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out and effectuate the purposes of the Fulbright program. That is the program which has to do with the exchange of persons, the cultural and educational program.

It also appears to provide that the Secretary of State is authorized to continue carrying out the Foreign Service building operations which the Congress authorized in 1946, through the utilization of the credits and proceeds, and that the Secretary of State may utilize foreign currencies for local needs; that is, local expenditures in the foreign countries.

The provisions of this section likewise authorize the Secretary to amend, modify, or renew agreements in effect on the date of this proposed act.

It provides that the proceeds derived from sales shall be administered in accordance with the procedures which may be established from time to time by the Secretary of the Treasury, and when reduced to United States currency shall be deposited to the credit of miscellaneous receipts.

It makes provision that the Secretary of State shall, except to such extent as the President shall otherwise determine, continue to perform other functions with respect to agreements for the disposal of foreign excess property in effect on the effective date of this act.

That concludes discussion of section 201 of title II.

Section 202 concerns the methods and terms of disposal. And I might add at this point that most of the provisions contained in section 202 are more or less extracted from the Surplus Property Act of 1944, as amended.

It provides that the property may be disposed of by sale, exchange, lease, or transfer, for cash, credit, or other property, for foreign currency credits, or other substantial benefits, or the discharge of claims resulting from compromise settlements, or such claims by any executive agency in accordance with law, whenever the head of the agency determines that this is in the interest of the United States to do so.

It provides that such property may be disposed of without advertising when the head of the agency deems it necessary in the interest of the Government.

It provides that the head of each agency may execute such documents for the transfer of title or other interest in the property and take such other action as he deems necessary or proper to dispose of such property; and in the final analysis he may even abandon or donate or destroy property, which he considers as having no commercial value, or the estimated cost of care and handling of which would exceed the estimated proceeds from its sale.

There is a provision in section 202 concerning the importation of certain property. A provision has to be set forth in the sales agreement covering any agricultural commodity, food, or cotton or woolen goods, that such property shall not be imported into the United States unless the Secretary of Agriculture determines that such property is in short supply in this country.

Mr. HOLIFIELD. That follows the general policy of the Surplus Property Act of 1944.

Mr. BRYAN. Yes; it does. Most of these provisions are lifted right from the Surplus Property Act itself.

Section 203 concerns proceeds and foreign currencies. It provides that the proceeds of sales shall be administered in accordance with


procedures which from time to time may be prescribed by the Secretary of the Treasury and shall, when reduced to United States currency, or if in United States dollars, be deposited in the miscellaneousreceipts account.

There is a provision in this section which says that the provisions of section 105 (b) of title I shall apply with respect to surplus property disposal under this title, and that the proceeds from the sale of property originally acquired from a reimbursable fund may be credited to such fund-paralleling the provisions in title I of the bill under consideration.

It further provides that any executive agency disposing of property abroad may deposit in a special account with the Treasurer of the United States such amounts of the proceeds as he considers appropriate or necessary in order that an appropriate refund may be made to purchasers in the event the agreements are not consummated or carried out, or in the event they are canceled or rescinded, and that such arnounts may be withdrawn from this account for the purpose of refund, without regard to the origin of the fund.

Mr. HOLIFIELD. Just a minute on that last statement.
Mr. BRYAN. Yes, sir.

Mr. HOLIFIELD. That applies to actual cash payments out of the special account?

Mr. BRYAN. Yes.
Mr. HOLIFIELD. And is confined to refunds of deposits.

Mr. BRYAN. I think it is. From reading that language, I think it is confined to refunds.

Mr. HOLIFIELD. Will you have your legal counsel give us a letter on that section?

Mr. BRYAN. Yes, sir.

Mr. HOLIFIELD. So we will be able to know just what is the Department's opinion as regards to it.

Mr. BRYAN. I am the only legal representative here, and, frankly, I have not analyzed that sufficiently to intelligently answer the question at this time.

Mr. HOLIFIELD. Will you give it a little further consideration and furnish a statement to the committee on that point?

(The material referred to is as follows:)



This statement is in response to the request by the House Committee on Expenditures in the Executive Departments for further clarification of the meaning and purpose of the provisions of section 203 of H. R. 2781 appearing opposite line 1 through 8 of page 28 of the bill.

