Mr. IHLDER. Yes, when they have served the purpose for which they are built.

Mr. CASE. Is it not as broad as it is long? If there is to be no change in the amount, if the money goes into the Treasury and Congress later decides it wants to demolish these houses and appropriates the money for it, is it not as broad as it is long?

Mr. IHLDER. The purpose is to secure acquiescence in the erection of urgently needed temporary war housing by assuring neighboring property owners that the Government will not needlessly injure them. It is the "ifs" that worry them and lead them to oppose war housing. It is the uncertainty, if Congress at the end of the war then determines to make an appropriation, it can demolish the houses. They say, "Yes; that was equally true in regard to the Government hotels on the Union Station Plaza; at any time Congress could have made an appropriation to demolish them, only it did not." So we are asking the Congress to say "We have appropriated money for temporary housing and; in order to carry out the stated intent of Congress that these houses are temporary, Congress provides the means to assure that its intent shall be carried out."

Mr. CASE. I think that goes into the question of post-war planning somewhat, and I am inclined to think that the country and Congress will have problems which it can face at that time, and maybe that should be reserved for determination by what conditions we find we have then.

Mr. IHLDER. Yet, in answer to Congressman Dirksen's question, it is because of the lack of assurance that we are having objections from every neighborhood where we propose to put these houses. They say, "You are going to ruin our property. Congress may make an appropriation, but we do not know what Congress will do. Now, before damage is done, is the time for Congress to decide." It says, "This is temporary housing"; that is what Congress has said. They answer, "All right; make good on the statement that it is temporary housing, and we will be somewhat pacified." But if Congress says "We do not know what we are going to do," we may leave these houses in your neighborhood," then they would really be scared. It was that of which Congressman Dirksen was speaking.

Mr. WOODRUM. Thank you, Mr. Ihlder.

FRIDAY, JANUARY 8, 1943.

FOREIGN SERVICE PAY ADJUSTMENT

STATEMENTS OF G. HOWLAND SHAW, ASSISTANT SECRETARY OF STATE; MONNETT B. DAVIS, CHIEF, DIVISION OF FOREIGN SERVICE ADMINISTRATION, AND LAURENCE C. FRANK, EXECUTIVE ASSISTANT TO ASSISTANT SECRETARY SHAW

LOSSES OF PERSONNEL STATIONED ABROAD ON DEPRECIATION OF FOREIGN CURRENCIES

Mr. WOODRUM. Mr. Shaw, you have an estimate of $365,000 for Foreign Service pay adjustment, as follows:

Foreign-service pay adjustment, appreciation of foreign currencies: For carrying into effect the provisions of the act entitled "An act to authorize annual ap

propriations to meet losses sustained by officers and employees of the United States in foreign countries due to appreciation of foreign currencies in their relation to the American dollar, and for other purposes," approved March 26, 1934 (5 U. S. C. 118c), and for each and every object and purpose specified therein, $365,000.

Will you make a statement on this item?

Mr. SHAW. Mr. Chairman, this is a request for an appropriation under the act of March 26, 1934, to enable us to meet the losses sustained by American officials abroad, on account of the appreciation of foreign currencies in terms of the American dollar. The only difference of importance this year is that we are asking for a good deal less. That is due to the fact that the Army and the Navy personnel is not included this year. They are going to request their appropriations separately, because of the element of secrecy as to the placement of military forces. That is why we are asking for a lesser amount.

JUSTIFICATION OF ESTIMATE

Mr. WOODRUM. You may insert the justification in the record.
Mr. SHAW. Yes, sir.

(The justification statement is as follows:)

$1, 350, 000

Foreign Service pay adjustment, appreciation of foreign currencies Regular appropriation 1943 act. Deduct nonrecurring and other items not required in 1944: Reduction in total of estimates of participating departments and establishments, due principally to withdrawal of American Government personnel from enemy and enemy-controlled areas, and to the transfer of provision for the War and Navy Departments for 1944 to the regular Budget estimates of those departments--

Total estimate or appropriation for 1944.---.

985, 000

365, 000

As a consequence of the decline in the exchange value of the United States dollar in 1933 when the Treasury suspended gold payments temporarily, and the subsequent revaluation of the dollar by the President's proclamation of January 31, 1934, at 59.06 percent of its former par value, officers, enlisted men, and employees of this Government in service in certain foreign countries were placed in a most difficult situation.

In order to remedy this situation, legislation was enacted on March 26, 1934, authorizing the payment of losses sustained due to the appreciation of foreign currencies in relation to the United States dollar, subject to regulations to be prescribed by the President. This enabling legislation, as amended in a minor detail by a later enactment, appears in title 5, section 118c, of the United States Code, as follows:

"There are authorized to be appropriated annually such sums as may be necessary to enable the President, in his discretion and under such regulations as he may prescribe and notwithstanding the provisions of any other Act and upon recommendation of the Director of the Budget, to meet losses sustained on and after July 1, 1933, by officers, enlisted men, and employees of the United States while in service in foreign countries due to the appreciation of foreign currencies in their relation to the American dollar, and to cover any deficiency in the accounts of the Treasurer of the United States, including interest, arising out of the arrangement approved by the President on July 27, 1933, for the conversion into foreign currencies of checks and drafts of officers, enlisted men, and employees for salaries and expenses: Provided, That such action as the President may take shall be binding upon all executive officers of the Government: Provided further, That no payments authorized by this section shall be made to any officers, enlisted men, or employees for periods during which their checks or drafts were converted into foreign currencies under the arrangement hereinbefore referred to: Provided further, That allowances and expenditures pursuant to this section shall not be subject to income taxes: And provided further, That the Director of the Budget shall report all expenditures made for this purpose to Congress annually with the Budget estimates."

