Mr. WIGGLESWORTH. That is right. What is the total?

Mr. NITZE. Certainly, the executive branch has had no evidence at all to warrant any higher figure than this $130,000,000 to $230,000,000 estimate. Everybody who has worked on this problem agrees that is a generous, optimistic estimate and not a low one.

ESTIMATED GOLD AND DOLLAR ASSETS OF FOREIGN COUNTRIES

Mr. WIGGLESWORTH. What is the over-all investment in this country for the ERP countries?

Mr. SOUTHARD. That is in this table here [indicating table XI]. (See table XI on p. 921.)

The CHAIRMAN. I want that table to go into the record.

Mr. WIGGLESWORTH. What is the over-all investment in this country of the participating countries?

Mr. SOUTHARD. This is a table which I think you would want on that [submitting]. The total of gold and dollars, including longterm assets, for the countries that are going to receive aid, excluding Switzerland and Portugal, is 9.4 billion dollars. The long-term investments are $4,039,000,000. The third figure from the left, or the middle figure, is the sum of the first two figures. It is the sum of the

gold and the short-term balances, or $5,361,000,000. Incidentally, this table covers also the reserve position of the Latin-American countries, country by country.

(The table referred to is as follows:)

Estimated total gold and short-term dollar balances of foreign countries and areas, June 30, 1945, Dec. 31, 1946, and Dec. 31, 1947

1

2

Estimated total gold and short-term dollar balances of foreign countries and areas, June 30, 1945, Dec. 31, 1946, and Dec. 31, 1947—Continued

Official figures were used for gold, wherever available. Data represent total holdings of governments and central banks without regard to location of such holdings. Estimates have been used for those countries which do not publish figures on their gold.

2 Short-term dollar balances (official and private) are composed principally of deposits in American banks and holdings of U. S. Government bills and certificates. The figures used in the table are gross and do not include short-term claims on foreigners payable in either dollars or foreign currencies.

Includes $104,000,000 in gold received in November 1947 from the Tripartite Commission for the Restitution of Monetary Gold. As of Dec. 31, 1947, most of the $104,000,000 was set aside as collateral for loans. Includes holdings of Iceland, Austria, Eire, Greece. Italy, Germany, and large gold holdings by the Tripartite Commission for the Restitution of Monetary Gold.

Based upon estimate of $390,000,000 for June 30, 1947, adjusted for sale of gold to the United States.

ESTIMATED TOTAL GOLD AND SHORT TERM DOLLAR BALANCES OF FOREIGN COUNTRIES AT VARIOUS PERIODS

This other table shows the movement in reserves since the war (table XII).

(See table XII on p. 920.)

The CHAIRMAN. There seems to be about $3,000,000,000, over-all, that is in "Other than ERP countries."

Mr. SOUTHARD. Other than in cash-basis countries.

The CHAIRMAN. And there is nothing there in the nature of longterm items, is there; in this "Other than the 16 countries," there is nothing in the nature of long-term investments?

Mr. SOUTHARD. Yes.

The CHAIRMAN. Yes; there is $900,000,000. Is that all Switzerland?

Mr. SOUTHARD. That is the $891,000,000 figure.

The CHAIRMAN. That is Switzerland?

Mr. SOUTHARD. That is the long-term investments for cash-basis

The CHAIRMAN. There is nothing of that character for Czechoslovakia or Yugoslavka or Roumania or Bulgaria?

Mr. SOUTHARD. That is under "Other Europe, non-ERP."

The CHAIRMAN. You gave them quite a little item, did you not? Mr. SOUTHARD. Yes, $568,000,000. You notice we estimate the greater part of that is gold, $473,000,000, and they have it at home. It is a remnant of the gold reserve that they hang onto, which seems to them to be a last resource.

The later tables show the Latin-American position and show, even in the case of Argentina, at the end of last year, they had left only $555,000,000 of gold and short-term dollar balances, as of December 31, 1947.

The other table (table XII) shows the same general break-down, but you will see on the second page of it, showing the movement, it does not give the break-down of all the countries. We just wanted to show the general movement of the assets.

