templated export apparently is less both percentagewise and dollarwise in 1948-49 than in 1947. That is correct, is it not? Mr. WAY. That is right. Mr. WIGGLESWORTH. Where is this electrical machinery to go? BASIS FOR ESTIMATES OF EXPORTS UNDER PROJECT Mr. WAY. The amounts were arbitrarily split; that is, you had the total amount of $500,000,000 as the request from Europe, which the committee decided was warranted, and that was split arbitrarily in this manner: we considered the former imports of the country from the United States and considered also the total amount of kilowatts they are going to install, and it was an arbitrary split based on those two considerations. Mr. WIGGLESWORTH. You mean the total request from the 16 participating countries is $500,000,000 for this item? Mr. WAY. That is right. Mr. WIGGLESWORTH. And you are planning to export to those 16 countries $95,000,000. Mr. WAY. In the first year. Mr. WIGGLESWORTH. The $500,000,000 was on a 4-year basis? Mr. WAY. That is on a 4-year basis; yes. Mr. WIGGLESWORTH. Does this mean $95,000,000 allowed compared with $125,000,000 requested? Mr. WAY. No. The request was in the form of a power program and not of electrical goods, and this report Mr. WIGGLESWORTH. You said the over-all request was $500,000,000 as I understood it, for 4 years. Mr. WAY. The over-all request for the power program. Mr. WIGGLESWORTH. And this over-all table shows $95,000,000 to be exported in fiscal 1948-49? Mr. WAY. Yes. That is composed of two items; that is $12,500,000 for the power program and $82,500,000 for other electrical goods. Mr. WIGGLESWORTH. Is that the full request for that year or not? Mr. WAY. That is the full request for that year; that is the first fiscal year, 1948-49. COUNTRIES TO WHICH ELECTRICAL MACHINERY IS TO BE EXPORTED Mr. WIGGLESWORTH. Where is that $95,000,000 worth of electrical machinery to go? Mr. WAY. $700,000 to Austria; $6,000,000 to Belgium-Luxemburg; $500,000 to Denmark; $22,000,000 to France; $1,000,000 to Greece; no assignment to Iceland; $1,000,000 to Ireland; Italy, $7,000,000; Netherlands, $6,300,000; Norway, $4,000,000; Portugal, $2,000,000; Sweden, $8,000,000; Switzerland, $1,000,000; Turkey, $2,000,000; United Kingdom, $28,500,000; western Germany, bizone, $5,000,000, making a total of $95,000,000. METHOD OF FINANCING PROGRAM Mr. WIGGLESWORTH. How much of that is to be financed by ECA? Mr. WAY. I am not certain of the balance of payments. Mr. WIGGLESWORTH. Who would know that? Mr. NITZE. 43.3 million dollars over a 12-month period. Mr. KEEFE. But, again, Mr. Nitze, you do not know what portion of that $43,000,000 is to be in the form of direct grants and what portion in the form of loans? Mr. STEFAN. I cannot get the $43,000,000. The electric power equipment is going to be 12.5 million, April 1, 1948 to June 30, 1949, and the other electrical goods, 82.5 making a total of $95,000,000. Is the $43,000,000 a part of that? Mr. NITZE. ECA financed portion. EQUIPMENT AND GOODS INCLUDED IN PROGRAM Mr. STEFAN. Do you have a break-down in here showing what kind of equipment and other electrical goods are involved in these figures? Mr. WAY. That is the full line of electrical equipment. Mr. STEFAN. Give us some illustration. Mr. WAY. Motors. Mr. STEFAN. What kind of motors? Mr. WAY. They will be all-sized motors. Mr. STEFAN. All-sized motors. Mr. WAY. Yes. Mr. STEFAN. What else besides motors? Mr. WAY. There will be switch gear. I can read some of the items that are included. Mr. STEFAN. Yes. Mr. WAY. In response to our request to the CEEC-the Committee on European Economic Cooperation-they submitted this list of items which they would probably be short of. Electrical condensers, that is, power condensers; voltage regulators and other instruments; circuit breakers and isolated switches, transformers; insulators-and other items are included here, but they are not in this electrical equipment list. Mr. STEFAN. Is any copper wire included? Mr. WAY. No. They are going to be short of copper in many instances, I know, in the copper program. Mr. STEFAN. I have a break-down of copper, and that is one of the things I was wondering about. This electrical equipment includes equipment, transformers, switches and circuit breakers, and so on, and motors. What other electric power equipment? Mr. WAY. There will be some generators during the early part of the program, small generators. There may be some large generators at the latter part of the program. Mr. STEFAN. A lot of our REA lines built in the United States are short of a lot of this equipment. Mr. WAY. They are short. Mr. STEFAN. And that is my concern as to the availability of this equipment. Mr. WAY. They were short, that is, the REA was short of power transformers. Mr. STEFAN. Of transformers and also of conductors. Mr. WAY. Yes; the companies, the manufacturers have been putting real pressure behind the REA program so that it is in pretty fair condition at the moment. 