  the  AEC  Statement  of  Policy  and  in
    section  D  of  the  General  Outline  of  Proposed  Legislation  in  the  appendix  Descrip-
    tion of  Proposed  Legislation.  In  these  paragraphs  the  possibility  of  Government
    guaranties  of  fixed-price  purchases  of  plutonium  is  provided  for,  but  the  desire
    of  becoming  economically  independent  of  such  obligations  is  also  unambiguously
    expressed.

    This  problem  is  a  difficult  one,  and,  in  any  case,  the  Commission's  position  Is
    primarily  a  matter  of  degree  and  of  emphasis.  I  would  like  to  argue  in  favor  of
    shifting  this  emphasis  more  toward  guaranteed  Government  purchases  of  plu-
    tonium. I  think  it  unlikely  that  commitments  of  this  nature  should  turn  out  to
    be  undesirable  in  any  foreseeable  future,  or  that  any  degree  of  availability  of
    plutonium  that  we  will  plausibly  achieve  can  prove  to  be  uneconomical  or  exces-

    ATOMIC    POWER    DEVELOPMENT  613

    sive.    The  potential  uses  for  this  material  are  more  varied  than  is  now  generally
    recognized,  the  value  of  flexibility  in  its  commitment  is  very  great,  and  all  this
    hinges  critically  on  its  freest  possible  availability.
    Sincerely  yours,

    John  von  Neumann.

    Wellfleet,
    Cape  Cod,  Mass.,  August  6,  1953.
    Hon.  W.  Steiiling  Cole,

    Chairman,  Joint  Comtnittee  on  Atomic  Energy,
    Dear  Mr.  Congressman  :  Thank  you  for  your  invitation  to  submit  to  your
    committee  my  comments  on  problems  relating  to  the  development  of  atomic
    power  for  industrial  use.  The  subject  has  long  interested  me,  since  serving  as
    counsel  to  the  Senate  Sp'ecial  Committee  on  Atomic  EJnergj'  under  whose  aegis
    the  basic  legislation  was  drafted.  Had  I  had  the  opportunity  to  attend  the  recent
    hearings  of  your  group  and  to  hear  the  various  witnesses  express  their  points
    of  view  I  would  have  been  glad  to  submit  my  own  opinions.  I  have  however
    been  at  my  summer  home  in  Massachusetts  during  the  entire  period  and  there-
    fore do  not  feel  I  should  avail  my.self  of  your  kind  offer,  at  least  until  I  have
    read  the  transcripts.  L'uder  the  circumstances  I  think  it  advisable  to  defer  giv-
    ing my  opinions  until  the  committee  takes  up  specific  legislative  proposals  at
    the  next  session  of  Congress.  At  that  time  I  should  like  very  much  to  be  heard
    in  person  on  matters  regarding  which  I  have  had  experience.  I  hope  you  will
    then  find  it  possible  to  renew  your  invitation.
    Sincerely,

    James  R.  Newman.

    Public  Affairs  Institute,
    Washington,  D.  C,  August  10,  1953.
    Hon.  W.  Sterling  Cole,

    Chairman,  Joint  Committee  on  Atomic  Energy,
    Congress  of  the  United  States.
    Dear  Mr.  Chairman  :  I  appreciate  your  request  of  July  22,  1953,  for  my  com-
    ments in  connection  with  consideration  by  the  Joint  Committee  on  Atomic  Energy
    of  problems  incident  to  a  definition  of  Federal  policy  on  industrial  atomic  power
    development.

    To  establish  the  basis  for  my  statement,  I  would  respectfully  suggest  that —

    (1)  This  country's  need  for  nuclear  power  is  not  so  immediate  or  urgent  as
    to  warrant  risking  the  great  advantages  of  continued  Government  development
    by  amending  the  Atomic  Energy  Act  to  turn  over  this  new  extension  of  the  public
    domain  to  private  power  companies  on  the  general  promise  that  more  rapid
    progress  would  result.

    (2)  There  is  no  ground  for  anticipating  that,  once  the  threat  of  public  develop-
    ment of  nuclear  power  is  removed,  private  enterprise  will  push  its  development
    as  rapidly  as  it  could  be  achieved  under  continued  Government  control.

    (3)  Assuming  maintenance  of  necessary  safeguards  for  individual,  community,
    and  national  security,  the  matter  imder  cousideratiou  belongs  in  the  gi'ueral
    field  of  power  policy  and  should  be  treated  in  such  a  way  as  to  bring  the  develop-
    ment of  nuclear  power  within  the  general  embrace  of  existing  Federal  power
    policy.

    (4)  The  international  aspects  of  the  question,  involving  the  adequacy  of  the
    materials  base  for  expansion  of  our  energy  civilization,  warrant  the  most  careful
    consideration.

    (5)  There  is  ample  time  to  permit  the  encouragement  of  widespread  public
    understanding  of  the  issues  involved  before  changes  are  made  in  the  policy  estab-
    lished by  the  Atomic  Energy  Act.

    NO  urgent  need  for  nuclear  power  in  the  united  states

    The  United  States  has  no  urgent  need  for  the  development  of  commercially
    feasible  nuclear  power  as  such.  On  the  contrary,  the  country  has  an  abundance
    of  conventional  energy  resources  to  meet  its  immediate  needs,  as  well  as  for
    estimated  expansion  in  production  of  electric  power  over  the  next  25  years.

    There  is  every  evidence  that  the  Nation's  coal  and  oil-shale  reserves  are  ample
    to  supplement  its  overburdened  petroleum  reserves  as  a  source  of  motor  fuel,
    and,  in  addition,  to  support  the  burden  of  the  Nation's  rapidly  growing  demand

    614  ATOMIC    POWER    DEVELOPMENT

    for  electric  power  until  the  continued  activities  directed  by  the  Atomic  Energy
    Commission  have  brought  nuclear  power  to  the  commercially  feasible  stage.

    It  is  true  that  the  President's  Materials  Policy  Commission  predicts  an  increase
    in  the  Nation's  electric-energy  requirements  from  just  under  400  billion  kilowatt-
    hours  in  1950  to  1,400  billion  in  1975,  with  coal's  responsibility  going  up  from
    about  90  million  to  300  million  tons.  But  in  1950  the  416,000  bituminous-coal
    miners  averaged  only  183  days'  work  during  the  entire  year  to  produce  the
    required  516  million  tons  of  coal.  This  compares  with  the  Bureau  of  Mines,  1949,
    estimate  that  on  a  lull-time  basis  the  country's  mines  would  have  produced  a
    total  of  860  million  tons,  or  more  than  enough  to  meet  the  Materials  Policy
    Commission  estimate  of  825  million  tons  required  for  all  purposes  in  1975.

    The  urgency  of  the  need  for  nuclear  power  may  also  be  considered  in  terms
    of  what  commercial  development  of  nuclear  power  might  offer  in  the  way  of
    lower  power  costs  or  reductions  in  electric  rates.  Here,  however,  the  policy  under
    which  nuclear  power  is  marketed  becomes  more  important  than  the  absolute
    reductions  in  the  cost  of  producing  electric  energy,  which  would  at  best  be
    slight.  This  would  point  to  no  modification  in  the  general  provisions  of  the
    present  Atomic  Energy  Act,  but  rather  to  their  implementation  in  terms  of  a
    program  for  Federal  development  of  nuclear  power.

    In  this  connection,  consideration  should  be  given  to  the  fact  that,  as  in  the
    case  of  development  of  hydroelectric  power,  fixed  charges  will  probably  con-
    stitute a  larger  proportion  of  the  cost  of  nuclear  power  than  of  electric  power
    produced  from  conventional  fuels.  Thus,  Prof.  Manson  Benedict,  of  the  Massa-
    chusetts Institute  of  Technology,  in  the  March  9,  1953,  issue  of  Chemical  and
    Engineering  News,  points  out  that  if  nuclear  fuel  were  obtained  at  no  cost  at
    all  the  allowable  powerplant  investment  could  not  exceed  $258  per  kilowatt
    of  capacity  to  be  competitive  with  $158  per  kilowatt  plants  using  conventional
    fuels  in  Boston,  Mass.

    With  the  successful  development  of  a  lireeding  reactor,  the  fuel  cost  may  be
    reduced  to  a  negligible  figure.  But,  according  to  Professor  Benedict,  the  $500
    to  $600  per  installed  kilowatt,  estimated  by  Dr.  Donald  Loughbridge,  assistant
    director  of  the  Atomic  Energy  Commission's  Division  of  Reactor  Development,
    as  the  cost  of  a  nuclear  powerplant  using  present-day  techniques,  would  have
    to  be  cut  in  half  before  nuclear  fuels  could  compete  with  coal  in  Boston,  Mass.

    On  the  other  hand,  with  the  investment  cost  of  a  nuclear  plant  brought  down
    to  $258  per  kilowatt  of  installed  capacity,  public  financing  would  mean  a  sav-
    ing of  some  $8  per  kilowatt-year  as  compared  with  private  financing,  assuming
    tax  equalit.v.  With  such  a  plant  delivering  electricity  on  a  high-capacity-factor
    basis,  this  would  mean  a  saving  of  somewhat  over  1  mill  per  kilowatt-hour,  or
    more  than  the  possible  reduction  in  fuel  costs  estimated  by  Phillip  Sporn,  presi-
    dent of  the  American  Gas  &  Electric  Co.,  as  the  possible  contribution  of  atomic
    power.

    The  importance  of  keeping  power  costs  down  goes  beyond  the  savings  to  con-
    sumers. It  involves  the  future  of  our  economy.  As  pointed  out  by  the  President's
    Materials  Policy  Commission,  the  central  problem  of  electnc  energy  is  how  to
    increase  the  Nation's  supply  2%  times  during  the  next  25  years  without  running
    into  considerably  higher  costs  per  imit.  According  to  the  Commission,  short-
    ages of  electricity  and  rising  real  costs  would  impede  economic  growth  and
    "could  throttle  national  effort  in  the  event  of  war."  Savings  in  fixed  charges,
    therefore,  may  become  a  matter  of  national  interest.

    l>ROPOSED  CHANGES  IN  THE  ACT  PROMISE  NO  GREATER  PROGRESS

    Analysis  of  proposals  to  change  the  Atomic  Energy  Act,  in  the  light  of  the
    history  of  the  varying  relationship  of  large  corporate  interests  to  technological
    progress,  suggests  that  the  real  objective  of  the  private  power  companies  is  to
    prevent  the  development  of  commercially  feasible  atomic  power  in  Government
    l)uilt  and  operated  plants,  rather  than  to  expedite  the  application  of  this  new
    form  of  fire  to  commercial  power  production.

    The  private  power  industry  is  predominantly  one  of  regulated  monopoly  with
    little,  if  any,  profit  incentive  of  the  kind  which  stimulated  the  development  of
    the  automobile  industry.  Furthermore,  there  are  powerful  forces  in  the  entire
    complex  of  the  country's  energy  economy  which  might  well  oppose  innovation
    so  long  as  expanding  sales  of  conventional  fuels  are  exceedingly  profitable.  Thus,
    there  is  evidence  of  a  definite  tendency  to  slow  down  progress  in  the  commercial
    production  of  oil  from  shale  or  the  synthesis  of  oil  and  natural  gas  from  coal.

    In  both  of  these  fields  the  United  States  Bureau  of  Mines  has  brought  pilot-
    plant  work  to  the  stage  where  private  enterprise  might  readily  take  over.    And

    ATOMIC    POWER    DEVELOPMENT  615

    in  these  fields  there  are  no  such  legislative  obstacles  to  the  entrance  of  such
    enterprise  into  the  further  development,  as  are  allegedly  holding  back  the  de-
    velopment of  nuclear  power.

    The  significance  of  lack  of  progress  in  thse  fields  is  highlighted  by  the  fact
    that,  in  terms  of  our  entire  energy  economy,  the  snythetic  production  of  oil  and
    gas  is  probably  of  more  immediate  public  interest  than  the  application  of  atomic
    energy  to  the  generation  of  industrial  power.  Today  these  fuels,  representing
    only  about  2  percent  of  the  Nation's  conventional  mineral  energy  resources,
    are  carrying  more  than  5()  percent  of  the  load.  By  any  estimate,  their  remaining
    service  lives  are  relatively  short  and  dependence  upon  imports  has  serious  im-
    plications !n  terms  of  national  security.

    Furthermore,  natural-gas  markets  in  the  Northeast  are  demanding  more  gas
    from  the  Southwest  faster  than  the  l)ig  pipelines  con  expand  their  deliveries.
    Meanwhile,  as  a  result  of  the  rapid  rise  in  field  prices  for  this  elite  fuel,  the
    cost  of  natural  gas  to  distribution  companies  in  the  Northeast  is  reaching  levels
    with  which  synthetic  gas  produced  in  the  Appalachian  coal  fields  might  readily
    compete.

    In  spite  of  these  seemingly  favorable  economic  factors,  it  seems  unlikely  that
    private  enterprise  v/ill  press  the  development  of  any  synthetic  sul-stitutes  for
    oil  or  natural  gas  so  long  as  the  big  oil  interests  have  reserves  to  unload.  This
    suggests  that  the  Nation's  great  energy-industry  complex  may  be  more  interested
    in  delaying  than  in  expediting  the  application  of  atomic  energy  to  the  field
    of  power.

    DESIRABILITY   OF  FEDEPvAL  ASSISTANCE   TO   CONSUMEK  AGENCIES

    The  most  important  counterpoise  to  monopoly  in  the  field  of  electric  power  is
    the  opportunity  for  consumers  of  electricity,  through  their  municipalities,  public
    utility  districts,  or  rural  electric  conperatives,  to  undertake  their  own  electric
    service.     This  can  be  demonstrated  through  a  wide  range  of  practical  examples.

