FOREIGN AID APPROPRIATION BILL FOR 1949 HEARINGS BEFORE THE SUBCOMMITTEE OF THE Hou COMMITTEE ON APPROPRIATIONS. HOUSE OF REPRESENTATIVES EIGHTIETH CONGRESS HC240 716 1949a COMMITTEE ON APPROPRIATIONS JOHN TABER, New York, Chairman RICHARD B. WIGGLESWORTH, Massachusetts CLARENCE CANNON, Missouri CHARLES A. PLUMLEY, Vermont FRANCIS CASE, South Dakota H. CARL ANDERSEN, Minnesota LOWELL STOCKMAN, Oregon JOHN PHILLIPS, California ERRETT P. SCRIVNER, Kansas CHARLES R. ROBERTSON, North Dakota FREDERIC R. COUDERT, JR., New York CLIFF CLEVENGER, Ohio LOUIS LUDLOW, Indiana JOHN H. KERR, North Carolina FOREIGN AID APPROPRIATION BILL, 1949 HEARINGS CONDUCTED BY THE SUBCOMMITTEE OF THE COM- TUESDAY, MAY 11, 1948. GOVERNMENT AND RELIEF IN OCCUPIED AREAS STANDARD CLASSIFICATION SCHEDULE pt.2 The CHAIRMAN. Mr. Draper, if you would, I think you might give us a little statement on this GARIOA picture. GENERAL STATEMENT Mr. DRAPER. I would be delighted to, sir. I am very glad to have this opportunity to appear before the committee. The Department of the Army, of course, has a double role in a sense. It is one of the executive departments of the Government, so interested in the ECA generally; and, secondarily, it has operating responsibility for the picture in Germany, and it will be principally along those lines that I will testify today. These conquered countries, Japan and Germany, have been the responsibility of the Department of the Army since the ending of military operations and the basis on which appropriations have been approved by your committees in the past for the use of the Department of the Army in Japan and Korea has been primarily on the basis of prevention of disease and unrest, and in order to prevent disorder which might interfere with the troops. Now, the development of the economic recovery program for Europe rounds out that Army picture and permits, in addition to GARIOA appropriations, appropriations for recovery, to finance the importation of raw materials to produce in turn exports which will permit bizone Germany to pay its own way. Two things, primarily, are needed in rehabilitation. Basically it is food, and, second, raw materials. Up to this time food and fertilizers have been the broad program. Now, the ECA should furnish and will furnish a certain amount of raw materials to round that out, with some machinery, and so forth. The The GARIOA program has been carefully integrated with the ECA program. They are not contradictory in any sense. GARIOA program is roughly $700,000,000, and something over $400,000,000 from ECA tentatively considered appropriate in the planning by the ECA for bizonal Germany, or a total roughly of $1,100,000,000. IMPORTANCE OF GERMANY TO ECONOMIC RECOVERY OF EUROPE Germany, as I see it, is the key to the economic recovery of Europe and gives opportunity to the Administrator and to the United States broadly in operating that program to bring about benefits for all the European countries by the use of industrial capacity, labor, knowhow in Germany that at present is not being used. So Germany's recovery is not only important to itself, but also to the United States in cutting down its costs of occupation. The other nations of Europe need Germany's industry and exports for their own rehabilitation and progress for the things they used to get from Germany. The 16 European countries participating in the proposed recovery program themselves recognized this, in spite of Germany having been an ex-enemy, and stated at their meeting in Paris: The German economy has been, in the past, and by the nature of things will remain, closely tied up with the economic system of other European countries. A substantial increase of output there will be required if Europe is to become independent of outside support. When I speak of Germany, I am speaking of bizonal Germany. Bizonal Germany has now reached about 44 percent in general industrial production of the 1936 level. Mr. Wilkinson just returned from Germany, and he says that since I have received my figures it is now about 48 percent. It is somewhere between 40 and 50 percent. The plans under the ECA are broadly to reach, by the end of the first ECA year, 60 percent of the 1936 production level. By the end of the second ECA year, 80 percent. By the end of the third year, 90 percent, and by the end of the fourth year about 100 percent of 1936 production. We have a few charts here which will broadly indicate what we see the picture to be in bizonal Germany and its relation to this problem in which your committee is interested. (The charts referred to have been translated into tables as follows:) APPROXIMATE NUMERICAL VALUES OF DATA SHOWN IN CHARTS 1 TO 8 ON BIZONE GERMANY, PREPARED FOR HOUSE APPROPRIATIONS COMMITTEE, SUBMITTED BY DEPARTMENT OF THE ARMY CHART 1 (a).-Postwar levels of volume of industrial area (expressed as percents of prewar base period) compared with other countries EXPLANATION OF CHART I (B) "REHABILITATION VERSUS RELIEF" (To be considered in conjunction with chart No. 5) This chart shows (1) the constant burden necessary for relief expenditures on behalf of bizone Germany and (2) the additional immediate burden of rehabilitation with its ultimate contribution to reduction of relief expenditures when rehabilitation begins to take effect. It presents graphically the sharp decline in outside financing required by bizone Germany expected to occur as a result of the impetus to bizone's export capabilities through increased imports of raw materials. In brief, the stimulation of needed industrial imports are expected to produce rapidly increasing exports which by the end of the sixth year will eliminate bizone Germany's trade deficit. It covers 8 years: 1947, the four ERP years and the three ensuing years. Throughout, expenditures for relief have been estimated at $740,000,000 which is the estimated amount for fiscal year 1949. In the first ERP year, the excess of imports over exports is shown as being financed by $740,000,000 for relief and $436,000,000 for rehabilitation. The second ERP year projects greater total imports and a further increase in exports, reducing the excess of imports over exports to $972,000,000. In the third ERP year the excess of imports over exports-that is, the amount to be financed-is actually somewhat less than basic relief imports of $740,000,000. By the fourth ERP year the excess of imports is reduced to $440,000,000, about $300,000,000 less than the projected relief figure without rehabilitation. By the sixth year (the second year after ERP) the chart projects a balance where all imports, including that for relief, are offset by exports. |