Mr. LOVETT. May I answer the latter part of that, Mr. Chiperfield? Mr. CHIPERFIELD. Yes.

Mr. LOVETT. The figures which we submit with respect to Italian requirements, appearing in the bluebook, are given after the elimination of items which were covered recently by the use of funds under the Relief Emergency Aid Act in order to enable the procurement of the coal shipments which must go forward the early part of December. That accounts for a part of it. The other items that were reduced were reduced because we felt that they involved payments which might come under adjustment through moratoria agreements between France, Belgium, and Italy. I can give you a list of the total reductions.

We have tried to screen this with the greatest of care and with the help of other governmental agencies, and that screening has resulted in the figures which are contained in the bluebook. That is the figure on which the presentation is based today.

Mr. CHIPERFIELD. I have a statement here, and I know that there will be prejudice in some people's minds because it is from the Chicago Tribune, in which it says:

There was a bumper olive crop and oil production which will exceed by four times the 750,000 quintals which producers must surrender to the Government for rationing.

Has there been a bumper crop of olive oil in Italy?

Mr. DORT. Yes. There has been an unusually large crop.

Mr. CHIPERFIELD. It goes on to say:

Only the wheat crop was poor this year, but American post-UNRRA grain deliveries, plus a good rice crop and abundant fresh vegetables and fruits, should easily compensate for this.

Then it goes on to say:

In less than a month since the downward trend of prices started official figures show that olive oil was down 17 percent; lard, 23 percent; butter, 15 percent

and so on. It goes on to say that livestock herds are reported to be back to prewar levels, and there is the belief that there is enough meat for the public's requirements. What do you say about that?

Mr. DORT. By far the largest item of the diet of the Italians is bread. During the summer they have been having substantial quantities of other kinds of food which have been added to that. That is illustrated by the fact that under the relief program we have not recently shipped fats and oils to Italy. We have, however, tried to keep the basic bread ration so that that part of their diet would be filled. In the winter months they will be relying more on bread and we know that they will have fewer vegetables and fruits. There have been no shipments of fats and oils under the relief programs in recent months.

Mr. CHIPERFIELD. They say here, "Coal for home heating is being rationed for the first time. Previously coal was banned for heating homes and none was distributed." Do you know whether that is occurring or not?

Mr. LODGE. I spent 3 weeks in Italy and went into these matters. As far as meat is concerned, Italy is not a meat-eating nation. Italians eat pasta made of flour. They have never been a meat-eating nation and they are less so now because they can only satisfy three-quarters

of their needs as far as wheat is concerned. Therefore, they certainly cannot afford to feed any wheat to animals.

As far as coal is concerned, it is very critical, especially with respect to private homes. The Italians look forward to being largely unheated during the winter. The situation of Italy following the withdrawal of our troops this summer is that they face a winter with practically no heat in their homes and with a very inadequate diet. That is the most reliable information that I could obtain.

Mr. CHIPERFIELD. In the appendix to your statement there is an item

Mr. JONKMAN. I would like to have that confirmed. The witness has not answered the question. I would like to see if they can give an official answer to the question.

Mr. DORT. They are, Mr. Chairman, very short on coal. They have been having a consumption of about 800,000 to 900,000 tons a month. The allocations for shipment in November and December are 600,000 tons, which represents a reduction in the amount they have been consuming in the last several months. The estimate in this interim program, I believe, is for 600,000 tons in December, and 650,000 tons a month from January on. In prewar years they consumed well over 1,000,000 tons a month.

Mr. CHIPERFIELD. On page 54 in appendix A there is item 5, "OFLC, surplus property credits, $178,000,000; amount distributed, $178,000,000; balance on hand, nothing."

Will you tell the committee about that transaction, Mr. Lovett? Mr. LOVETT. This figure of $178,000,000 on page 54, item 5, I am informed consists of the two sales made of bulk surplus property. The surpluses were sold under two credits and they owe us $178,000,000 on that account.

Mr. CHIPERFIELD. We have spent $1,500,000, have we not? That is the figure in your statement?

Mr. LOVETT. I think that one and a half billion is approximately the figure.

Mr. CHIPERFIELD. Thank you; that is all.

