Page images

an area, to leave some jeeps or some miscellaneous motor vehicles behind, but I do not think there has been any great quantity. There have been a number of reports and we have investigated all of them, so far as I know, and they were disproved, or found that the action was required by the circumstances.

Mr. HARVEY. I see.

Mr. HOLIFIELD. Thank you very much, Mr. Murphy. Any further questions?

Mr. BURNSIDE. Just one question : Do you have any airplane parts left scattered around the world?

Mr. MURPHY. Yes, we have a large inventory in Australia at the present time; that is somewhere around $11,000,000 of inventory that I referred to earlier.

Mr. BURNSIDE. The reason I asked that is because the National Guard, I understand, is looking for airplane parts.

Mr. MURPHY. We have those parts; they are available to the armed services.

Mr. BURNSIDE. Including the National Guard ?

Mr. MURPHY. Well, no; we do not deal with the National Guard; we deal with the Air Force, which I believe has supply responsibility.

Mr. BURNSIDE. The reason I asked the question is that General Fox was up to see me recently, and I wanted to know whether they were buying new airplane parts if they are now available.

Mr. Murphy. This inventory was screened by the Air Force; it sent a representative to Australia and withdrew several hundred thousand dollars worth of property for removal, and we are selling the balance, or trying to sell the balance.

Mr. HOLIFIELD. You are not offering it for sale on an agency basis?
Mr. HOLIFIELD. As they are doing here?
Mr. MURPHY. No; we have not followed that practice.
Mr. HOLIFIELD. There is no demand for that type of disposal?

Mr. MURPHY. You see, Mr. Chairman, all of these items are restricted as to importation under section 33 of the Surplus Property Act, so it would be virtually impossible at this time for private industry. All of the services can retain any property that they select. at this time.

Mr. HOLIFIELD. Have you had any aviation parts experts appraise the value of the property to see whether it is worth while to bring it back?

Mr. MURPHY. Yes; this inventory was appraised for about $14,000,000, as I recall. We have made a strenuous effort to sell to interested parties in this country, and we have not been able to find anyone, so we are about to close a deal with the Australian Government, whereby they will buy the entire remaining inventory, and we hope to close that in the next few days.

Mr. HOLIFIELD. What do you contemplate realizing from such sale ?

Mr. MURPHY. We hope to obtain the equivalent of $400,000; that will be in Australian pounds.

Mr. HOLIFIELD. What is your present overhead cost, per month, in handling this property?

Mr. MURPHY. Negligible. The Autralian Government has been doing the guarding; it is supplying a watchman and a stock clerk.. Our present overhead at Sydney consists of one Army officer, a captain, and one civilian stenographer.

Mr. HOLIFIELD. The Australian Government is furnishing this service without reimbursement!

Mr. MURPHY. Yes. This property originally was lend-lease and was recaptured by the United States, and during the past 12 months we have been going on a month-to-month basis, continuing with the Australian Government a custodial arrangement, and so far it has not cost us anything.

Mr. HOLIFIELD. That is an amazing situation. Any further questions?

Mr. BURNSIDE. I think it is a good business proposition to buy $11,000,000 worth of property for $400,000.

Mr. HOLIFIELD. Of course, I think that the amount they recover is in line with some of the domestic recoveries, percentage-wise.

Thank you very much, Mr. Murphy.
Mr. MURPHY. Thank you.


DIVISION Mr. HOLIFIELD. Mr. Leland W. King, Chief of the Foreign Buildings Division will be our next witness.

Mr. KING. I am Associate Chief, Mr. Chairman.

Mr. HOLIFIELD. Do you have a prepared statement you wish to make to the committee, Mr. King ?

Mr. King. No, Mr. Chairman. We have joined with Mr. Bryan's statement. I do not know anything to add, so far as the buildings program is concerned, except to say that this legislation does not change at all the existing procedure, nor does it entail any new legislation as far as the existing Foreign Building Act is concerned.

Mr. HOLIFIELD. Could you give the committee a brief picture of your functions in the amount of buildings over which you have control?

