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At the end of the war, the Army had great supplies of attabrine and antimalarial drugs in Ghana which they did not want to return to this country. They turned these over to the missionaries. That attabrine actually kept the young men and the young women in school for the next 5 years, because malaria was almost 100-percent endemic in that part of the world among the young people. I received a letter in 1950 asking me to provide some antimalarial drugs so that these people could continue to go to school. If they did not have that drug, they would be absent at least 3 out of 5 class days.

In the islands of Oceania and New Guinea, which suffered so badly in the last war as a result of bombings and invasions, a great deal of surplus was left on the bases. The metal from the old airplanes and old quonset huts forms the support for the concrete schools which have been built since that time.

In the Carolines and Marshalls, an area which would be benefited by the enactment of these bills, missionaries, Protestant and Catholic alike, are carrying the burden of education and health services. Presently it is not possible to hand over the surplus which exists on Guam to these islands for these services; these bills would provide for that.

Any surplus property donated to voluntary agencies would be given the best of care and would be used over and over again for the benefit of the poor and distressed of these less-developed areas. May I repeat what I stated in the beginning; that is, the prestige of the American people and their Government would be greatly enchanced by using these voluntary agencies as a "people to people" approach. The voluntary agencies already have won the confidence and respect of these people. They understand the culture of the areas and, therefore, are careful to treat the people with respect, permitting them to retain their dignity, no matter how poor they are.

This concludes my statement, Mr. Chairman. I hope I have been of some assistance to the subcommittee in its deliberations on the proposals which would provide good, usable property for health and education activities abroad. Thank you.

DIVISION OF FOREIGN MISSIONS,

NATIONAL COUNCIL OF CHURCHES OF CHRIST IN THE U.S.A.,

Senator ERNEST GRUENING,

Chairman, Subcommittee on Donable Property,
U.S. Senate Committee on Government Operations,
Washington, D.C.

New York, N.Y., May 31, 1960.

MY DEAR SENATOR GRUENING: I wish to acknowledge with thanks your letter of May 24, which reached my desk just before the long weekend of Memorial Day.

For your information and inclusion as a part of the record of the hearings of your subcommittee, I am enclosing herein the statement which the executive board of the division of foreign missions of the National Council of Churches has approved. This statement, as you see, gives views that such a distribution of excess foreign property should be on a government-to-government basis; that the recipients should be judged on the basis of need by the institutions for this property; that the need to be met and the quality of the services rendered should be determining factors; and that all institutions established and supported by U.S. citizens should receive equal treatment with other "nonprofit, charitable, or eleemosynary public or private institutions."

The bill S. 2725, is in line with the basic considerations indicated above, namely, that such property donations should be on a government-to-government basis and no discriminatory provisions should be made in favor of Institutions established and supported by U.S. citizens.

On the other hand, it is our opinion that bill S. 2732 contains certain restrictions on the donation of foreign excess property which the executive board of the division of foreign missions cannot support.

For your information, the foreign missions boards of the division of foreign missions in 1958 expended overseas $53,634,876. The total U.S. Protestant missionaries serving overseas in 1958 numbered 24,284, of whom 10,977 were related to boards of the division of foreign missions of the National Council of Churches.

May I request that this letter and the enclosed statement be incorporated in the record of the hearings on these bills.

Yours respectfully,

LUTHER A. GOTWALD,
Executive Secretary.

A STATEMENT BY THE EXECUTIVE BOARD OF DIVISION OF FOREIGN MISSIONS, NATIONAL COUNCIL OF THE CHURCHES OF CHRIST IN THE U.S.A.

Subject: Bills proposed in the Senate and House of Representatives regarding the donation of foreign excess property for educational and health purposes. The executive board of the division of foreign missions of the National Council of Churches deems it commendable that steps be taken by the U.S. Government to donate foreign excess property where it can effectively meet the needs of the peoples in the lands concerned.

In many lands institutions, such as "hospitals, clinics and health centers, schools, colleges, and universities," have been established by mission and church organizations of American origin and supported by American funds. In this connection, it should be noted that many Protestant missionary organizations are transferring more and more such institutions to organized bodies on the field, which bodies are controlled by a church or a church board in the foreign land.