The regulations to govern the payment of currency appreciation losses, as they now stand, are the result of some years of experience with the problem and are so designed as to insure fulfillment of the intent of the law and prevent abuse. The basic rates prescribed for the several currencies are derived from actual averages for the 5-year period from 1927 through 1931, a time when the international exchange markets were operating under normal and reasonably stable conditions. The amounts appropriated and obligated for currency appreciation losses during the years for which provision therefor has been made are as follows:

Actual 1942.-The following table (schedule A) shows estimated final requirements for the 1942 fiscal year as nearly as can be calculated at the present time upon the basis of information received from the departments and establishments concerned: SCHEDULE A.-Actual 1942

Estimate for 1944.-At the request of the War and Navy Departments, their estimates for currency appreciation losses for the 1944 fiscal year are omitted from the present submission for reasons of military secrecy, and will be included in the separate appropriation estimates to be submitted by the Departments concerned.

The distribution of United States Government personnel in foreign countries where currency appreciation losses are currently reimbursable, by countries and by departments and establishments, is shown in the following table :

SCHEDULE B.-Number of officers and employees serving in areas where currency appreciation losses are reimbursable

The basic salaries and allowances of personnel shown on the foregoing statement are as follows:

SCHEDULE C.-Basic salaries and allowances of officers, enlisted men, and employees serving in areas where currency appreciation losses are reimbursable

SCHEDULE D.-Countries where exchange relief is currently payable, and approximate percentage of loss in each

Requirements for the 1944 fiscal year are estimated by applying the percentage of loss shown on schedule D to the basic salaries and allowances shown on schedule C, and by including nominal amounts for the several departments and establishments for losses accruing on the salaries of temporary employees and on per diems of personnel traveling on official business, and for such contingencies as fluctuations in rates of exchange and changes in the numbers of persons in given areas or in their rates of pay. The computation of estimated losses for 1944, by countries and by departments and establishments, is as follows:

SCHEDULE E.-Estimate 1944-Anticipated currency appreciation losses

Remarks. In order that there may be no misunderstanding in comparing amounts shown for the several departments and establishments for 1943 and 1944, as printed in the Budget, it is to be borne in mind that the 1943 column shows the allocation made to each office at the beginning of the fiscal year, and not the original estimate for each office on which the total appropriation is based. It

has been the practice to set up a reserve at the beginning of each fiscal year, and for 1943, $247,750 is being held in reserve. Of course, in the 1944 column no reserve is shown and the total estimate for each department and establishment is listed directly. Mention is made of this point merely to avoid possible confusion as to the comparability of figures listed in the two columns.

ADJUSTMENT FOR PERSONNEL CHANGES IN EXCHANGE RELIEF AREAS

Mr. WOODRUM. Now, on this item of $31,549 "Adjustment for personnel changes in exchange relief areas": How much did you use for that this current year.

Mr. SHAW. There is allocated at present $420,000 for that, is there not, Mr. Davis?

Mr. DAVIS. Yes; that is an estimate covering items that cannot be accurately foreseen, and is based on experience. It is something less than 10 percent.

Mr. WOODRUM. I see the item of $31,549 for 1944 is carried in the current bill as $10,441?

Mr. DAVIS. No. Mr. Shaw has already stated that the prior allocation for the whole department is $300,000.

Mr. WOODRUM. But in your schedule E on page 56 of the hearings of last year, you showed $10,441 under this item. Why is it $31,549 this year?

Mr. FRANK. Because there is an apparent expansion of personnel being sent to affected areas by various other agencies of the Government, which we cannot foresee in terms of the extent of additional funds necessary. The services are still expanding and there will be additional personnel.

Mr. WOODRUM. You think it may be more next year than it is this year?

Mr. FRANK. That is right. We have no way of estimating what that will be.

Mr. DAVIS. As a matter of fact, the estimate has to be made up some months in advance and, when the trend is upward as it is this year, there is an expansion of personnel that we cannot forecast and include in the estimate. For example, there has been an increase in Turkey. We had 71 persons in Turkey in the estimate, and the number has risen to 106 at present.

CURRENCY APPRECIATION LOSS IN VENEZUELA

Mr. WOODRUM. What is the explanation of the very large loss in Venezuela-60.67 percent?

Mr. DAVIS. That is explained in the two tables, schedule C and schedule D-the pay roll in Venezuela, to which is applied the percentage of loss in the rate of exchange for the bolivar, which is 30.03 cents, as compared with the basic rate of 18.69 cents, resulting in a 60 percent loss-the highest rate of loss in any currency. That applied to the pay roll gives the amount needed for Venezuela, which totals $152,000. The underlying reason for the high exchange value of Venezuelan currency is the favorable economic situation, resulting from large petroleum exports.