[Atomic Power Development and Private Enterprise]
[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-
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