Secretary HARRIMAN. That does not come under my particular jurisdiction, but if you want me to I will be glad to get that information.

Mr. LODGE. I would appreciate it.

Secretary HARRIMAN. It is not in my Department, but I think we can get it for you.

Mr. LODGE. If we do not have it of course we cannot send it, but if we do, it would seem to me that we ought to send what they need. Secretary HARRIMAN. Mr. Bissell says we have our own needs for the type of wheat wanted, but that is not the complete answer. I will try to get the information for you.

Mr. LODGE. Thank you.

Mr. LODGE (chairman pro tempore) Mrs. Douglas.

Mrs. DOUGLAS. Mr. Secretary, in reference to the question just asked about the kind of wheat being sent to Italy, we also sent corn to France and we sent wheat to Germany and a number of complaints came back to us about it.

Secretary HARRIMAN. What happened last spring was that the requirements were in excess of the support program and we had already shipped a great deal of corn to Germany and more than they had been able to consume in bread, and last spring there was a surplus of corn and under an agreement with the French Government we sent them corn to mix with the wheat which they had, and in order to balance the corn they had in Germany we sent them a little extra wheat.

In no sense is France discriminated against; there was a technical question of using to the best advantage the supplies that each area had. I know the French did not like the corn, and I do not think you did either when there, but at the same time it was nutritive and it was all we had to send, and we had an enormous crop available, and it was only late in the summer we realized we had a short corn crop.

Mr. CHIPERFIELD. Mr. Secretary, we wish to thank you for your testimony. It may be possible that after we hear Mr. Herter the committee would like to have you return; one or two members may have some questions.

Secretary HARRIMAN. Of course, I am always available.

May I, before you close, give you some figures in answer to a question about petroleum, of the production last year: According to the Public Committee's report which analyzed the program of recovery and it has carried that out in the following report:

In connection with the world requirements, and comparing 1946 with 1951, the United States today is supplying 63 percent of the world requirements, that is, we are receiving our own requirements in that we are exporting about the same amount we are importing.

Nineteen percent from other Western Hemisphere countries, largely from the Caribbean area.

Nine percent from the Middle East.

Six percent is estimated for Russia and 3 percent from other countries.

Now, when it comes to 1951, according to this analysis, the United States will drop from 63 to 54 percent; the Caribbean from 19 percent to 17 percent, which is desirable, and the Middle East from 9 to 20 percent, and Russia is left the same, because we have no information about any increased production.

So this would contemplate more than doubling the quantity in terms of percentage of world supply in the Middle East. That refers to your question, Dr. Judd.

Dr. JUDD. Even so, that does not refer to the East Indies part?
Secretary HARRIMAN. This is in other countries area.

Dr. JUDD. I see.

Secretary HARRIMAN. No estimate was made of that. Because of political uncertainties we could not make any estimate, but it would be hoped that there would be an increase.

Dr. JunD. Thank you.

Mr. CHIPPERFIELD. Thank you, Mr. Secretary.

The committee will take a recess until 2 p. m.

(At 12:52 a recess was taken until 2 p. m. of the same day.)

AFTER RECESS

(The committee reconvened pursuant to the taking of the recess, Hon. Charles A. Eaton (chairman) presiding.)

Chairman EATON. On behalf of the committee, I wish to ask all Members of Congress who are present to come up and sit with us on the platform, giving us the benefit of their presence up here.

The committee is delighted to welcome our distinguished colleague, Mr. Herter, who, with the select committee of which he has been so able, competent, and remarkable a leader, has already done a great job. They have laid the foundations upon which to build an intelligent policy as the days go by.

We welcome with great pleasure our colleague to testify before us here today.

STATEMENT OF HON. CHRISTIAN A. HERTER, A MEMBER OF CONGRESS FROM THE STATE OF MASSACHUSETTS

Mr. HERTER. Mr. Chairman and members of the committee, I have not any prepared statement for this hearing, but I would like to begin, if I might, by referring to the fact we have just had available for distribution for the members of the committee seven documents. Chairman EATON. Is that all?

Mr. HERTER. Yes.

Chairman EATON. I think the committee falls down at that point. You should have more.

