get them back and we would not get the shipments back in their wagons. That is one of the reasons why there was such a very serious shortage of coal to come into Berlin, that was to come from Soviet or Polish sources.

The CHAIRMAN. Germany produced 28,000 coal cars prewar and she is not getting any now. France is only producing a few. Both of them have steel that they could go to work on and both of them have got the coal. Why do they not go to work and do that? Why do they not put their folks to work instead of lying down on us?

Mr. KEEFE. France is not going to buy coal from Poland, according to this article, in exchange for goods which she can use to sell in the United States or in hard-dollar countries, for dollar exchange, as long as she can get the coal from the United States for nothing. That is a sure thing.

PRESENT SHIPMENTS OF POLISH COAL TO FRANCE

Mr. LISTER. France is taking over 50,000 tons of Polish coal a month at the present time, and that is shipped by all-rail movement from Poland to France. The Poles are overcommitted for their total exportable supply of coal. Most of the Polish coal moves are under bilateral trade agreements, and the total of the coal committed under those agreements by Poland is in excess of the quantities she can export. So that if she shipped more coal to France she would have to short-fall somebody else. The facts do not support the contention that Polish coal is begging for disposal. All of it is now being disposed of.

The CHAIRMAN. How could this man print that statement if he did not have anything to base it on?

Mr. LISTER. I do not know.

The CHAIRMAN. Has the Times become that unreliable?

Mr. KEEFE. The situation that confronts anyone seeking factual information that is reliable is this: He is confronted constantly by what appear to be authoritative statements, based upon what appears to be authoritative information.

Mr. NITZE. I am not sure that one can rely upon Mr. Michael Hoffman's stories in their entirety.

Mr. KEEFE. I do not know what you can rely on myself any more. Mr. LISTER. The article indicates the information was obtained from Polish sources.

The CHAIRMAN. We have discussed the Belgium-Luxemburg situation somewhat.

COAL REQUIREMENTS FOR DENMARK

We will take up the items for Denmark. You have Denmark scheduled for an increase in importations. You have 993,000 metric tons ECA-financed, and an increase in importations of 5,400,000 in 1947 to 6,000,000 tons in 1948-49 which is approximately 600,000 above prewar. Why would they need more coal than they had prewar? And why would we need to help them out on that? They do not have an industrial picture that would require a substantial increase in coal over their prewar supply.

Mr. LISTER. The prewar rate of supply was approximately 5,400,000. The figure shown for 1948-49 is 6,000,000. The increase in requirements is largely due to a combination of factors. One of them is attributable to the fact that Denmark is now employing about 25,000 workers in the production of peat, which is used as a substitute for coal. The CHAIRMAN. That would not be a reason for increasing their consumption of coal, it would be a reason for decreasing it.

Mr. LISTER. No, the peat workers are not being used to their greatest economic efficiency in producing peat; on the other hand, Denmark has a shortage of agricultural workers. These people producing peat are drawn directly from agriculture and it would be to Denmark's advantage to employ those people in the production of agricultural goods and to displace the peat she uses with coal, thereby having more agricultural goods for export.

An additional increase in requirements is attributable to reconstruction needs.

The CHAIRMAN. Denmark was not damaged very much, was it? It is not my information that she was.

Mr. LISTER. On the other hand much of her plant and equipment was run down during the war for lack of upkeep and maintenance and has to be replaced in the postwar years.

The CHAIRMAN. Denmark did not have a very large manufacturing business or anything of that kind anyway. The total number of people engaged was only 180,000 in the prewar period. They cannot have much of a rehabilitation problem, on a large scale that would require more coal than they had prewar.

Mr. LISTER. An additional reason for her higher requirements is attributable to the fact that in the postwar years the fuel available is of lower efficiency than in the prewar years; it is of a lower quality, with a greater average of waste in it, as a result of which most countries have had to burn more coal in order to produce an equivalent quantity of goods. That is a fact which runs throughout all these consumption requirements.

The CHAIRMAN. You mean that the coal they are getting now is not any good?