Mr. King. At the present time we are operating in some 68 countries, about 240 cities. The foreign building operation includes our furnishing and leasing operations.

So far as the utilization of surplus property proceeds is concerned, we are operating under approximately 42 agreements in about that many countries. At the present time we are under what we like to call a recovery operation, getting some real estate for local currencies which are blocked in most cases, and at the same time we are eliminating the dollar appropriations for rents.

Mr. BURNSIDE. We were a few years ago renting a lot of property and when an American Embassy or office had to move it had to find a suitable property at quite an expense.

Mr. KING. A considerable amount. Mr. BURNSIDE. And the same thing was true with the consular offices.

Mr. King. Yes. Mr. BURNSIDE. Now following the policy which Congress has adopted, we are using the money that is available to foreign currency and buying up property which can be used by embassies and consular service.

Mr. King. Yes.
Mr. BURNSIDE. In keeping with our great Nation.

Mr. KING. Yes, insofar as the utilization of blocked credits and currencies is concerned, and insofar as they are commercially feasible. Of course, we have to be careful not to inherit a high carrying charge by securing properties of excessive size or of excessive age, or which are otherwise unsatisfactory, where the net dollar cost to the taxpayer would exceed the amount saved.

Mr. BURNSIDE. It is much better to own the property if you do not have to buy it.

Mr. King. That is right.
Mr. BURNSIDE. And we do not have to pay taxes on it.
Mr. King. That is right.

In the current year, before the House Appropriations Committee, Subcommittee for State, we estimated that our added maintenance expenses would run approximately 50 percent of the present leasing account, providing a net saving to the Government, through this operation, and at the same time providing

Mr. BURNSIDE. Provided better quarters?

Mr. King. There are some places, such as Warsaw, Manila, and China, and some of the more backward areas of the earth where it is almost mandatory that the United States Government house its employees.

Our present balance of recovery is approximately $70,000,000, through the surplus-property account.

Since the inception of the program in the spring of 1947 we have acquired approximately 386 buildings—separate and distinct operations.

We are now housing approximately 1,000 Americans in Governmentowned quarters overseas. The existing legislation_limits us to $110,000,000 in foreign credit transfers back to the Treasury, this being the fiscal control exercised over the utilization of these currencies.

In many areas we have virtually completed the program, but we estimate that before it is completed, owing to various impediments such as lack of material, labor, and other obstructions, that we will recover approximately $200,000,000 through using foreign local currency credits.

Mr. BURNSIDE. How much local currency credit do we have at this time?

Mr. King. For the building program?
Mr. King. Approximately $200,000,000 has been earmarked.
Mr. BURNSIDE. About $200,000,000?

Mr. King. Subject to the approval of Congress, to increase the credits from $110,000,000 to $200,000,000.

Mr. BURNSIDE. In other words, it will take about $200,000,000 to complete the program?

Mr. KING. Yes, sir; the actual amounts available in credits are about 1.5 billion dollars.

Mr. BURNSIDE. That is what I had in mind.

Mr. King. Yes. The building program represents an important percentage of the total available, I think, about 15 percent.

Mr. BURNSIDE. How much money is available ?

Mr. KING. Under the foreign disposal agreements, either as against lend-lease or the outright sale of surplus property, or through what we call bulk settlements, that is adding up the entire business of lend-lease and surplus property, I think the assets resulting from sale of surplus property under credit agreements amount to approximately $1,100,000,000.

Mr. HOLIFIELD. One billion and one hundred million dollars?
Mr. KING. Yes, sir.
Mr. BURNSIDE. You said $2,000,000 before, I believe.

Mr. King. I meant $1,100,000,000 and I might add, this entire sum is not for foreign buildings program.

Mr. HOLIFIELD. Are those funds intermingled with the blocked currency, as the result of the ECA operation, or are they entirely independent?

Mr. King. At the moment, Mr. Chairman, we have not needed or had to have to call on the ECA for their counterpart funds, the 5percent item. That is what you are referring to?


