Mr. VORYS. Mr. Secretary, I find in this blue book report justifying this interim-aid program that the State Department estimates are based on the availability of 520,000,000 bushels of wheat from the United States. Your report mentions 500,000,000.

Secretary HARRIMAN. I think the public committee's report mentions 570,000,000 on that.

Mr. VORYs. Of wheat?

Secretary HARRIMAN. Of wheat.

Mr. VORYS. Just wheat?

Secretary HARRIMAN. Yes; that is wheat; that is right-just wheat. Mr. VORYS. I thought you mentioned 500,000,000.

Secretary HARRIMAN. That is right; and the 70,000,000 is other coarse grains. You are quite right.

Mr. VORYS. As I understand, possibly both of those estimates are pretty optimistic estimates. What about that?

Secretary HARRIMAN. As I said, in October, the Cabinet committee indicated, unless special measures were taken, there would be only about 470,000,000 bushels. May I use both wheat and coarse grains together? That 470,000,000 bushels of wheat and coarse grains together would be available, and to get up to last year's shipments, which were 100,000,000 more, would require conservation in the United States.

I am not quite sure what the State Department used combining wheat and coarse grains, but we are working on the export figures that have been used, about halfway between the two. We must, in protection of our own situation here, ship currently what is safe to ship and reserve some for increase or decrease, depending on what the developments are in the spring. You see, the need for this grain goes right up into July, and the allocations are handled on a monthto-month basis, depending on developments. It is agreed by all who have studied it that even if we can ship 570,000,000 bushels of wheat and coarse grains, it still will not come up to the very minimum reasonable needs of Europe and other areas of the world that import grains.

Mr. VORYS. You mention wheat and coarse grains. The State Department justification is in wheat.

Secretary HARRIMAN. Yes.

Mr. VORYS. For instance, on page 44 of the blue book, it says the allocations of wheat from the United States during the last quarter of 1947 have been about 115,000 tons per month, whereas about 228,000 tons per month are needed in the period under consideration to avoid reduction in rations. They say later that if the wheat supply will not permit such an increase, that substitute foodstuffs should be included. But they state the thing in wheat, and I wonder what your estimate would be in wheat. You mentioned 470,000,000 bushels of wheat and coarse grains. How much of that is wheat?

Secretary HARRIMAN. I think that were about 400,000,000 bushels of wheat and 70,000,000 bushels of coarse grains.

Mr. VORYS. Let me get my point across. I am not a farmer or agricultural expert, and I have an awful time when I run into tables that figure tons and then bushels.

Secretary HARRIMAN. Me, too.

Mr. VORYS. And I am still not sure how you divide it, but it strikes me when you are talking about wheat at $3 a bushel and then you

talk about coarse grains, it is somewhat confusing. What does that mean?

Secretary HARRIMAN. It is oats, barley, corn, and rye.

Mr. VORYS. To me-to throw them together is like saying we can afford to export 600,000,000 tons of wheat and apples. Both of them are foods; both of them have caloric value, but they are entirely different in quality and prices. Do you see my point?

Secretary HARRIMAN. Yes; in terms of prices and, at the same time, from the standpoint of the food committee they are, to some extent, interchangeable, because when there comes a shortage of wheat, as perhaps you saw when you got to France, they mix in the coarse grains and get a type of bread which has nutritive value but is not very palatable. So, from the standpoint of supplying the food needs. a substitution can be made of coarse grains when the more desirable wheat is not available.

May I make this statement in connection with the figures? We deal with the over-all shipments from the United States in connection with the availables. When it comes to shipments from specific countries, it is a fact we have shipped currently very substantial tonnages of grain, but in those particular countries-Italy and France, particularly in France-the needs were not as great just after the crop season as they would be later on in the year, and we have been shipping to areas where they build up stocks, like in Germany and Japan. Britain, also, is very careful in its control of its grain. Some of the other countries are not as careful; therefore, we try to build up stocks where we are sure they will be preserved until the need comes in the winter and spring months, and we must have variations between different countries even on a monthly basis, even though we may ship pretty much on a monthly basis from the United States.

Have I made myself plain?

