(1) Page 2, line 18, strike out "nine" and insert "thirteen". Strike out "of which two shall be for replacement only".

(2) Page 3, line 18, strike out "$113,500,000" and insert "$117,377,000," an increase of $3,877,000.

(Extract from House report (pp. 3 and 4))

"A total of $113,500,000 is included in the bill to provide the funds for the formulation and execution of the foreign policy of the United States including the conduct of diplomatic and consular relations with foreign countries, conduct of diplomatic relations with international organizations, and related activities.

"The amount allowed is $6,350,000 below the amount of the budget estimate but is an increase of $1,500,000 over the amount appropriated to date for the present fiscal year.

"For the present fiscal year 13,331 permanent positions were provided in this appropriation item of which 4,589 are domestic and 8,742 are in the Foreign Service. An increase of 568 positions was requested in the budget for the coming year. The committee has not approved the request for additional positions but has provided sufficient funds to maintain the 1960 position level. The committee is confident that the necessary reduction in positions can be made in' existing operations to supply the positions required for new programs including new posts and elevations.

"The committee recognizes that some small savings have been made in transfer and communication costs, but feels that additional savings of the taxpayers' funds are in order. Post to post transfers should be held to a minimum. Con-. sideration should be given to longer tours of duty. A more modest patternshould be followed in setting up Embassies in newly established countries. The completion of the new building here in Washington should not only increase the effectiveness of the operations of the Department but should result in substantial savings in personnel and other expenses.

"An examination of the hearings will disclose that a rather haphazard method of assigning personnel to oversea posts after they have completed a world language course at the Foreign Service Institute has been followed in the past. The Department heads now indicate that this practice is being corrected. The savings made in the proposed world language reductions should offset the costs of the recognized need for hard languages.

"It seems somewhat incongruous that approximately 700 dependents can be trained in the Foreign Service Institute at a cost of practically nothing to the taxpayer, as claimed by Foreign Service Institute officials, although whenever they propose to train a small number of additional personnel, such a proposal is always accompanied by a request for additional funds. The fact that the Foreign Service Institute has been training dependents without legal authority therefor might conceivably have some bearing on these estimated costs.

"The committee has heretofore called attention to the waste of taxpayers' funds in the operation and management of the Foreign Service Institute and to the fact that there has been an utter lack of coordination between the Institute and the Foreign Service. The Department has heretofore been directed to ascertain if the languages cannot be more ably and economically taught in existing reputable educational institutions. The hearings will indicate that no conscientious effort was made to negotiate with educational institutions. The committee calls attention to the testimony on pages 691 to 748 of the printed hearings. "The committee believes that the increase of $1,500,000 over the appropriation for the current fiscal year plus savings which can be instituted should adequately provide for oversea wage and price increases, the opening of new posts, elevation of consular posts to diplomatic status, improved support for existing staff, increased consular activities, modernization of oversea cryptographic facilities, and the costs of the Federal employees' health benefits."

JUSTIFICATION

This appropriation provides for the salaries and other operating expenses of the Department in Washington and for all U.S. embassies, legations, and consulates abroad. The 1961 budget estimates for salaries and expenses included $119,850,000 and 13,899 positions, an increase of $7,550,000 over the amount appropriated for fiscal year 1960 (inclusive of $300,000 appropriated in second Supplemental Appropriation Act, 1960). The 1961 request took into account a net reduction in the base of $488,793, resulting from an adjustment in the lapse rate of $1,128,696, offset by decreases totaling $1,617,489. These decreases result from a reduction in communication costs, move to the new building, a reduction in the cost of transportation of effects, savings in rentals and quarters allowances as a result of the availability of Government-owned facilities, termination of the special immigration program under Public Laws 85-316 and 85-892, and nonrecurring expenses. In the 1961 request, 74 positions were eliminated

from the base.

The 13,899 positions (4,686 domestic, 4,510 Americans, 4,703 locals) requested for 1961 represent an increase of 479 positions over the 13,420 positions included in the base for 1961 (13,494 authorized for fiscal year 1960 (inclusive of 89 positions provided by Second Supplemental Appropriation Act of 1960) offset by the reduction of 74 reflected in the adjustment to the base).

The House bill provides an appropriation of $113,500,000, an increase of only $1,200,000 over the amount appropriated for fiscal year 1960, inclusive of the $300,000 appropriated in Second Supplemental Appropriation Act, 1960. The House report suggests that a reduction be made in existing operations to provide the positions required for new programs, including new posts, elevations, and consular workloads.

The Department has carefully reviewed the budget estimate in the light of the report and the action of the House of Representatives, together with the increasing responsibilities imposed upon the Department and Foreign Service as a result of the continually changing and critical international situation. The Department has accordingly eliminated lower priority operations wherever possible in an endeavor to reduce its revised requirements for fiscal year 1961 as near as possible to the House allowance. To meet minimum essential requirements, the Department requests the restoration of $3,877,000 and 295 positions.

The following table shows an analysis of the base adjustments and program increases requested for 1961, the effect of the House action and the restoration requested.

As indicated in the foregoing table, the House allowance has been distributed among three mandatory program increase requirements: oversea wage and price increases, the elevation of consular posts to diplomatic status, and costs of the Federal Employees Health Benefit Act. After providing for these built-in increases, no funds remained of the House allowance for the opening of new posts, improved support for existing staff, additional political and economic activities, increased consular activities, increased hard language training, and improved communication facilities. The additional amounts requested for these activities have, however, been reduced wherever possible or deferred to a later year, and are considered to be only the amounts necessary to meet current minimum essential requirements.

The following paragraphs discuss the program increases which could not be accommodated within the House allowance and for which restoration is requested:

The Department's budget request for fiscal year 1961 included an increase of 85 positions and an amount of $826,850 for opening 11 new posts as follows:

Changing conditions in the above countries and the growing importance of centers which have assumed new importance necessitate the opening of new Foreign Service posts in order to represent adequately the interests of the United States. The new posts in Nepal, Pakistan, and Brazil, involve posts of embassy status and are required to maintain deplomatic contact with the national governments. In the case of Nepal, the post was formally opened August 5, 1959, and initially staffed by the transfer of two American positions from New Delhi. Additional positions (8 American and 10 local) were provided by the Second Supplemental Appropriation Act, 1960. The post in Pakistan is also being opened in fiscal year 1960 and seven positions (two American and five locals) were provided by the same supplemental appropriation act. The new posts in Africa, Mexico, and Europe are needed to give protection and welfare services to American citizens, to meet increasing demands for visa services, and to provide for urgently needed political and economic reporting in areas which are not now adequately covered.

The Department has carefully reviewed its estimates for opening new posts in the light of the House report, and with a view to reducing the amount requested wherever possible consistent with the responsibilities with which the Department is charged. It has been concluded that opening of the proposed consulate at Oaxaca, Mexico, and one of the proposed consulates in Europe could be deferred to a subsequent fiscal year. This reduces the amount currently required to 67 positions and $707,986.

Restoration of 67 positions and $707,986 is considered necessary in the best interest of the United States, and is requested.