General BRAY. Yes, Mr. Mitchell. It's a draft plan. It has not been approved. It's a plan that my agency has initiated simply because, as I told the chairman, we became aware that emergency responsibilities at the Federal level and between the Federal and State and local levels were not clear. We do have a draft plan.

Mr. MITCHELL. There is such a plan then. What does the plan provide for?

General BRAY. The plan provides for a full range of possible peacetime nuclear emergencies, all the way from a rather simple spillage or a leakage down to and including the possibility of blackmail threats of nuclear detonations and so on, including industrial accidents as well. What the plan attempts to do is assign responsibilities under different categories of situations. The plan will place one agency in the lead role, and others in supporting roles. The development of detailed, specific contingency plans would still be needed for each particular area. We call this Federal Response Plan an overall umbrella plan primarily for the assignment of responsibilities to eliminate possible overlapping, duplication or confusion.

Mr. MITCHELL. This sounds very encouraging. It sounds as though somebody is beginning to do some comprehensive planning in this area. It's in draft form?

General BRAY. I would repeat; it's a draft plan. It's under review at this point by the Federal departments and agencies and the executive branch.

Mr. MITCHELL. What's your timetable for finalizing it? When can I take a look at it?

General BRAY. Well, I'll have to provide the specifics for your record. I have been out of town for the last couple of weeks. We are in sort of the final stages of review. I would hope within a month or so we will be able to distribute the plan, but let me get a specific date for you and provide it for the record, sir.

[Information submitted for the record follows:]

The current draft, which is the fifth one, is dated May 3, 1976. It was sent to the involved federal departments and agencies on May 6 for their formal concurrence. It is anticipated that the month of August and part of September will be needed to resolve issues raised in the comments. This should then permit promulgation of the plan in late September or early October 1976.

Mr. MITCHELL. Could I ask you just one or two more questions? To the best of your knowledge, does the plan provide for radioactive waste disposal accidents? We had that occur in New England this spring I think.

General BRAY. Yes. Again, it would include the assignment of responsibilities, but not a detailed plan of action.

Mr. MITCHELL. I have lots more questions about it, but I will forego some of those questions. Mr. Chairman, I would like to submit a set of questions for the record which call for detailed information on this Federal Response Plan for Peacetime Nuclear Emergencies.

Senator PROXMIRE. Fine.

Mr. MITCHELL. Now General Bray, educate me a little bit more. Is there something called Plan D?

General BRAY. Yes, sir.

Mr. MITCHELL. What's that?

General BRAY. Plan D is a plan that has been in existence for quite a number of years, since in the mid-1960's. It's a plan in which differ

ent responsibilities are assigned to departments and agencies in the event of an overall nuclear attack upon the United States.

Mr. MITCHELL. A crippling nuclear attack?

General BRAY. Yes. It is a nuclear attack situation.

Mr. MITCHELL. It's been in existence for a number of years? General BRAY. Yes. We are in the process of updating it at the present time.

Mr. MITCHELL. It is being revised?

General BRAY. Yes.

Mr. MITCHELL. Why?

General BRAY. We're simply going back and looking over that plan and two or three other plans that had been in existence since the mid-1960's. We felt there had been sufficient change in-between with our relationships with the Soviet Union, the threat, the overall position of our country and elsewhere in the world, that warranted reviewing it for possible change. So it's simply an updating to make sure it's current with today's real world.

Mr. MITCHELL. In short, I guess what you're saying is that at one time we were assuming an understanding, an achievement of some sort of rapprochement with the Soviet Union. There was one plan in effect for that time period. Then it appears that détente thinking is out the window and we are now rethinking and relooking at this plan in terms of the Soviets being a real threat during this presidential election year?

General BRAY. Let me correct one thing. Our planning has always included the possibility that the Soviet Union or some other country may conduct a nuclear attack on the United States and Plan D was intended to outline responsibilities and situations to try to cope with that. The plan would still basically do that. It's simply to review our present executive structure and our present assignment of responsibilities to make sure nothing has fallen through the cracks and everything previously written is still correct. It does not reflect basic change in strategy.