We believe, therefore, that distribution of excess foreign property should be on a government-to-government basis-the recipient government designating an agency for the purpose of distribution, and the U.S. Government prescribing minimum standards of operation for such a foreign agency. Every recipient of such donated excess foreign property should be judged on the basis of need by the institution for this property. Distribution should be made equitably on the basis of needs. Thus, both the need to be met and the quality of the service rendered by the institution should be final determining factors. Therefore, all institutions established and supported by U.S. citizens through mission or church organizations should receive equal treatment with other "nonprofit, charitable, or eleemosynary public or private organizations" in the country where excess foreign property would be donated for such use by the U.S. Government.

We further believe that no preferential treatment should be shown to institutions on the basis that they are "directly or indirectly founded, sponsored, or supported by American citizens."

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HONORABLE SIR: Your office is respectfully requested to make the following statement a matter of record in the matter of H.R. 9996 which will permit the importation of oversea surplus property for sale on the domestic market.

The National Electronic Distributors Association, of which I am the executive vice president, is opposed to the passage of this legislation. The membership of our association is composed of wholesalers of electronic equipment, components, and replacement parts.

Wholesalers of electronic products are, in effect, extensions of manufacturers' warehouses and thereby represent a reservoir of vital material that could be, in a national emergency, commandeered or purchased by the U.S. Government. Vast stocks of vital electronic products were obtained from wholesalers by the Government at the beginning of World War II. It has been authoritatively stated that the availability of those products gave the war effort a 6-month advantage in the production of electronic equipment.

It is imperative that the position of wholesalers, also known as distributors, be guarded against legislation which would lessen their ability to be of service in a national emergency. H.R. 9996 opens the door to the reimportation of electronic

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products which could harmfully effect the ability of wholesalers in the electronic industry, to successfully operate their businesses.

There are approximately 2,000 wholesalers (distributors) of electronic equipment, components and replacement parts. They do not distribute radio and television receiver sets. These wholesalers employ approximately 50,000 persons and have investment in inventory of approximately $300 million.

Wholesalers of electronic equipment, components, and replacement parts are presently facing extremely harmful competition from imports of electronic products from Japan and other low-wage, long-hours industrial nations. The addition of a Federal law, such as proposed in H.R. 9996, would further tighten the belt of strangulation of their business enterprises.

There are only a very few importers of surplus electronic products who would gain from the passage of H.R. 9996, while the 2,000 wholesalers of such products would suffer. The importers' inventories, if a national emergency should occur, would be of no value to the U.S. Government; whereas the inventories of the wholesalers of electronic products would be immediately available, if necessary, to the Government.

We have been informed that H.R. 9996 as reported by the full committee of the House of Representatives has been changed to read:

"*** it shall be unlawful to import such property into the United States * * * unless the Secretary of Commerce determines that the importation of such property would not result in undue loss of production or employment in the United States."

We are further informed that the Department of Commerce neither submitted nor approved the foregoing provision of H.R. 9996. It is obvious that the Department of Commerce would find it difficult to determine when and where there was "undue loss of production or employment in the United States" covering the importation of 1, 100, or 1,000 units of surplus electronic units.

The watering down of the provisions of existing laws provided in H.R. 9996 changes administration by the Department of Commerce from an active nature to procedures of passiveness.

The foregoing statement of attitude by the wholesalers of electronic equipment, components, and replacement parts is not based upon a selfish premise. It is submitted on the basis that a high inventory of electronic products by wholesalers, located throughout the United States, is essential to the defense of the Nation in the event of a national emergency.

The National Electronic Distributors Association respectfully submits this statement in the hope that it will be carefully read and seriously considered by Members of the U.S. Senate and the House of Representatives.

Respectfully,

GAIL S. CARTER, Executive Vice President. MAY 27, 1960.

Hon. ERNEST GRUENING,
U.S. Senate,

Senate Office Building, Washington, D.C.

