Last July, May, and March, there was a very acute shortage; supplies were not getting through, and it was necessary each time to loan them food from the German pipe line. I think it was last July that two complete cargoes of grain which were actually at sea and destined for Germany were diverted to Austria. General Keyes stated that this action literally saved them from starvation.

Mr. STEFAN. And had it not been for the supplement by GARIOA, there definitely would have been some starvation in Austria, would there not?

Mr. VOORHEES. General Keyes wrote us that there would.

QUESTION AS TO DUPLICATION IN THE ADMINISTRATION OF PROGRAMS

Mr. STEFAN. Certainly. And that brings me right back to this binder twine and a lot of other matters, where there is duplication of purchasing and things like that. How are you going to run that whole system over there with three or four administrative organizations?

Mr. VOORHEES. That is a question that is rather beyond my capacity to answer.

Mr. STEFAN. Well, this committee has to know. If we are going to have duplication of purchasing, duplication of distribution, and supplementing here and there, why do not they have one administration on relief over there, especially in the occupied countries?

Mr. VOORHEES. I can present the facts. It is for you to draw the conclusions. I do not think I am qualified to draw the conclusions. Some food for Germany is certainly an absolute military necessity. At least, the Army should have control of enough funds for food to preserve order. If there should be any interruption of that pipe line for Germany, such as occurred in Austria, we would have a catastrophe right away. That is why we have to have food flowing into Germany regularly, and dependably, at the present time. There is not time for any delay on food; it has got to arrive. The experience has been everytime that, when there has been any break in the food supply, that we have had riots.

Mr. STEFAN. I want you to be very frank about this, because we all want to reach the same objective-to get some relief and rehabilitation over there in the most efficient and competent way. Will you agree with me that there is duplication going on today-duplication of administration over there-or is there?

Mr. VOORHEES. That depends on the way the matter is run, and this has not yet been decided. There need not be duplication of it. I believe personally-and let me say I do not know much except when you get down to food-the business side of this matter is a thing I do not have any profound knowledge of, but on supplying food I do know something about it-I am sure you have got to have one organization for the supply of food for Germany.

Since you have raised the question of Austria, I want to say it is my sincere belief that the military position in Austria also necessitates the same thing. It is a smaller thing, but very serious. We have a small group of Americans located away out in the Russian zone, in Vienna, completely surrounded by Russians, and the maintenance of order, the maintenance of peace, absolutely requires a regular supply of food. That is what we ought to have as a military necessity. Mr. STEFAN. Then there is a duplication of administration there, is there not?

Mr. VOORHEES. It is not a duplication; it is a separate administration.

Mr. STEFAN. Well, you have two administrations.

Mr. VOORHEES. As you have raised the question, I will say this: It is my sincere belief, because of the urgent military necessity and because of the fact that a large part of food for Austria goes right through Germany, it is my sincere belief which I have urged in every way I could that the food supply for both Austria and Germany should be managed integrally, so that they can be handled flexibly. If a local situation occurred in Austria, you could divert a ship or two to Austria and take the next ship or two that came along for Austria and turn them back to Germany, and you could manage it absolutely flexibly in order to get food there.

Mr. STEFAN. Then the answer, if you will pardon the interruption and save time, is "Yes"; you have two administrations there, and they should be integrated. Is not that true?

Mr. VOORHEES. I think they should be integrated, and there are two administrations.

Mr. STEFAN. Thank you. That is all.

BINDER-TWINE SITUATION

Mr. VOORHEES. May I answer your question a little further about the binder-twine matter?

Mr. STEFAN. Yes.

Mr. VOORHEES. In the way this has been run in the past, which we are going to change in connection with the ECA program; the industrial items have been paid for by the proceeds of German exports. We have only come to you gentlemen for money for food and related items. We did not ask you for any funds for binder twine, because this is an industrial item for which we were not supposed to request funds.

The first time I learned of this crisis about binder twine-I have forgotten the precise date, but it must have been somewhere around the 1st of April-I immediately made it one of the first things requested of ECA for Germany. Mr. Hoffman was just being appointed at that time, and some action had to be taken before you could expect, in reason, that Mr. Hoffman could start to function on a specific matter like binder twine.

Mr. STEFAN. That is right. But he had $800,000,000 made available to him immediately, and he spent $63,000,000 and there was not any binder twine in that $63,000,000.

