man, to purchase agricultural commodities in the United States to be furnished to countries with which we have programs for the purposes, insofar as it is possible to do so, of achieving the particular objective or program for which the dollars are originally to be appropriated.

PROGRAM FOR BERLIN

For example, you may remember, sir, that we have a proposed program for Berlin in this current request. We would contemplate under this legislation purchasing United States agricultural commodities, selling those agricultural commodities in Western Germany, thereby developing the local currency that we need to carry out our program of investment loans and other activities in West Berlin.

We have for consideration in this bill a proposed program of $75 million for the purchase of aircraft to expedite and speed up the improvement of the Royal Air Force of the United Kingdom. Again, if that program is approved by the Congress, we would propose to use the $75 million in the first instance to buy surplus agricultural commodities in the United States, deliver those for sale in the United Kingdom, and use the pounds so generated to place the orders for the aircraft.

QUESTIONS ON SURPLUS PROGRAM

Senator DIRKSEN. Dr. FitzGerald, let me make this suggestion. I have an idea because of the widespread interest in this whole surplus program that the first question that would be directed to the commitee on the floor would be this: They would say, we gave authority to FOA to spend between $100 million and $250 million using local currency in order ultimately to get rid of agricultural products. That is what they will say to us. They will say, tell us how much was actually spent, what were the commodities, and where they went, and in the case of local currencies, how were the local currencies used. That will be the first broad question.

Then the second broad question will be, how much do they want for fiscal 1955, under the Foreign Aid Act, and if there is any supplementation what is proposed to be done under the Agricultural Trade Development and Assistance Act.

So roughly I think our problem will fall into those three broad frames.

I wonder if we cannot nail down now this $245 million item. You got pretty close to your maximum.

Dr. FITZGERALD. Yes, sir.

Senator DIRKSEN. So we will be able to say they did actually utilize the authority up to $225 million which is an excellent record, since there was a maximum of $250 million in the first instance, so now since you have disposed of $245 million in fiscal 1954, just break down. rather concretely for us what countries and what commodities, and how the money was used.

Dr. FITZGERALD. Yes, sir.

Senator DIRKSEN. You can do this along broad lines.

PROGRAM RELATED TO COUNTRIES INVOLVED

Dr. FITZGERALD. The details in respect of the countries involved are shown on page 16 of this unclassified submission and you may wish, Mr. Chairman, to have that included in the record.

Senator DIRKSEN. Yes, without objection, since this is not classified material, we will insert page 16 of the book No. 1 in the record at this point.

(The information referred to follows:)

Sec. 550 local currency program-source of dollar funds and planned use of local

currency

[In thousands of dollars]

Source of dollar funds-1954 Planned use of local currency (in dollar equivalents)

1 Available for OSP contracts, deliveries against which may go to other countries.

2 Local currency proceeds of sec. 550 sales to Finland tentatively programed for purchase of Finnish commodities for Greece ($1 million) and for relief of Berlin refugees ($4 million).

3 For Dependent Overseas Territories.

4 Includes $4 million of local currency proceeds from sec. 550 sales to Finland.

Represents local currency proceeds from sec. 550 sales to Finland.

6 Local currency sales proceeds of the sec. 550 sales program are $7,250 less than the United States dollar cost of the commodities.

COMMODITIES HANDLED UNDER PROGRAM

Dr. FITZGERALD. The third column in that table, Mr. Chairman, shows country by country the distribution of the funds, that is, of the $245 million. The largest, as you see, is the United Kingdom with $72,250,000; Japan is second, and there are a number ranging from ten to twenty-five million.

Senator DIRKSEN. Is there a comparable table showing the commodities that were handled under this program?

Dr. FITZGERALD. There is on page 451 of the larger book, an unclassified page containing two charts.

Senator DIRKSEN. That is unclassified, too, is it not?

Dr. FITZGERALD. Yes.

Senator DIRKSEN. I think that would be reproduced for the record at this point.

(The charts referred to foliow:)

Amount ($ Millions)

Amount ($ Millions)

Purchasing
Country

Country Utilizing
Local Currency

BREAKDOWN OF COMMODITIES BY COUNTRY

Dr. FITZGERALD. The left-hand chart shows, commodity by commodity, the breakdown of the $245 million. The right-hand chart shows not only the countries involved, but also a breakdown, country by country, of the commodities involved.