    If  the  time  ever  arrives  when  such  self-supply  of  power  becomes  technically  or
    economically  beyond  the  means  of  even  relatively  small  consumer  communities,
    the  protection  of  the  public  interest  in  this  vital  field  will  be  seriously  weakened.
    Unless  supplemented  by  this  potential  pul)lic  competition,  public  utility  regula-
    tion caiuiot  cope  with  large  power  monopolies.

    The  policy  of  the  Nation  in  this  field  should,  therefore,  include  provision  for
    participation  by  consumer  groups  along  two  lines :

    (1)  Federal  assistance  in  the  organization  and  financing  of  a  joint  municipal-
    cooperative  experimental  project  for  the  development  of  commercially  feasible
    applications  of  atomic  energy  to  the  development  of  commercial  electric  power.

    (2)  Atomic  Energy  Commission  undertakings  in  various  parts  of  the  country
    for  commercial  development  of  nuclear  power  with  a  view,  not  only  to  the  con-
    quest of  this  new  resource,  but  also  to  the  continuing  assurance  of  economical
    power  supply  to  all  municipalities,  public  power  districts,  or  rural  electric  co-
    operatives.

    To  avoid  discrimination  in  favor  of  private  monopoly  in  the  power  field,  it
    is  essential  that  the  Federal  Government  work  out  a  sound  basis  for  coopera-
    tion with  the  power  agencies  of  State  and  local  governments,  as  well  as  with
    rural  electric  cooperatives,  along  these  lines.

    The  cominned  interest  represented  by  existing  public  and  cooperative  electric
    systems,  involves  an  investment  of  about  $5  liillion,  supplying  some  9  million
    customers  with  about  .50  billion  kilowatt-hours  a  year.  This  is  ecpiivalent  to
    about  5  times  the  Consolidated  Edison  System  serving  the  New  York  metropoli-
    tan area,  or  10  times  the  Detroit  Edison,  so  far  as  investment  is  concerned.  But
    it  is  so  scattered  as  to  require  the  Federal  Government  to  provide  the  integra-
    tion of  effort  needed  to  make  possible  the  development  of  economically  feasible
    nuclear  power,  as  well  as  the  integration  of  power  supply  for  the  regional  galax-
    ies of  such  nonprofit  systems.

    Such  assistance  to  public  and  cooperative  power  systems  has  been  the  key
    to  Federal  power  policy  for  nearly  50  years.  It  has  centered  around  the  develop-
    ment of  the  country's  waterpower  resources,  which  the  conservation  movement,
    as  well  as  the  law,  have  considered  as  resources  of  the  people.

    P"'irst,  the  1906  Reclamation  Act  provided  that  power  developed  in  connection
    with  Federal  irrigation  projects  should  be  marketed  with  a  preference  to  public
    agencies.  Next,  the  ^U^2^t  Federal  Water  I'ower  Act.  now  jiart  I  of  I  he  Federal
    Power  Act,  provided  that,  in  connection  with  any  private  application  for  a  license
    to  develop  hydroelectric  power,  the  Federal  Government  should  have  the  first
    refusal  to  develop  the  site  in  question.     Thereafter,  if  any  State  or  municipality

    616  ATOMIC    POWER    DEVELOPMENT

    applied  for  development  of  the  site,  it  should  have  a  preference  over  the  private
    applicant.

    There  followed  the  Tennessee  Valley  Authority  Act,  the  Fort  Peck  Act,  the
    Bonneville  Power  Act,  the  Rural  Electrification  Act,  and  the  Flood  Control  Act
    of  1944,  all  of  which  adopted  the  principle  first  established  in  the  Reclamation
    Act  of  1906,  broadening  it  to  include  rural  electric  cooperatives  with  public
    electric  systems  as  entitled  to  first  claim  to  power  supply  from  Federal  river-
    basin  projects.  Federal  development  of  power  had,  meanwhile,  become  one  of
    the  objectives  in  broader  multiple-purpose  river-basin  programs  which,  in  addi-
    tion to  irrigation,  include  soil  conservation,  forestry,  flood  control,  navigation,
    pollution  control,  fish  and  wildlife  management,  and  recreation.

    The  evolution  of  this  policy  furnishes  a  modern  implementation  of  the  ac-
    knowledged legal  right  of  communities  to  public  or  cooperative  electric  service.
    But  this  implementation  is  unevenly  distributed  over  the  land,  because  certain
    regions  are  blessed  with  more  ample  waterpower  resources  than  others.  Federal
    development  of  commercially  feasible  nuclear  power,  within  the  general  frame-
    work of  Federal  power  policy,  will  make  possible  an  equalization  of  the  avail-
    ability of  power  from  Federal  projects,  as  between  the  regions  which  have  and
    those  which  have  not  opportunities  for  hydroelectric  development  on  a  scale
    sufficient  to  meet  the  requirements  of  public  or  cooperative  electric  systems.

    There  is  another  aspect  of  the  problem  of  assuring  consumer-owned  power
    agencies  real  participation  in  the  development  of  commercially  feasible  nuclear
    power.  This  involves  the  fact  that  the  more  economical  nuclear  power  plants
    will  be  found  to  be  relatively  large  in  size.

    In  terms  of  the  foreseeable  future,  it  appears  that  the  reactor  unit  of  a  nuclear
    power  plant  may  cost  approximately  as  much  for  a  relatively  small  plant  as  for
    ■one  of  very  large  capacity.  For  the  smaller  municipal  and  rural  cooperative  elec-
    tric systems  to  get  the  full  benefits  of  low-cost  nuclear  power,  therefore,  it  will
    be  necessary  for  them  to  share  in  the  supply  furnished  by  a  plant  or  intercon-
    nected plants  which  would  be  quite  beyond  their  means  or  needs.  This  can  be
    arranged  only  by  Federal  or  State  responsibility  for  the  wholesale  power  supply,
    unless  the  municipal  and  cooperative  electric  systems  are  to  be  forced  to  depend
    upon  competing  private  monopoly  for  their  share  of  nuclear  power.

    ATOMIC  ENERGY  AS  A  RESOURCE  OF  THE  PEOPLE

    Atomic  energy,  as  a  resource  for  the  generation  of  electric  power  and  perhaps
    Tiltimately  even  more  important  uses,  is  available  because  of  the  greatest  mobili-
    zation of  scientific  and  industrial  genius  that  has  ever  been  brought  to  bear  on
    a  single  aspect  of  the  wonderful  complex  of  forces  that  we  call  the  universe.
    This  mobilization  was  made  possible  and  carried  through  as  a  tremendous  invest-
    ment project  of  the  American  people  through  their  Federal  Government.

    The  people  of  this  country  were  entering  a  new  investment  field  of  a  magnitude
    and  complexity  beyond  the  scope  of  any  combination  of  enterprise  acting  under
    the  rules  of  the  private  financial  market.  The  people  have  already  approved  an
    investment  totaling  at  least  $10  billion  in  this  extraordinary  resource-creating
    public  enterprise.

    It  would,  therefore,  represent  a  betrayal  of  democracy  to  permit  this  new
    resource  to  be  reduced  to  private  possession.  Like  the  flowing  waters  in  our
    rivers  and  the  waterpower  potentialities  associated  therewith,  it  should  remain
    a  resource  of  the  people,  a  part  of  the  public  domain,  not  to  be  permanently
    alienated  in  whole  or  in  part.  This  means  that  the  present  provisions  of  the
    Atomic  Energy  Act,  under  which  fissionable  materials,  new  discoveries  in  the
    field  of  atomic  development,  and  the  basic  elements  in  the  industry  are  public
    property,  should  remain  in  effect.  But  it  means  more,  for  it  requires  the  working
    out  of  provisions  in  harmony  with  existing  waterpower  law  to  safeguard  the
    public  interest  in  the  best  utilization  of  nuclear  energy  to  produce  electric  power,

    SOCIAL,  POLITICAL,  ECONOMIC,  AND  INTERNATIONAL  EFFECTS

    The  Atomic  Energy  Commission  is  required  by  law  to  report  to  the  President
    on  the  social,  political,  economic,  and  international  effects  of  industrial  use  of
    atomic  energy  whenever  such  use  has  been  developed  to  the  point  where  it  is
    of  practical  value.

    In  terms  of  the  country's  domestic  economy,  the  effects  of  the  use  of  nuclear
    power  must  be  viewed  in  the  light  of  two  possible  alternatives:  (a)  Its  use  to
    maintain  the  potentialities  of  public  or  cooperative  competition  as  a  supplement
    to  regulation  of  private  monopoly  in  the  field  of  electric  power;  or   (b)  its  use

    ATOMIC    POWER    DEVELOPMENT  617

    by  such  private  monopolies  to  strengthen  their  predominance  and  gradually
    eliminate  the  competitive  force  of  municipal  or  cooperative  power  systems.  The
    latter  would  involve  the  ultimate  fostering  of  a  colossus  in  the  energy  field
    which  would  be  hardly  compatible  with  the  continuance  of  our  democratic
    society.

    In  terms  of  the  country's  foreign  policy,  based  as  it  is  on  continued  friendship
    and  cooperation  with  free  peoples,  the  retention  by  the  Government  of  control
    of  the  development  of  nuclear  power  on  a  commercially  feasible  basis  could  have
    tremendously  important  international  effects.  The  contributions  which  this
    country  can  make  to  the  efforts  of  other  peoples  to  raise  their  living  standards
    will  be  greatly  facilitated  if  the  Government  has  a  proprietary  interest  in  the
    development  of  nuclear  power.  This  may  well  prove  the  most  important  thing
    we  have  to  offer  toward  modernizing  nations  which  are  lacking  in  conventional
    energy  resources.

    Associate  Director  Robert  Maynard  Hutchins  of  the  Ford  Foundation  has
    highlighted  this  point  with  the  statement :  "If  it  were  not  for  the  fact  that
    the  United  States,  which  regards  atomic  energy  as  a  weapon,  is  the  center  of
    research  and  development  in  the  field,  atomic  energy  might  l)e  coming  to  the
    rescue  of  countries  that  are  poor  in  energy  and  that  are  unlikely  to  reach  a
    satisfactory  standard  of  living  unless  they  can  find  new  resources  of  it."

    Hutchins  mentions  particularly  India,  as  hardly  likely  to  achieve  industrializa-
    tion on  a  large  scale  in  the  absence  of  discoveries  of  coal  and  oil  or  the  exploita-
    tion of  atomic  energy,  and  many  of  the  countries  in  Latin  America  must  be
    reckoned  in  the  list.  Furthermore,  Western  Europe  faces  a  particularly  serious
    energy  problem,  as  its  better  coal  seams  are  mined  out.

    It  is,  therefore,  of  vast  importance  that  a  national  policy  covering  the  develop-
    ment of  nuclear  power  include  provision  for  the  greatest  flexibility  in  the  use  of
    this  new  energy  resource  as  an  instrument  of  foreign  policy.

    TOWARD  ADEQUATE  PUBLIC  UNDERSTANDING

    There  is  grave  question  whether  there  is  sufiicient  public  understanding  of  the
    issues  involved  to  protect  the  public  interest  in  a  final  determination  of  policy
    to  govern  the  development  and  use  of  nuclear  energy  for  industrial  power.  As
    pointed  out  by  Oscar  M.  Ruebhausen,  chairman  of  the  New  York  Bar  Associa-
    tion's committee  on  atomic  energy  in  industry  :

    "There  is  today  no  substantial  body  of  informed  public  opinion  that  can  be
    drawn  upon  to  formulate  an  atomic  program  for  the  future.  There  are,  it  is
    true,  scattered  throughout  the  country,  both  in  the  Government  and  out  of  it,
    groups  of  able  men  qualified  to  pass  on  atomic  problems  but  never  in  the  history
    of  our  demovraey  have  ice  been  compelled  to  rely  on  so  feio  to  debate  problems
    so  vast.  There  is  a  critical  need  for  informed  public  thinking  on  these  ques-
    tions."   [Italics  mine.]

    Either  the  Joint  Committee  on  Atomic  Energy  or  the  Atomic  Energy  Commis-
    sion might  well  sponsor  a  popularly  presented  objective  effort  to  assure  wide
    public  understanding  of  the  nature  of  atomic  energy  as  a  source  of  ix»wer,  the
    various  approaches  to  its  use,  the  problems  involved,  the  ultimate  value  of  the  new
    resource  in  economic  terms,  the  relationship  of  atomic  energy  as  a  source  of
    industrial  power  to  the  military  aspects  of  the  problem,  the  many  ways  in  which
    the  pioneer  work  in  commercial  use  could  go  forward,  and  the  possibilities  of
    maintaining  safeguards  against  monopolization  of  its  advantages.

    This  effort  to  broaden  public  understanding  might  include,  as  Mr.  Ruebhausen
    suggests,  a  new  and  determined  move  by  the  Atomic  Energy  Commission,  without
    compromising  military  secrets,  to  declassify  those  facts  whicli  are  essential  to
    informed  public  judgment  on  a  proper  policy  for  full  industrial  use  of  atomic
    energy.

    RECOMMENDATIONS

    On  the  basis  of  the  considerations  outlined  above,  there  are  two  broad  conclu-
    sions as  to  the  further  development  of  Federal  policy  on  industrial  atomic-power
    development.

    In  the  first  place,  there  should  be  no  general  overhauling  of  the  Atomic  Energy
    Act  until  the  wider  dissemination  of  fundamental  information  on  the  subject,  in
    popular  form,  has  produced  a  better-informed  public  opinion.  Meanwliile,  the  Act
    in  its  present  form  appears  to  safeguard  the  public  interest,  at  the  same  time
    leaving  the  Atomic  Energy  Commissoin  free  to  encourage  desirable  progress  in
    the  application  of  atomic  energy  to  the  production  of  commercial  electric  power

    618  ATOMIC    POWER    DEVELOPMENT

    and  to  relax  unnecessary  restrictions  on  the  release  of  information.    No  imme-
    diate amendment  appears  necessary.