Mr. VOORHEES. I know he had about 63,000,000 problems, too. Mr. STEFAN. But this was a big one.

Mr. VOORHEES. What we did as to that was, in the first place, we found all the binder twine that the War Assets Administration still had. Some had been sold, as you pointed out. We arranged immediately with the War Assets Administration to make that available to us, and we proceeded with it without waiting for the legal clearance. The War Assets Administration cooperated very generously and in a fine spirit, indeed. We told them we would make the funds available somehow, and I took funds out of GARIOA, whether I had a right to or not, because it was an emergency, and I said, "Pending the time we can get an answer from ECA, we will put up the money,

if necessary." They then were requested to ship it, and it is being shipped.

Mr. STEFAN. How much?

Colonel BLUMENFELD. $820,000 worth.

Mr. STEFAN. How much in bales and pounds?

Colonel BLUMENFELD. I am afraid I do not have that.

Mr. ANDREWS. Two million and some pounds.

Mr. STEFAN. Only 2,000,000 out of the 22,000,000? There was not much left, because the horse had already gone out of the barn, and 21,245,000 pounds had been sold, of which 3,700,000 went to a Russian satellite.

Mr. VOORHEES. May I say further I am sure, if this thing is going to succeed, there is going to have to be more flexibility between what we have called category A items and these industrial items, so that the vitally needed industrial items are also supplied and so that we do not run the risk of losing German-grown wheat for a lack of binder twine. Certainly that does not make sense. We cannot tolerate shortages of that kind. I believe we now have the machinery and the funds available under the ECA so that will not occur again.

Request has been made of ECA for the binder twine which is necessary, and I believe funds will be forthcoming. I think the condition, which has been a bad one in the past, as Colonel Andrews described, is in the process of being remedied.

Mr. NITZE. May I point out that the ECA legislation did not go through until April 3; the Administrator was not appointed until April 5; and all that took place after this particular matter arose to which you are referring.

Mr. STEFAN. When were those first shipments made of the $63,000,000? I want to be as constructive and as factual as I possibly can. April 30 is when you told us of the $63,000,000, and this was April 19 that $63,482,376 of the first $800,000,000 was turned over to you, and you procured and authorized meat and meat products, vegetables, bread grains, flour, and related products, animal oils, seeds except oilseeds. I do not see any binder twine in there, and that was available to you. If there had been such a demand for that, it would seem. that you could have put that in that shipment, if that is a big incentive over there and would break this bottleneck so the farmer would let loose some products for the people in the cities. And binder twine is going begging around here, and I am wondering why it was not picked up, because the Army did pick up 5,200,000 pounds of it and sent it to Japan.

Mr. NITZE. My only point was the ECA law did not go through Congress until April 3 and the Administrator was not appointed until April 5.

Mr. WILKINSON. I think I can answer that question better than anyone else. The requirements for binder twine for this harvest were calculated last year. The Germans were instructed to incorporate in their import program the necessary raw materials in order to make binder twine in Germany. As Mr. Andrews has pointed out, for internal administrative reasons, which means just plain incompetence and the failure on our part to follow closely this one particular item in the import program, we did not realize until February of this year that the necessary steps has not been taken in order to bring into Germany the raw materials to make the binder twine we wanted.

We then started scouting around to see what we could do about it, and we inquired here in the United States, inquired in Belgium, Switzerland, Mexico, and every place, and, by the time we had gotten our feelers out, the bulk of this binder twine had gone. We had not, up to that time, intended to bring in any finished binder twine.

Mr. STEFAN. You had, however, picked up 5,200,000 pounds and sent it to Japan, because the emergency called for sending it to Japan to weave new hawsers and things like that.

Mr. WILKINSON. That is true, and here we have put out an emergency call from Germany, that they need to come under that.

Mr. STEFAN. Well, 33 percent of all the tobacco we raise is going over to Germany and those countries as an incentive, because we want to get the farmers supplied with some luxuries in order that they will let loose foodstuffs for the people in the cities. Colonel Andrews made one of the finest witnesses I ever heard, and he tells me those farmers say, "Give me binder twine, horseshoe nails, and horseshoes." They do not say tobacco. If they can get a few million pounds of binder twine and things like that that are going begging in the United States, that is the answer, to me.

Mr. WILKINSON. I understand. I missed the point. The initiative in following up your line of thinking would have come from this end in offering to us binder twine as an incentive that is correctand that was not done.

