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Mr. ANDERSON. Gilbert Anderson, with the Division of Exchange of Persons, State Department.

One of the most interesting ways in which the surplus property pro-ceeds are being utilized is in the international educational exchange program, authorized under the Fulbright Act.

Under that act the Secretary of State is authorized to undertake negotiations for executive agreements with countries having purchased United States surplus property, for the establishment of United States educational foundations or commissions to operate educational exchange programs in those countries.

So far nine agreements have been concluded and programs are under way with the following countries: The United Kingdom, France, Belgium and Luxemburg, Italy, Greece, Burma, China, the Philippines, and New Zealand.

The essential benefits of the program are available to citizens of the United States, and also to nationals of participating foreign countries.

(1) For United States citizens, opportunities are provided for study, teaching, and research in foreign countries participating in the program, (2) for nationals of those countries, the opportunity is provided for travel grants to enable such citizens to attend schools and institutions in this country, and also (3) a provision is made for attendance of nationals of participating countries at American institutions of learning abroad.

In brief, as the act states, a scholarship for American students may consist of travel to and from the United States, a maintenance allowance, tuition, books, and other incidental educational exepnses.

Programs have been operating for 1 year in China, Greece, Burma, and in the Philippines, and for the first time are now operating in the United Kingdom, Belgium, France, and Italy. The benefits are of large scope, and are of direct benefit to countries which have had considerable war devastation.

In Burma, for example, the Fulbright program has been able to add to the faculty of the University of Rangoon in the fields of education, public health, and subjects of that type.

In the Philippines, where studies of the entire national educational system are underway, the Fulbright program is making a direct contribution. Assistance to the Philippines includes the services of United States professors teaching in Philippine universities, and, in addition, through consultation to the Philippine Government. There is a tremendous interest in this program in the Philippines.

In the United Kingdom the competition for gradute student scholarships has just been completed, and over 2,000 American citizens from every State in the Union have applied for grants.

Mr. HOLIFIELD. May I interrupt to ask that for each one of these countries that you have spoken of you give us the number of students that are now on exchange.

Mr. ANDERSON. Now on exchange?
Mr. HOLIFIELD. Yes.
Mr. ANDERSON. Either on exchange or authorized ?
Mr. HOLIFIELD. Yes; we would like to have both.

Mr. ANDERSON. Yes. In the United Kingdom, between 50 and 100 United States students will receive scholarship grants within the next :3 or 4 months.

In Belgium, 24 students will receive benefits; in France, 250; in Italy, 140; in Greece, 16; in the Philippines, 6; in New Zealand, 12; in China, 20; in Burma, 8.

That is in this one category of student scholarships alone. There are provisions, for professor exchange and for advanced research grants also, and if you want those numbers I can give them to you.

Mr. HOLIFIELD. I would like to have the over-all number of persons on that exchange basis.

Mr. ANDERSON. Today?

Mr. HOLIFIELD. In relation to the amount authorized, and we would like to know how fully you are using your authorization.

Mr. ANDERSON. Yes. In this first year's operation, with 9 countries, we are estimating that approximately 1,500 to 2,000 citizens of the United States and nationals of participating foreign countries will take advantage of the scholarships under the Fulbright program. When the program is operating fully, with some 20 different countries, we anticipate 2 to 3 times that many participating.

Mr. HOLIFIELD. Is there a limit on the number that can be exchanged in the Fulbright Act? I do not remember at the moment.

Mr. ANDERSON. The limit is only on the anual amount available per country and the act itself which provides that the equivalent of $20,000,000 is the maximum allowable for any one country.

Mr. HOLIFIELD. Per year?

Mr. ANDERSON. The total maximum expenditure authorized by the Fulbright Act for any one country per year is the equivalent of $1,000,000. However, the proceeds available for exchanges with some countries may be considerably less than this authorized maximum.

Mr. HOLIFIELD. Does that come in the nature of utilization of frozen credits in these foreign countries or is it through a direct appropriation ?

Mr. ANDERSON. It is the fund derived from the sale of surplus property.

Mr. HOLIFIELD. That is, the use of frozen credits ?
Mr. ANDERSON. That is right.
Mr. BURNSIDE. Would that be true of lend-lease?
Mr. ANDERSON. The Fulbright Act did not include lend-lease.
Mr. BURNSIDE. Did not include it?
Mr. ANDERSON. No.
Mr. HOLIFIELD. Any questions, Mr. Harvey?

Mr. HARVEY. I was very much interested in this, and I wonder if it would be possible, Mr. Anderson, to prepare and send to the committee a brief statement, so far as the figures are concerned, not repeating necessarily your testimony but setting forth the figures in such way that we can have them before us.

Mr. ANDERSON. I will be glad to do that.

Mr. HOLIFIELD. I think each member of the committee would like to have those figures. In my opinion this is one of the most important things that we can do, the exchange of students and broadening our cultural relations with these countries. It ce tainly is a move toward peace, and I wish it were possible to extend it.