Mr. WIGGLESWORTH. Now, would the British collateral Mr. Case referred to be included in that figure?

Mr. GLENDINNING. Yes; it is included in the British figure.

Mr. WIGGLESWORTH. Then the total over-all figure for the participating countries, excluding Portugal and Switzerland, is estimated at $9,400,000,000?

Mr. SOUTHARD. That is right.

Mr. WIGGLESWORTH. And no part of that, is contemplated, to be used to meet the requirements of ERP?

Mr. SOUTHARD. Not for collateral loans, but we think it is certain. that during the program they will have to continue in some countries to draw on their gold and dollar reserves, because this program is not going to meet all of the basic, essential needs of those countries.

Mr. WIGGLESWORTH. But in figuring loans and credits, so-called, in the over-all table, which are deducted from needs, in order to arrive at an over-all figure for the first 12 months of the program, no part of this $9,400,000,000 is included?

Mr. SOUTHARD. That is right. I think we want to be sure, of course, it is understood that the gold, which amounts to $4,072,000,000 and I think we can say this without any exaggeration-in every case has now reached the point where, with the possible exception of Belgium, any further reductions in the gold reserves become a matter of great national concern. Take, for example, the French case, $550,000,000 in gold. That is a publicly known figure in France. They cannot reduce that figure without going to parliament and asking authority to shift gold from the reserve of the Bank of France, over to their stabilization fund for sale to us. Once they do that, it is a sign to the French public that this figure which, tragically enough, is about $2,000,000,000 under their holdings at the end of the war and is now down to $550,000,000-that that last solid remnant of their reserve is beginning to dwindle.

In the case of the Netherlands, $244,000,000, that is a sort of sacred figure. They have said, literally, they would rather do without and cut down their imports to the bone than to have to state to the public they have spent all of their gold reserve, which is now down to about 10 percent of the cover, and say the remainder is going to have to be sold.

Mr. CASE. That would be, of course, to protect them. They would do without a loan until they get it built up.

Mr. SOUTHARD. Evidently.

PRIVATE GOLD HOLDINGS IN FRANCE

Mr. CASE. What would you have to say with respect to France, where reports have appeared in the press of $1,000,000,000 to $2,000,000,000 of gold being privately held?

Mr. SOUTHARD. Without commenting on the figure-because we have tried our best to search back and make estimates-there is undoubtedly a very considerable amount of gold and maybe a certain amount of dollar currency hoarded in France and hoarded in all of the other countries. Probably a substantial amount is hoarded in France, because they have been gold hoarders for many years.

I do not know of any way history can show us to get that out of private hoards short of stabilization in France. Those people-the peasants and the rest of the people have it. The bayonet does not bring it out. The efforts of the Nazis to frighten them, by insisting on calling in everything, did not bring it out of hiding. The Germans, when they went into France, called in all of the national assets, but that had no effect. Gold is hidden under the beds, under the floors, and you would have to use the most ruthless means to get it out. The French have an internal gold market, and, among other things, as a part of this effort you said you admired, they are hoping that the gold market, which is now legal, might bring that gold out in the open, although at pretty high prices. Some may come out when the people have to sell it in order to live, but I do not believe any considerable amount will come out of hiding except under the same circumstances which brought it out in the twenties. When you get real stabilization in the country, out it comes. It is tantalizing to think it is there, but I do not know how to get it out.

Incidentally, of course, that is not included in these figures; these figures here are the mobilized reserves, and there is no use trying to add the others.

Mr. CASE. I recognize that. I thought it was obvious from the $550,000,000 estimate that it does not include the hoarded gold.

AVAILABILITY OF RESERVES OF GOLD AND DOLLARS HELD BY SWITZERLAND, PORTUGAL, AND TURKEY

Mr WIGGLESWORTH. I notice one other statement in this report of the Committee on Foreign Affairs. It says:

According to United States Treasury officials the excess gold and dollar balances of Switzerland, Portugal, and Turkey amount to 1.5 billion dollars. Since this is free gold, in the sense that it is not needed as currency reserve, it might advantageously be used to help implement the ERP philosophy of mutual aid. These three countries were all participants in the Paris Conference and it is to be hoped that some of this might be available in the form of long-term loans to participating countries that are experiencing serious balance-of-payments difficulties.