Colonel BLUMENFELD. May I say there is actually now under contract $800,000 worth of binder twine that Mr. Voorhees referred to?

Mr. STEFAN. Two million pounds.

Colonel BLUMENFELD. And there is $1,200,000 under contract by JIEA from their own export funds, from Mexico. We have been assured it will arrive in time for the harvest. That makes the total expenditure $2,000,000 to be financed $800,000 from the ECA Administration, which was one of the first priority items referred to, and $1,200,000 which JIEA financed from its own export funds. The shipments are being expedited, and we have every assurance they will be there in time to be assimilated and used in this harvest.

Mr. WIGGLESWORTH. I want to ask one or two questions which may have been covered yesterday, but I am not clear in my own mind on the over-all picture.

RELATION OF GARIOA REQUEST FOR GERMANY TO ECA ESTIMATED PROGRAM

The GARIOA request which is before us amounts to $1,250,000,000, and we were told of that amount $706,000,000 would go to Germany. How is that $706,000,000 related to the $822,000,000 which I understood was supposed to represent the GARIOA appropriation in the over-all ECA table at page D-6 of the justifications?

Mr. VOORHEES. The $822,000,000 figure is for the 15 months' period, not for the 12 months' period. The substance of it is set forth in our justifications at page 1158.

If you will look at the table there, the first line of figures we have taken directly out of the ECA brown book from page 39. The first column gives the 15 months' required shipments from the Western Hemisphere to Germany. The second column gives the German dollar

earnings also on a 15 months' basis. In the next column, the $822,000,000 gives what is called "loans and credits." In this case, that is actually the GARIOA appropriation. The reason for that heading is explained because in other countries-countries other than western Germany-there were substantial funds supplied through loans and credits. Therefore, they put the GARIOA contribution under that column of western Germany.

Mr. NITZE. It is explained in footnote 3, on page D-6, that in the case of bizonal Germany it includes the appropriation of $822,000,000 being requested by the Army.

Mr. WIGGLESWORTH. Is the short answer to my question that the $706,000,000 is four-fifths of the $822,000,000?

Mr. VOORHEES. Not precisely. On the next column below that, you have the comparable figures for fiscal year 1949 on a 12 months' basis. Our contribution for that period is $675,000,000 as to those items listed. The $706,000,000 which was given as the total payment for Germany includes the cost of the military government, salaries of employees, and some funds for reorientation. But the corresponding figure for the items which are included within the ECA program is $675,000,000 on the 12 months' basis. That would bring us out to the estimated deficit for which ECA would require funds$427,000,000 compared with their request of $437,000,000.

Mr. NITZE. For a different time period.

Mr. VOORHEES. Their request is for the April 1-March 31 period; ours, of course, is for the fiscal year July 1-June 30; so that a precise reconciliation is not possible, but that is substantially reconciled.

Mr. WIGGLESWORTH. To what extent are the items to be covered by the GARIOA appropriation included in the statement of needs for western Germany in column 1 of the over-all ECA table, at page D-6 of the justifications?

Mr. VOORHEES. That is set forth at pages 1155 and 1156.

Mr. WIGGLESWORTH. Cannot you answer that, Mr. Voorhees? Mr. VOORHEES. To what extent?

Mr. WIGGLESWORTH. Yes. Is it all included or not?

Mr. NITZE. Yes.

Mr. VOORHEES. I am not sure I agree with that. The ECA request is not all included within the GARIOA.

Mr. WIGGLESWORTH. I asked the question the other way around. Mr. VOORHEES. GARIOA is substantially all included in the ECA. Mr. WIGGLESWORTH. Is it all included?

Mr. VOORHEES. No, sir. As to the petroleum products, ECA did not have a sufficient amount of petroleum products for Germany, and they had reduced, as I recall it, by about 200,000 tons the petroleum which we knew we needed, and we added that to our estimates.

Mr. WIGGLESWORTH. I do not get a very clear picture of this yet. I have before me an over-all table given to us by Mr. Nitze to be used in working on the main ECA items. That over-all table is broken down into six columns of figures, column No. 1 giving the needs, country by country, and another column, in which the GARIOA appropriation is included, and what I am trying to get at is the relationship of the amount now requested for GARIOA purposes to the over-all needs listed in column 1 of the table. I thought from what was said yesterday that GARIOA was included in the ECA total.