[See Appendix II, p. 224 for further information on Plan D.] Mr. MITCHELL. It has no relationship to the pronounciamentos being issued by the Secretary of State about the strong defense against the Soviets? I'm curious as to whether this is just a routine revision or did this revision occur because someone said "Look, the bad boys who became good boys are now getting to be bad boys again, so let's review the plan."

General BRAY. No, sir; it was not that. I was not instructed to do it on any policy change. It was simply my review to make sure the plans were current and up to date and accomplished the purposes for which they were intended.

Mr. MITCHELL. You had indicated that, among your other many responsibilities, you have to deal with emergencies or crises in terms of economic preparedness. You mentioned that the Department of Commerce gets involved there. What kind of crisis management efforts are pursued or are capable of being pursued, let's say specifically, through the Department of Commerce. This is a followup to your question, Mr. Chairman. If we've got Brezhnev and his hordes flying across the ocean, do you call the Secretary of Commerce and say, "Look, let's get cracking." What do you tell him to crack on?

General BRAY. Let me respond in three parts. First, we do have a very close and continued relationship with the Department of Commerce particularly in the implementation and management of the Defense Production Act of 1950 by which we provide priorities on normal defense contracts and other normal programs. Second, we also maintain very close relationships with the Department of Defense in what we call the defense industrial mobilization programs. That's to make sure we have adequate factories, adequate production capacity to meet our wartime——

Mr. MITCHELL. Let me interrupt you. I told you I'm a slow learner. Let's keep it focused on the Department of Commerce. That's kind of finite and I want to ask you specifically what constitutes this business of crisis management efforts with the Department of Commerce. Let's focus in on that one as an illustration.

General BRAY. I think, as an illustration-and again, let me point. out, one of my responsibilities in terms of industria! preparedness of economic preparedness is in the Executive order that says I'm responsible for maintaining a research and development capability to help. predict and monitor possible materiel shortages for the future. In other words, in the aftermath of the oil embargo, where are we next apt to run into materiel shortages? Is it going to be chromium, bauxite, zinc, lead-in what area do we have to work? We are quite concerned with developing our analytical capability and we are putting a lot of work into it along with the Department of Commerce which provides input data to us, and these econometric projections of where and how are we apt to run into a shortage, particularly a critical resource interruption.

Now when we do, Mr. Mitchell, we then try to determine how big the problem is and what sort of program should we have. Should we increase our stockpile, increase our productive capacity, try to develop substitutes or develop conservation programs? Those are the sorts of things we try to work out with the Department of Commerce and other interested departments as well, but I'll limit it just to the Department of Commerce.

As to crisis management, the one that comes to mind was the little incident a couple years ago when we had a truckers stoppage and we had all the trucks stop rolling on the highways. In managing that crisis, we activated in the Federal Preparedness Agency a situation. room manned with representatives from Commerce, Justice, the FBI and all the other appropriate departments and agencies; we prepared specific contingency plans assessing how bad the situation was becoming, what options were available to the President or to the executive authorities, and how far could the situation deteriorate before we needed to take some other positive action? So we do have mechanisms already established in writing, already established in forms of committees working with other departments and agencies, in the crisis management role. And our purpose is first, to coordinate and make sure everybody in the Federal Government is using the same base of information; second, to assist in gathering the information; third, to conduct some evaluations, some analytical evaluations of the impact of this particular crisis; and fourth, to do the contingency planning outlining the options which we then provide to the decision-making authorities. That's our role, along with Commerce and other depart

ments and agencies, in the area of resource interruption, as we call it, in the crisis management area.

Mr. MITCHELL. My time is up and I have a number of other questions which, Mr. Chairman, with your permission, I will give to General Bray to ask him to respond to them. Thank you very much.

Senator PROXMIRE. Fine. Senator Sparkman?

Senator SPARK MAN. I have no further questions.

Senator PROXMIRE. General Bray, I want to thank you very, very much. As I say, we are disappointed that we don't have the report we requested. We hope we will have it just as soon as possible and in spite of my criticism of the operation, I think we are all very impressed by your remarkable grasp of the situation, your articulateness, your intelligence and your determination to do the best job you can under the circumstances.

General BRAY. Thank you very much.

(For responses to additional questions for the record, see p. 187.) Senator PROX MIRE. Our final witness this morning is Governor Coldwell of the Federal Reserve Board. We are delighted to have you, Governor Coldwell. I understand that Mr. Grimwood is with you.