    In  the  second  place,  longer-range  consideration  of  the  more  precise  definition
    of  policy  concerning  future  use  of  atomic  energy  as  a  resource  for  power  produc-
    tion should  have  as  its  objective  the  broadening  of  the  Nation's  present  resources
    policy  to  cover  this  new  public  power  resource.  This  might  be  accomplished  by
    enacting  a  new  part  to  the  Atomic  Energy  Act,  including  some  such  provisions  as
    the  following :

    (1)  Declaration  that  atomic  energy,  including  all  fissionable  materials,  is  a
    resource  of  the  people  of  the  United  States,  a  part  of  the  public  domain,  to  be
    utilized  in  the  public  interest,  and  that  ownership,  possession,  and  control  of  this
    resource  shall  always  remain  vested  in  and  inalienable  to  the  people.

    (2)  Provision  for  Federal  construction  and  operation  of  atomic  powerplants
    (a)  whenever  requested  by  public,  cooperative,  or  private  electric  systems,  either
    singly  or  in  combination,  provided  a  sufficient  market  is  shown  to  warrant  such
    a  project,  or  (&)  where  Federal  development  of  such  power  would  provide  a  basis
    for  sound  expansion  of  industry.

    (3)  Provision  for  marketing  power  from  Federal  atomic  powerplants  in  such
    manner  as  to  (a)  encourage  the  most  widespread  use  at  the  lowest  possible  rates
    consistent  with  sound  business  principles,  (b)  accord  a  preference  to  public  bodies
    and  cooperatives  in  the  sale  of  the  power,  and  (c)  enable  the  marketing  agency
    to  build  such  transmission  facilities  as  may  be  necessary  to  make  the  power  and
    energy  available  in  wholesale  quantities  on  reasonable  terms  to  public  bodies,
    cooperatives,  and  privately  owned  companies.

    (4)  Provision  for  licensing  non-Federal  development  of  atomic  power  on  a
    basis  similar  to  the  licensing  of  non-Federal  development  of  waterpower,  such
    provision  to  include:  (a)  Limited-term  licenses,  (6) opportunity  for  recapture  at
    end  of  license  period  on  a  net-investment  basis,  (c)  no  capitalization  of  rights  or
    patents,  (d)  profits  over  an  agreed  fair  return  to  go  into  an  amortization  fund  for
    reducing  net  investment,  (e)  uniform  accounting  on  a  cost  basis,  if)  preference
    to  public  and  cooperative  systems  in  obtaining  licenses,  (g)  equality  for  public
    and  cooperative  electric  systems  in  obtaining  power  from  licensed  atomic  power-
    plants,  with  licensees  obligated  to  expand  capacity  to  the  extent  necessary  to
    assure  such  equality,  and  (h)  Federal  regulation  of  power  system  so  licensed,
    with  authority  to  require  interconnection  and  coordination  after  hearings.

    (5)  Provision  for  the  planned  contribution  of  the  advantages  of  atomic  power
    to  economically  underdeveloped  nations,  particularly  to  those  lacking  domestic-
    energy  resources,  on  a  basis  of  mutual  assistance,  not  exploitation.

    (6)  Provision  for  broadening  the  field  of  the  Atomic  Energy  Commission  as  a
    permanent  resources-creating  agency,  with  authority  to  finance,  undertake,  and
    direct  great  undertakings  requiring  the  mobilization  of  the  scientific  and  indus-
    trial power  of  the  country  for  peacetime  purposes.

    BROADER  OUTLOOK

    The  atomic  age  has  opened  at  the  critical  moment  when  wars,  with  their
    omniverous  appetite  for  materials,  superimposed  upon  the  vast  expansion  in  the
    peacetime  demands  of  so-called  advanced  nations,  threaten  the  standards  of  living
    of  these  peoples  and  the  hopes  of  other  peoples  to  rise  in  the  ladder  of  material
    civilization.  The  urgency  of  the  situation  is  reflected  in  the  report  of  the  Presi-
    dent's Materials  Policy  Commission,  when  it  speaks  of  "soarinu"  demands,  shrink-
    ing resources,  the  consequent  pressure  toward  rising  real  costs,  the  risk  of  war-
    time shortages,  the  ultimate  threat  of  an  arrest  or  decline  in  the  standard  of  living
    which  we  cherish  and  hope  to  help  others  attain."

    The  Materials  Policy  Commission  points  out  that,  if  all  nations  of  the  world
    should  achieve  the  same  standard  of  living  as  our  own,  the  resulting  world
    need  for  materials  would  increase  to  6  times  the  already  massive  consumption.
    It  states  its  conviction  that  the  United  States  and  other  free  nations  must
    coordinate  their  resources  to  the  ends  of  common  growth,  common  safety,  and
    common  welfare.

    Only  as  we  maintain  institutions  corresponding  with  the  new  powers  of  the
    atomic  age,  institutions  which  transcend  without  superseding  private  enterprise,
    can  we  hope  to  meet  this  challenge.  Such  institutions,  of  which  the  Atomic
    Energy  Commission  is  a  protot.ype,  will  undertake  great  projects  for  the  creation
    of  new  and  inexhaustible  resources  which  alone  can  assure  the  continuance  of
    the  tremendous  resource-consuming  structure  reared  by  private  enterprise.  They
    will,  at  the  same  time,  maintain  control  of  the  use  of  these  new  resources  in  order
    to  assure  equitable  distribution  to  meet  the  needs  of  all  peoples.

    ATOMIC    POWER    DEVELOPMENT  619

    In  these  terms,  I  would  respectfully  urge  the  Joint  Committee  on  Atomic  Energy
    to  give  careful  consideration  to  increasing,  rather  than  diminishing,  the  utility
    of  the  Atomic  Energy  Commission  as  a  publicly  financed  corporation,  specifically
    empowered  to  carry  forward  the  development  of  the  atomic  age  in  this  broader
    peacetime  field.  It  should  be  developed  as  one  of  the  new  instruments  of
    democracy,  combining  the  flexibility  of  the  corporate  form  with  the  responsibility
    of  Government  in  the  field  of  large  public  investment.  The  objecrive  should  be
    the  broader  and  more  efficient  use  of  the  new  resources  opened  up  by  progress
    m  the  nuclear  field  during  the  last  10  years  in  order  to  provide  a  more  ample  base
    for  future  expansion  of  private  enterprise  in  the  fields  for  which  it  is  best
    adapted.

    Respectfully  submitted.

    Leland  Olds.

    Statement  of  J.  E.  Coates,  President,  Patent  Law  Association  of  Los  Angeles,

    July  30,  1953

    The  Patent  Law  Association  of  Los  Angeles,  through  its  legislative  committee,
    has  given  careful  consideration  to  the  advisability  of  amending  the  patent  pro-
    visions of  the  Atomic  Energy  Act  of  1946.  It  is  the  recommendation  of  this
    association  that  the  act  be  amended  in  several  respects.

    the  patent  grant

    The  Congress  deemed  it  advisable  at  the  time  the  act  was  passed  to  prohibit
    patents  for  inventions  usable  solely  in  the  production  of  fissionable  matei'ial  or  the
    utilization  of  fissionable  material  or  atomic  energy  for  a  military  weapon.  This
    view  was  on  considerations  of  security  for  there  was  at  that  time  no  permanent
    legislation  to  prevent  the  issuance  of  patents  affecting  national  security.  Since
    that  time  the  Invention  Secrecy  Act  of  1951  (Public  Law  250,  S2d  Cong.)  has
    become  a  permanent  law.  That  law  provides  for  delay  in  the  issuance  of  patents
    relating  to  matters  affecting  the  national  security  and  is  adequate  to  prevent
    improper  disclosures  of  inventions  in  the  field  of  atomic  energy.

    The  United  States  Patent  Office  has  a  special  division  for  examining  patent
    applications  on  classified  subject-matter  including  those  relating  to  atomic  energy.
    Since  tlie  Invention  Secrecy  Act  provides  adequate  security  and  the  Patent  Office
    is  prepared  to  examine  applications  there  no  longer  exists  any  valid  reason  for  a
    prohibition  against  such  patents  which  is  contrary  to  the  spirit  of  our  basic  patent
    law.  This  provision  should  be  repealed  so  that  those  who  are  capable  of  making
    contributions  in  this  field  will  have  the  incentive  of  the  same  reward  for  their
    efforts  as  may  be  obtained  in  other  fields.

    COMPULSORY    LICENSING

    The  provision  of  the  act  which  compels  licensing  in  the  commercial  fields  of
    atomic  energy  is  contrary  to  the  basic  patent  laws  of  tlie  United  States.  Com-
    pulsory licensing  has  been  advocated  and  enforced  in  many  foreign  countries,
    the  only  noticeable  result  being  the  discouragement  of  venture  capital.  The
    exclusive  right  of  a  patent  justifies  the  private  investor  in  taking  the  risk  of
    commercial  success.  When  the  right  is  made  nonexclusive  and  the  field  opened
    to  copyists  then  the  incentive  disappears.  Without  the  private  investor  the
    inventor  has  no  prospect  of  financial  backing  and  his  incentive  disappears.

    The  argument  that  the  background  knowledge  resulting  from  research  spon-
    sored by  the  Government  should  not  be  used  to  create  a  j)rivate  right  is  untenable.
    The  atomic-energy  field  is  the  same  as  any  other  field  in  this  regard  for  the
    inventor  of  an  improvement  in  any  field  makes  use  of  the  Itackgroiuid  knowledge
    contributed  by  others.  A  patentee  does  not  stake  out  a  claim  in  the  public
    domain  but  is  merely  given  a  right  to  exclude  others  fi'om  using  the  new  inven-
    tion made  by  him  without  his  consent.  When  an  inventor  produces  a  new
    invention  in  the  commercial  field  of  atomic  energy  he  should  enjoy  the  same
    exclusive  rights  as  any  other  inventor.  This  can  be  accomplished  only  by  rejioal
    of  the  compulsory  licensing  provisions  of  the  act.

    TITLE  TO  PATENTS

    There  is  no  need  or  justification  for  the  provision  of  the  act  which  empowers
    the  Commission  to  requisition  or  condemn  patents  which  it  desires  to  administer.

    367140—5.3 40

    620  ATOMIC    POWER    DEVELOPMENT

    Under  the  act  of  1910  as  amended  (28  U.  S.  C.  1498)  the  Government  has  the
    right  to  use  any  patent  upon  payment  of  .iust  compensation  to  the  patent  owner.
    Thus  the  Government  is  never  hindered  in  the  use  of  patents  for  governmental
    purposes.  Any  provision  that  goes  beyond  this  is  unnecessary  and  should  be
    repealed.

    PATENT  RIGHTS  OF  CONTRACTORS

    The  military  branches  of  the  Government  have  a  general  policy  in  dealing
    with  contractors  who  do  research  and  development  work  of  leaving  with  such
    contractors  the  title  to  inventions  made  by  them,  taking  a  nonexclusive  license
    for  governmental  purposes.  Such  policy  gives  the  Government  all  of  the  rights
    which  it  needs,  at  the  same  time  giving  to  contractors  the  incentive  to  do  such
    work  on  a  low  margin  of  profit.  The  needs  of  the  Government  with  regard  to
    atomic  energy,  particularly  in  the  fields  which  are  primarily  commercial,  are
    basically  the  same  and  would  be  satisfied  by  the  same  policy.  It  is  believed
    that  the  Commission  should  adopt  this  same  general  policy  rather  than  one  of
    assuming  complete  control  over  the  disposition  of  patent  rights.  As  pointed
    out  above,  this  latter  policy  merely  results  in  discouraging  private  capital  from
    the  field,  with  the  unfortunate  result  that  public  funds  must  continue  to  be  used
    substantially  exclusively  to  carry  on  the  needed  research.

    CONCLUSION

    Tremendous  sums  of  money  have  necessarily  been  spent  by  the  Government
    to  accomplish  the  initial  phases  of  atomic-energy  research  and  development.
    The  Invention  Secrecy  Act  of  1951  now  provides  adequate  security  for  the  mili-
    tary phases  of  the  work.  To  accomplish  the  maximum  progress  in  the  commer-
    cial fields  of  i)ower  production  and  utilization  the  act  should  now  be  amended
    to  encourage  private  capital  to  take  the  same  type  of  financial  risk  that  it
    assumes  in  other  fields.  As  private  research  and  development  increase,  the  need
    for  the  use  of  public  funds  in  this  field  will  proportionately  decrease  and  the
    people  of  the  United  States  will  obtain  the  maximum  benefit  in  industrial  progress
    and  national  security.

    Phillips  Petroleum  Co.,
    Bartlesville,  Okla.,  July  10, 1953.
    Hon.  W.  Sterling  Cole,

    Chairman,  Joint  Committee  on  Atomic  Energy,

    Washington,  D.  C.
    My  Dear  Mr.  Cole:  We  acknowledge  your  letter  of  July  2  addressed  to  our
    chairman,  Mr.  K.  S.  Adams,  which  was  forwarded  from  our  New  York  office
    to  our  operating  office  at  Bartlesville.    Mr.  Adams  is  away  on  an  extended  trip,
    hence  I  am  replying.

    We  appreciate  very  much  the  opportunity  offered  to  discuss  with  you  and  the
    joint  committee  the  problems  relating  to  definition  of  a  Federal  policy  on  indus-
    trial atomic-power  development.  Some  of  our  views  have  been  transmitted  to
    the  joint  committee  through  staff  discussions.

    In  accord  with  your  request  we  are  attaching  reproductions  of  pages  95
    through  100,  relating  to  industrial  nuclear  power,  of  IDO-16088,  a  nonclassified
    document  dated  March  23,  1953,  entitled  "Atomic  Energy  in  Retrospect  and
    Prospect,"  by  R.  L.  Doan  (manager,  atomic  energy  division,  Phillips  Petroleum
    Co.,  Idaho  Falls,  Idaho).

