into that expenditure after the cessation of hostilities, which meant, of course, that there was the question whether the act as provided by Congress would give them the right to proceed. And yet the installations are there.

So the next question that comes up in my mind is whether the Navy, under the act, would be acting unlawfully if it expended that amount of money to safeguard and protect the installations that have been an absolute necessity in the general program of the War Department or the Navy Department.

Mr. FISHER. That is simply the reason I am bringing these points out, because I think they are aggravated as of VJ-day. I doubt very much if the war was still going on, we would question the project, because we would be on too weak a ground to question that of itself.

Senator THYE. Then I would like to ask this other question: Then it is a question now of whether the Navy installations, the troops that are quartered there, and other facilities that are part of the naval community—whether they have a right to protect themselves against a scarcity of water in any given period of the time of their existence there. You see, that is the only question that rests right before us here, and that is whether there is a necessity for the water. Of course, may be wrong in that.

I

Mr. CASEY. Your entire question is based on the assumption that at the time this project was started-suppose, for example, we were still in a state of war; suppose hostilities were still going on-in other words, your question is based on the legal authority of the Navy Department to have constructed this aqueduct for all war purposes and have expended money and gone along with construction when the war was actually on.

Senator THYE. My whole contention is whether the act is broad enough to permit the Navy to make such expenditures. If the war had still been in progress you would say "yes"; by your own admission you would not have questioned it.

The next question is: Are the installations at San Diego still a necessity as of August 14, 1945? That is a question of date, as to when you entered into the program. If their installations were of sufficient importance at that specific time that the Navy Department felt there was the necessity for them to protect themselves against the scarcity of water that may occur in the next 18 months or 2 years and they could not rely on the city making that expenditure, nor the county, and so the Navy weighed the entire question in their mind and said: “We have got installations here that we know we must use for at least two or more years, and in order that we safeguard ourselves, this is what we must do, and we feel and we do know that the act gives us the authority." So they proceed to authorize this, and you now question whether they had the right to make such an authorization, and I am trying to convince my own mind whether they had the right, so I bring up the argument of the question whether the Navy had the right to protect its property, and just the same as I tried to establish whether the city could have constructed that without the assistance of the Navy, and I got my thoughts rather clear on that question, and now I am trying to get clear on this question.

Senator MCCARTHY. Since you are dealing today only with the legal aspects of this matter, I assume you made no investigation to determine

whether or not this project was wise or unwise from a practical standpoint? You are concerned solely with the legal aspects?

Mr. FISHER. That is right. We have in our investigation reports all kinds of data as to water, but we have not considered that, because we have not questioned that.

Mr. CASEY. I would like the opportunity to answer Senator Thye's question later.

The CHAIRMAN. Let us have the answer now.

Mr. CASEY. As of VJ-day it is our position that the situation has changed. As to Public Law 289, in the letter of the Secretary of the Navy requesting that authority, he stated that the purpose of the act was for the prosecution of the war. In the report of the committees approving that legislation they stated that the act was designed for the prosecution of the war. When the war ended it may very well have been that the same necessity for a water supply existed in the future as had existed in the past, but it was known at that time that this aqueduct could not possibly have been completed for 2 years. Now, I agree that the need would exist for 2 years from August 14, 1945, but the war was over at that time, even though the Navy was going to have a permanent installation at San Diego, and therefore would need the water permanently. It then became a peacetime project, and I do not believe that that peacetime project was within the contemplation of wartime legislation.

Senator MCCARTHY. May I interrupt there? In going over the record here I find that the Navy did transmit the plan to both the House and Senate Naval Affairs Committees.

The CHAIRMAN. January 10, 1045.

Senator MCCARTHY. January 10, 1945, they submitted a plan to both of the committees with regard to the San Diego project. I find the total cost of the project was $17,500,000; for the Navy Department, $12,250,000; for the War Department, $1,750,000; for the Federal Works Agency, $3,500,000, and I get the impression that in that plan they were attempting to comply with Public Law 289, which says that prior to the acquisition or disposal by lease or otherwise of any land acquired for naval use under the authority of this or any other act, the Secretary of the Navy shall enter into agreement with the Naval Affairs Committees of the Senate and House of Representatives with respect to the terms of such acquisition or disposal. I find that on the 14th of May 1945, Senator Walsh, head of the Senate Naval Affairs Committee, writes:

You are hereby advised by the Committee on Naval Affairs that there is no objection to the above listed projects.

