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Sec. 7. 'The Act entitled "An Act providing for the purchase or erection, within certain limits of cost, of embassy, legation, and consular buildings, abroad,' approved February 17, 1911, is repealed, but such repeal shall not invalidate appropriations already made under the authority of such Act. SEC 8. This Act may be cited as the "'Foreign Service Buildings Act, 1926."

Sec. 9. The Secretary of State, when he finds it to be in the interest of the Government, with the concurrence of the Foreign Service Buildings Commission, is authorized to sell buildings and grounds acquired for the use of diplomatic and consular establishments in foreign countries, and notwithstanding the provisions of any other law, to apply the proceeds of such sales toward the purchase and construction, furnishing and preservation of other properties, or held in the Foreign Service Buildings sund, as in the judgment of the Commission may best serve the Government's interest: Provided, however, That ihe Secretary of State shall report all such transactions annually to the Congress with the Budget estimates of the Depar! ment of State.

Public hearings were held on bill H. R. 4282 (an identical bill which had been introduced in the 78th Cong.) on May 2, 1944, during which testimony was given by Mr. G. Howland Shaw, Assistant Secretary of State, and Mr. Leland W. King, Acting Chief of the Foreign Buildings Office, Department of State. H. R. 4282 was favorably reported to the House on May 5, 1944, but failed to pass before adjournment. It was reintroduced on January 4, 1945, as H. R. 685, and hearings on the new bill were held on January 30, 1945. The bill was ordered favorably reported with clarifying amendments on page 2, which were adopted to make it clear that proceeds from the sales of buildings and grounds could be used for the furnishing of Foreign Service buildings, and also that such funds need not be used at once, but could be held in the Foreign Service building fund until required.

The act of May 7, 1926, and subsequent amendments, providing for a Foreign Service Buildings Commission for the acquisition of buildings and grounds in foreign countries for the use of the Government of the United States of America, established a very large realestate business, and Government-owned buildings and grounds abroad located all over the world now represent an investment of upward of $10,000,000.

The Foreign Service Buildings Commission and its functions were transferred to the Department of State by the President's Reorganization Plan II, with a provision that theCommission shall exercise advisory functions and all other functions (including administrative functions) shall be exercised under the direction and supervision of the Secretary of State by such division, bureau, or office of the Department of State as the Secretary shall determine.

Effectively to protect this property, particularly to conserve the investment, it is important that the Secretary of State now be delegated authority to dispose, with the concurrence of the Foreign Service Buildings Commission, of the property by sale when it is in the Government's interest and to utilize the proceeds of such sale for the purchase and construction and preservation of other properties acquired, or authorized to be acquired, agreeable to the Foreign Buildings Act and appropriations made by the Congress under the authorization of the organic law.

A delegation of the congressional power to dispose of the property acquired, a precedent for which is found in the delegation of power to the War and Navy Departments to dispose of public property by auction, will round out the existing legislation and enable handling the very large responsibility incident to the acquisition, preservation, exchange, and disposal of buildings and grounds to the best interests of the Government. Property values diminish because of continuing conditions and the public need for property for diplomatic and consular establishments abroad is affected adversely by encroachments and restrictions which would not necessarily affect the value of such property for other purposes but, for one reason or another, does render continued use by the Government for representative purposes, inexpedient, uneconomical, and inefficient.

The legislative authority permitting the exchange of Government properties has resulted in several very favorable transactions whereby the original investments and holdings have been materially enhanced. However, it has been impossible in certain instances because of the differences in the relative values of the properties involved or because the property desired is held by several owners having no individual or joint interest in the Government's property, and the resulting complications in attempting to reconcile differences have been involved and have presented difficulties which have prevented successful conclusion of negotiations undertaken in the public interest.

The legislation proposed would permit the Department to make a cash sale and use the proceeds for direct purchases. It actually involves only a means of implementing the present exchange law to overcome practical difficulties of operation. The disposal of property by cash sale and return of the proceeds to the general receipts of the Treasury, and the appropriation by Congress of new money to permit of the purchase of other property more suitable for consular and diplomatic establishments as an alternative proposal, would not afford as practical a procedure as would enactment of the bill suggested. The time necessary to obtain adequate funds through resort to the appropriation procedure would not permit of making definite commitments so often necessary to conclude altogether satisfactory real-estate transactions.

There is for consideration as well the currency exchange factor involved. The exchange value of the United States dollar in terms of the Argentine peso has appreciated approximately 60 percent since the purchase of the property it is now desired to dispose of in Buenos Aires. The present value of this property, expressed in terms of United States dollars, would represent an actual loss to the Government, but the property has actually increased in value about 25 percent in terms of pesos. A cash sale and utilization of the proceeds in pesos would permit the purchase of a much more desirable site for the Government's purposes and if the Department were in a position to liquidate its holdings as may be determined to be in the Government's interest when a favorable opportunity is afforded, and could use the proceeds of such sale, desirable properties could be obtained protecting, if not enhancing, original investments or holdings for which funds have been appropriated by the Congress, and which have been acquired or are proposed to be acquired with the approval of the Foreign Service Buildings Commission, which procedure it is intended in nowise to alter. All transactions consummated during the fiscal year would, of course, annually be reported to the Congress with the Budget for the succeeding fiscal year. .

An example of the problem confronting the Department is drawn from its experience in trying to dispose of property purchased in Buenos Aires in 1930 for $283,602.22 under the less favorable exchange conditions already mentioned. Subsequent to the purchase of this property, the imposition of highly restrictive zoning regulations and the encroachment on the property of a subway have made it unsuitable for the purposes intended, and it is now desired to locate the Embassy offices in a less congested area. Sustained efforts over a period of time to dispose of the present site and to acquire a more desirable property by exchange have failed, and several desirable properties have since been sold or have otherwise become unavailable. Although cash offers have been made for the site owned by the Government and efforts to locate more desirable alternate properties have been successful, a cash transaction is requisite to successful solution of the present situation.

Another example is the American Embassy residence property acquired at Santiago, Chile, in 1922 for $150,000. In the years which have intervened since this property was purchased, the section of the city in which the property is located has changed from residential to commercial, and will eventually become unsuitable for an Embassy residence. During this period the value of the property has increased appreciably and a sale at this time would not only be profitable but the proceeds of the sale would permit a very considerable enhancement of the Government holdings without necessitating an additional appropriation of funds. However, the possibility of effecting a successful negotiation for an exchange of properties is far less promising than would be the case were it possible to proceed under the authority proposed in the accompanying bill.

In such capital cities as Rome, Prague, Berlin, London, Paris, and Helsinki, changes in city planning, war damage, or other contingencies may make it most desirable for the Department to act quickly in changing its property holdings. The legislative authority to conclude such negotiations on a cash basis, as well as by property exchanges, would be an important asset in protecting the Government's interest, and is recommended to the favorable consideration of the Congress.

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18t Session



No. 50



JANUARY 30, 1945.—Committed to the Committee of the Whole House and

ordered to be printed

Mr. Bloom, from the Committee on Foreign Affairs, submitted the



[To accompany H. R. 687)

The Committee on Foreign Affairs, to whom was referred the bill (H. R. 687) for the relief of certain officers and employees of the Foreign Service of the United States who, while in the course of their respective duties, suffered losses of personal property by reason of war conditions, having considered the same, report favorably thereon without amendment and recommend that the bill do pass.

The Committee on Foreign Affairs held hearings on December 7, 1944, on an identical bill, 8. R. 4988, during which testimony was

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