CHART 2.-Percent of industrial production (for certain selected basic commodities)

CHART 4 (a).-Coal production, past, current, and anticipated (pithead production)

CHART 4 (b).—Crude steel production, past, current, and anticipated (total production in thousand tons)

CHART 5.-External trade targets for imports and exports 1947 and ERP years by major categories (based upon 1947 prices)

CHART 7.-Bizone GY category "B" items, comparison of first 2 months

POSTWAR LEVELS OF VOLUME OF INDUSTRIAL PRODUCTION IN BIZONAL AREA COMPARED WITH OTHER COUNTRIES

Our basic belief is that because the German level of industry, which is shown by the lower line on this chart, has gradually been rising since the occupation, from a little over 20 percent to something over 40 percent now, the unused capacity represented by the difference between this line and 100 percent can be of basic use in the improvement and rehabilitation of Europe.

The other countries of Europe, while, of course, looking forward to increased production and productivity, are using their past capacity to a far greater degree.

Italy is the nearest to Germany. It has risen a little, and is now somewhere around 65 percent.

With the exception of Italy the others average about 100 percent of the production they achieved in the base year. For example France has gradually been going up, and hovers above or below 100 percent.

These figures came, incidentally, from the United Nations publica

tions.

In the case of Belgium, the line ran up and past 100 percent, and is a little above it now.

In the same way the United Kingdom has been just above 100 percent right along. It is around 115 percent now.

The United States, as a matter of comparison, is at a figure of about 160 percent, just to show you the comparison here.

That does not mean that these other countries have reached 100 percent of the standard of living of 1936, or any other comparable year.

The CHAIRMAN. Are those figures based on volume, or on dollars? Mr. DRAPER. They are based on volume of production, sir. My point here is simply that there is unused capacity in Germany to a greater degree than there is in any other country, and we should use it. ECA can make use of that for all of western Europe.

POSSIBILITY OF INCLUDING GERMANY IN ECA PROGRAM

(Chart 1B)

The second chart is simply to draw attention to the fact that there are two possibilities. One is to continue relief in Germany, on the basis we have been doing it, and let it go along for an indefinite time, and the other is to put in an amount for recovery, by way of ECA over a short period of time, in the form of raw materials and thereby increase exports, to bring down the United States cost fairly rapidly over a period of years. Over a period of time this second method would probably cost less.

PRODUCTION OF STEEL, COAL, FERTILIZER, ETC. IN GERMANY

(Chart 2)

This next chart shows the industrial production of two or three. items.

You asked me, Mr. Taber, about crude steel the other day. The steel figures at the present time are shown on this chart. It is planned for the first year to rise quite rapidly. The steel production total is supposed to go from 3 million tons in 1947 to 5%1⁄2 million tons in the first ECA year.

In coal there has been a steady rise in production, and there is a steady increase projected forward.

There is more potash in the Russian zone, but speaking of the two bizonal ares, the United States and British, it has been very slowly rising.

We are projecting a considerably sharper rise, which is very important in the food picture.

On nitrogen again, as a fertilizer, that has been doing reasonably well in comparison with anything else. It has already reached a point of some 80 percent of the 1936. It is projected that within the next 12 months it will go well above what it was in 1936.

Mr. WIGGLESWORTH. Is that on a calendar-year basis?
Mr. DRAPER. This is the first ECA year, sir.

This is based on

1946, 1947, and then the balance of the line is shown at the end of

the first ECA year.

Mr. WIGGLESWORTH. Roughly on an April 1 basis?

Mr. DRAPER. Roughly; yes, sir. You could figure April 1 or July 1, either one, probably.

The CHAIRMAN. Mr. Wilkinson told us that the general level was up to 64.

Mr. WILKINSON. Forty-eight, sir.

The CHAIRMAN. Forty-eight percent?

Mr. DRAPER. I wish it were 64; 44 was the figure we had from a month or two ago.

PRODUCTION DATA ON GERMANY

(Chart 3)

The next chart shows the production data, and that will indicate, again, a comparison between 1936, which is the first box, the 1946 actual production, the 1947 actual production, shown in the black, and the first ECA year planning, shown in the dotted block.