I find that on May 16 Mr. Vinson notified the Navy that he and Mr. Drewry, acting as a subcommittee of the House Committee on Naval Affairs, approved the following works projects, and lists about 20, including the San Diego project.

I do not find any other document here which indicates a coming into agreement with the Naval Affairs Committee. From your examination are you aware of any other document on this?

Mr. CASEY. No, sir, except the testimony of the Navy Department that they did transmit a copy of the contract that they finally executed with the city of San Diego.

Senator MCCARTHY. I am speaking of the inception of this project. Mr. CASEY. No, sir.

Senator MCCARTHY. Then I call your attention to the fact here that at this time

Senator ROBERTSON (interposing). May I interrupt, Senator? Are you talking now about the first letter that the Navy Department sent to each of the Naval Affairs Committees, House and Senate, saying they were going to build this project?

Senator MCCARTHY. I am trying to determine at this time, Senator Robertson, whether or not this project was legal at its inception.

Senator ROBERTSON. The record will show, I think, that both committees of the House and Senate, Naval Affairs Committees, replied to the letter from the Secretary of the Navy, approving this project. Senator MCCARTHY. I now ask you whether or not there are any letters, other than those that I have here?

Senator ROBERTSON. I think there are further letters showing when they decided.

Senator MCCARTHY. Where? If they are here, I would like very much to see them. I don't know of any such. I find there is approval by the Naval Affairs Committee and approval by a subcommittee of the House Committee on Naval Affairs of a project to be shared by the Army, the Navy, and Public Works. I find no other permission of any kind.

Senator ROBERTSON. You will find in the record that the Navy wrote both of these committees that they were going to complete this project and turn it over to the city of San Diego, to which they received no reply.

Mr. CASEY. There was one acknowledgment.

Senator MCCARTHY. I think we are concerned with three things. here:

1. Was this project legal at the time of its inception? That is, did the Navy act according to law at the time they commenced the project?

2. When they reexamined the contract after the war had ended, were they then, under the intent of the law, in duty bound to call upon both of the committees again and say: "Now that the war is over, we have not yet started this project; do we still have your approval?"

3. Whether or not the contract that was entered into at a subsequent date with the city of San Diego, whether or not that was legal. I do not believe when we are discussing this matter with these gentlemen we are concerned with anything except the legal aspects of the

case.

Senator ROBERTSON. This is my understanding of what the record has so far developed: 1. The necessity as a matter of defense was established and admitted.

Senator MCCARTHY. But it was up to the committee, the House Committee on Naval Affairs and the Senate Committee on Naval Affairs, to determine. I believe that is why the law says that the Navy must come into agreement with those committees. Now, if those committees were derelict in their duty, we cannot blame that on the Navy.

Senator ROBERTSON. I understand the chairman of the Senate Committee on Naval Affairs specifically approved this project.

Mr. CASEY. I would like to interrupt at this point.

Senator MCCARTHY. May I continue my examination to determine whether or not there was such approval?

Mr. CASEY. My comment is with respect to that very proposition. I do not construe Public Law 289 in the same light that the Senator does. We will read that over again and see if my conception of this law is correct. I construe this proviso requiring that the Navy come into agreement with those two committees, not as posing to those two committees a complete description of this project for the purpose of having those committees approve the project, but merely for coming into agreement with the Naval Affairs Committee with respect to the terms upon which the land is to be acquired for those projects— that is, whether it is to be purchased, whether it is to be condemned, whether it is to be leased, and so forth.

Senator FERGUSON. Are you contending that it is only a question of whether or not the land is to be acquired? It isn't a question of the doing of the work on the land?

Mr. CASEY. That is it exactly.

Senator FERGUSON. That is the way I have been reading the act. Mr. CASEY. Exactly.