Mr. VORYS. To come back, Mr. Lovett, to the form of the legislation, you were not here when this Public, 84, relief bill came up this spring. Although there was tremendous secrecy about the figures involved, it was a balance-of-payments proposition just as is the present bill. We talked a lot about relief, but what we were doing was to furnish dollars to help the balance of payments of those countries so that in that respect this proposal is quite the same.

Now, as to the matter of the 6 percent, there are about three or four pages of Public, 84, each paragraph of which was the subject of long debate in both bodies. There were long hours of conference and each paragraph of it represents the congressional ideas that are going to be redebated before we have any interim bill whatsoever, if we bring in a new bill.

My suggestion was that if the administration under Dick Allen functioned satisfactorily under that law, from the standpoint of getting it through Congress and also the administration in the field, it would be better to proceed under that law than to get up another one. Now, you brought up the 6 percent proposition. The reason that was put in was that it was the hope of the Congress that some other

nations would come in with it. It was represented that the amount was only 57 percent, and 43 percent would come in from some place else, and if we put in the law a provision that the United States could finance with dollars the supplies from other countries, it was felt that would be an invitation to them to say, "Why, we will sell stuff to the United States rather than contribute to this great need."

Now, that same subject matter will again be under consideration in the Congress, and while we all recognize the cogency of the suggestions you have made, that if some of this can be procured elsewhere it will lessen the impact on our economy; yet we wonder whether there is not some hope of having the Argentine, Canada, and some of the other Western Hemisphere nations put in some relief, or aid, on the same basis we are. Then, if they want to borrow some dollars, they are a good risk and we can take that up as a separate matter.

However and I realize this is sort of a long question- if it is determined that the 6 percent figure is wrong, all you have to do is to change that figure, change the $350,000,000, change the figure under the RFC advances, change a half dozen words in the bill, and you have got a structure that Congress is used to and the State Department and our Government and other nations understand. That was the reason why I keep emphasizing this.

Mr. LOVETT. Well, Mr. Vorys, I was not in on the discussions which gave rise to this relief assistance bill, and of course the Congress will have to determine the form it shall take. In my earlier comments I was merely trying to point out that we did not propose the method of amendments to Public Law 84 because we thought that it might be simpler in a new bill to work in a degree of flexibility we feel is absolutely essential to the satisfactory operation of this 4-month period. As you suggest, it is simple legislation, and if your sugges tion would enable more prompt action, that is a matter that the gentlemen in the Congress will have to decide.

The fundamental interest in this and the thing we have tried to express with complete frankness throughout the hearing is the fact that we will need, in order to do this job, a considerable degree of flexibility. In particular, that 6 percent figure would very materially limit us. As you say, it could be altered; that itself would be a satisfactory answer on that point.

Mr. VORYS. In going through the blue book I find not one item in the list of relief, of aid items which were not within the classification of food, medical supplies, processed and unprocessed materials, foods, seeds, fertilizers and pesticides-that is the list of stuff in Public, 84, so they are the same items that you are talking about?

Mr. LOVETT. In the broad classification, that is true, always on the assumption, Mr. Vorys, that we are dealing with this at the earliest possible moment. In other words, if the availability of funds under this bill should be delayed, some of the items which we now anticipate would be procured with the funds requested would have to be procured by these countries with their own resources. Under these circumstances, the requirements we would meet might fall in some other classification.

We are trying to maintain the countries literally as going concerns, because they are lost if they are completely bankrupt. If they become completely bankrupt, that magnifies the whole problem. If they are

going concerns they have needs as a going business that vary from day to day.

I cannot fully estimate what will happen, for example, if a ship load of coal were lost, or something of that kind, during the winter months. It would have a very serious effect because of the thin margins on which these countries are operating. That is the reason why we have suggested in several instances here that we have a high degree of flexibility.

That also explains some of the language in the earlier clauses which I am sure you gentlemen will wish to discuss later.

I cannot say that that same protection could be given in amendments, and I would not want what I am saying now to be misunderstood in any way. I am merely trying to give the background which led to the conclusions which we reached.

