and so forth, which they contemplate will be included in the bilateral agreement. Mr. HOFFMAN. That is right. Mr. WIGGLESWORTH. These bilateral agreements are negotiated by the State Department, are they not? Mr. HOFFMAN. That is right. Mr. WIGGLESWORTH. And as yet they have not been entered into. Mr. HOFFMAN. No. Mr. BISSELL. The law provides that they shall be negotiated by the State Department working cooperatively with the Administrator, and the arrangement has been made for mutual negotiations on their part. Mr. HOFFMAN. I think I should say that we are in complete accord with the policy the State Department is adopting in trying to build up the European organization, the Committee for European Economic Cooperation, I believe is the full name of it and to channel the activities into that organization, because this program again if successful must have not only the maximum help in this country but the maximum mutual help between the countries. Mr. WIGGLESWORTH. These bilateral agreements, as I understand your conclusion, are a condition precedent to any substantial aid under the program; is that right? Mr. HOFFMAN. Yes. Mr. WIGGLESWORTH. And they must be concluded first. Mr. BISSELL. If I may interpose again: The program provides that for the first 90 days temporary aid may be extended if the receiving countries have formally indicated their intention to negotiate such agreements, but 90 days after the effective date of the program agreements must be in force or the aid to the country in question must be closed. Mr. WIGGLESWORTH. Was that formal indication given at Paris, or must it be given since then? Mr. BISSELL. That formal indication must be given in a specific letter of intent. Mr. WIGGLESWORTH. And have those been received, and if so to what extent? Mr. BISSELL. I think none has been received, and possibly the most that has been done so far has been the preparation of the United States side of the indicating document, indicating to the Government what their letters of intent must state. That indication has gone out to them and it is expected that letters of intent will be received from all the governments in the course of the next few days. PROPOSAL FOR ARRANGEMENTS AS TO LOANS AND GRANTS Mr. HOFFMAN. I think perhaps, Mr. Wigglesworth, we should add this, that we are also proposing, of course, working with the NAC— the National Advisory Council-to enter into definite arrangements as to what proportion of the amounts advanced during the first quarter are loans and what proportions are grants. We have a strong feeling that the loans should be loans and grants should be grants and the two should not be mixed, and that there should be nothing left to uncertainity, so that within a short time after we proceed we expect to have that all cleaned up and the countries will know exactly what proportion of the first-quarter allotment will be grants and what will be on loan basis. Mr. WIGGLESWORTH. The $800,000,000 already allotted is exclusively on a grant basis? Mr. BISSELL. The sum alloted is merely an allocation. Mr. WIGGLESWORTH. The language here refers to grants within the allocation. Mr. CAWLEY. The $800,000,000 has not been allotted as yet. EXPORT CONTROL Mr. WIGGLESWORTH. The matter of export control is left as is? Mr. WIGGLESWORTH. It is brought under cooperation and run in consultation with the Administrator. Mr. HOFFMAN. That is right. ADMINISTRATIVE EXPENSES AND TECHNICAL EXPENSES Mr. STEFAN. What do you feel the administrative costs will be; about what percentage? Mr. HOFFMAN. About $15,000,000 against the total. Mr. STEFAN. You have $20,000,000 here. Mr. HOFFMAN. $21,000,000, including the technical services, against the total. Mr. STEFAN. You do not have that set up in the justification yet. Have you been before the Bureau of the Budget on the administrative expense set-up? Mr. HOFFMAN. I have not personally. Mr. CAWLEY. At one stage an estimate was submitted to the Bureau of the Budget for approximately $20,000,000 for administrative expenses, which the Bureau of the Budget reviewed and turned over to the Administrator. Mr. STEFAN. Did not the Budget decrease that some? ADJUSTMENTS BY BUREAU OF BUDGET Mr. CAWLEY. The Budget suggested certain adjustments to him, many of which the Administrator concurred in. As indicated before, he is asking for a $15,000,000 budget, for administrative expenses, and $6,000,000 for technical expenses, which figures have the approval of the Budget. Mr. STEFAN. That makes the $21,000,000? Mr. CAWLEY. Yes, sir. Mr. STEFAN. There was some decrease made by the Bureau of the Budget on other items, was there not? Mr. CAWLEY. The principal item that they reduced, Mr. Stefan, had to do with the transfer of amounts to other agencies for their participation in this program. The original total of the requests from these other agencies was approximately $14,000,000. The Bureau of the Budget has made a detailed study of those requests and came to the conclusion that we should allow these agencies about $4,000,000, which is the figure included in our $15,000,000 estimate for administrative expenses. TIME REQUIRED TO DEVELOP ORGANIZATION Mr. STEFAN. When will you be prepared to give the committee a break-down of this entire organization and the salaries of each. employee? Mr. CAWLEY. I am afraid that it will be 2 or 3 months before we can furnish that. Mr. STEFAN. Why? Mr. CAWLEY. We have no formal organization yet. Mr. STEFAN. You will have about 500 in the United States and about 1,000 in Europe. Mr. CAWLEY. Yes, sir. Mr. STEFAN. Your administrative set-up was explained by the Administrator, Mr. Hoffman, a little while ago, but you will not be able to give the committee any information as to the individuals and the entire administrative set up for 2 or 3 months? Mr. CAWLEY. We based our estimate on one-sixth lapses, which allows for 2 to 3 months' delay in filling positions. This organization is going to develop slowly, and I am certain we cannot tell you at this time what the organizational set-up will be, along with the functions and the details of the positions. Mr. STEFAN. Did the Budget ask you for that? Mr. CAWLEY. They asked what State used when the budget was originally prepared. The original