Mr. HERTER. Well, sir, those seven documents were prepared for whatever utility they might be to this committee in considering the matter that is now before you. They had to be revised at the last moment, because the figures contained in some of them were not adjusted to the figures that were presented to you by Mr. Marshall on Monday and, therefore, our staff and the members of the committee have been working overtime to try to reconcile those figures with the figures that had previously been given to us as representing the requirements of the countries in particular that you are now studying. The first of those reports deals with the French crisis and interim aid: the second with the Italian crisis and interim aid; and the other five deal with the principal commodities which are now in short supply in this country, analyzing from a statistical point of view the avail

abilities of those commodities for any programs that might be undertaken.

Perhaps, if I might, I would like to point out some of the difficulties in dealing with figures in this over-all picture. I should like to read to you the introduction to the French report which I think will give you a very definite idea of how hard it is to get exact figures dealing with the requirements of a country and likewise making those figures correlate with the availabilities that might be found either here or elsewhere in order to meet the requirements. So, if I may, I would like to read this introduction to you. I might say parenthetically that this report was prepared by Congressman Wolverton, of New Jersey, the chairman of the subcommittee; Congressman Macy, of New York; Congressman Keogh, of New York, and Congressman Monroney, of Oklahoma, and was approved by the full committee. This is the introduction :

This report is an attempt to summarize the major factors in the present crisis in France's balance of payments and to set forth the dollar requirements for the so-called interim aid period. The interim aid period was defined by the executive branch as that period of time during which the aid was required but during which a new agency or new method of handling it could not become fully operative. Originally the interim aid period was of 6 months' duration, from October 1, 1947, to March 31, 1948, but the report of the Secretary of State submitted to Congress on November 10 covers only the 4 months' period from December 1, 1947, to March 31, 1948.

There have been a long series of estimates of the amounts of interim aid required emanating from the executive branch, but only the estimate of November 10 is an official request to Congress for an appropriation of funds. The difference between the figures in the November 10 estimate and those prepared by the Departments of State and Treasury on October 31 will be discussed in the body of the report. The only important difference is that the November 10 estimate includes the sum for payments to be made prior to March 31, 1948, for the shipments of commodities for 1 month after that date in order to maintain the flow of goods in transit. This inclusion is not made clear for commodities other than wheat in the text of the November 10 report of the Secretary of State, but is the only way in which the November 10 figures can be reconciled with the estimates of October 31.

Then we go on and say that the difference in the figures that are now before you for the Italian aid and for the French aid is due to the fact the figures are not prepared on the same basis. In other words, they are prepared for different periods of time and on a separate basis. I think that is very clearly laid out in these reports, and I would like very much to come back to those reports in a moment in order to clarify what I am now saying.

I can, perhaps, agam illustrate the difficulties with regard to the problem that is now before you by turning to the interim European aid report that was submitted to us by the Secretary of State on the 10th, in which there appeared a draft of legislation together with a number of explanatory tables. On pages 20 and 21 of that report and likewise on pages 42 and 43 of that report, you will find in tabular form the commodities and the dollar figures of the supplies to be given under a form of grant-in-aid to these various countries and likewise the commodities which these countries are expected to pay for out of their own resources or out of borrowings from the Export-Import Bank or from the International Bank. These are very confusing tables to us. They are confusing in this sense: You find in table 1, for instance, under the French requirements, that there is an item of $111,

000,000 for wheat and an item of $20,000,000 for fats and oils; an item of $116,000,000 for coal and $22,000,000 for petroleum products. Those are all apparently to come out of interim aid grants furnished by the United States as grants-in-aid.

Then in the table just below that you will find others that we expect them to pay for-food to the extent of $30,000,000; fats and oils to the extent of $12,000,000; and petroleum products to the extent of $23,000,000. And I have tried awfully hard to find, either in the testimony you have already had or in this report itself, at just what point there is a line of demarcation as to when a country pays for something in its own gold or dollars or out of a loan it has made and at what point it is given as a grant-in-aid.

I cite that again only to emphasize the point I want to make, that I think the committee of which I was a member and vice chairman under you, sir, felt very strongly about, namely this, that in undertaking any program as extensive as this one, even as an interim program, or any program that the Congress might approve under what is developed from the Marshall proposals, we have felt very strongly it was imperative that a proper organization be set up to screen the figures and money estimates and to set those properly against what is available in the world. If I might, I would like to develop that last point; that is, the question of availabilities.