75408-48-pt. 1-43 Mr. STEFAN. The REA program? Mr. WAY. That is right. The CHAIRMAN. Oh, no; I beg to differ with you. We have miles and miles of farmhouses that are already wired for electricity but they do not have the conductors. Mr. WAY. I was speaking of transformers. Mr. STEFAN. I beg your pardon. They have plenty of them? Mr. WAY. We are in fair supply; we are not in perfect supply. Mr. STEFAN. Yes. That is what this equipment represents? Mr. WAY. The large transformers would have to go on a waiting list if Europe asks for them now. Mr. KEEFE. What was the answer? Mr. WAY. The present deliveries in the United States are about 18 months, and if they ask for them today it might be 18 months before they could even get a look at them. Motors are just about even with the board. Mr. STEFAN. The total cost of the electric power production part of this program for the United States is estimated at $5,315,000,000? Mr. WAY. That is the cost to Europe. Mr. STEFAN. That is by 1951, the 4-year program? Mr. WAY. That is the cost to Europe. Mr. STEFAN. Yes. Mr. WAY. Of which they have asked for 6 percent of $5,000,000,000; $200,000,000 out of the $315,000,000. Mr. STEFAN. So that the record may be straight: Is that the total requirement for electric equipment, including the electric power portion of the production program and the electric goods for consumption purposes the total is estimated at $14,000,000,000 for 4 years, plus; is that right? Mr. WAY. $14,000,000,000 includes all the other equipment, that is all of the electrical equipment which Europe can manufacture during that period. OBJECTIVE OF PROGRAM IN EUROPEAN ELECTRICAL DEVELOPMENT Mr. STEFAN. The justification states: These amounts are required to make the backlogs in production and maintenance of electric production and consumption during the war, and to aid Europe in overcoming its serious lag in electrical development behind modern economies. Does that mean that the whole program is based upon the objective of putting them back where they were prewar? Mr. WAY. It would put them ahead. Mr. STEFAN. Ahead of prewar? Mr. WAY. Yes. Electricity was not as available in Europe as it is in the United States that is, prewar, it was not as available. Mr. KEEFE. You have stated the fundamental basis of the entire program; as I understand it, you had as the genesis the total number of kilowatts available, and the total kilowatt production desired; that is what I understood you to say, and then the European Committee came in with an additional program? Mr. WAY. The European Committee met; they had all of them from each country, and they met on a power program. That is very similar to a program we get in the United States. We plan and we hope, and we say we need to put in so many kilowatts in the next 4 years. Mr. KEEFE. They determine they have got so much production now and "We hope that we can step up the production to so many kilowatts." Mr. WAY. Yes. Mr. KEEFE. In this period of time? Mr. WAY. Yes. Mr. KEEFE. And to achieve that production will require so much material. Mr. WAY. Yes. Mr. KEEFE. So much equipment, and so they come up with a demand for that equipment to implement the objective of the production of so many kilowatts which they believe is necessary. Mr. WAY. That is right. Mr. STEFAN. If I may refer to the statement in the justification: Despite war damage to power plants, total installed capacity in the participating countries increased from 39,000,000 kilowatts in 1938 to 42.1 million kilowatts in 1946, or by 8 percent. That is based on 12 months' operation. This increase average is 1 percent per year, as contrasted with a 4-percent increase in 1938 alone. With more intensive utilization of installed capacity, output of electrical energy increased from 130.5 billion kilowatt-hours in 1938 to 153 billion in 1946, or by 18 percent. This compares with an increase of approximately 100 percent in the United States over the same period. Now based on the increase in kilowatts what is the objective? How many kilowatts are you shooting for