budget and organization have not yet been adopted. I would like to explain at this point, Mr. Stefan BUDGET SUMMARY FOR ADMINISTRATIVE EXPENSES Mr. STEFAN (interposing). You must have had some kind of a staff presented to the budget, did you not, when you appeared before them? Mr. CAWLEY. Yes; there was one submitted. Mr. STEFAN. You had an organizational chart; did you not? Mr. CAWLEY. Yes, sir. Mr. STEFAN. Can you not give that to the committee? Mr. CAWLEY. Yes; we can, but we have not adopted it. Rather, I would prefer to tell this committee about how far we think the $15,-000,000 administrative budget will permit us to go, allowing approximately 500 people in the United States and approximately 1,000 overseas, of which 700 will be American citizens and 300 aliens; and some of the other expenses necessary to get this organization under way. I do have some details by objects of expenditure. Mr. STEFAN. May we have that? Mr. CAWLEY. Yes; I can supply that information for the record,. and can explain it as we get into the details. (The matter referred to is as follows:) Budget summary for administrative expenses, April 3, 1948-April 2, 1949 Personal services: DEPARTMENT SERVICE Full-time personnel, 500, average salary of $5,400 less 16 lapse. Other objects: Travel, based on 75 regular travelers at $1,427 per annum, 30 WAE consultants at $1,163 per annum, 12 advisory board members, at $960 plus 100 overseas trips, at $1,300. Transportation of things, average cost of $2 per employee, plus shipment of personal effects of 40 persons, at $750 each. Communication services, average cost of $195 per person per year-Department average at WPB. Rents and utility services, average of $6 per person per year, plus $225,000 reimbursement to PBA for building rental. $2,250,000 400,000 $2,650,000 283, 000 31,000 97,000 228,000 Printing and binding, standard forms, etc., $14 per person, plus $160,000 for reports to Congress and $27,000 for miscellaneous items. 194,000 Other contractual services, basic average cost of $58 per person per year, plus maintenance of building, $38,000, alterations to buildings, partitioning, etc., $100,000; hire of aircraft $30,000; entertainment, $25,000; and professional services, $58,000 280,000 25,000 482,000 1,620,000 4,270,000 Supplies and materials, average of $50 per person per year.. Equipment, basic office set-up at $690 per person, plus office machines at $53,000; filing equipment, $63,000; motor vehicles, $21,700, and miscellaneous Full-time United States personnel, 700, average salary of $6,000 less 16 lapse. Other objects: Travel, 641 initial assignments, 176 replacements and 489 dependents at $440 Transportation of things. Shipment of personal and household effects for 641 Rents and utility services. Rental of office space-114,100 square feet at $1.67 $3,500,000 1,638,000 5,463, 000 878,000 1.408,000 411,000 201,000 28,000 Other contractual services. State Department average $42 per person, plus official residence allotment $9,200, entertainment fund $67,000 and contingency item $200,000 318,000 Supplies and material. At State Department average of $59 per employee, all types. 59,000 Equipment. Same allowance rate as for Department service, only for 1,000 employees instead of 500.. 1 Utilization of State Department administrative staff will save 133 United States personnel and 103 alien. 75408-48-pt. 1 The CHAIRMAN. I thought the committee might take up the details later on after we have completed with the general statement of Mr. Hoffman. Mr. STEFAN. Then I will not get into the details, except one or two questions on the general statement. You indicated that you have already allocated about $800,000,000 of the first $1,000,000,000? Mr. CAWLEY. No. Mr. HOFFMAN. This allocation which came this morning is in tentative form. Mr. CAWLEY. Of the $1,000,000,000 that has been allocated to ECA, $800,000,000; the President still has in reserve $200,000,000. Mr. STEFAN. Has anything been shipped yet, Mr. Cawley? Mr. CAWLEY. Yes. DISCUSSION OF PROBLEM OF BUILDING UP PRODUCTION AND RESOURCES OF PARTICIPATING COUNTRIES Mr. STEFAN. I am going to ask a question, and I do not know whether it should be on the record, but my attention was called to this article in the Washington Evening Star. Britain plans to manufacture and ship to Russia 1,100 railroad locomotives, 150 Diesel electric generators and 300 electric motors of the 100-kilowatt type during the next 3 years. This has just been disclosed by the board of trade with the publication of a white paper detailing all of the machinery and equipment Britain has agreed to send Russia under their new trade pact. The list includes 2,400 flat trucks, 2,400 winches, 210 excavators, 250 caterpillar loading cranes, 24 power turbine stations, and a number of tugs, dredges, cranes, and oil-refining equipment. In return, Britain will get 450,000 metric tons of barley, 200,000 tons of corn, and 100,000 tons of oats, Incidentally there are 40 bushels in a metric ton. Export authorities say some of the equipment undoubtedly will be manufactured from steel coming to Britain under the Marshall aid plan. Under the present provisions of the Marshall program Britain will get $141,000,000 worth of electrical equipment from the United States. Vast amounts of iron and steel also are to be shipped here. Most of the equipment going to Russia could be sold in Argentina and in other parts of the world for United States dollars. But Britain takes the position that it needs rough grins to increase its dairy and cattle production so badly that it is willing to send scarce machinery to the Soviet Union. Under terms of the agreement, the British and Russians will hold new talks, probably in May, to broaden their trade. It is planned that the exchange will be kept in balance so there will be no transfer of currency. I am bringing that to your attention now, Mr. Hoffman, because there will be attempts to use that as an illustration, that here we are inplementing the Marshall plan with appropriation, and our purpose is to help these countries recover their economic condition in this fight against communism. Now would you care to comment on that? Mr. HOFFMAN. I would be happy to comment on it, Mr. Stefan. |