Mr. BURNSIDE. You mentioned increasing the number of countries to 20 participating countries.

Mr. ANDERSON. Yes.
Mr. BURNSIDE. Would you name those additional countries?

Mr. ANDERSON. The additional countries above the nine which are now participating in the program are Norway, the Netherlands, Austria, Turkey, Egypt, Iran, Pakistan, India, Australia, Korea, and possibly Siam and Indonesia.

Mr. HOLIFIELD. Any further questions?
Mr. BURNSIDE. What is the number involved in these exchanges ?

Mr. ANDERSON. That is, inclusive of professor and research scholar grants?

Mr. BURNSIDE. Yes.

Mr. ANDERSON. There will be approximately 1,500 additional grants awarded in the countries just mentioned.

Mr. BURNSIDE. Primarily from this country and other countries? Mr. ANDERSON. Yes.

Mr. BURNSIDE. You have not put through the same type of program in South America, have you?

Mr. ANDERSON. The only two countries where that may be possible is Ecuador and Peru, but there has not been a great deal of surplus property sold in those countries, as I understand. Others can probably testify more accurately on that. I might add that there are other Federal Government programs with Latin America for educational exchanges.

Mr. BURNSIDE. The reason I asked the question is that some of the Brazilian officials were interested along that line.

Mr. ANDERSON. Yes. We would welcome, of course, an increase of educational exchange with that country.

It so happens that there are other countries in Europe which are not included, such as Switzerland and Sweden, countries which would like to take part in such educational activities.

Mr. HOLIFIELD. Are there any further questions of Mr. Anderson? If not we thank you, Mr. Anderson.

Mr. ANDERSON. Thank you, Mr. Chairman.

Mr. HOLIFIELD. Mr. Bryan, do you have any other representatives from the State Department who wish to testify before the committee?

Mr. BRYAN. No, Mr. Chairman; I think that concludes our presentation.

Mr. HOLIFIELD. Thank you very much; you are excused.

Mr. Scammahorn testified before this committee, I believe last Friday, and he has asked for permission to clarify and revise his testimony. Is there any objection from any member to extending that courtesy? No objection is heard, and Mr. Scammahorn will be permitted to clarify his statement.

I understand there is also a letter from the Secretary of Agriculture, Mr. Brannan, pertaining to this bill. I ask that that be made a part of the permanent record, if there is no objection. (The letter referred to follows:)

MARCH 25, 1949. Hon. CHET HOLIFIELD.,

House of Representatives. DEAR MR. HOLIFIELD : This is in response to your request to Mr. Scammahorn this morning for the views of this Department on H. R. 2781, a bill to reorganize and simplify the procurement, utilization, and disposal of Government property, and for other purposes.

The purpose of this bill—to reorganize and simplify the procurement, utilization, and disposal of Government property-is a very commendable one. The need for this is long standing, and proper attention at this time can be of substantial service to the operating programs. Therefore, we wish to contribute as much as we can toward providing the best possible plan for the Government generally.

Undoubtedly there should be one place where study and consideration can be given to all related problems in this field for the purpose of generally improving such operations throughout the Government; however, at the same time, we definitely feel that the primary objective of any such implementation should be to improve the assistance given in this field to the operation of program activities.

Program admin'strators have many related responsibilities which are not proposed or suitable for centralization, including (1) determining what, when and how much to buy, (2) deciding what, when, where, and how much to store and distribute, and (3) resolving whether special or ordinary quality will meet program needs. Therefore, there must be a staff to carry out such responsibilities, as even in servicing the operating programs a staff is needed to select the source, issue orders and generally insure that what is needed will be where it is needed at the right time and in the right quantities. Some of the sources which must be considered in individual cases before a decision is made as to how procurement is to be accomplished include: (1) Surpluses, (2) Prison Industries, Inc., (3) blind-made products, (4) Federal supply schedule contracts, (5) Bureau of Federal Supply stores, (6) Government Printing Office (paper, ink, and so forth), (7) Post Office (envelopes), and so for h.

The necessity for considering at all times the costs to the operating programs: of using these central sources, as well as the economies which can be demonstrated by centralized buying, is emphasized by the fact that the Hoover Commission reported that the overhead costs of issuing more than 50 percent of the orders in the Federal Government are probably more than the cost of the merchandise.

Section 102 (a) provides for the administrator to consider economy, efficiency, or service with due regard to the program activities of the agencies concerned in prescribing policies and methods of procurement and in the operation of warehouses, supply centers, etc., and procurement and supplying of property and services for the executive agencies.

Section 106 (a) provides for the President to prescribe policies necessary to effectuate the provisions generally of the activities covered by the bill.

Section 106 (g) has been interpreted as making it mandatory for the administrator to advise and consult with affected agencies.