Mr. VORYS. No; that is probably not your fault, it is my fault. Secretary HARRIMAN. It is not your fault; it is a very complicated subject.

Mr. VORYS. We are thinking here about three countries and a plan is being discussed involving five hundred and ninety-odd million dollars. In the case of Italy it is proposed to jump the allocation, according to the text before me, from 115,000 tons a month to about 228,000 tons a month. I cannot see where we are going to get it. And if we cannot get it, then we do not need as much money.

I am deeply concerned about this matter of talking in large sums of money and talking about availabilities that are not available. We may be kidding ourselves or kidding the people over there, that they are going to get something which they are not going to get.

Now, one other thing. I understand that those who have been in Italy, and others, have received information that the Italian wheat crop is a whole lot better than their official figures show, possibly because of the fact that they cannot get the wheat out of the farmers, or for various reasons. If the Italian wheat crop looks better and ours look worse, then our interim aid program ought to face those realities. That is what I have in mind. It looks to me, knowing very little about it, as if that is the situation at present.

Secretary HARRIMAN. There are two questions. One is, how can we increase shipments to Italy? I attempted-and not very clearly-

to explain that although we were shipping out of this country on a monthly basis, which may be more or less level, and although we were able to get out somewhat more than the average in the summer months, the receipts by individual countries vary.

As I tried to explain, there are certain areas where we can build up stocks and where the practices of the country are such that we can make sure that they will not be dissipated and used too soon. We overship during those months, then, in order to make it possible to ship to the other countries in greater quantities later on in the season.

In the early months of a crop, naturally, where there is the indigenous supply, we want to have the maximum pressure used for the collection of that supply, and have it run just as long as it can. And it is for that reason that you get discrepancies in monthly average shipments.

When it comes to your second question about collections, I can only generalize on that subject. I believe that collections from the countries under consideration are not as great as, perhaps, they should be. There are all sorts of reasons for that, with which, I am sure, you are familiar. And all we can do is to use our pressures on the governments to use all legitimate means of forcing those collections. But you will not get full collections from farms until you have more incentive, more confidence in their currencies, and something which they can buy in exchange.

We will have to recognize that is possible only in the police state that can shoot the farmers who do not carry out the orders of the government. And we do know that the collections are not as perfect as we would like to have them and as they should be. But we are dealing with human beings and trying to preserve democracies, and we will have to do the best we can in terms of pressures on these governments and in terms of their using democratic methods to get the maximum collections that are feasible.

No doubt the farmers are living much better than the people in the cities. How you are going to equate that fairly, until you get a stable situation, is pretty hard to say. I think we have got to recognize, though, that we cannot expect the impossible when we are dealing with human beings under democratic processes.

Mr. VORYS. Yes; that is a very good point, that we cannot expect the impossible over there. But I am concerned that we are encouraging them to expect the impossible from us.

may be

Secretary HARRIMAN. I think they do expect the impossible from us. I am sure that you found, as I have-and it very flattering, but it is not very realistic-that these people in Europe consider, because we did such an amazing job during the war, that we are a well that has no bottom to it, and all they have to do is to ask and we can wave our left hand and produce it.

I think there should be more education of the people of Europe on that. Of course, what they ask for and what we give are entirely different matters and previously I tried to explain the current mechanism which screens month by month and determines what the different countries need, what their relative needs are or what the relative needs of the areas are and what our capabilities are in this country.

That was one reason I explained why it was impossible to set today a definite program. But I did express the belief that within this sum

of money we could take care of these very minimum requirements. If we should have a better wheat crop than now seems to be indicated, it may well be that we can ship more in the second quarter than now appears to be possible. On the other hand, if the wheat crop is worse than is now estimated, it may well be impossible for us to do so and it may be wiser for us to keep a larger carry-over than is now calculated. That will come more in the second quarter than perhaps in the period under consideration here.

The State Department also mentions what I mentioned, the question of substitute foods. Those substitute foods are very valuable, in addition to their calory value, in terms of proteins or salts or chemicals, or what not. But they are more expensive in their caloric value, and therefore the drain on wheat becomes so great, because you can get more calories for your dollars from wheat than elsewhere. But we can perhaps supplement our wheat shipments with these other types of food which are more readily available.