Senator DIRKSEN. Bread grain will mean, of course, preponderantly wheat.

Dr. FITZGERALD. Yes.

Senator DIRKSEN. Then cotton comes next, and then tobacco. Senator Dworshak raised a question about tobacco the other day, so I might refresh him on the fact that there is $38% million of tobacco that enters into this surplus-commodity program.

The fats and oils-I presume that is in variety, cottonseed oil, peanut, lard-and soybean oil.

Mr. FITZGERALD. Yes.

Senator DIRKSEN. Yes. The meats would be mainly what?

Dr. FITZGERALD. Meats are primarily low-grade Commercial and canner and cutter meats. Fruits are both fresh and canned fruit.

REQUESTS FROM COUNTRIES

Senator DIRKSEN. I notice as you go on to the right-hand chart on page 452 that in the case of some of these countries, it involved only a single commodity. Was there an initial request from the countries in the first instance, or was some proposition made to them?

Dr. FITZGERALD. It worked both ways, Senator. I would say that is more than half the instances there was an initial request for it on the part of the country and frequently, including more, or other commodities than those for which sales were finally completed. You will remember, sir, that in the case of section 550 last year, there was a provision that the sale be in addition to the sales that country would normally make from both the United States and other friendly sources of supply.

Senator DIRKSEN. You mean purchases.

Dr. FITZGERALD. Yes, sir. Purchases by the countries. So in a number of instances, requests were made under section 550 that did not qualify under that provision. The sale would not have been an additional sale, but would have been a substitution for what they would otherwise purchase, and had intended to purchase.

These represent, I think, in substantial measure, sales of agricultural commodities which were in addition to those that would otherwise have been made.

ITALIAN GRAIN CROP

As it happened last year, Italy had an extraordinarily good grain crop. It had a wheat crop of about 8,800,000 tons, which is almost enough for its own consumption requirements. As a consequence, the imports of wheat were negligible last year. As you know, it is also a major producer of olive oil and substantially meets its own requirements for fats and oils. Their cotton was last year the only commodity of consequence in which it was possible to develop a program of additional imports.

50226-54--19

Senator DIRKSEN. I think, Doctor, that makes pretty clear the size of your program and its breakdown as between commodities and countries. Now, what about the local currencies?

PRICES PAID AMERICAN PRODUCERS

Senator HAYDEN. Before that, I would like to ask, how were the prices paid to the Americans who furnished these products determined?

Dr. FITZGERALD. The sales were made on a commercial basis, Senator Hayden. What we did in the case of the section 550 transactions was to issue, after agreement had been reached with the importing country, a procurement authorization under which importers in the importing country made offers to suppliers in the United States for the commodities concerned. If the Department of Agriculture had an export program in that commodity, it, of course, was taken into account when the importer from the importing country made an offer to a United States supplier.

PRIVATE TRANSACTIONS

Senator HAYDEN. Then it was a private transaction between the importer in the foreign country and the American supplier. They agreed upon the price?

Dr. FITZGERALD. They did; yes, sir.

Senator HAYDEN. If this had been a Government operation it would have to be competitive bidding to determine who would supply the given quantity of wheat or cotton or whatever it may be?

Dr. FITZGERALD. That would be correct, sir, unless it came, of course, as it might under those circumstances, from the stocks of the Commodity Credit Corporation.

Senator DwORSHAK. Did not all of this come from the stocks of CCC?

Dr. FITZGERALD. Practically none of it came from the stocks of CCC.

Senator DwORSHAK. Why not?

Dr. FITZGERALD. For two reasons.

Senator DwORSHAK. You mean to say that this wheat that was sent overseas under the section 550 program did not come from surplus wheat stocks owned by the Government?

Dr. FITZGERALD. As far as I know, sir, none of it came from CCC stocks. There may have been 1 or 2 small transactions.

SURPLUS WHEAT STOCKS IN UNITED STATES

Dr. FITZGERALD. It did not for two reasons. First of all the surplus of wheat in the United States is not confined to those stocks which at any given time the Commodity Credit Corporation may own. The surplus stocks of wheat in the United States are in the hands of Commodity Credit Corporation, in the hands of the private trade, in the hands of farmers perhaps under loan. We are under instructions from the Congress wherever it was possible to use private trade channels in the mutual security program. We were able to combine the instructions of Congress to use private trade channels and to ship surplus commodities, not necessarily commodities in CCC hands, but Com