The Office of the Foreign Liquidation Commissioner, Department of State, in its operations under section 30 (c) of the Surplus Property Act of 1944, which contains the same provisions, deposits all its receipts from sale of surplus property in a special deposit account established by the General Accounting Office for "Sales of surplus property in foreign areas." Section 30 (c) of the Surplus Property Act provides for refunds to be made from this special deposit account when “any disposition is rescinded or does not become final, or payment for breach of any warranty.” It was recognized by the drafters of this legislation that only a small portion of the total receipts from sales of surplus need be retained in the special deposit account to pay refunds. The remainder of the funds could then be drawn off into the miscellaneous receipts account of the Treasury.

Accordingly, funds received by the Office of the Foreign Liquidation Commissioner from any specific contract are not earmarked in the special deposit account

as a source of possible refunds but are mingled with all other receipts from sales by this Office. The language in 30 (c) (and under (ii) of the last proviso of sec. 203 of H. R. 2781) which provides for withdrawal of “amounts, so to be refunded or paid, without regard to the origin of the funds withdrawn” permits refunds to be made from any money remaining in the special deposit account whether or not the money collected under the particular contract remains in the special deposit account or has been transferred to general fund revenues as miscellaneous receipts. Of course, reference is made on the refund voucher to the document evidencing collection under that particular contract. For example, if receipts from 10 contracts are paid into the special deposit account and an amount equal to the receipts from the first eight contracts would be deposited into miscellaneous receipts, receipts from contracts 9 and 10 would be available to pay refunds on any 1 of the 10 contracts.

Mr. BRYAN. Section 204 covers several miscellaneous provisions, first of which authorizes the President to prescribe policies not inconsistent with this title as he may consider necessary to effectuate the provisions of this title and to serve as a guide for the various executive agencies having responsibility under the title.

The second provision permits the head of any executive agency to delegate authority, or to authorize successive redelegation of authority to officers and employees under their command, or to the head of another executive agency.

The third provision authorizes the head of the agency, subject to the civil-service and classification laws, to appoint and fix compensation of personnel to carry out the activities under this title, and outside the country, to make such appointments without regard to the civil. service and classification laws.

The fourth concerns the question of making annual reports to the Congress. Each agency is to make an annual report to the Congress of excess property which has been disposed of.

The fifth permits the transfer from the State Department to other agencies of the Government, personnel, records, property, obligations, commitments, and funds that have been either appropriated or allocated for the purposes of carrying out the provisions of this title.

I think that concludes title II, and if I may I would like to introduce the several representatives here who are familiar with each of these activities, in the event the committee would like to ask questions.

Mr. HOLIFIELD. Will you withhold that for just a moment?
Mr. BRYAN. Yes, sir.

Mr. HOLIFIELD. Are there any questions by members of the committee?

Mr. HARVEY. I was going to ask in this particular connection just how much, if you have any suggestion or any idea, surplus property is involved. Going back to section 201 and on down where you are dealing with it in that section, how much surplus property is there left with which your office is charged ?

Mr. BRYAN. Charged at this time?
Mr. HARVEY. Yes; that is right.

Mr. Bryan. Mr. Chairman, if I may, I would like to call on Mr. Francis T. Murphy, the Deputy Director of the Office of Foreign Liquidation Commissioner, to answer that.

Mr. HOLIFIELD. I have him on the list as the next witness just as soon as you are through.

Mr. BRYAN. I am sorry.

Mr. HOLIFIELD. I thought we might perhaps conclude with your statement first, if that is agreeable with you, Mr. Harvey?

Mr. HARVEY. Yes. The other question I had in mind was the matter you called attention to, that we should have a letter giving us an analysis of the language to which you referred. I think that is very appropriate. Those are all the questions I have in mind.

Mr. HOLIFIELD. Any other questions?

Mr. BURNSIDE. Section 204, getting down to line 23, subject to the civil-service and classification laws, will take care of the special method for securing pernnel that would be in the Foreign Service, would it?

Mr. BRYAN. I think perhaps this section provides specifically for the employment outside the United States of personnel; that is taken care of in here, to carry out the provisions of this title; those within the United States are subject to the civil-service and classification laws.

Mr. BURNSIDE. You have a separate method of selecting some of the personnel even in the United States who are in the Foreign Service?

Mr. Bryan. Under the Foreign Service Act of 1946, a detailed: procedure is provided.