Mr. VORYS. You mentioned the screening process. You have had vast experience in the administration of such programs. Have you given any thought to the way in which this interim-aid program should be administered?

Secretary HARRIMAN. May I ask that you eliminate the word "vast"? I have had experience, but I agree with the State Department. with Secretary Marshall's recommendation, and Mr. Lovett's, that the post-UNRRA relief organization be the agency to carry this out, and that the Congress consider more deliberately the permanent organization of the recovery program. From my information, which is only second-hand, because they had not gotten the organization started when I was in Europe in June, they are developing a good organization and it is being competently handled. That exists. And as this is an emergency measure it would seem better to use that organization than try to build a new one.

Mr. VORYS. I think that is all. I wanted to get your views some time on the permanent organization, but possibly you will be back with us when we come to consider that?

Secretary HARRIMAN. Yes. I want to say that the committee made a recommendation on administration and although I agree with part of it, I am not in full agreement with all of it. So I would be very glad to discuss with you my own views as well as theirs. I think that they have made a definite contribution, however, in certain principles that they have established.

Mr. VORYS. You have had the personal experience of being LendLease Administrator and working in countries where somebody else was ambassador; and also of being an ambassador where others were running some such organization. At the proper time, your personal experience, if told to us, whether good or bad, would be very valuable; to me at least.

Secretary HARRIMAN. May I say two things in that respect? I am absolutely convinced that we should have only one representative of the United States in any one country, and that the relationships with the government should be under the control and direction of the ambassador. Otherwise there will be confusion and chaos of the first water.

On the other hand, in the operating questions, our experience during the war was, for instance, we had a small staff in England and we were

able to penetrate all of the major problems of the British economy; their food situation, agricultural situation, coal production, munitions production, and so forth. That is done as between specialists and the supply ministries of the Government. I know that I would be much confused about things that you do and know about, but I can assure you that it is not a difficult thing, if you get competent people, particularly if you have an organization that is established with dignity, with the proper kind of people attached to it, to bring in specialists for special studies, who can work for 3 or 4 months and you get their results as a basis.

I shall be very happy to discuss that in further detail with you. Those two principles, though, I think should be recognized. One, that the ambassador must over all be responsible for the relations with these individual countries. On the other hand, you need specialists away beyond the people whom we permanently keep abroad, in order to get the type of information that we must get to judge the requirements of the countries and to satisfy ourselves that our supplies are being properly used; to make, in a friendly way, suggestions to the ministries of other governments as to how they can better use their facilities in their programs. And they can operate on such a basis with those people so that our technical skills which are very great, both in industry and agriculture, can be made available to help those people. That can be done very quickly when you are dealing with supply problems on a cooperative basis. Mr. Bissell has had some experience with that and I am sure that he agrees.

Mr. VORYS. That is all.

Mr. JONKMAN. Mr. Secretary, on page 5 of your substantive statement, you say:

The interim aid program, in other words, has no new impact upon our domestic grain markets. To say that it has no new impact is, of course, in no way to deny that export purchases have already had a substantial impact on our domestic prices.

Did the administration agree with you on that statement?

Secretary HARRIMAN. Certainly the members of the Food Committee with which I am associated, Mr. Anderson and Secretary Marshall, and Mr. Lovett, who sits when Secretary Marshall is not there.

Mr. JONKMAN. I want to compliment you for being decidedly refreshing, because this is the first definite statement that I have read from the administration as to one of the causes of the high cost of living.

Secretary HARRIMAN. I do want to add, though, that there are other causes for the increased cost of living which have no relationship to our exports.

Mr. JONKMAN. There is no question about that, Mr. Secretary, but so far all I have heard from the administration is that our exports have had no effect on the high cost of living, or that they have had no serious effect. So I want to compliment you on a statement that it seems to me cannot be refuted.

Secretary HARRIMAN. I think, sir, it comes to an interpretation of exactly what is said and one has to make a complete analysis of where it has had an effect and where it has not had an effect. Certainly the exports have been a contributing factor to the over-all inflationary pressures.

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