    I  thank  you  for  affording  us  the  opportunity  to  appear  before  the  joint
    committee.

    Sincerely  yours,

    R.  W.  Thomas,

    Vice  President.

    Atomic  Energy  in  Retrospect  and  Prospect

    We  now  come  to  the  "$G4  question,"  which  has  received  wide  public  discussion
    during  the  past  year  or  two  in  connection  with  the  Atomic  Energy  Commission's
    so-called  industrial  participation  program.  The  question  may  be  stated  some-
    what as  follows :  "How  soon,  and  under  what  conditions,  can  a  feasible  basis  be
    found  for  the  investment  of  private  capital  in  a  joint  venture  with  the  Govern-
    ment in  the  field  of  industrial  nuclear  power  production?"  The  fact  that  such  a
    venture  must  of  necessity  be  a  joint  one  with  the  Government  at  once  presents
    the  problem  of  the  relative  interests  of  the  two  parties  in  the  plant  investment,

    ATOMIC    POWER    DEVELOPMENT  621

    the  operating  costs,  and  the  manufactured  product.  In  the  particular  case  of
    nuclear  power  production,  which  requires  the  simultaneous  production  of  fission-
    able material  to  make  it  even  approximately  competitive  on  an  economic  basis
    with  conventional  power,  it  is  impossible  to  make  an  objective  evaluation  of
    economic  feasibility  without  first  defining  the  relative  interests  of  the  Govern-
    ment and  the  company.  Depending  on  how  much  of  the  total  cost  the  Govern-
    ment is  willing  to  assume  on  the  basis  of  its  interest  in  plutonium,  the  nuclear
    power  might  be  considered  economic  or  uneconomic.  However,  this  would  be
    purely  a  matter  of  cost  allocation.  All  of  the  plutonium  produced  to  date  has
    been  made  under  the  urgency  of  military  objectives  which  must  of  necessity  con-
    sider delivery  schedules  ahead  of  production  costs.  It  is  tempting,  therefore,
    to  say  that  if  the  Government  will  guarantee  to  buy  the  plutonium  output  of  a
    dual-purpose  nuclear  power  reactor  at  a  price  equal  to  present  production  costs,
    or  will  finance  the  building  of  the  reactor  and  take  over  the  processing  of  the
    irradiated  nuclear  fuel,  an  industrial  concern  might  feel  justified  in  financing
    the  electrical  part  of  the  plant  and  get  its  profit  through  sale  of  the  power.
    Either  procedure  might  be  considered  "economic"  so  far  as  the  power  cost  is  con-
    cerned, as  long  as  there  is  a  real  military  need  for  the  plutonium  produced.  Rut
    this  is  not  the  kind  of  economics  upon  which  to  launch  a  new  industry.

    Obviously  if  atomic  energy  had  no  military  implications  tliere  would  be  no
    necessity  for  all  of  the  present  restrictions  surrounding  activity  in  this  field  and
    little  need  for  extended  discussion  on  the  economics  of  nuclear  power.  Private
    companies  who  saw  a  chance  to  make  a  profit  through  the  sale  of  uranium  would
    go  into  the  business  of  exploration  and  production.  If  engineering  studies  showed
    a  favorable  "payout"  on  nuclear  powerplants  through  the  sale  of  electrical  ix)wer,
    plutonium,  and  other  radioisotopes  in  a  free  and  open  market,  the  necessary
    capital  for  the  venture  would  probably  be  forthcoming.  On  the  other  hand,  if
    engineering  and  economic  studies  did  not  indicate  a  profit  to  be  made  com-
    mensurate with  the  risk  involved,  the  arrival  of  the  atomic  age  on  the  industrial
    scene  would  be  delayed  until  such  time  as  a  favorable  economic  picture  did
    develop,  regardless  of  the  spectacular  nature  of  atomic  energy  itself.  Some-
    where down  the  line  of  Government-sponsored  activity  in  atomic  energy,  when  all
    military  requirements  are  essentially  fulfilled,  the  same  "hard-rock"  economic
    philosophy  should  come  into  play  in  Government  financing  of  this  activity.  The
    only  sound  long-term  basis  for  the  development  of  a  nuclear  power  industry  is
    one  in  which  the  fissionable  material  used  and  produced  is  valued  strictly  on  its
    worth  as  a  commercial  product.  This  would  be  higher  than  the  fuel  value  alone,
    because  of  the  byproduct  value  of  the  radioactive  isotopes  that  could  be  produced,
    but  it  would  be  considerably  lower  than  the  present  military  value.

    It  is,  of  course,  out  of  the  question  to  talk  about  a  free  and  open  competitive
    development  of  atomic  energy,  for  reasons  familiar  to  everyone  in  this  audience.
    Probably  all  of  the  present  legal  restrictions  embodied  in  the  Atomic  Energy  Act
    of  1946  are  well  justified  on  the  grounds  of  national  security  and  the  pulilic
    interest.  Nevertheless,  the  nature  of  these  restrictions  presents  a  well-nigh
    insurmountable  barrier  to  industrial  participation  in  the  development  of  nuclear
    power  on  a  private  capital  basis.  Changes  in  the  present  law  tliat  would
    alleviate  some  of  these  restrictions  have  been  suggested  by  various  persons,  but
    none  of  these  changes,  nor  any  others  likely  to  become  possible  in  the  foreseeable
    future,  will  alter  the  basic  roadblocks  to  privately  financed  industrial  progress
    in  this  field ;  namely,  the  fact  that  a  single  agency,  the  Government,  controls
    all  of  the  raw  material,  is  the  sole  customer  for  the  fissionable  material  which
    might  otherwise  constitute  a  major  income-producing  item,  and  makes  most  of
    the  rules  of  operational  procedure.

    What,  then,  can  be  done  in  a  situation  where  everyone  recognizes  the  potential
    future  benefits  of  nuclear  power  but  the  circumstances  are  such  that  i)rivate
    industry  cannot  go  forward  on  its  own?  The  obvious  answer  would  apitear  to
    be  that  the  Government  itself,  which  holds  all  the  cards,  should  do  whatever
    going  forward  we  all  agree  to  be  desiral)le,  with  industry  participation  cither
    on  a  fee  or  plant-lease  basis.  The  fee  or  terms  of  the  lease  could  be  set  up  in
    such  a  way  as  to  provide  a  premium  for  top  quality  performame,  thereby
    bringing  incentive  into  play  to  cut  down  costs.  This  can  ])e  done  more  readily
    in  a  production  or  manufacturing  operation  than  in  one  that  is  primarily
    experimental.

    However,  before  undertaking  to  "go  forward"  in  the  field  of  nuclear  power
    it  would  appear  sensilile  to  ask  ourselves  the  question,  "where  are  we  going  and
    why?"  Neither  the  spectacular  nature  of  atomic  energy  nor  the  fact  that  a  lot
    of  heat  energy  is  being  thrown  away  at  all  of  our  plutonium  production  reactors

    622  ATOMIC    POWER    DEVELOPMENT

    in  themselves  constitute  valid  reasons  for  harnessing  the  power  of  the  atom.  If
    the  value  of  the  power  to  be  recovered  by  installing  heat  exchangers  and  gener-
    ators at  Hanford  or  Savannah  River  is  sufficient  to  justify  the  cost  of  the  extra
    equipment,  that  is  something  that  should  be  done.  In  fact,  it  would  have  con-
    siderable merit,  in  view  of  the  large  demand  which  atomic  energy  activities  are
    making  on  the  electrical  generating  capacity  of  the  country.  If,  on  the  other
    liand,  the  installation  of  such  equipment  cannot  be  justified  on  economic  grounds
    it  should  not  be  undertaken,  unless  the  value  of  the  resultant  international
    prestige  will  make  up  the  deficiency  in  payout.

    This  brings  up  a  very  important  question  which  has  not  received  the  public
    attention  it  deserves.  Its  importance  stems  from  the  fact  that,  whereas  it  would
    r.utomatically  receive  an  economic  answer  if  atomic  energy  could  take  its  place
    in  competitive  industry,  the  possibility  exists  that  because  atomic  energy  must
    necessarily  be  a  Government  monopoly  under  present  conditions,  the  development
    of  nuclear  power  might  be  undertaken  under  political  pressure  rather  than
    economic  pressure.  The  question  is  this :  "How  urgent  is  it  to  get  on  with  the
    development  of  nuclear  power  and  how  far  should  we  as  a  nation  go  in  building
    central  station  nuclear  powerplants?"  Undoubtedly  the  Atomic  Energy  Com-
    mission has  been  pondering  this  question  for  some  time.  Each  of  us  will  have  his
    own  opinion  in  this  regard  and  there  is  probably  no  answer  that  would  receive
    universal  acclaim.  My  own  feeling  is  that,  because  of  the  high  probability  that
    fissionable  material  can  sooner  or  later  be  economically  substituted  for  coal  and
    oil  in  those  specialized  applications  for  which  it  is  adapted,  it  is  important  that
    the  Government  undertake  in  the  reasonably  near  future  the  development  and
    construction  of  2  or  3  distinctly  different  varieties  of  dual-purpose  nuclear  power-
    ].lants  for  the  purpose  of  getting  essential  engineering,  operating,  and  economic
    data  that  can  only  come  from  actual  experience.  These  plants  should  be  large
    enough,  preferably  25,000  electrical  kilowatts  or  more,  so  that  the  operating  data
    will  have  some  industrial  significance.  They  should  be  located  where  the  power
    can  be  utillized  to  the  best  advantage,  and  designed  with  proper  regard  for
    economy  in  consti'iiction  and  operating  costs.  But  it  should  be  accepted  in  ad-
    vance that  they  are  experimental  plants  built  for  the  purpose  of  gaining  experi-
    mental data  whi(b  will  have  national  usefulness  inputting  nuclear  power  to  work
    whenever  it  becomes  feasible  to  do  so.  Consequently  the  value  of  the  information
    obtained  should  be  considered  as  one  of  the  principal  commodities  of  these-
    plants  and  should  serve  to  compensate  for  the  higher  power  costs  that  will  almost
    certainly  pie  ail  in  comparison  to  commercial  rates  in  the  same  locality.

    It  is  still  much  too  early  in  the  atomic  age  to  make  any  reliable  predictions
    as  to  the  ultimate  destiny  of  atomic  energy  in  our  economic  society.  Its  destiny
    may  be  the  complete  and  total  destruction  of  our  way  of  life.  Being  of  a
    basically  optimistic  nature,  liowever,  I  predict  that  nations  will  yet  find  a  way
    of  living  peaceably  with  themselves  short  of  the  all-out  use  of  atomic  bombs,
    and  that  10  years  from  now  we  will  still  be  arguing  what  to  do  about  fitting^
    atomic  energy  into  the  industrial  hierarchy.

    Public  Utilities  Commission,

    State  of  Maine,
    Augusta,  July  20,  1953.
    Hon.  W.  Sterling  Cole,

    Chairman,  Joint  Committee  on  Atomic  Energy,

    Washington  25,  D.  G.
    Dear  Mr.  Cole  :  Your  letter  of  July  11  and  I  have  apparently  been  playing
    musical  chairs  with  each  other  around  the  State  of  Maine  for  the  last  week
    or  so,  but  it  finaliy  caught  up  with  me  this  afternoon.

    It  will  be  impossible  for  me  to  get  away  from  my  work  as  chairman  of  the
    State  public-utilities  commission  in  time  to  testify  on  the  22d,  as  you  suggest.
    I  will  have  some  fairly  strong  views  on  getting  atomic  power  into  industrial
    hands.  I  have  been  away  from  the  whole  matter  for  well  over  a  year  and
    a  half  and  doubt  seriously  wbether  any  statement  which  I  could  prepare  would
    be  of  real  intei-est  or  help  to  the  committee.  However,  if  at  a  later  date  you
    think  it  would  be  lielpful  for  me  to  appear  in  order  to  venture  some  suggestions
    antl  to  participate  in  discussion,  I  will  be  glad  to  do  so.
    With  kindest  personal  regards,  I  remain
    Yours  sincerely,

    Sumner  T.  Pike,  Chairman.

    ATOMIC    POWER    DEVELOPMENT  623

    Univeesitt  of  California,
    Department  of  Chemistry  and  Chemical  Engineering,

    Berkeley  Jf,  Calif.,  J^ly  21,  1953.
    Hen.  W.  Sterling  Cole,

    Chairman,  Joint  Committee  on  Atomic  Energy,
    United  States  Congress,  Washington,  D.  C.
    Dear  Mb.  Cole  :  I  am  happy  to  respond  to  your  recent  request  for  my  views
    on   desirable   changes   in   atomic-power   policy.     May   I   first   summarize   very
    briefly  my  estimate  of  the  general  technological  status  of  nuclear  power :

    1.  Nuclear  power  is  definitely  feasible.

    2.  There  is  an  adequate  supply  of  nuclear  fuel.

    3.  Although  the  relative  economy  of  atomic  power  is  not  yet  certain,  general
    trends  indicate  that  atomic  power  will  become  economical  for  a  gradually  in-
    creasing range  of  purposes  and  locations.

    On  this  basis  I  conclude  that  it  is  unquestionably  of  advantage  to  the  United
    States  to  develop  atomic  power  promptly.  The  questions  concern  the  best
    framework  of  policies.  It  is  my  opinion  that  the  greatest  progress  and  most
    satisfactory  results  will  arise  if  atomic  power  is  integrated  into  our  present
    industrial  and  power  economy  as  rapidly  as  is  feasible.  To  promote  this  inte-
    gration a  number  of  policy  changes  are  necessary.  Some  will  require  legisla-
    tion ;  others  may  be  attainable  within  present  legislation  if  the  Congress
    indicates  a  clear  intent  that  the  present  provisions  should  be  interpreted  more
    liberally.