Mr. King. We have had adequate assets under the other agreements with one or two exceptions, and they have wanted to use their reserves for the strategic stock-pile program, as you know.

If I might say, as of possible interest to the committee, these operations have been carried out on about a 1 percent dollar cost. Ninetynine percent has been in the form of utilization of foreign assets, assets held abroad.

Mr. HOLIFIELD. Are there any further questions of Mr. King?

Mr. HARVEY. Just this one question as I think I have lost out about part of it.

Mr. King. I lost out myself for a minute.

Mr. HARVEY. Would you mind telling me now again the source of this $2,000,000,000 fund !

Mr. King. Subject to correction on the amount, since that really is the province of the FLC, the credits are arrived at by first, the disposal of surplus property, almost entirely arising from World War II.

Secondly, through adjustments with foreign governments on lendlease.

In the case of Great Britain, they made a so-called bulk settlement, where both the surplus property acquisition and the lend-lease values were combined in one agreement.

These agreements are made in the form of dollar credits. In other words, the buying countries or agencies are obligated to return to the United States over, in some cases, very many years, the dollar value of the property which the country acquired.

In operating the FBO, the Fulbright program, and for the administrative expenses abroad, the procedure is to call upon these Governments for local currency payments in lieu of dollar payments. In many cases, in fact in almost all cases, the dollar is in short supply in these countries, and in making this form of liquidation it is very advantageous to them and to this country.

Mr. BURNSIDE. Do we have any so-called credits in countries behind the iron curtain?

Mr. King. Yes; we have some very substantial agreements with Poland and Czechoslovakia, and Austria, if it could be called behind the iron curtain ; Yugoslavia, is another.

Mr. BURNSIDE. What about Hungary?
Mr. King. And Hungary.

Mr. HARVEY. Then it is possible, and you still call on these countries and our Government can utilize those credits ?

Mr. King. Without exception, every call we have made on these governments they have met.

(Off the record discussion.) Mr. King. Of course, you realize we were faced with a very bad situation, with the complete devastation of some of these buildings.

Mr. BURNSIDE. Some of the embassies were destroyed?
Mr. King. We did not own the buildings.
Mr. BURNSIDE. It was leased ?
Mr. King. It was held under lease prior to the war.

Mr. HOLIFIELD. Any further questions of Mr. King? If not, we thank you, Mr. King.

Mr. King. Thank you.


Mr. HOLIFIELD. We will hear next, Mr. William D. Wright, Chief, Division of Central Services.

Do you wish to add anything, Mr. Wright, to what has already been presented ?

Mr. WRIGHT. No, Mr. Chairman. Mr. Bryan covered the situation as far as we are concerned. I am concerned with the normal, every-day procurement and administrative operation of the States equipment, and the bill under consideration covers the interest of the Department of State, in that respect.

Mr. HOLIFIELD. Are there any questions of Mr. Wright?
Mr. Harvey. I have no questions.

Mr. HOLIFIELD. Mr. Paul J. Andrews, I understand, could not be here, and Mr. Bryan took Mr. Andrews place. It that right?

Mr. BRYAN. Mr. Anderson is present but I am advised that he has nothing to add to what has alreody been presented. Mr. Gilbert Anderson is here as a witness for State Department if the committee desires any further information on the educational-exchange program of the Department.

Mr. HOLIFIELD. The name on my list is Paul J. Andrews, Office of the Administrator of Foreign Liquidations. Mr. Anderson is from the Office of Foreign Liquidations?



PERSONS, STATE DEPARTMENT Mr. HOLIFIELD. What is your position, Mr. Anderson? Mr. ANDERSON. I am with the Fulbright program. Mr. HOLIFIELD. Do you have anything you wish to add at this point?

Mr. ANDERSON. If you are interested in the work of the Fulbright program I would like to make a statement.

Mr. HOLIFIELD. I think the committee is interested and would like to have you make a brief statement. Will you identify yourself for the record.

« PreviousContinue »