Undoubtedly these policy provisions on the part of Congress in acting on any legislation will be very worth while to all concerned since otherwise an administrator of the program might consider that he was given a directive to prescribe policies and methods, to operate warehouses, and to procure personal property, which, if not properly interpreted, could cause impediment to operating programs and significant increases in administrative expenses, even though certain savings in first cost might be evident. Notwithstanding these provisions, however, in view of the fact the

the supplying of equipment and materials is so vital to the welfare of operating programs of this Department and in view of the recent findings of the supply task force and recommendations by the IIoover Commission, your committee may want to consider the following suggestions presented by this Department in the interest of providing an organization which could, perhaps, have a better opportunity, in the years to come, to provide leadership under which there could be effectuated an activated coordination of supply interests throughout the Federal Government, whereby not only could operating programs be properly serviced but over-all maximum efficiency and economy be accomplished :

1. That there be provided a statement of policy by the Congress to the effect that operation of the supply function would be delegated to the operating depart. ments and agencies, and that centralization would be undertaken only where over-all economies—considering adequacy of service and contributory administrative costs to the operating programs can be effected. Such a statement in the bill could possibly be considered to give better recognition to the fact that the purpose of supply activities is first and foremost to serve operating programs and that economies are to be sought in reducing the average cost of unit output of the projects for which money is specifically appropriated, as well as in: certain segments, such as purchasing (which sometimes is a very small portion of the total appropriation for the project itself.

You asked this morning that there be included points of difference with the Hoover Commission report on this point. The above appears to be in agreement

with the Commission report on Office of General Services, which states on page 3, concerning the responsibility of the Office of General Services, that “* the Office of General Services should, to the greatest extent possible, delegate responsibility for exercising these three functions to the departments and agencies.” Again, on page 6, concerning the supply aspects of the recommendations, it is stated that, “It would assure systematic handling and fundamental standards, and its objective would be to decentralize activities into the different departments, agencies, and field office regions."

2. That the proposed organization be established with leadership as the primary objective and possibly located in the Executive Office of the President where those in charge could be presumed to speak more directly for the Chief Executive, It is our thought that this could possibly be more effective in administering any policies and methods which may be prescribed than for the organization to be established in a coordinate agency which would not appear to be required to share quite so completely in the responsibilities for not only servicing but overall accomplishment of the operating programs.

Perhaps the objectives mentioned in paragraphs 1 and 2 above could be illustrated by the following hypothetical case as requested this morning. Suppose photo developer is considered a common-use item and by central arrangements the Government's entire needs can be procured from one source by all Federal agencies at 45 cents per gallon, which may be 10 or 15 cents per gallon cheaper than purchasing from regular open-market sources. The central authority may decide, in view of the estimated quantities of photo developer used by the Government, that the savings which could thus be effected would justify requiring all Federal agencies to use this source exclusively. However, one of the Department's small field stations may need to purchase a gallon of the developer and also at the same time a supply of several other chemicals which may not be available from the particular source designated for the developer by the central authority. The station would, under the circumstances outlined above, have to write two purchase orders; whereas, except for the mandatory source determination of the central agency, the entire lot could be ordered from a single open-market source which could also supply the photo developer, but at the 10 or 15 cents per gallon higher price. If such a case were a fact, the question would then arise as to whether the Government and the over-all economy would be better off in the long run if the program-operating agency which makes out the order could simply include the gallon of photo developer on the one combined order at the slightly higher price or whether another order including a single item for a separate shipment is justified. In view of the administrative costs (the Hoover Commission report mentioned that the administrative cost of processing each purchase transaction is greatly in excess of $10), the necessity of issuing two orders rather than one could thus result in the gallon of photo developer costing the taxpayers more than $10.45 instead of about 55 or 60 cents, since froin a practical standpoint it could have been included on one general order at no appreciable increase in administrative cost.

This hypothetical case is intended only to demonstrate the possibilities of what could happen, not only in the instance of one item but literally thousands, unless all of the different problems of the operating agencies are considered and properly weighed in relation to the visible economies to the Government of a central system. We do not doubt the soundness of having a central system nor the possibilities for economies which exist, and as Mr. Scammahorn mentioned this morning, it is the policy of the Department to use the different central sources to the fullest extent practicable. We merely use this as a demonstration of the intimate relationship of the administrative problems of the operating agencies to any central supply program.

The question raised is merely whether any agency which is coordinate with other departmental agencies can be expected to maintain the same perspective and degree of balanced thinking under the stress of having to make decisions intimately affecting the servicing of operating programs and over-all economy as would be the case if the decisions were made by an authority placed in a position in which the responsibility for the administrative costs and servicing the operating programs authorized by the Congress will be equal to that for carrying on the central supply system. The enlargement and overemphasis of a central supply system is a natural tendency in the earnest desire of giving maximum service, and we thought the committee might want to consider whether a staff office of the President would give greater assurance to everyone concerned that these responsibilities will be equal.

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