    It  is  obvious  that  private  ownership,  subject  to  appropriate  controls,  of  nuclear-
    power  facilities  and  of  fissionable  material  must  be  allowed.  Also,  it  is  clear
    that  there  should  be  reasonable  private-patent  rights.  The  more  troublesome
    problems  may  arise  in  the  areas  of  information  policy  and  safety  policy;  yet
    I  believe  there  are  no  basic  diflSculties  here.

    There  should  be  a  general  separation  of  important  atomic-weapon  informa-
    tion from  other  presently  classified  atomic  information.  At  one  time  there  was
    an  overlapping  of  weapon  and  reactor  information.  Without  possible  involve-
    ment in  classified  information,  I  cannot  explain  in  detail  the  reasons,  but  I  am
    convinced  that  it  is  now  possible  to  segregate  all  really  important  weajwn  data
    from  the  reactor  area.  Our  security  of  weapon  data  would  be  greatly  improved
    if  it  were  clearly  segregated  and  if  security  clearances  for  the  weapons  area
    could  be  handled  separately  from  other  areas.  The  Commission  should  be  given
    broad  authority  to  handle  reactor  data  as  it  deems  best.  I  believe  that  a  great
    body  of  presently  classified  reactor  data  might  well  be  published.  However,  it
    should  also  be  possible  for  reactor  data  to  be  handled  at  a  low  classification
    without  the  limitations  now  associated  with  atomic  energy  restricted  data.

    Safety  policy  must  be  made  realistic.  There  has  been  a  tendency  to  consider
    that  any  reactor  mishap  would  lead  to  a  major  catastrophe  with  vast  amounts
    of  radioactivity  spread  over  a  broad  area.  Yet  as  experience  increases  we
    see  that  the  actual  operational  failures  have  led  to  damage  of  an  extremely
    local  character  if  there  was  any  dnmage  at  all.  We  want  atomic  iK)wer  to  be
    the  safest  type  of  power,  but  we  do  not  want  to  see  it  impeded  by  arbitrary
    regulations.  In  particular  there  should  not  he  a  fixed-exclusion  area  regardless
    of  the  intrinsic  safety  of  the  reactor.  The  aim  should  be  to  ])lace  resiwnsibility
    en  the  reactor  builders  and  operators  rather  than  upon  some  separate  group.

    It  will  be  necessary  for  the  Government  to  continue  to  supi>ort  the  basic
    research  in  the  atomic-energy  area  at  least  until  a  large  industry  has  developed.
    Traditionally,  most  basic  research  has  been  supported  by  universities  or  gov-
    ernments; hence  this  is  no  departure  from  normal  practice.  Also  the  public
    should  realize  that  the  major  atomic-energy  expenditures  to  date  have  been
    for  weapons  development  and  production.  The  level  of  exjienditure  for  basic
    atomic-power  rcseftrch  is  substantial  but  is  far  smaller  than  the  present  weapons-
    production  budgets.  This  program  should  include  provision  for  experimentiil-
    reactor  construction,  because  it  is  often  faster  and  cheaper  to  test  a  novel  tyi)e
    of  reactor  as  a  whole  than  to  test  all  of  its  components  separately.

    While  I  have  no  brief  to  present  in  favor  of  combined  power  and  plutonium
    production  reactors,  I  would  think  it  unfortunate  if  such  proposals  were  arbi-
    trarily excluded.  The  important  matter  is  to  get  useful  power  producers  into
    operation  so  that  we  may  gain  experience.  We  should  keep  ourselves  free  to
    choose  the  routes  which  may  be  expected  to  yield  the  greatest  progress  for  the
    smallest  cost.

    Finally,  I  should  like  to  emphasize  that  there  are  a  multitude  of  types  of  power
    reactors.  Also  there  are  a  wide  variety  of  auxiliary  devices  which  will  improve
    reactor  operation.    We  need  not  fear  that  private  entry  in  this  field  will  lead  to

    624  ATOMIC    POWER    DEVELOPMENT

    a  monoply  based  on  patents  on  a  particular  design  or  type.  Rather  we  need  the
    freedom  of  private  enterprise  to  malfe  independent  judgements  as  to  the  most
    promising  types  of  reactors  and  to  follow  these  judgements  without  the  necessity
    of  convincing  a  central  authority  that  a  particular  selection  was  best.  Also
    we  need  the  incentives  of  competition  to  reduce  the  costs  of  reactor  construction
    and  operation.

    You  are  to  be  congratulated  for  exploring  this  subject  thoroughly  at  this  time
    and  I  am  sure  that  valuable  policy  changes  will  develop.    If  I  can  assist  in  any
    way  please  do  not  hesitate  to  call  on  me.
    Yours  very  sincerely,

    K.    S.   PiTZER,

    Dean,  College  of  Chemistry.

    Massachusetts  Institute  of  Technoi-ogy,

    Department  of  Food  Technology,

    Cambridge,  Mass.,  July  31,  1953.
    Hon.  W.  Sterling  Cole,

    Congress  of  the  United  States,  Joint  Committee  on  Atomic  Energy,
    Washington,  D.  G.

    My  Dear  Congressman:  Answering  your  inquiry  of  July  24  concerning  any
    written  comments  I  may  wish  to  make  on  problems  incident  to  the  definition  of  a
    Federal  policy  on  industrial  atomic-power  development,  I  thank  you  for  your
    suggestion  but  I  feel  I  have  nothing  to  present  at  the  moment  which  is  pertinent

    Thanking  you  again  for  your  consideration.
    Sincerely  yours,

    B.  E.  Peoctor.

    Radioactive  Products,  Inc.,

    TT^„   wo  ^  Detroit,  Mich.,  July  31,  1953.

    Hon.  W.  Sterling  Cole,  '       j      i

    Chairman,  Joint  Committee  on  Atomic  Energy,  '*'j

    House  of  Representatives,  Washington,  D.  C.

    T  ?^^  Congressman  Cole:  This  will  acknowledge  the  receipt  of  your  letter  of

    July  24  inviting  such  comments  as  we  may  have  pertinent  to  the  amendment  of

    offerX"f^lfoSJc-^2iSf  ■  '  ""=""''  ""^  °»°''"°"^  ^"^  ^"  ■"-*^  °»
    While  the  companies  who  are  interested  in  the  development  of  economic
    S^«rfn^hr/,/''f  ""^"^l^^^  represented  in  respect  to  such  amendment,  I  wish  to
    speak  in  behalf  of  another  segment  of  this  industry  which  might  be  considered
    as  a    fringe    or  incidental  activity  to  that  of  nuclear  power  production

    fepecihcally  I  refer  to  companies  such  as  Radioactive  Products,  Inc ,  who  are
    engaged  m  the  secondary  distribution  of  radioactive  isotopes  and  are  engaged
    in  the  development  of  new  applications  of  these  materials  to  various  indufSal
    and  other  problems.  These  companies  are,  for  the  most  part,  quite  new  and
    small  but  are  engaged  in  solving  problems  relating  to  most  of  the  major  IndiLs
    tries  of  our  country.  Their  work  may  well  prove  to  be  the  key  to  the  early  devel
    opment  of  economic  nuclear  power,  although  it  is  quite  unlikely  that  their  actM-
    ties  will  ever  justify  the  construction  of  a  reactor  for  their  purposes
    n,nTi  ^^"^  Y""  ^Ji"^?.<^^.  of  aspects  of  the  present  Atomic  Energy  Act  which  seri-
    ously hinder  the  activities  of  these  companies.  As  an  example,  I  should  like  to
    review  some  of  the  difficulties  which  might  be  encountered  bv  a  company  such
    a.  ours  who  wishes  to  evaluate  and  develop  an  application  of  bj^roduct  mate-
    roif  «f"''"r'''".^  extremely  high  radiation  levels  such  as  may  be  encountered  Tn
    cold  steri  ization  or  the  catalysis  of  a  particular  chemical  reaction.

    1  irst,  tins  investigator  is  unable  to  acquire  information  as  to  the  materials
    that  are  potentmlly  available  from  a  large-sized  operating  reactor.  Suchfnfor
    mation  is  genera  ly  available  only  to  the  personnel  of  contractors  of  the  Atomic

    S"rthntTon;rnr  't5"i.^"'"  ^  T^'^^  "^^'^  ^^'^  this  information  in  connectTon
    Tt  or  hnL  h-  ^-  ^}  K'""  ^"^Pl«yed  by  one  of  the  larger  companies,  on  the
    o  her  hand,  his  opportunities  are  much  greater  since  it  is  quite  likely  that  the

    neSrnenTfw\''V"  ''''^"  ^"  i*^"^^"  ^^"^^^-^  Commission  contract  sufficiently
    pel  tinent  that  he  r-an  acquire  this  exploratory  data.     Let  us  suppose,  however,

    m^l.  h^^7''^'^''*"'r  ^''^  *^  ''^"^'"''^  the  necessary  information,  and  detlr^
    mines  that  his  proposed  application  may  be  feasible.  He  would  like  to  purchase
    a  fuel  element  recently  removed  from  a  reactor,  or  else  to  have  an  iri?dSn  ol

    ATOMIC    POWER    DEVELOPMENT  625

    his  own  uranium  sample  made  in  one  of  the  reactors.  It  is  only  by  tlie  broadest
    interpretation  of  the  law  (as  I  understand  it)  that  such  transfer  is  allowable.
    Were  this  broad  interpretation  made,  however,  and  were  he  to  receive  the  ma-
    terial or  services  requested,  he  would  be  immediately  involved  in  a  tremendously
    complicated  and  expensive  procedure  in  accounting  for  every  trace  of  the  fission-
    able material  which  had  passed  into  his  hands.  He  would,  further,  be  in  pos-
    session of  physical  objects  and  information  which  would  require  extreme  security
    measures.  He  would  assume  liabilities  beyond  any  ordinary  industrial  practice
    for  the  perpetual  safe  handling  of  the  materials  that  came  into  his  possession.
    His  distribution  and  use  of  these  materials  would  henceforward  be  under  the
    control  of  the  Atomic  Energy  Commission.  Certainly  a  consideration  of  this
    succession  of  difficulties  would  discourage  the  initiation  of  any  but  the  most
    obvious  likely  applications.

    Let  us  look  specifically  at  the  origins  of  these  diflSculties  and  offer  suggestions
    which  might  alleviate :

    1.  Security

    While  we  recognize  fully  that  the  information  involved  in  the  above  investi-
    gation would  touch  upon  significant  reactor  design  parameters,  operating  charac-
    teristics and,  possibly,  even  fissionable  material  production  rates,  this  is  equally
    true  for  those  companies  engaged  in  the  sutdy  of  nuclear  power.  The  Commis-
    sion has  granted  clearances  to  such  groups  who  have  undertaken  very  substantial
    study  programs.  There  is,  however,  no  ready  mechanism  by  which  a  small  com-
    pany is  able  to  secure  such  '"study  clearance"'  for  qualified  personnel  wisliing  to
    undertake  projects  of  a  lesser  magnitude.

    2.  Account aWity

    While  the  possession  of  even  minute  quantities  of  fissionable  material  would
    have  been  of  immense  value  to  our  potential  enemies  at  one  time,  this  is  hardly
    true  today.  We  suggest,  therefore,  that  reasonable  amounts  of  these  fissionable
    materials  be  available  with  no.  or  highly  simplified,  accountability  procedures.
    Tf  private  industry  should  develop  a  nuclear  power  system,  these  materials  will
    .ssume  their  true  economic  value  in  terms  of  their  energy-producing  potentiality.
    The  accountability  measures  will  then  become  inventory  procedures  which,
    according  to  commercial  practice,  will  be  of  a  complexity  justifiable  by  the  value
    of  the  material.

    3.  Control  byproducts

    The  Atomic  Energy  Commission  is  now  charged  with  the  responsibility  for
    the  safe  handling  of  byproduct  materials.  While  there  is  no  question  of  the  fair-
    ness and  reasonability  with  wliich  they  have  administered  this  program,  the
    legal  implications  of  the  purchase  of  such  material  today  are  far  beyond  the
    limits  of  reasonable  business  obligations.  A  secondary  distributor  of  these  ma-
    terials assumes  liabilities,  it  is  my  understanding,  that  he  cannot  pass  on  to
    other  subsequent  purchasers  and  users  of  these  materials.  While  these  restric-
    tions on  the  use  of  byproduct  materials  are  understandable  in  terms  of  the
    Atomic  Energy  Act  of  1946,  they  were  not  (as  with  other  aspects  of  the  act)
    prepared  with  the  thought  of  potential  commercialization  of  this  field.

    J/.  Small  companies

    As  indicated  in  section  1  above,  but  in  a  more  general  sense,  we  wish  to  \irge
    that  the  potential  importance  of  small  companies  who  are  engaged  in  the  devel-
    opment of  these  many  facets  of  this  new  industry  be  borne  in  mind,  and  their
    particular  problems  should  be  considered  in  the  amendment  of  the  Atomic  Energy
    Act  of  1946.

    Very  truly  yours,

    Homer  S.  Myers,  President.

    The  Rand  C!orp.,
    Santa  Monica,  Calif.,  July  28, 1953.

    Hon.  W.   STE2SLING  COLE,

    Chairman,  Joint  Committee  on  Atomic  Energy,

    Congress  of  the  United  States,  Washin.gton,  D.  C.
    Dear  Me.  Cole  :  We  are  honored  to  have  you  invite  our  comment  on  industrial
    atomic  power  development.     The  subject  is  not  in  our  normal  field  of  study ;  I  re-
    gret, therefore,  that  we  are  unable  to  offer  a  useful  comment.