You will see that in the case of coal we get fairly close in the next year to the prewar year 1936.

In crude and semifinished steel production it gets up to 51⁄2 million tons, which is only one-third of what it was in 1936. There is a progression of improvement in the last three years, however.

In pig iron you have about the same comparison, for natural reasons. In potash there is a big increase.

The CHAIRMAN. You indicated in this table, I thought, that the potash was going to get up to 80 percent, practically.

Mr. DRAPER. The potash was around 80 percent.

The CHAIRMAN. You indicated the nitrogen at 130 percent.

Mr. DRAPER. Yes, sir; that is correct.

The CHAIRMAN. Why should we not be able to take care of their requirements that way, instead of having to supplement it from here? Mr. DRAPER. It will be shrinking, and there will be decreasing amounts of imported fertilizer. It is primarily because the period of war and postwar years through which the ground was worked had far less than the ground needed, and it requires additional amounts now to restore its fertility.

The production is in the British zone, largely, but that will be spread over both zones.

Mr. Voorhees, would you care to add to that?

Mr. VORHEES. I would like to take that up in more detail later on. We have just sent over there the top chemist of the Department of Agriculture, and one of the leading experts in fertilizers from one of our principal universities, to estimate what they actually need there, and what can be done by local production.

Mr. DRAPER. You see, Mr. Taber, when you realize that this year, 1947, is just about half in nitrogen what it was prewar, you see that even with what we have supplied we have nothing like 100 percent for this year.

The CHAIRMAN. I thought the black line showed 80 percent.

Mr. VOORHEES. The nitrogen is 80 percent, sir.

Mr. DRAPER. That is right.

The CHAIRMAN. The potash is only a little better than half?
Mr. DRAPER. That is right. I was referring to potash before.

The CHAIRMAN. This chart which you have given us shows better than 80 percent by the end of the year, and maybe a little better than one-third through the year it shows better than 60 percent.

Mr. DRAPER. That is correct.

Mr. VOORHEES. The principal deficiency is, of course, in phosphates. The CHAIRMAN. Phosphate rock?

Mr. VOORHEES. We have the rock, but they do not have the acidulating facilities. They cannot produce enough of the finished superphosphate.

We have done very much better in building up the nitrogen. That situation is fairly satisfactory, but phosphates are a great problem.

I am just parroting the discussion I had with this group who just came back. By the way, I have Dr. Jacobs available, in case you should want him to testify from first-hand knowledge. I have no first-hand knowledge. I am merely repeating what he told me.

The CHAIRMAN. We will try to hear him as we go along.

Mr. WILKINSON. The production capacity of the bizonal area, of course, is not at all the same figure as the consumption of the bizonal These show the rate of recovery of the productive facilities, not the possibilities of satisfying prewar consumption.

area.

Mr. DRAPER. That is right. They may have imported, prewar. Mr. WILKINSON. They did.

Mr. WIGGLESWORTH. This black column, the 1947 production, is that again roughly on a fiscal-year basis?

Mr. DRAPER. No, sir. The figures here, I believe, are calendar

year.

Colonel BLUMENFELD. That is a calendar year.

Mr. WIGGLESWORTH. What is the fourth column from the left in each instance?

Mr. DRAPER. On this particular chart, that is the first ERP year figure, taken for comparison. That is not by a calendar-year comparison but just for comparison.

Mr. WIGGLESWORTH. This is an April 1 to April 1 estimate?
Mr. DRAPER. Yes, sir.

COAL AND CRUDE STEEL PRODUCTION IN GERMANY

(Charts 4a and 4b)

The next chart just shows in more detail the coal and steel production, and it shows that the 3 years that have gone by have shown reasonable improvement, but it still shows far below what it was before and shows constant step-ups under the planning.

The same thing is true with the steel. It goes from a figure of about 3 million to 51⁄2 million and then on up to 10 million tons projected for the fourth year.

Mr. WIGGLESWORTH. That means you anticipate getting back to the 1936 level of coal production only at the end of the fourth ECA year?

Mr. DRAPER. That is correct, sir. That will be under tremendous stress and strain, because a number of the mines will require very