Mr. SOUTHARD. We hope Switzerland is going to do something. You will notice we have possible Swiss credits on the other table (table IX) of $50,000,000 to $125,000,000. The Swiss gold position is good. I think really the Swiss problem is not one of lack of gold reserves against which to make credits; it is much more a problem of the Swiss having to maintain a certain volume of imports in order to be able to stabilize their economy and continue to export. They are so dependent on the flow of imports to keep their industries going that if they extend credits beyond a certain point and do not get enough imports, it means they face an inflationary problem, because the money they spend goes out and the raw materials do not come in.

Mr. WIGGLESWORTH. Is the 1.5 billion dollars referred to by the Foreign Affairs Committee with reference to Switzerland, Portugal, and Turkey included in the 9.4 billion dollars?

Mr. SOUTHARD. No, sir; here is the table of their gold position in dollars [submitting]. In the meantime, since the earlier figures, the administration has shifted Turkey out of the cash basis group, because Turkey's position has deteriorated somewhat.

Mr. WIGGLESWORTH. In other words, the 1.5 billion dollars referred to by the Foreign Affairs Committee is included in the 12.4 billion dollars?

Mr. SOUTHARD. That is right. I would like to check that figure. Mr. WIGGLESWORTH. And that 1.5 billion dollars has not been included in the column 3 of the over-all table entitled "Loans and Credits"?

In

Mr. SOUTHARD. That is right; except insofar as you have an item of 50 to 125 million dollars here for Switzerland on the table of possible Swiss credits. I would like to check back on the figure you have read there in the report of the committee saying that Switzerland, Portugal, and Turkey had 1.5 billion dollars in excess reserves. Switzerland and Portugal, in the reserve figures given us as the official figures, there is only 1.3 billion dollars all told in gold, and I really would not suppose any considerable part of that is excess to the internal reserve requirements.

May I have the privilege of checking that and submitting a statement?

Mr. WIGGLESWORTH. Certainly.

(The following was submitted later:)

AVAILABILITY OF RESERVES OF GOLD AND DOLLARS HELD BY SWITZERLAND, PORTUGAL, AND TURKEY FOR EXTENSION OF CREDITS UNDER ECA

In a report submitted to the Senate Finance Committee by the National Advisory Council on international monetary and financial problems on December 18, 1947, it was estimated (p. 62) that the gold and dollar reserves held by Switzerland, Portugal, and Turkey as of June 30, 1947, exceeded by approximately 1.5 billion dollars the amounts needed to finance the current flow of their international trade and to serve as backing for their currencies.

A

Switzerland accounted for the preponderance of this total. The Swiss normally have held reserves substantially in excess of their own requirements as an offset to the large volume of foreign funds which is held in the form of Swiss francs. The Swiss authorities feel that it is necessary to maintain a large reserve because of the possibility that these foreign deposits may be withdrawn in the future. substantial part of the gold and dollars held by Switzerland probably represents funds transferred to Switzerland from eastern Europe during the past 10 years. Since the owners may not prove to be permanent residents of Switzerland, the funds may not be available for lending abroad to the same extent as funds owned by permanent Swiss residents. The executive branch agrees that the Swiss should be encouraged to assist the recovery program by extending credits in gold or dollars to other European countries. However, Switzerland is a sovereign country and is not receiving financial assistance from the United States. In table IX an estimate of such credits has been included in an amount of 50 to 125 million dollars.

With respect to Portugal and Turkey the amount of excess reserves as of June 30, 1947, was estimated at about $300,000,000. During the second half of 1947, this margin was reduced almost 50 percent, and further drawings upon reserves have been taking place during the first 4 months of 1948. As a result of this decline, Turkey has been removed from the category of cash basis countries and included with the group of countries to receive financial assistance. While Portugal still has some small margin for minimum requirements, this is not likely to exceed the amount of its own net deficit on current account during the fiscal year 1948-49.