    We  shall  follow  the  results  of  your  committee  with  a  great  deal  of  interest.
    Sincerely,

    F.  R.  CoLLBOHM,  Director.

    626  ATOMIC    POWER    DEVELOPMENT

    Electric  Boat  Division,
    General  Dynamics  Corp.,
    Oroton,  Conn.,  August  7,  1953.
    Hon.  W.  Sterling  Cole,

    Chairman,  Joint  Committee  on  Atomic  Energy,

    Congress  of  the  United  States,  Washington,  D.  C.

    Dear  Mr.  Cole  :  This  is  in  reply  to  your  letter  of  July  13,  inviting  my  written
    comments  on  some  of  the  problems  incident  to  definition  of  a  Federal  policy  on
    industrial  atomic  power  development.  I  am  aware  of  much  of  the  testimony
    presented  before  your  committee  and  material  published  in  the  press  on  this
    subject  and  will  attempt  to  avoid  undue  repetition.  The  points  which  follow,
    however,  are  ones  which  in  my  opinion  merit  special  emphasis  or  the  inclusion
    of  which  is  necessary  to  keep  the  whole  problem  in  better  perspective.

    I  would  like  to  risk  the  suggestion  at  the  outset  that  concentration  on  the
    problem  of  industrial  atomic  power  development  may  be  an  inadequate  approach
    to  the  Nation's  whole  atomic-energy  program.  I  believe  the  whole  problem  is  to
    initiate  and  foster  a  transplantation  of  the  iVEC  program  from  a  condition  of
    Government  monopoly  to  a  condition  of  normal  free  enterprise — to  the  extent
    compatible  with  national  security — and  without  impairing  progress  in  the  prose-
    cution of  the  AEC's  current  programs.

    This  is  not  to  underrate  the  importance  of  industrial  atomic  power  develop-
    ment but  to  emphasize  that,  the  total  potential  of  atomic  energy  is  so  great  and
    so  varied,  there  may  well  be  other  developments  of  equal  or  greater  significance
    than  the  use  of  the  atom  for  commercial  power.  Solid  state  physics  and  result-
    ing synthetic  metals  and  alloys  may  open  up  a  whole  new  chapter  in  this  mech-
    anized age.  Significant  effects  on  the  world's  food  supply  may  result  from  de-
    velopments based  on  controlled  application  of  photosynthesis.  Medical  appli-
    cations may  prove  revolutionary.  The  transitions  necessary  to  speed  up  and
    broaden  progress  on  these  varied  fronts  may  require  successive  legislative  steps
    and  no  one  formula  or  panacea  may  be  adequate.

    In  making  such  transitions  without  impairing  current  progress,  the  approach
    to  the  specific  industrial  atomic  power  development  must  not  ignore  the  impact
    on  the  present  and  projected  programs  for  nuclear  propulsion.  The  naval  nu-
    clear propulsion  program  has  made  tremendous  progress  in  a  strikingly  short
    time.  The  accomplishment  to  date  warrants  a  hard  look  as  to  what  made  it
    possible.  To  my  mind  the  answer,  as  it  was  in  the  case  of  the  bomb,  is  the
    centralized  control  which  has  led  and  directed  the  efforts  of  several  Govern-
    ment agencies  and  many  industrial  companies  in  a  broad  but  coordinated
    program  toward  specific  goals,  spearheaded  by  leadership  which  knew  what  it
    wanted  and  when.  A  great  portion  of  the  accomplishment  to  date,  and  that  to
    come,  is  directly  applicable  to  the  sought-for  economic  commercial  atomic  power.
    It  would  be  a  grave  error  to  allow  effort  to  level  off  or  fall  into  confusion  after
    the  first  achievement  of  significant  useful  power,  as  it  did  in  the  first  years  fol-
    lowing the  attainment  of  the  Nation's  first  atomic  bomb.

    The  team  harnessed  into  the  present  nuclear  propulsion  program  knows  of
    many  points  in  which  significant  improvement  is  possible  and  knows  that  this
    further  progress  is  not  dependent  on  legislative  changes  but  only  on  continued
    support.  Some  of  this  further  progress  is  dependent  upon  improvement  of
    pieces — such  special  components  as  heat  exchangers,  new  type  pumps,  and  en-
    gineered valves — and  many  of  the  leading  manufacturers  of  these  special  comiK)-
    nents  that  would  be  engaged  in  a  commercial  power  program  are  already  direct-
    ing the  full  efforts  of  their  specialists  to  these  problems.  The  continued  high
    rate  of  progress  in  this  program,  with  its  large  degree  of  applicability  to  in-
    dustrial power  should  not  be  interrupted  or  retarded  by  sudden  and  immediate
    diversification  of  effort  coincident  with  implementation  of  the  AEC  proposed
    changes.

    Desirable  as  it  is  for  private  industry  to  assimilate  portions  of  the  AEC  pro-
    gram along  traditional  American  patterns,  the  transition  from  Government  mo-
    nopoly to  a  system  of  free  enterprise  must  take  into  account  the  following
    considerations :

    1.  That  projects  of  substantial  significance  now  under  Government  sponsor-
    ship not  be  sacrificed  nor  impaired.  To  allow  disruption  could  not  only  jeopard-
    ize military  goals  but  could  also  deter,  rather  than  further,  the  future  develop-
    ment of  atomic  power  for  peaceful  purposes.

    2.  That  the  creation  of  rights  in  private  industry  to  exploit  the  atom  not  re-
    sult in  a  premature  relaxation  of  Government's  efforts  in  this  field.

    ATOMIC    POWER    DEVELOPMENT  627

    3.  That  the  transition  be  effected  without  draining  existing  organizations  al-
    ready engaged  in  essential  atomic  work  of  key  personnel.

    These  considerations  require  the  continuance,  without  slackening  of  effort,
    of  the  current  drive  on  immediate  technical  objectives.  Even  with  respect  to
    commercial  atomic  power,  the  greatest  immediate  progress,  in  my  opinion,  will
    come  from  building  on  knowledge  already  gained  in  the  nuclear  propulsion
    program,  just  as  the  lessons  of  other  military  developments  have  been  applied
    to  civilion  commercial  uses,  such  as  the  locomotive  diesel  which  evolved  from
    the  marine  diesel  and  the  television  industry  which  evolved  from  wartime
    radar.

    It  is  apparent  that  many  students  of  the  problem  feel  that  ways  must  be
    found  soon  to  redirect  the  atomic-energy  program  into  more  normal  channels;
    that  as  the  Commission's  industrial  empire  grows,  the  dangers  of  monopoly
    increase ;  that  preoccupation  with  urgent  military  requirements  may  not  result
    in  balanced  support  of  industrial  programs;  that  the  master-planning  concept
    cannot  be  counted  on  to  chart  a  wise  course  for  industrial  developments  to  the
    exclusion  of  the  forces  arising  from  the  interplay  of  free  enterprise  and  com-
    petition of  ideas ;  that  under  a  monopolistic  management,  Government  may  in-
    sinuate its  influence  into  business  life  to  an  unwarranted  degree.  To  my  mind
    there  is  the  added  practical  difficulty  that  the  continued  control  and  financing
    by  a  single  Government  agency,  of  a  total  program  which  is  already  passing  in
    magnitude  the  total  Federal  Government  operation  prior  to  World  War  I  will
    grow  unwieldy  and  may  grow  sluggish  and  confused,  if  permitted  to  continue
    indefinitely.

    How  can  the  needed  transition  be  set  in  motion  without  disrupting  the  present
    program?  In  my  opinion,  this  can  be  accomplished  only  in  stages  and  by
    studied  steps  after  careful  analysis  of  the  impact  of  each  proposed  change  on
    the  overall  program.  Although  fundamental  changes  in  the  law,  such  as  the
    Commission  has  recommended,  may  be  desirable  to  establish  a  proper  frame-
    work, enactment  of  such  a  statute  should  not  of  itself  be  understdod  as  con-
    gressional sanction  for  any  specific  course  of  action.  This  type  of  broad  legis-
    lation may  induce  private  industry  to  identify  and  seek  its  proper  level  as  a
    rightful  contender,  but  the  passage  of  such  legislation  does  not  in  itself  provide
    the  answer  as  to  how  the  transition  should  be  made.

    The  several  types  of  legislative  actions  and  their  sequence  requires  a  review
    and  interpretation  of  the  technical  and  economic  and  security  position  of  any
    segment  of  the  overall  program  under  consideration.  To  that  end,  I  suggest
    that  the  deliberations  of  both  your  committee  and  the  Commission  would  be
    assisted  by  setting  up  under  joint  congressional-executive  sponsorship  a  small
    but  topflight  group  of  persons  familiar  with  the  various  facets  of  the  problem.
    I  suggest  that  such  a  task  force  consider  the  overall  atomic-energy  program  but
    not  attempt  to  produce  a  complete  plan  in  any  one  study  assignment.  It  would
    submit  recommendations  from  time  to  time  as  it  arrives  at  conclusions  which
    it  considers  to  be  mature  and  thoroughly  reasoned  out.  This  group  need  not  be
    limited  to  items  requiring  legislative  revisions  where  it  appears  that  a  reexami-
    nation of  present  policy  is  indicated.  Such  an  example  may  be  a  reconsideration
    of  portions  of  the  present  "declassification  guide."  Sensitive  as  this  subject  is —
    and  much  as  any  relaxation  in  the  guide  needs  critical  examination  by  all  con-
    cerned— a  fundamental  reappraisal  may  result  in  a  high  yield.  I  personally  feel
    that  higher  fences  around  smaller  areas  make  for  better  national  security.
    There  can  hardly  be  a  realistic  approach  to  this  problem  on  the  part  of  the
    Commission  as  long  as  the  apparent  national  policy  is  that  all  matters  per-
    taining to  the  AEC  program  are  restricted  data.

    This  special  panel  could  well  apply  itself  to  the  following  questions  among
    others :

    1.  Considering  the  present  status  of  the  nuclear  propulsion  program  and  its
    anticipated  developments  in  the  next  few  years,  should  design  and  ('(instruction
    of  a  commercial  powerplant  be  proceeded  with  now,  either  by  the  Government
    or  by  private  industry?  What  would  the  impact  of  such  a  new  program  be  on
    the  nuclear  propulsion  program?

    2.  Should  the  establishment  of  normnl  industrial  patterns  he  attempfc^d  now
    by  allowing  private  ownership  of  fissionable  materials  and  facilities  for  their
    production?  Should  ownership  be  extended  to  processes  and  facilities  needed
    to  separate  and  enrich  fissionable  material  and  to  separate  and  recover  or  dispose
    of  irradiated  materials?

    3.  Is  there  an  alternative  or  additional  route  to  assimilation  of  the  atomic
    program  by  industry  by  "decontrolling"  segments  of  the  program  under  the
    jurisdiction  of  the  Atomic  Energy  Commission  on  a  progrannnatic  basis?

    628  ATOMIC    POWER    DEVELOPMENT

    4.  Are  there  advantages  to  be  gained  from  transferring  part  of  the  Atomic
    Energy  Commission  program  to  other  Government  agencies?  For  example,
    should  the  quantity  production  of  ordnance,  after  perfection  and  tests  and
    approval  of  standard  types,  be  transferred  to  Department  of  Defense?  Should
    portions  of  the  biology  and  medicine  program  be  transferred  to  public-health
    services?  Are  there  large  portions  of  the  general  research  progi-am  (not  con-
    cerned with  weapons)  overdue  for  assumption  by  other  public  or  private
    organizations?

    5.  To  what  extent  can  declassification  of  areas  outside  weapons  and  reactor
    technology  be  effected  without  impairing  security?

    6.  To  what  extent  should  the  patent  provisions  of  the  Atomic  Energy  Act
    and  the  Commission  patent  policy  be  revised?

    7.  To  what  further  extent  can  private  industry  under  a  clear  statement  of
    Federal  policy,  perform  enlarged  research  and  development  work  and  engage
    in  the  production  and  sale  of  components  and  facilities  independent  of  the  Com-
    mission and  on  its  own  initiative?

    In  summary,  industrial  atomic-power  development  is  one  piece  of  a  broad
    problem.  Action  to  broaden  it  must  include  practical  consideration  of  the
    technical  status  and  momentum  of  the  significant  allied  propiilsion  and  other
    AEC  programs.  Other  equally  important  segments  of  the  total  AEC  program
    may  well  require  other  forms  of  legislative  or  other  action  and  other  timing
    of  that  action.  Although  the  current  Commission  recommendations  represent  a
    start,  continued  total  progress  and  adequate  consideration  of  other  phases  of
    the  program  well  justify,  during  the  transitional  period,  detailed  study  of  pro-
    posed courses  of  action  by  a  qualified  panel  representing  all  interests.
    Sincerely  yours,

    Carleton  Shugg.

    South  Carolina  Electric  &  Gas  Co.,

    Columbia,  S.  C,  August  7,  1953.
    Hon.  Sterling  Cole.

    Chairman,  Joint  Committee  on  Atomic  Energy,

    Senate  Office  Building,  Washington,  D.  C.
    Dear  Chairman  Cole  :  Thank  you  for  your  letters  of  July  24  and  August  1  to
    Mr.  S.  C.  McMeekin,  president  of  this  company.     As  Mr.  McMeekin  is  currently
    out  of  the  city,  and  an  answer  to  your  letters  is  necessary  by  Aug-ust  10,  I  am
    taking  the  liberty  of  replying.

    This  company  is  very  much  interested  in  participating  in  the  study  of  the
    feasibility  of  producing  electrical  power  with  nuclear  fuels,  and  entering  ir^to
    certain  phases  of  the  work  related  thereto.  We  believe  that  changes  in  existing
    statutes  necessary  to  permit  .such  industrial  participation  should  be  made,  and
    that  a  policy  .should  be  stated  in  favor  of  participation  and  development  by
    private  industry.

    Also,  of  course,  access  would  have  to  be  made  available  on  a  classified  basis
    to  concepts  and  data  which  will  contribute  to  a  better  understanding  of  this
    field.

