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Mr. WEBB. That is right. I would be glad to give you a statement on that airport program, Senator.

Senator BREWSTER. I would like to have your current estimate of what you actually expect now. You have estimated $21,000,000, but I think you will find it is considerably less than that if you explore. (The statement requested is as follows:)

Operating expenses for the first 7 months of the fiscal year 1948, indicate that the expenditure estimate of $21,565,402 for the airport program contained in the 1949 budget is considerably in excess of the expenditures which may now be expected to materialize. This situation develops owing to a slower growth of the program than was originally anticipated. Because of the many uncertainties attending the program, and in consequence of the delays brought about through the necessity of major project revisions in accordance with a substantial reduction in the budget requested for fiscal year 1948, the execution of grant agreement with sponsors has not proceeded as rapidly as was anticipated. Although grant agreements are being executed, at this time, at a rapidly accelerating rate the end result will be a substantial decrease in expenditures for fiscal year 1948. Reexamination of the expenditure estimates in the light of the foregoing facts indicates that probable expenditures during the current fiscal year will not exceed $12,000,000.

Senator LUCAS. I think his estimates are about as close, perhaps, as some figures from Congress. But I would like to go to the floor, Mr. Chairman

Senator BREWSTER. Not on revenues, at any rate.

The CHAIRMAN. I would like to ask two brief questions. Then we can excuse the witness.

We are about two-thirds the way through this present fiscal year. Are your expenditures which have been made so far more or less than two-thirds of those which you expect to make during the fiscal year?

Mr. WEBB. They are less than the two-thirds.

The CHAIRMAN. Substantially less?

Mr. WEBB. Yes.

The CHAIRMAN. How much?

Mr. WEBB. Several billion dollars.

The CHAIRMAN. Do you expect to make that up between now and the end of the fiscal year?

Mr. WEBB. Yes. There will be additional expenditures that occur in the latter part of the year, certain interest payments and other things fall more heavily in the latter part of the year.

The CHAIRMAN. Let me ask you this: In figuring your expenditures what level of income do you adopt?

Mr. WEBB. They are figured on different bases, Senator. The general level that was used in the budget were the prices of August 1947. The CHAIRMAN. Those were high prices?

Mr. WEBB. Yes, although I believe they have increased some since then.

The CHAIRMAN. Have they not reduced considerably in some areas? Mr. WEBB. I do not believe they have gone as far back as August. The CHAIRMAN. So whatever the level that you take, that also is subject to the fluctuations which occur after that.

Mr. WEBB. That is right. I pointed that out.

The CHAIRMAN. In other words, if prices were to go down you would not have to spend so much.

Mr. WEBB. For things you buy.

The CHAIRMAN. For the same objectives.

Mr. WEBB. But certain other items in the budget would increase and tend to offset those.

The CHAIRMAN. That would depend entirely as to what the price level is on those items.

Mr. WEBB. Things like farm-price support.

The CHAIRMAN. If you had a drastic price recession you would not have to spend so much to accomplish the same.

Mr. WEBB. But some other problems in the Government would increase and tend to offset those.

The CHAIRMAN. I have no doubt about that. I am simply talking about buying goods. If the cost goes down, you do not have to pay as much money for the same goods. Is that not right?

Mr. WEBB. That is right.

The CHAIRMAN. If it goes up you have to pay more. That is quite evident.

Senator BREWSTER. Can the gentleman find any reasons for optimism? You gave a rather pessimistic view. There must be some things in your vast range of knowledge that are encouraging. You can try tomorrow morning to dig up one or two of those.

General Lord, who was your distinguished predecessor in the previous liquidation of war, was also helpful in that direction as to how we could solve that problem. Your tendency seems to be to find all the reasons why it is utterly impossible and I am sure you want to be as helpful as you can.

Mr. WEBB. I was going to say, Senator, that having devoted a great deal of effort to reducing departmental requests by some $7,000,000,000 before they came to you, I would hope you would take that into consideration in considering whether or not I have been easy.

Senator BREWSTER. We appreciate that, all right.

Mr. WEBB. They used to tell me about General Lord-that he had a nice way of doing business. If somebody wanted to see him, he would say, "Find out what they want, and tell them they cannot have it." I have not done that in this budget.