Mr. BURNSIDE. This will take care of it?
Mr. BRYAN. Of that type of personnel.
Mr. BURNSIDE. Yes; this will take care of that type of personnel.
Mr. BRYAN. Yes, sir.
Mr. HOLIFIELD. This makes no difference in the present law?
Mr. BRYAN. No, sir.

Mr. BURNSIDE. It will take care of the employees you would have to employ in foreign countries?

Mr. BRYAN. That is right.
Mr. BURNSIDE. So there would be no conflict?
Mr. BRYAN. There would be no conflict.

Mr. HOLIFIELD. Thank you very much, Mr. Bryan. Now, will you introduce the next witness?



Mr. BRYAN. I would like to introduce to the committee, Francis T. Murphy, Deputy, Foreign Liquidation Commissioner.

Mr. HOLIFIELD. Mr. Murphy, will you first answer the question asked by Mr. Harvey, unless it is contained in the general statement you may have prepared ?

Mr. MURPHY. No; it is not. It is about $13,000,000, Mr. Harvey.
Mr. HARVEY. Is this in the nature of real-estate property?
Mr. MURPHY. Moveable property.
Mr. HARVEY. Moveable property?
Mr. MURPHY. Yes.

Mr. HARVEY. And what has been the progress; how rapid are you disposing of it?

Mr. MURPHY. We will complete it by June 30 of this year.
Mr. HARVEY. June 30 ?
Mr. MURPHY. Yes.
Mr. Harvey. That is the only question I have.
Mr. HOLIFIELD. Mr. Burnside.

Mr. BURNSIDE. We are not declaring any consulate building surplus.. By the way, we do have consulate buildings for consulate offices in a number of these countries behind the iron curtain now?

Mr. MURPHY. I believe we do.

Mr. BURNSIDE. Having bought those buildings?
Mr. MURPHY. Yes; I think that is correct.

Mr. BURNSIDE. Are we extending the policy of buying buildings for embassies in any other countries now?

Mr. MURPHY. I do not believe there is any activity in that field at the present time, and I doubt if there has been for any recent months, although a representative of the FBO could more accurately answer that question than I.

Mr. BURNSIDE. We are not declaring any of these consular buildings surplus property?

Mr. BURNSIDE. We are just closing the buildings?

Mr. MURPHY. We are just closing the buildings, but we are retaining title to the property; yes.

Mr. HOLIFIELD. Do you care to make a general statement, Mr. Murphy ?

Mr. MURPHY. No; I do not have any general statement, other than to

say that we are in accord with the statement made by Mr. Bryan; as a matter of fact, we worked on it jointly.

Mr. HOLIFIELD. May I refer you to page 27 of the bill, line 9, where you are given authority to abandon, destroy, or donate foreign excess property under your control if it has no commercial value. How do you arrive at the fact that it has no commercial value; do you have any formula?

Mr. Murphy. We have no set formula. It has been the practice to test the market by sale offers in the various countries; occasionally we have invited bids. Usually it is the result of market tests, but depends upon the location of the property, which usually is in a remote area, and sometimes it becomes necessary to either donate or abandon the property.

Mr. NOLIFIELD. What is the nature of the property; is it real property or personal property?

Mr. MURPHY. In our experience there has been real property. The armed services might have an air strip at some remote spot, such as Burma. There have been donations of movable property, but I think they are in the minority. There have been some abandonments.

Mr. HOLIFIELD. Your functions are rapidly nearing termination, as far as foreign property liquidation is concerned ?

Mr. MURPHY. Yes, and we propose to liquidate our activities; and we hope it can be done by June 30 of this year.

Mr. HOLIFIELD. Are there any further questions?

Mr. HARVEY. Mr. Chairman, right in this connection, and what I am about to ask you is not in a critical sense at all, Mr. Murphy.

Mr. MURPHY. I understand.

Mr. HARVEY. But there has been information furnished to the Congress that there is still scattered all over the world materials as a result of the war, and I am thinking now particularly of some statements and articles which I have read to the effect that trucks, and jeeps, and that sort of thing were just abandoned. Is that included in the type of material that you are discussing here?

Mr. MURPHY. No; this is what you might call the official abandonment of property that has not been declared surplus.

I do not doubt that as to the property to which you refer there were cases where some agency found it necessary, when they moved out of

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