    We  also  wish  to  work  with  the  staff  of  the  Savannah  River  project  on  all
    possible  phases  of  this  work,  due  to  the  close  proximity  of  this  project,  as  well
    as  the  fact  that  we  are  furnishing  them  electrical  power.
    We  appreciate  very  much  your  cooperation  in  this  matter.
    Very  truly  yours,

    J.  M.  COSTEIXO,

    Executive  Vice  President.

    American  Gas  &  Electric  Co.,
    tJew  York,  N.  Y.,  August  7, 1953.
    Hon.  W.  Sterling  Cole,

    Chairman,  Joint  Committee  on  Atomic  Energy,

    Congress  of  the  United  States,  Washington,  D.  G.
    My  Dear  Chairman  Cole  :  I  appreciate  your  letter  of  July  24,  19.53,  inviting
    my  comments  in  connection  with  your  committee's  current  consideration  of  the
    problems  incident  to  definition  of  a  Federal  policy  on  industrial  atomic-power

    ATOMIC    POWER    DEVELOPMENT  629

    (leve>opment.  I  have  been  greatly  impressed  with  the  range  and  the  depth  of  the
    hearings  which  your  committee  has  just  concluded  on  this  subject  and  which  I
    have  followed  as  closely  as  possible  without  bavins^  available  all  the  transcripts.
    I  look  forward  to  studying  these  hearings  in  detail  as  soon  as  they  are  published.

    In  the  meantime,  however,  it  seems  clear  to  me  that  the  committee  has  per-
    formed a  most  useful  service  in  oiiening  up  these  problems  publicly  and  in  se-
    curing such  illuminating  statements  of  the  numerous  points  of  viewwhich  char-
    acterize the  thinking  on  this  subject  by  representatives  of  Government  and  of
    private  interests.  In  view  of  the  character  of  the  committee's  hearings,  I  doubt
    that  at  this  stage  I  could  offer  any  couuuents  that  will  materially  add  to  the
    record.

    However,  for  whatever  it  may  be  worth,  I  should  like  to  describe  the  position
    of  my  company  in  regard  to  technological  developments  in  general  and  atomic
    power  in  particular.  Our  record  in  relation  to  other  technological  developments
    is  one  of  which  I  think  we  can  be  justly  proud  because  of  the  advances  in  the
    art  of  generation,  transmission  and  distribution  of  power  to  which,  in  col-
    laboration with  the  manufacturers  of  equipment,  we  have  contributed  over  the
    past  quarter  of  a  century.  It  is  fair  to  say  that  our  company  has  had  a  sig-
    nificant part  in  the  remarkable  improvement  over  this  period  in  efficiency
    and,  therefore,  attainment  of  greater  economies  in  the  production  of  electric
    power  by  present  methods,  especially  in  coal-fired  steam  boilers.  It  is  nat-
    ural that  one  of  our  primary  interests  should  have  been  in  the  improvement
    of  the  art  of  generating  electric  power  with  coal  because  the  American  Gas  &
    Electric  system  is  located  in  the  heart  of  the  Appalachian  bituminous-coal  terri-
    tory. It  is  also  for  this  reason  that  even  if  the  more  optimistic  views  as  to
    development  of  atomic  power  should  be  realized,  it  would  be  a  long  time  before
    such  power  could  be  competitive  with  electricity  produced  as  efficiently  as  our
    is  in  an  area  like  ours  which  is  so  favorably  situated  with  respect  to  coal
    resources.

    At  the  same  time  my  colleagues  and  I  have  been  actively  engaged  in  studying
    the  questions  involved  in  atomic  power  ever  since  1945.  Our  continuing  studies
    convince  us  that  the  time  is  now  ripe  for  vigorous  efforts  to  jierfect  processes
    by  which  electric  energy  may  be  produced  economically  with  nuclear  reactors.
    And  because  as  an  electric  utility  we  have  responsibility  for  everything  having
    to  do  with  the  production  and  distribution  of  power  and  in  the  improvement
    of  the  art  with  respect  thereto,  my  company  is  not  only  vitally  concerned  with
    this  subject  but  is  prepared  to  devote  currently  a  substantial  amount  of  money
    and  talent  to  developmental  work  in  this  field.  We  see  no  immediate  prospect
    that  we  could  attract  or  would  be  justified  in  expending  capital  in  the  amounts
    necessary  to  construct  solely  with  private  funds  large-scale  nuclear  reactors
    immediately.  For  the  immediate  future,  rather,  we  feel  that  our  contribution
    should  be  and  will  be  on  a  scale  appropriate  for  research  and  developmental
    undertakings.

    In  this  research  and  developmental  work,  in  which  we  are  already  taking  part
    in  considerable  measure  and  with  expectation  of  expanding,  we  have  been  and
    expect  to  cooperate  and  collaborate  with  other  concerns  from  our  own  industry
    and  from  other  industries  and  with  the  Government.

    There  is  every  indication  that  if  work  is  pushed  it  will  bring  us  to  the  position
    where  the  prospect  will  open  up  for  full-scale  private  development  of  commercial
    atomic  power.  To  this  end  it  will  be  helpful  that  Federal  legislative  and
    administrative  policy  be  reshaped  in  such  a  fashion  as  to  encourage  and  pro-
    mote this  eventuality,  because  it  is  clear,  as  your  committee  so  pointedly  sum-
    marized the  situation  in  your  release  of  July  31,  that  the  climate  of  Federal
    legislative  and  administrative  policy  will  have  a  significant  bearing  on  realization
    of  this  goal.

    As  to  the  specifics  of  desirable  redefinition  of  Federal  legislative  and  admin-
    istrative policy,  which  I   realize  is  your  committee's  main  concern,  I  should
    appreciate  an  opportunity  to  comment  further  after  I  have  bad  the  benefit  of
    study  of  the  published  hearings.
    Sincerely  yours,

    Phiup  Sporn,  President.

    630  ATOMIC    POWER    DEVELOPMENT

    Standard  Oil  Development  Co.,

    New  York,  N.  T.,  August  7,  1953.
    Mr.  Sterling  Cole,

    Chairman  of  the  Joint  Committee  on  Atomic  Energy,
    Congress  of  the  United  States,  Washington,  D.  C.

    Dear  Mr.  Cole  :  In  accordance  with  your  letter  of  July  24,  I  am  writing  to
    give  ruy  views  on  some  of  the  problems  incident  to  definition  of  a  Federal  policy
    on  industrial  atomic  power  development.  The  views  which  I  am  presenting
    are  my  personal  views.  The  views  of  the  General  Advisory  Committee  of  the
    Atomic  Energy  Commission,  of  which  I  am  a  member,  have  not  yet  been  formulated
    in  regard  to  this  question.

    Before  presenting  my  views  on  changes  in  legislation  which  may  aid  in  the
    industrial  atomic  power  development,  I  would  like  to  review  what  I  feel  the
    Atomic  Energy  Commission  has  accomplished  in  this  direction,  and  the  general
    economic  background  for  atomic  power  as  I  understand  it.

    I  feel  that  the  Atomic  Energy  Commission  has  done  an  outstanding  job  in  the
    utilization  of  atomic  energy  for  improved  military  weapons  and  in  producing
    the  materials  required  for  this  purpose.  This  has  been  the  main  responsibility
    of  the  Atomic  Energy  Commission  and  is  the  field  in  which  they  have  put  the
    most  emphasis.  At  the  same  time,  through  work  financed  by  the  Atomic  Energj'
    Commission,  much  information  has  been  obtained  to  serve  as  background  for
    the  industrial  application  of  atomic  energy.  This  information  has  been  utilized
    in  the  development  of  the  atomic-powered  submarine  which  is  closely  related
    to  industrial  atomic  power.  The  successful  oi)eration  of  a  pilot  type  of  breeder
    reactor  by  the  Atomic  Energy  Commission  is  also  an  important  step  in  the
    development  of  industrial  atomic  power.

    The  production  of  industrial  atomic  power  is  closely  related  to  the  production
    of  Plutonium  or  other  fissionable  materials  and  the  same  general  types  of  equip-
    ment are  involved.  Very  likely  in  any  industrial  atomic  power  development
    Plutonium  would  be  produced  as  a  byproduct.  Partly  as  a  consequence,  the
    Commission  has  given  serious  consideration  to  industrial  atomic  power  and
    has  carried  out  numerous  engineering  studies  and  a  good  deal  of  experimental
    work  directed  to  giving  a  suitable  technical  background  for  production  of  atomic
    power.

    The  studies  of  the  possibilities  of  atomic  power  carried  out  by  various  in-
    dustrial and  utility  companies  have  indicated  that,  based  on  present  technology,
    electricity  produced  from  atomic  energy  may  be  somewhat  more  expensive  than
    electricity  produced  from  normal  fuels.  It  seems  reasonable  that  with  further
    advances  in  technology  atomic  energy  may  reach  a  competitive  status  with  con-
    ventional fuels  for  production  of  industrial  power  and  in  the  long  run  it  is  likely
    it  will  offer  a  cheap  form  of  basic  energy  for  this  purpose.  From  the  standpoint
    of  overall  national  welfare,  it  seems  unwise  to  have  legislation  standing  in  the
    way  of  normal  development  of  the  industrial  application  of  atomic  energy  and
    from  many  standpoints  the  existing  legislation  does  have  this  effect.  Present
    legislation  largely  removes  all  normal  incentives  for  private  companies  to  spend
    their  own  money  in  work  directed  toward  the  industrial  utilization  of  atomic
    power.

    Research  and  experimental  development  leading  to  industrial  atomic  power
    can  be  handled  in  1  of  3  ways.  One  way,  which  is  the  present  way  and  is
    the  one  essentially  set  by  present  legislation,  is  for  this  research  and  experi-
    mental development  to  be  handled  entirely  by  the  Atomic  Energy  Commission.
    As  an  alternative  to  this,  with  proper  changes  in  legislation,  such  development
    of  industrial  atomic  power  could  be  handled  with  their  own  funds  by  such
    private  companies  as  may  be  interested  in  this  field  and  the  Atomic  Energy
    Commission  could  entirely  drop  out  of  the  industrial  atomic  power  development.
    A  third  procedure  would  be  for  both  private  companies  and  the  Atomic  Energy
    Commission  to  work  independently  with  their  own  funds  on  the  experimental
    development  of  atomic  power  and  at  the  present  time  this  would  seem  to  be
    the  best  mode  of  procedure.  For  private  companies  to  spend  money  in  this  de-
    velopment, as  brought  out  above,  however,  changes  in  legislation  are  desirable.
    I  would  not  favor  the  Atomic  Energy  Commission  owning  or  operating  large
    atomic  powerplants  except  insofar  as  such  facilities  may  be  desirable  for  furnish-
    ing their  own  power  needs.

    The  Atomic  Energy  Commission  and  its  contractors  have  a  large  number  of
    capable  people  who  can  further  the  development  of  atomic  power  and  undoubted-
    ly will  do  a  good  job  in  this  direction.  Groups  of  this  kind,  however,  are  sup-
    ported entirely  by  Government  funds  and  do  not  have  a  profit  incentive  to  make .

    ATOMIC    POWER    DEVELOPMENT  631

    their  work  as  effective  as  possible  in  the  shortest  possible  time,  and  also  have
    no  competitive  factors  to  spur  them  to  the  most  economic  and  rapid  solution
    to  the  problem.  A  proposal  in  a  large  group,  such  as  that  represented  by  the
    Atomic  Energy  Commission  and  its  contractors,  must  necessarily  be  considered
    by  central  groups  and  decisions  reached  by  central  committees,  and  such  a
    screening  program  quite  often  results  in  an  undesirable  compromise  of  views.

    If  legislation  were  changed  to  make  it  attractive  for  private  industry  to  work
    on  the  development  of  industrial  atomic  power,  the  number  of  people  consider-
    ing various  possibilities  in  atomic  power  would  in  time  be  greatly  increased.
    These  added  people  in  private  companies  would  be  activated  by  an  incentive
    for  profit  and  by  competition  to  push  the  development  forward  to  a  degree  that
    does  not  exist  in  Government-financed  groups.  Such  companies  would  also
    vary  in  objective.  There  is  no  real  substitute  for  the  progress  that  can  be  made
    by  a  lot  of  people  thinking  about  a  problem  such  as  this  and  being  allowed  to
    spend  their  own  money  on  what  they  think  offers  attractive  possibilities.  I  feel
    the  joint  committee  should  give  serious  consideration  to  the  possibility  that
    other  countries  than  the  United  States  may  make  more  rapid  strides  in  the  de-
    velopment of  industrial  atomic  power  due  to  the  fact  that  they  may  not  have
    the  restrictive  legislation  that  this  country  has,  which  in  effect  limits  the  work
    on  industrial  atomic  power  to  that  which  is  financed  by  the  Government.

    As  pointed  out  above,  I  feel  that  more  progress  will  be  made  on  the  develop-
    ment of  industrial  atomic  power  if  private  companies  using  their  own  funds
    take  an  active  part  in  such  development.  It  should  be  realized,  however,  at
    the  start  there  may  not  be  many  companies  who  would  be  immediately  attracted
    to  this  field  and  that  some  time  may  be  lost  if  the  Atomic  Energy  Commission
    does  not  continue  work  itself  in  the  field  of  research  and  experimental  develop-
    ment leading  to  industrial  atomic  power.  For  this  reason  I  would  favor  changes
    in  legislation  which  would  make  it  attractive  to  private  companies  to  participate
    in  the  development  but  at  the  same  time  I  would  not  favor  at  this  time  the
    Atomic  Energy  Commission  discontinuing  its  work  in  this  field.  I  do  feel,
    however,  that  the  Atomic  Energy  Commission  should  from  time  to  time  adjust
    its  efforts  in  the  light  of  what  private  industry  may  be  doing  and  as  private  in-
    dustry takes  a  more  active  part  in  the  program  I  would  think  the  Atomic  Energy
    Commission  should  be  less  active.