DEAR SIR: The full implications of H.R. 9996, the foreign excess property bill, are of considerable concern to the members of this association. I feel sure that several associations dealing with the type of goods that can be declared surplus overseas have objected to the bill and they have done so with good reason.

The Sporting Goods Jobbers Association is seriously concerned especially about the prospect of the importation of any quantity of tents and sleeping bags. We do not know what influence such importation may have on employment in the manufacture of such goods but the influence on both price and profit in the line of distribution could be tremendous. Consider the release for sale to sporting goods dealers of a quantity of sleeping bags. The bags would undoubtedly be offered at a lower wholesale price than that for sleeping bags of like grade and quality now being manufactured or now in stock in wholesalers warehouses. As the lower prices are publicized, dealers will stop buying and will cancel orders for the domestic sleeping bags. These dealers will cancel regardless of the quantity imported.

This means that an offer to sell even 100 sleeping bags at a reduced price in a single metropolitan area could freeze several thousand sleeping bags on the shelves of wholesalers within several hundred miles of where the imported merchandise is offered. The stock turnover of several dozen wholesalers of

sporting goods is reduced, their operating costs go up, their capital is tied up in inventory that they cannot move, and their orders for similar and for other goods are reduced if not eliminated. The influence of the low priced sale of a small quantity of imported sleeping bags, like waves in a pond, extend in all directions. The point that only a few sleeping bags are involved is not valid because many, many dealers and many wholesalers will become involved. If 3 dealers in a town where 30 dealers exist, sell the low priced imported sleeping bags, 27 dealers are not able to compete effectively pricewise in the sale of goods of like grade and quality.

I believe that your committee and the Congress should consider carefully the far-reaching effects of admitting a single shipment of sleeping bags and tents declared surplus overseas for resale in this country. I hope that you will make these few points I have tried to bring out a part of the subcommittee hearings concerned with H.R. 9996, as amended.

Thank you.
Sincerely,

BOB ERATH, Chairman, Legislative Committee.

STRASSER, SPIEGELBERG, FRIED, FRANK & KAMPELMAN,

Hon. ERNEST GRUENING,
U.S. Senate,

Washington, D.C.

Washington, D.C. June 3, 1960.

DEAR SENATOR GRUENING: During the course of your subcommittee's hearing on S. 3154 on June 1, a number of statements were made by various witnesses on which I feel some comment is necessary.

THE CONSTRUCTION INDUSTRY

First of all, let me say, Senator Gruening, that you were completely correct in pointing out that if the construction equipment industry is facing a problem, the problem must be met squarely by going to its root. It is perfectly clear that foreign excess property has nothing to do with whatever may be the present plight of the manufacturers and distributors of construction equipment.

We do not question that the construction equipment manufacturers are operating at only 60 percent of their capacity. But this capacity is geared for wartime conditions, and barring some major and unlikely upsurge in our peacetime economy, this industry cannot hope to operate at peak capacity. Thus, during the Korean war in 1951 and 1952 respectively, the Government bought $316 million and $445 million of construction equipment, while Government procurement under normal peacetime conditions such as during the past 5 years has run from $50 to $74 million. This is a fact of economic life, and availability of surplus property has nothing to do with this fact. Actually, there have now been since June 1958 four major hearings on the problem of reentry of foreign excess property-three hearings before the Dawson committee in the House, and the hearing before your committee. Despite all the complaints and concerns expressed, there has never been a single specific, factual example presented as to injury to a domestic manufacturer caused by availability of surplus property.

The recent report by the Dawson committee on H.R. 9996, companion bill to S. 3154, explicitly points out that there has been little "hard evidence" and no cases shown of harm to domestic industry. In his testimony before your committee, Mr. McKenrick, spokesman for the Construction Industry Manufacturer's Association, acknowledged that his industry has not been hurt in the past by importation of foreign surplus because of the present provisions of law. But is it not significant that he cannot point to even a single case of harm caused by domestic surplus, which has entered the economy on a volume about 20 times that of foreign surplus ever since the end of World War II?

There are a number of hard facts which we can give the committee. We urge you to consider the following.