The CHAIRMAN. Mr. Casey, I think we can clear that up by reading the letter of approval from Senator Walsh to Admiral Moreell. The letter, dated May 14, 1945, reads as follows:

Vice Admiral BEN MOREELL, United States Navy,

Chief, Bureau of Yards and Docks, Navy Department.

MY DEAR ADMIRAL MOREELL: On May 4, 1945, you referred to this committee for consideration proposals of the Navy Department to acquire land or property by lease or otherwise as covered by projects No. 337-C to 364-C inclusive. You are hereby advised that the Committee on Naval Affairs of the Senate interposes no objection to the above listed projects.

Sincerely yours,

DAVID WALSH.

And the letter from Chairman Vinson, dated May 16, 1940, reads as follows, addressed to Commander McHale:

MY DEAR COMMANDER: This is to advise you that Mr. Drewry and I, constituting a majority of the subcommittee on projects, of the House Committee on Naval Affairs, today approved the following Public Works projects.

Then it lists them. That is signed by Carl Vinson.

This one is evidently on facilities, but the letter from Senator Walsh to Admiral Moreell indicates approval of the acquisition of the land. Mr. CASEY. But the point I am making here is what the act contemplated. The Navy Department submits this proposition to the Naval Affairs Committee in advance: "We are going to acquire land by lease or otherwise." In other words, they do not tell how they are going to get it, where they are going to get it or anything else. They want a blanket approval of the entire project from the Naval Affairs Committee, which they received, but the time for the Navy Department to have gone to the Naval Affairs Committee was when they are taking a parcel of land out there, a right of way or anything else, and say: "We are acquiring this land, this particular land, this right of way, by purchase or condemnation, and we would like to come into agreement with the Naval Affairs Committee that this is the proper way in which this land should be acquired."

Senator FERGUSON. Is it contended that the letter of May 16 from Carl Vinson, chairman of the subcommittee, or chairman of the full

committee, is a compliance with the law? Is it contended that two members of the subcommittee can approve this?

Mr. FISHER. That is the Navy Department's position.

Senator FERGUSON. You contend, then, that this was compliance with the law?

Mr. CASEY. No, Senator; I contend that the request made by the Navy Department was not a request contemplated by the law, and that the approval given by the Naval Affairs Committees was not approval contemplated by law.

Senator ROBERTSON. May I ask a question there? If all the other naval projects were approved in that way, why did he challenge this one?

Mr. CASEY. The particular project that we are concerned with here is this one that came up as a result of this investigation. `I do not know what happened in the case of the other naval projects. The other naval projects were authorized in Public Law 289 and put before the appropriations committee, the place where they should have been put.

Senator ROBERTSON. But your principal has testified that if the war was still going on you would be on too thin ground to challenge this project. Well, it is necessarily a problem whether, the project being started and one-half of it contracted while the war was still going on, you were in a position then to challenge it, and in your last report you tell us that what you are chiefly complaining about is that they did not come into agreement on a contract by which the Navy arranged for transfer of the property with a recovery of 100 percent of the original investment, which we will not get from any surplus property, and that is the issue you have challenged in your final report.

Mr. CASEY. This prepared memorandum that we have submitted today?

Senator ROBERTSON. The memorandum that you have submitted: The Navy said that it had notified these two committees that it was going to dispose of this aqueduct when completed, to the city of San Diego for $500,000 a year, which would take 30 years or more to reimburse the Navy for its complete expenditures. They wrote letters to the two Naval Affairs Committees stating that they were going to do that. They got no answer from Chairman Vinson of the House Naval Affairs Committee. They did get a brief letter from Chairman Walsh of the Senate Naval Affairs Committee saying "Thank you for your report. Keep me advised." Which they thought was coming to agreement with him. Why they did not insist on a report, a statement from Chairman Vinson I do not know, but evidently they thought they had gone as far as the law required them go.

to

Now, I understand your office took the position that, in the first place, the act of July 2, 1940, related to national defense, and you would cut off national defense at VJ-day and that what happened to a $300,000,000 naval establishment which during the war protected the Pacific, the greatest we had, is not any longer concerned with national defense; it was cut off on VJ-day, when the war ended.

Your second contention, as I understand it, was that when they wanted to dispose of this on a basis that would net the Government 100 percent on the dollar expended, it was surplus installation, they