Senator BREWSTER. Perhaps we need to find another General Lord. The CHAIRMAN. If there are no further questions which the members of the committee wish to ask, we will excuse the witness. Senator BYRD. I have one.

I would like to have Mr. Webb be prepared to answer tomorrow as to the budget for 1950. There are a number of references here as to the increase between the budget of 1950 over 1949.

I would like to have him answer specifically as to what part of the $7,000,000,000 which the President did not approve the requests-what part of that was for military purposes.

Mr. WEBB. I will be glad to do that.

Senator, I have one problem, and that is that I am to appear before the Senate Appropriations Committee tomorrow morning.

The CHAIRMAN. Would you be content to have that put in the record?

Senator BYRD. I would like to examine him on it if he is going to appear again before the committee.

The CHAIRMAN. We had no intention of calling him again unless you wish him called.

Will you be content with that?

Senator BYRD. That will be all right. I can get it by correspondence.

The CHAIRMAN. And as to the 1950 expenditures, that especially will be completely in accord with the diversions of Congress. Mr. WEBB. Yes, sir.

The CHAIRMAN. So that these gloomy forecasts, I hope, may not realize.

Mr. WEBB. It is our common experience in trying to hold expenditures down.

Senator BREWSTER. I would also like to have you include in your notation for the record the precise figures for the European program concerned with shippings. I have had a great deal of difficulty in finding out what was contemplated in that whole field.

Mr. WEBB. I would be glad to do that.
(The information requested is as follows:)

ESTIMATED SHIPPING COSTS UNDER ERP PROGRAM

I. ESTIMATE OF COST INCLUDED IN STATE DEPARTMENT SUBMISSION

The ERP program includes $1,700,000,000 for the dollar cost of shipping during the 4-year period. This cost is broken down by year and by type of cargo, as follows:

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As emphasized in the formal submission to Congress, these estimates are based on a number of variable factors, principal among which are the level of ocean freight rates, and the over-all level of traffic under ERP. The above data assume the level of freight rates in effect as of July 1, 1947. There has since been some decline in rates; if the present level continues, shipping costs for the program would be somewhat lower than estimated above. However, there is no assurance that the present level will actually continue in effect. In fact, there is a strong possibility that rates will rise when shipments under ERP commence in volume, unless the requested authority to make surplus ships available to foreign operators is granted. There is no basis at present for revising the estimates of total commodity traffic upon which the above cost data are based.

The above estimates also assumed the sale to the European nations of the 200 surplus vessels requested by them in their Paris report. The State Department has estimated that, in the event that such transfer is not effected, the dollar cost shown above would be increased by about $300,000,000, as indicated below: Millions

Additional dollar freight: Cost (gross)‒‒‒

Less offsetting dollar costs involved in foreign purchase and operation: (a) Down payment for vessels__.

of dollars

432

(b) Annual installments_

(c) Dollar expenditures for port charges, etc..

Total offset__

Additional dollar freight cost (net)--.

32

14

86

132

300

It should be noted that some vessels have already been transferred since submission of the ERP estimates. Recent information from the European nations indicates that their present requirement would call for the purchase of only about 100 additional vessels.

II. SAVINGS POSSIBLE THROUGH CHARTER TO FOREIGN OPERATORS

In addition to the 200 vessels assumed to be sold to the European nations, the ERP program recommended to Congress proposes the transfer by charter of not to exceed 300 surplus vessels. The dollar savings made possible by the transfer of this number of vessels has been estimated by the State Department at about $240,000,000, as indicated below:

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Thus, the net dollar shipping cost under ERP, assuming both sale and charter as indicated above, would be as follows:

Total dollar shipping cost (assuming sale of 200 vessels)
Less savings through charter of 300 vessels---

Net dollar shipping cost with sale and charter_.

Billions

of dollars

$1.7

.2

1.5

The CHAIRMAN. We will recess until 10 o'clock tomorrow morning. (Thereupon, at 12:05 p. m., the committee adjourned, to reconvene Tuesday, March 2, 1948 at 10 a. m.)

72605-48-7

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