Mr. LISTER. It is about 5 percent lower in quality than prewar coal. The CHAIRMAN. Why is that?

Mr. LISTER. That is due to the following reasons: One is that the surface cleaning facilities were run down during the war and those facilities have not been replaced, so that not as much of the coal is being washed properly or cleaned at the present time.

Then secondly, due to the shortage of coal there is a tendency to neglect quality in favor of volume; the mines do not have the incentive to produce high grade, clean, and well sorted coal because they can sell everything they produce; the lack of a buyers' market has reduced the incentive to grade coal properly.

Thirdly, development was neglected during the war, as a result of which a lower quality of coal is mined, with more dirt in it than

prewar.

The CHAIRMAN. But they have a very much lower production in the major products than they had prewar. Are there any questions on Denmark?

COAL REQUIREMENTS FOR FRANCE

France is our next item, where you have 10,800,000 tons of coal through ECA. You have a production of 53,000,000 as against prewar of 47,000,000 tons; and the 1946 production was 49,000,000 tons, and the 1947 production was 47,000,000.

The amount of coal that was available prewar was 68,000,000 tons and the figure is 76,000,000 now. Why is that, why the 14,000,000 increase above last year; why do you need this 10,000,000 tons paid for by ECA?

Mr. LISTER. Again, as in the case of Belgium, France experienced a depression before the war as a result of which she was not using her industrial plants to the fullest.

Secondly, there are large reconstruction requirements; reinvestment, and additional capital plant requirements which explain the increase in French coal consumption as compared with the prewar years.

The French steel industry, prewar, for example, was operating at a rate far below capacity, whereas the French at the present time are not only trying to get their steel industry up to capacity but even to increase it by adding new mills and new blast-furnace facilities.

Again, as in the case of Denmark, the increased requirement is also attributable to the lower efficiency of the coal available. There are in general two factors with respect to efficiency: One, the burning efficiency of the plants using coal is below prewar standards; and, second, the quality of the coal itself is lower. There has been a decline in general of about 5 percent in the quality of coal in Europe as a whole.

Mr. NITZE. There is another factor, Mr. Chairman, and that is the United States today is experiencing a great shortage of steel, compared with demand; before the war Europe depended in part on the United States for steel. The United States is now unable to supply all of Europe's import requirements, and in order to meet that deficiency in steel the French and various other countries are attempting to get their steel production up to fill their urgent requirements. The increased steel production does involve a substantial increase in coal consumption, and that is a part of the reason why the French requirements have risen more rapidly than they were before the war.

Mr. CASE. Do you regard it as good economy to ship the coal from the Ruhr down into France and to build up steel-producing mills rather than to use the coal where the steel mills are, where they have natural water transportation, and where they are close to the Swedish ores?

Mr. NITZE. It is my understanding that the German steel production is to be stepped up as rapidly as it can.

Colonel BLUMENFELD. Yes.

Mr. NITZE. The facts in the brown book differ from the estimates that were presented to the Appropriations Committee; the present estimates indicate that German steel production has been increased.

Mr. CASE. That seems to be a sound argument for shipping the iron ore to the coal, as is done in the United States, rather than shipping the coal to the ore.

Mr. NITZE. I think the estimates here are also changed-I think the Swedish iron ore is even closer to Germany than the United States ore. Mr. CASE. I think that is a perfectly natural flow.

Mr. NITZE. Yes.

Mr. CASE. Where you have an industry that rests so much on coal, where water transportation is available for materials required in the production of steel, and it is more economical than it would be to ship both coal and ore into France, and also to have to build up mills when you have idle mills in Germany.

Mr. NITZE. As I understand, the German economy is such that there is no immediate hope that the German steel production can be increased above the target during the fiscal year 1948-49; that the mills are being utilized to the maximum.

Colonel BLUMENFELD. I believe the final target is now, as I remember, some 10.7 million tons.

Mr. CASE. That was the revised level of industry figure.

Colonel BLUMENFELD. After the original figures were submitted to the Paris conference they were a lot lower than they are now-the crude steel production estimates were increased to approximately 5.5 million tons. The increase to 5.5 is based on increased rich Swedish iron ore.