now? The CEEC report calls for an expansion of capacity amounting to 21,445,000 kilowatts under the so-called national program of the participating countries, and 2,306,000 kilowatts under the international program. The former is expected to cost $5,000,000,000; and the latter $315,000,000. What is the expansion program, on a kilowatt basis? Is the inquiry propounded by the gentleman from Wisconsin, Mr. Keefe. You Mr. WAY. The demand for electric current is quite flexible. can make steel by the use of coal or you can make it by the use of electric energy; you can run your factories with steam turbines, or you can run them by electric motors, but if you run them by electric motors we have found you do it more efficiently. They have set up these national programs-I have all the details here, if you wish to examine them. Mr. STEFAN. No; we do not, but I wanted to see what the total amount of the objective in kilowatts is. The CEEC program sets up a requirement of $500,000,000 in equipment from the United States of which $300,000,000 is intended for the national program and $200,000,000 for the international project. The $300,000,000 for the national program is required to provide primarily for bottleneck items which the participating countries will not be able to produce among themselves. Now where does the break in that bottleneck come, in terms of kilowatts, and what is the total at which you are aiming in breaking the bottleneck? Mr. WAY. This does not intend that we shall supply a complete generating plant. We tried, by a series of questions, to get the representatives of the CEEC to say "We need this particular item," and to give us a list. They would say, "We are building a plant, which will consist of a generator, a boiler, a turbine and auxiliary equipment, and we lack one thing which will put that plant in operation; that is what we would ask you for." So, it does not come down to a particular list of things. They arrived at the total by an expediency which is common in engineering; they took the $5,000,000,000 and took 6 percent of it; that is how the $300,000,000 was arrived at; there was nothing more precise in the $300,000,000 than it is 6 percent of $5,000,000,000. Mr. STEFAN. That is certainly not a firm program, and because there is a lot of flexibility, and they are likely to have one of these plants hanging sometime before they get it running, and before they get into industrial operation. Mr. WAY. They are planning ahead, in asking for this. That is the precise method by which they arrived at the $300,000,000. In the international program there was a selection of nine plants out of several hundreds that were proposed. Each country proposed where there was a nice project that could be developed, and the committee, the European committee, selected nine which would contribute most to international supply, and they called it the international program, and that is what constitutes the international program. LOCATION OF SELECTED PLANTS REQUIRING EQUIPMENT Mr. STEFAN. Where are these nine plants located? Mr. WAY. Two brown-coal plants in Germany; a volcanic steam plant in Italy; one or two large hydroelectric plants in Switzerland; one in Austria; and the others are grouped around that area; I could not give the predise locations. Mr. STEFAN. Hydroelectric? Mr. WAY. All hydroelectric; the one thing about the hydroelectric is it adds to the total amount of energy available and releases coal and other forms of fuel. Mr. STEFAN. Of the nine plants how many are to be repairs or reconstruction; or are they all new ones? Mr. WAY. All new ones. Mr. STEFAN. All new ones? Mr. WAY. There is some generation at the present site where this volcanic steam plant is. OVER-ALL OBJECTIVE OF EUROPEAN RECOVERY PROGRAM Mr. KEEFE. The point that I was patiently listening for and you have not answered the question as yet, to which I was leading up to is what is the objective that the ECA has in mind in these foreign countries? Now generally you say the reconstruction of the plants to get them back where they will be able to get off our necks and to handle their own affairs, and so on, and so forth. Now we are dealing with the subject of electricity, and we come to the basic program, based in general, as you have indicated from the statement "We need so much production of electric energy, and over a period of a certain time." We can furnish this, and "We are asking you, the United States, under this program, to furnish materials, supplement what we are |