1. Wholesale prices of construction machinery and equipment have risen from (1947-49=100) 90 in 1947, to 111.5 in 1950, to 148.6 in 1956, to 169.2 in April 1959. This should be compared with the wholesale price index for all commodities which has risen from 96.4 in 1947 to 120 in April 1959.

2. Many manufacturers of construction equipment have continued to show a high volume of sales and net profits, with a decline only for the period reflecting the most recent business recession. Caterpillar Tractor Co., for example, had net sales of more than $742 million in 1959, well above the $685 million sales in the "peak year" of 1956, and its sales for the first quarter of 1960 were well above those for 1959. In addition, Caterpillar's net earnings in 1959 were considerably higher than in our recent year except 1956. The same is true for Koehring Co. The sales of Allis-Chalmers in 1959 were higher than for any recent year except 1956, and 1960 sales for the first quarter were well above those for the comparable period in 1959. Engineering News Record for March 24, 1960, states that January 1960 was a record month for new equipment orders, 2 percent over the record set in 1951, and predicted that 1960 "should set a new high in equipment orders."

3. American manufacturers of construction equipment have established manufacturing facilities in many foreign countries. Department of Commerce figures show that there are at least 85 such plants in other countries. Prior to 1958, the United States produced 96 percent of the construction equipment used in the free world. This new development has drastically reduced exports of equipment from the United States, and much of this equipment manufactured abroad is returned to the United States for sale in competition with equipment made by American workers.

CONSTRUCTION EQUIPMENT DISTRIBUTORS

Mr. H. J. Mayer testified at the June 1 hearing concerning the "plight" of construction equipment dealers. He points out that his association's Cost of Doing Business Survey shows that the average distributor's return on sales before taxes was 3.77 percent in 1956, 2.46 percent in 1957, and 2.15 percent in 1958, which, he added, was "admittedly a recession year." He uses these figures to suggest that the problem is one of a falloff of sales. But this very same survey on page 4 characterizes 1956 as a "peak year" from the standpoint of sales volume, and shows that for all distributors, the median average sales volume was $1,994,419. True the median average of sales dropped in the recession years 1957 and 1958 to $1,770,743 and $1,739,859 respectively. Thus the decline in median average sales from 1956 to 1958 was only about 10 percent. The real difficulty with the profit picture of this industry is not to be found on the sales side, but rather on the expense side. This is shown clearly in the survey introduced by Mr. Mayer which indicates and explicitly states that the "generally dismal gross profit picture on used equipment sales can be traced to over allowance on trade-ins" which over allowance averaged 12.6 percent per dollar of sales. Similarly, the survey shows that another factor affecting profits on used and new equipment has been the increases in the prime interest rate since 1956.

Accordingly, the effort to suggest that there is a meaningful relationship between foreign excess property and the economic situation of equipment distributors must be labeled as palpably misleading, to put it mildly.

Similarly, your subcommittee was told that the recent practice of auctioning construction equipment "indicates a strong buyer's market." This is simply not true. Within the past several years, the Department of Defense has commenced the practice of selling surplus construction equipment at auctions. The experience at such sales showed that auctions could move equipment more quickly with greater monetary return than ordinary selling techniques. Accordingly, several private companies have become construction equipment auctioneers. Development of this auction practice is not a reflection of distress-it reflects only a new, aggressive sales device for getting rid of inventory at good prices. Mr. Mayer uses the device of "scare" figures. First, he tells the committee that there are no sound estimates as to the amount of foreign excess property. Then he tells the committee that during the fiscal year 1959, prospective importers sought to bring $30 million worth of construction equipment into the United States as foreign excess property. His admittedly "rough" analysis is untrue. Colonel Rey provided authoritative data on the quantity of foreign excess property. There is no mystery about this. According to Colonel Rey's testimony, during fiscal year 1959 the Department of Defense disposed of only $12 million worth of construction equipment as domestic surplus. Thus, only about 0.6 percent of all domestic surplus was construction equipment. Applying this percentage to the $75 million worth of foreign excess property applications

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