If you will turn to the Italian report that we have distributed, you will see on the last page of that report a table indicating the different figures we have had before us on which to work and our own estimates as to what is available and what that which is available would cost. That is page 14. In that, you will find a very large discrepancy in the very first item; namely, the item of cereals from the United States. The discrepancy there is a discrepancy that arose out of the fact that after being given the preliminary estimates as to what was going to be asked of the Congress we did our very best to ascertain from the responsible agencies and others as to what there might be available in the way of cereals in the United States. And there we ran into a problem that I think it is of the greatest importance to develop and to develop fully, because I think it is very vital to the whole program.

I feel it is vital to the whole program from two points of view: First, I think it is vital from the point of view of a ship-shape and capable job being done by the Congress itself. In the second place, I think it is vital because I think the worst thing-and I repeat thisthe worst thing we could do would be to make dollars available for commodities that are not available, and in that way lead people to believe they can get something which, in fact, they cannot get. I think it would be infinitely better to make understatements of what we can promise to do rather than overstatements.

If I may, I would like to cite a concrete example of that in the case of Germany. General Clay begged-literally begged-that he be advised on what calorie ration he could put the people under the American flag and under his command in the military occupation zone. He had been promised earlier in the year he would receive 3,600,000 tons of grain. That was sufficient in his estimates, with the local harvest, to put the German people on a 1,550-calorie basis. He thought he would have that grain available to him. It developed later that grain is not available to him. I think he has been very fortunate, probably,

in being able to replace the calorie value of that grain from a large purchase of sugar in Cuba. The one thing he asked us to do is that when promises are made to him, he said, "Please tell me the worst now. If we know the worst and things get a little better, it is going to be infinitely healthier for the morale of everybody concerned than if you promise me I can fulfill a certain ration basis and then I cannot reach it." He said, "Twice before that has happened, and I have not been able to meet what was promised from the availability of the United States, but which never came through.'

So we have identically that same problem arising here, and I am going to spend a little time on it, because I think it is one you ought to have very much in mind.

You will notice, again going to page 14, the first item there, that our committee's estimate of the quantity of wheat that would be available for allocation to Italy is very much smaller than the amount for which you are asked to supply dollars, and it was with great hesi-tation that any member of our committee felt that smaller item was the correct item; because, naturally, no one likes to go down lower in a food item when people are in pretty difficult shape. On the other hand, I think if you would be good enough to look at one other document here that is, the grain requirements and availabilities, which is a separate document, No. 3-and turn to page 5, to the table with regard to the United States exports, if I may, I should like to read to you that table. It has been very carefully prepared and very carefully gone over. It says:

Total quantities shipped or programed July through December 1947 (including amounts carried over from June allocation) are 305,500,000 bushels.

The quantity of grain exported during any prior period is not to be taken as a criterion of the amount which may be shipped in the January to July 1948period. For instance, in 1946-47 we exported at a low rate in the early part of the year, expecting in November that we would be called on for only 267,000,000 bushels of wheat. Then, beginning in late January to meet increased demands, exports were greatly increased. For 1947-48, we have put the pressure on the early part of the crop year, and the present danger is we may over-export, in view of the deteriorated prospect for the 1948 winter wheat crop and the partial corn-crop failure. In other words, exports up to last year's 563,000,000 bushels of all grains might be feasible, even from the much smaller total grain crop of 1947, but if 1948 prospects are promising-not a true prospect at present. Crop availabilities and prospects, rather than past (first half, 1947) export rates would appear to set the future supply ceiling.

There are other tables in here that I think it would be well to refer to in that connection, and I won't continue reading the rest of that report. But if you will examine those with the schedule here, you will see that nearly three-fifths of what we consider the maximum of grain exports have already gone to Europe or will have by the 1st of December, and that leaves only perhaps two-fifths of the maximum for the total year that can be exported in the next 7 months.

Obviously, that is a pretty small quantity, and the requirements that have been set down in these documents against which dollar figures are shown in the State Department document, I do not think realistically take account of that fact, and it is that which we have tried to bring out particularly in the Italian report in setting our own figures. I might add one other thing in connection with this whole question of trying to collect figures. When we returned from Europe on the ship, we had a tentative balance sheet of the Italian requirements.