Mr. VORYS. Now, throughout the statement of needs of the three countries there is food in the program to be provided by the legislation. Then there is other food which they are to procure through other sources, so that you have made a break-down of the food items. Could you tell us on what basis that was made?

Mr. LOVETT. You mean the break-down in the distribution of the food items, in the classification?

Mr. VORYS. Yes.

Mr. LOVETT. Wheat, fats

Mr. VORYS. For instance, glancing on page 10, here on table 1, of commodities to be supplied under the interim aid program, which includes food, $20,000,000; table 2 includes food, $16,000,000.

Now I wonder if there was any significance, as between the two. I think this is a similar item for each of the countries of food under this program, of food they are to get for themselves?

Mr. LOVETT. That is right, Mr. Vorys.

Mr. VORYS. And then over on page 10—

Mr. LOVETT. On page 10, that is the case of adding up requirements in table 2. What we have done is to take the total assets which are available and apply them to the needs which they have proven to us. That $16,000,000 shown for food in table 2 is the counterpart of the relief which Mr. Dort discussed earlier.

There is an item that is somewhat greater in France where the relief allowance does not enter into it.

But in general I think the point of your question is that we have taken the available assets of these countries and measured those assets against the items which they must have in order to eat and to work. They fall within certain well-established patterns, for the most part. For instance, the daily bread ration in France is 200 grams a day, and that multiplied by the number of people to be fed gives us the amount of cereals required.

There are also the imports of coal for transportation, industrial, and other purposes which can be broken down and measured.

We have felt that we should be assured that they use their own funds in the procurement of those materials as far as they possibly can, and that after that assurance has been given the needs which remained uncovered should be met with our funds, as shown in table I. Mr. VORYS. Yes. There is no difference in the classification of

foods, let us say, on table 1 and table 2-$20,000,000 above and $16,000,000?

Mr. LOVETT. No, sir. After they have used their own funds, then we take up the remaining deficit in food or in the other items which they cannot cover as shown in table I.

Mr. VORYS. One more question: On page 21, apparently, provision is made in the pipe line for the furnishing of wheat to France to take care of them for 5 months, not a 4-month period, that is, through April 30, 1948.

That is the only place where I notice the procurement plan is on a 5-month basis. I appreciate that you must plan to buy what you need for March 30 to last through April; you have gone into that before, but is this program a 5-month program, that is, for wheat for France, or is it just that one item of food?

Mr. LOVETT. No; and I might point out, Mr. Vorys, that to some extent Italy and Austria are covered by relief.

Mr. VORYS. By what?

Mr. LOVETT. By available relief funds, for that extra period.

Now what happens is, in order to get the coal to them in January, we have to pay for it in December.

Mr. VORYS. Do you mean that-maybe I do not understand your answer or maybe you do not understand my question, but wheat for France is proposed on a 5-months basis in your recommendation. Mr. LOVETT. Oh, yes; that is true.

Mr. VORYS. Now is there a 5-months program for wheat for Italy? Mr. LOVETT. The dollars have to be spent in order to have the pipe lines maintained in a constant flow. In the case of France, this requires procurement of wheat for 5 months in the program. In the case of Italy, only 4 months' requirements need to be covered in the interim aid program because the relief program has taken care of December shipments.

Mr. VORYS. Well, as you just look over the thing, if this is in fact a 5-months program rather than a 4-months program that would explain why it is so big, and that is why I am anxious to find out whether in general there is a program that represents having the pipe lines full on March 31.

Mr. LOVETT. That is right.

Mr. VORYS. Thank you very much.

Chairman EATON. Mr. Kee.

Mr. KEE. Mr. Secretary, with reference to whether or not all the money appropriated by the Congress for relief, in the last appropriation bill, which I believe was Public, No. 84, has that been expended or allocated? I would like to know, if it is consistent with the policy of the State Department to answer the inquiry, whether or not the State Department considers that by the expenditure of that money in various countries for which it was provided and in which it was expended enabled us to accomplish what we were told were the objectives of the appropriation? In other words, to what extent have we relieved those countries and to what extent has that halted the spread of certain objectionable political ideologies, and to what extent have we protected them from the dangers which they were facing at the time we made the appropriation.