    The  Atomic  Energy  Commission  has  made  certain  proposals  in  regard  to  modi-
    fication of  existing  legislation  so  as  to  permit  ownership,  use,  and  transfer  of
    fissionable  materials  by  private  companies  under  license  of  the  Atomic  Energy
    Commission.  It  is  my  understanding  that  the  proposed  changes  would  still
    leave  the  Commission  in  absolute  control  of  the  transfer  and  disposition  of
    fissionable  and  source  material  which  I  think  is  essential  from  a  national  se-
    curity standpoint.  These  changes,  along  with  the  right  of  the  Atomic  Energy
    Commission  to  lease  and  sell  fissionable  material  and  source  materials  to  pri-
    vate companies,  are  essential  for  the  participation  of  private  companies  in  the
    industrial  atomic  energy  power  development.  These  proposed  changes  may  in-
    volve modification  of  sections  7  (b)  and  7  (c)  of  the  Atomic  Energy  Act.  As  the
    Atomic  Energy  Commission  has  indicated,  it  may  be  too  early  to  submit  the
    sort  of  report  called  for  in  section  7(b).  If  legislation  is  enacted  to  allow  licens-
    ing of  private  companies  to  own,  use,  and  transfer  fissionable  materials,  it  would
    seem  to  me  that  there  should  be  some  revision  in  the  conditions  under  which
    this  is  done,  as  now  called  for  in  section  7  (c)  of  the  act.  Conditions  (1)  and  (LM
    of  section  7  (c)  dealing  with  the  indicated  useful  purpose  being  commensurate
    with  fissionable  material  requirements  and  with  health  and  safety  standards
    seem  wise.  I  am  afraid,  however,  that  provision  (3)  of  this  subsection  would
    have  the  effect  of  reducing  competition  among  private  companies.  This  condi-
    tion (3)  calls  for  licensees  making  available  to  the  Atomic  Energy  Commission
    detailed  information  and  data  concerning  their  activities,  with  the  thought  it
    seems  to  me  that  the  Commission  may  pass  this  information  on  to  other  licensees.
    I  think  that  information  obtained  from  a  licensee  should  be  held  confidential
    liy  the  Commission  and  not  passed  on  to  other  licensees.  The  Commission  should
    obtain  detailed  information  on  those  phases  of  a  licensee's  work  that  are  im-
    portant from  the  standpoint  of  national  security  but  only  such  additional  infor-
    mation as  may  be  required  to  determine  if  conditions  (1)   and  (2)  are  met.

    In  order  to  insure  that  private  companies  will  take  an  interest  in  atomic-power
    development,  I  feel  that  revision  should  be  made  in  the  patent  section  of  the
    act  as  covered  in  section  11.  I  can  see  no  real  reason  why  patents  should  not
    be  allowed  on  inventions  that  are  solely  directed  to  the  production  of  fissionable
    materials  or  the  use  of  such  materials.     I  would  think  allowance  of  patents

    632  ATOMIC    POWER    DEVELOPMENT

    in  these  fields  would  stimulate  research  and  development  by  private  companies
    and  that  patents  in  this  field  should  be  treated  in  the  same  way  as  patents  in
    any  other  field,  whether  it  concerns  atomic  energy  or  not.

    Section  11  (c)  of  the  act  essentially  calls  for  compulsory  licensing  of  many
    patents  utilizing  fissionable  materials  or  atomic  energy.  This  compulsory  licens-
    ing is  at  a  royalty  to  be  determined — in  the  first  instance  by  the  Atomic  Energy
    Commission,  and  in  the  final  instance  by  the  courts.  I  cannot  see  where  there  is
    any  real  need  for  such  a  provision  for  compulsory  licensing  and  it  puts  a  great
    deal  of  power  in  the  hands  of  the  Atomic  Energy  Commission  from  the  standpoint
    of  fixing  royalty  rates.  In  my  opinion,  this  provision  of  compulsory  licensing
    will  have  tlie  effect  of  discouraging,  at  least  to  some  extent,  private  companies
    from  entering  the  industrial  atomic-energy  field.  Utilization  of  all  other  forms
    of  energy  up  to  the  present  have  been  successfully  carried  out  without  such
    restrictions  on  patents  and  it  is  difficult  to  see  where  they  are  particularly  needed
    in  the  atomic-energy  field.  Actually,  radiation  energy  may  in  the  long  run  be  a
    more  important  form  of  energy  than  atomic  energy  from  an  industrial  stand-
    point and  there  are  no  such  restrictive  patent  provisions  in  the  radiation  energy
    field.  Section  11  (d)  of  the  act  gives  the  Atomic  Energy  Commission  power  to
    take,  requisition,  or  condemn  patents  in  the  whole  field  of  atomic  energy.  These
    powers  are  very  broad  and  the  possibility  of  their  utilization  may  discourage
    private  companies  from  going  into  the  atomic-energy  field.  Here  again  it  is  hard
    to  see  why  these  powers  are  necessary.

    The  argument  has  been  advanced  that  modifications  of  the  patent  provisions
    of  the  Atomic  Energy  Act,  such  as  are  discussed  in  this  letter,  would  give  an  undue
    advantage  to  those  companies  or  organizations  who  have  worked  closely  with  the
    Commission  in  the  atomic-energy  development  through  contracts  with  the  Com-
    mission. Such  companies  v.ould  have  some  advantages  over  other  companies
    due  to  the  familiarity  with  what  has  been  done  and  the  fact  they  have  trained
    personnel  familiar  with  atomic-energy  technology.  This  possible  advantage  to
    certain  companies  would,  however,  have  to  be  weighed  against  the  disadvantage
    of  not  having  private  companies  participate,  using  their  own  funds,  in  the  atomic-
    energy  development.  I  would  think  that  any  patents  based  on  inventions  result-
    ing from  w(;rk  financed  by  (Tovernment  funds  should  be  assigned  in  so  far  as  they
    apply  to  the  atomic-energy  field,  to  the  Government  who,  in  turn,  should  dedicate
    the  patents  to  the  public.  In  addition,  the  past  work  and  reports  of  the  At^mir
    Energy  Commission  should  be  available  as  prior  art  for  reference  against  patent
    applications  in  the  atomic-energy  field.  The  Atomic  Energy  Commission  should
    act  as  a  public  representative  to  insure  that  patents  are  not  granted  covering
    inventions  that  have  been  made  in  the  past  in  the  course  of  the  work  financed
    by  the  Atomic  Energy  Commission.  Provisions  of  this  type  would  go  a  consider-
    able way  toward  removing  advantages  companies  might  have  due  to  their  past
    close  connection  with  the  Atomic  Energy  Commisson.

    From  the  standpoint  of  the  whole  industrial  atomic-energy  development,  it
    would  be  most  helpful  if  the  Atomic  Energy  Commission  would  declassify  infor-
    mation dealing  with  the  production  and  utilization  of  atomic  energy  for  industrial
    power  as  rapidly  as  is  consistent  with  national  security.  Most  progress  will  be
    made  in  atomic-energy  development  with  the  broadest  dissemination  of  existing
    knowledge.

    Changes  in  legislation  of  the  general  type  I  have  proposed  would,  I  believe,  be  of
    long-range  advantage  to  the  Nation  and  will  keep  the  Nation  at  the  forefront
    in  the  development  of  industrial  atomic  power.  The  foremost  consideration
    in  any  changes  in  the  Atomic  Energy  Act  should  be  national  security.  In  my
    opinion,  with  proper  control,  active  participation  of  private  companies  in  the
    develoiiment  of  industrial  atomic  power  will  benefit  national  security.
    Very  truly  yours,

    E.  V.  MuKPHREE,  President.

    University  of  California,

    Radiation  Laboratory,
    Livermore,  Calif.,  July  23,  ]95-i.
    Hon.  Sterling  Cole,

    Chairman,  Joint  Committee  on.  Atomic  Energy,

    Cmigress   of   the   United   States,   Washington,   D.    C.
    Dear  Sir:    In  response  to  yoxir  invitation  to  make  a  statement  in  connection
    with  the  development  of  atomic  energy  by  private  enterprise,  I  should  like  to
    discuss  two  topics  concerning  which  I  have  some  specific  experience.     These

    ATOMIC    POWER    DEVELOPMENT  633

    are  the  safety  of  nuclear  reactors  and  the  connection  between  power  production
    and  military  application.

    Briefly,  my  opinion  can  be  stated  as  follows :  First,  nuclear  power-producing
    units  will  be  dangerous  instruments  and  careful  thought  will  have  to  be  given  to
    their  safe  construction  and  operation  and,  second,  there  is  a  great  and  increasing
    need  for  fissionable  materials  in  the  military  field.

    I  should  like  to  recommend,  first,  that  an  advisory  committee  should  be  set  up
    to  review  planned  reactors  and  supervise  functioning  reactors  under  the  control
    of  private  enterprise.  Instead  of  setting  up  a  new  committee,  the  present  Advi-
    sory Committee  on  Reactor  Safeguards  of  the  Atomic  Energy  Commission  might
    serve  this  purpose ;  and  second,  that  the  Government  stimulate  power  production
    by  private  enterprise  by  guaranteeing  to  buy  militarily  useful  byproducts  at  a
    predetermined  price  and  in  limited  l)ut  large  quantities  for  a  period  of  5  or  10
    years.

    SAFETY  OF  NUCLEAR  REACTORS

    For  the  past  6  years  I  have  served  as  the  Chairman  of  the  Reactor  Safeguard
    Committee.  Recently,  this  committee  and  the  Industrial  Committee  on  Reactor
    Location  Problems  have  been  merged  into  the  Advisory  Committee  on  Reactor
    Safeguards,  and  I  am  participating  in  the  work  of  this  new  committee.

    Up  to  the  present  time  we  have  been  extremely  fortunate  in  that  accidents  in
    nuclear  reactors  have  not  caused  any  fatalities.  With  expanding  a])plications  of
    nuclear  reactions  and  nuclear  power,  it  cannot  be  expected  that  this  unbroken
    record  will  be  maintained.  It  must  be  realized  that  this  good  record  was
    achieved  to  a  considerable  extent  because  of  safety  measures  which  have  neces-
    saril.v  retarded  development.

    The  main  factors  which  influence  reactor  safety  are,  in  my  opinion,  reasonably
    well  understood.  There  have  been  in  the  past  years  a  few  minor  incidents,  all
    of  which  have  been  caused  by  neglect  of  clearly  formulated  safety  rules.  Such
    occasional  accidents  cannot  be  avoided.  It  is  rather  remarkable  that  they  have
    occurred  in  such  a  small  number  of  instances.  I  want  to  emphasize  in  particular
    that  the  operation  of  nuclear  reactors  is  not  mysterious  and  that  the  irregular-
    ities are  no  more  unexpected  than  accidents  which  happen  on  account  of  disregard
    of  traffic  regulations.

    In  the  popular  opinion,  the  main  danger  of  a  nuclear  pile,  is  due  to  the  possi-
    bility that  it  may  explode.  It  should  be  pointed  out,  however,  that  such  an
    explosion,  although  ix)ssible,  is  likely  to  be  harmful  only  in  the  immediate
    surroundings  and  will  probably  be  limited  in  its  destructive  effects  to  the  oper-
    ators. A  much  gi'eater  public  hazard  is  due  to  the  fact  that  nuclear  plants  con-
    tain radioactive  poisons.  In  a  nuclear  accident,  these  poisons  m;iy  be  liberated
    into  the  atmosphere  or  into  the  water  supply.  In  fact,  the  radioactive  poisons
    produced  in  a  powerful  nuclear  reactor  will  retain  a  dangerous  concentration
    even  after  they  have  been  carried  downwind  to  a  distnace  of  10  miles.  Some
    danger  might  possibly  persist  to  distances  as  great  as  100  miles.  It  would  seem
    appropriate  that  Federal  regulations  should  apply  to  a  hazard  which  is  not
    confined  by  State  boundaries.  The  various  committees  dealing  with  reactor
    safety  have  come  to  the  conclusion  that  none  of  the  powerful  reactors  built  or
    suggested  up  to  the  present  time  are  absolutely  safe.  Though  the  possibility  of
    an  accident  seems  small,  a  release  of  the  active  products  in  a  city  or  densely
    populated  area  would  lead  to  disastrous  I'esults.  It  has  been  therefore  the
    practice  of  these  committees  to  recommend  the  ob.servance  of  exclusion  distances,
    that  is,  to  exclude  the  public  from  areas  around  reactors,  the  size  of  the  area
    varying  in  appropriate  manner  with  the  amount  of  radioactive  poison  that  the
    reactor  might  release.  Rigid  enforcement  of  such  exclusion  distances  might
    hamper  future  development  of  reactors  to  an  unreasonable  extent.  In  particu-
    lar, the  danger  that  a  reactor  might  malfunction  and  release  its  radioactive
    poison  differs  for  different  kinds  of  reactors.  It  is  my  oiiinion  that  reactors  of
    sufficiently  safe  types  might  be  developed  in  the  near  future.  Apart  from  the
    basic  construction  of  the  reactor,  underground  bication  or  paritcularly  thought-
    full.y  constructed  safety  devices  might  be  considered.

    It  is  clear  that  no  legislation  will  be  able  to  stop  future  accidents  and  avoid
    completely  occasional  loss  of  life.  It  is  my  opinion  that  the  unavoidable  danger
    which  will  remain  after  all  reasonalde  controls  have  been  emi)loyed  must  not
    stand  in  the  way  of  rapid  development  of  nuclear  power.  It  also  would  seem
    that  proper  legislation  at  the  pi'csent  time  might  make  provisions  for  safe  cun-
    struction  and  safe  operation  of  nuclear  rea-

    u.

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