What you're testifying on I think is one of the most fascinating developments I have read of in a long time. I read in the Washington Post a few months ago about a $4 billion cache in small bills—I think they said something like $1 billion in ones and the rest pretty much in fives and tens that were out at the Culpeper relocation site in the event of a nuclear disaster, so, if everything else in the country were destroyed, we'd still have a money supply-no people, water or food, but we'd have a lot of cash. That fascinated me. I was very interested in that because it seems that the one area where we are prepared is to have these dollars, even though I don't know what we'd do with them. But the dollars would be there in the event we have an absolute total nuclear disaster. I was concerned that we would expend so much effort on that and so little on what seems to me to be the essential problem of saving lives and providing the necessities that people have to have. I'm sure there's some kind of an answer and you're a very skilled and able man and I'm sure you can give us a good answer. Go right ahead. STATEMENT OF HON. PHILIP E. COLDWELL, GOVERNOR, FEDERAL RESERVE BOARD; ACCOMPANIED BY GORDON B. GRIMWOOD, ASSISTANT DIRECTOR AND PROGRAM DIRECTOR FOR CONTINGENCY PLANNING

Mr. COLDWELL, Mr. Chairman, I'm happy to have this opportunity to describe to the Joint Committee the responsibilities of the Federal Reserve System in the emergency preparedness area and our plans to carry out those responsibilities if necessary.

Federal Reserve System involvement in contingency planning for an attack on the United States began in the early 1950's. It was formalized in 1956 when the Office of Defense Mobilization issued a Defense Mobilization order to the Board. That order was superseded by Presidential Executive orders, the most recent of which is Executive Order 11490 dated June 11, 1976.

The Federal Preparedness Agency has designated the Federal Reserve a Category A agency, which means that we have essential func

tions that must be continued during an attack and in an immediate postattack period. The Executive order requires, among other things, that such agencies maintain alternate headquarters and sites for the storage of duplicate essential records.

More specifically, the Executive order charges the heads of the Federal bank supervisory agencies, including the Federal Reserve Board, with responsibility for developing emergency plans, programs and regulations to cope with the potential economic effects of mobilization. or an attack. Functions which the order specifies must be carried on include (1) provision and regulation of money and credit; (2) acquisition, decentralization, and distribution of currency; (3) collection of checks; (4) fiscal agency and foreign operations; (5) provision for the continued or resumed operations of financial institutions; and (6) provision of necessary liquidity to those institutions.

These policies and plans are not directed at the areas of the country that would be devastated by an exchange of high yield nuclear weapons. Rather, they are aimed at the undamaged or lightly damaged areas where national survival might depend upon maintaining economic momentum and organized economic activity. This is a point that is often overlooked by those who, quite understand ably, are preoccupied by the terrible problems that would confront us in the damaged areas. I should point out also that these plans are based on a general war-an "all out" nuclear exchange. However, we have examined the problems that would be generated by a limited exchange such as the one being examined by this committee. We have concluded that the same plans would apply, the difference being one of magnitude. The plans would be easier to implement, since presumably a large number of our normal operating facilities would survive, and problems of communication and control would be less difficult.

The Board and the Reserve banks have organized themselves to meet the responsibilities outlined briefly above by establishing alternate headquarters and duplicate record storage sites in nontarget areas. In the Board's case, we have been able to combine these functions at a facility which also operates our vital communications system on a day-to-day basis. Lists of officials and staff who would relocate to these sites when instructed to do so have been established and are kept current. Succession lists are maintained on a current basis. Delegations of authority which would be triggered by an attack have been made to Reserve banks that might be out of communication with the Board.

The problem of insuring a currency supply is made difficult by the facts that the only production source of Federal Reserve notes is the Bureau of Engraving and Printing here in Washington, and that almost all of the Reserve banks and branches are in potential target areas. We have established an inventory of the various denominations of Federal Reserve notes at our facility at Culpeper, Va., to provide a cushion until the Bureau could get back into production. Since we must assume that high-speed equipment at normal operating facilities would not be available, plans for maintaining the check collection and currency distribution systems involve a high degree of decentralization. Check agent and cash agent banks, each serving a small geographic area, have agreed to perform these functions in an emergency