Mr. NITZE. The figures we have in the brown book for crude steel are 5,500,000 tons in bizone, 275,000 tons in the French zone, plus 1,900,000 tons in the Saar.

The CHAIRMAN. Are there any further questions on the French coal picture?

Mr. CASE. Mr. Chairman, I know we are not dealing with the steel question now, but I do want to ask a question or two about steel as it relates to coal.

Are we being called upon also to finance the shipment into France of some steel for the purpose of building steel mills which will in turn demand imports of coal?

Mr. NITZE. I believe the estimate of the French imports requirements of coal will decline substantially in the succeeding fiscal year; is that correct, Mr. Lister?

Mr. LISTER. Imports from the United States will decline. The French requirements for United States coal are substantially down for the current year. Last year they were in the order of 15 or 16 million.

Mr. CASE. That has not answered the question as to whether or not we are going to be called upon to send steel into France to make steel mills which will in turn call for more coal, the use of more coal from building additional steel mills? Are we being called upon now to send steel to France?

Mr. NITZE. I am afraid I will have to supply that information for the record.

Mr. CASE. Very well.

(The information requested follows:)

In the CEEC program, France proposed to increase her pig-iron capacity by 1,700,000 metric tons, her capacity for producing crude and semifinished products by 2,000,000 tons, and her capacity for producing finished steel by 1,500,000,000 tons. In the CEEC report the French indicated that they expected only a minor part of the new installations to come from the United States. The answer to Mr. Case's question therefore is that the steel-producing facilities to be supplied by the United States, if any, are to be relatively small.

COAL REQUIREMENTS FOR GREECE

The CHAIRMAN. The next country is Greece, and there you have 15,000 tons of coal, with an increase of perhaps 600,000 tons above their 1947 picture, but with a domestic production of about a half million tons. I was wondering why they need that contribution, which would put them practically up to the prewar figure.

Mr. LISTER. AS to the difference between the 1947 supply and that furnished for 1948-49 there is one particular reason why this increase would appear so large.

In the early part of 1947 Greece had simply exhausted her foreign currency, particularly dollars. She just was not importing any coal, any of the coal that she had been allotted by the European Coal Organization; she was unable to pay for any of the coal that she needed badly.

Therefore, a part of the increase, between 1947 and 1948 to 1949 is attributable to the fact that her dollar situation was such she could not finance the import of coal; she was not getting it in 1947.

The CHAIRMAN. She is not going to be able to finance this coal that is supposed to be imported this year, is she? Somebody else is going to have to do that.

Mr. NITZE. That is correct. The problem there is similar to Austria where the coal requirements will come largely from other participating countries.

The CHAIRMAN. What would be the other participating countries that might supply the coal, and the credits that would be involved? Mr. LISTER. It would largely be Germany, and possibly some quantity from Britain.

The CHAIRMAN. Germany and Britain cannot supply this credit, can they?

Mr. LISTER. It is an import that would not necessarily be supplied in credits.

The CHAIRMAN. What is it to be paid with?

Mr. NITZE. Greece can supply a quantity of oil; she can supply a certain number of goods.

Mr. MAHON. She has dried fruits and olive oil.

Mr. NITZE. As I said, earlier, Mr. Chairman, Greece does present a problem similar to Austria where we have a considerable United States responsibility. It is one of the problems where the deficit with the Western Hemisphere will have to be worked out on some kind of a basis.

The CHAIRMAN. Any questions on Greece?

Mr. CASE. Before the war the total coal production was given at 108,000 metric tons; 1946, 122,000; 1947, 120,000; 1948 and 1949, 460,000. How has she been able to quadruple her domestic production? Mr. LISTER. It is lignite mined mostly by open-pit operation. It is comparatively easy to increase output by open-pit methods once the equipment is obtained.

COAL REQUIREMENTS FOR ICELAND

The CHAIRMAN. For Iceland you have 175,000 tons of imports as against 158,000 prewar, against 170.000 last year, and 95,000 the year before. You do not show a request for funds for that particular

purpose.