COMMITTEE ON APPROPRIATIONS

JOHN TABER, New York, Chairman

RICHARD B. WIGGLESWORTH, Massachusetts CLARENCE CANNON, Missouri

GEORGE Y. HARVEY, Clerk

SUBCOMMITTEE ON DEFICIENCIES

JOHN TABER, New York, Chairman

RICHARD B. WIGGLESWORTH, Massachusetts CLARENCE CANNON, Missouri
ALBERT J. ENGEL, Michigan
KARL STEFAN, Nebraska
FRANCIS CASE, South Dakota

WILLIAM A. DUVALL, Executive Secretary to Subcommittee

DEPOSITED BY THE

UNITED STATES OF AMERICA

JUL14'48

FOREIGN AID APPROPRIATION BILL, 1949

HEARINGS CONDUCTED BY THE SUBCOMMITTEE OF THE COMMITTEE ON APPROPRIATIONS, HOUSE OF REPRESENTATIVES, IN CHARGE OF DEFICIENCY APPROPRIATIONS ON THE DAYS FOLLOWING, NAMELY:

TUESDAY, APRIL 20, 1948.

ECONOMIC COOPERATION ADMINISTRATION

STATEMENT OF PAUL G. HOFFMAN, ADMINISTRATOR; RICHARD BISSELL, CONSULTANT; CALVIN HOOVER, SPECIAL ASSISTANT; EDWARD MASON, SPECIAL ASSISTANT; F. R. CAWLEY, ACTING BUDGET OFFICER; W. T. PHILLIPS, ADVISER ON SUPPLIES, ECONOMIC COOPERATION ADMINISTRATION; ROBERT LOVETT, UNDER SECRETARY OF STATE; AND PAUL NITZE, SPECIAL ASSISTANT; WILFRED MALENBAUM, CHIEF, INTERNATIONAL AND FUNCTIONAL INTELLIGENCE; AND A. M. ROSENSON, ASSISTANT CHIEF, DIVISION OF FINANCIAL AFFAIRS, DEPARTMENT OF STATE

GENERAL STATEMENT

The CHAIRMAN. The committee has under consideration this morning an estimate contained in House Document No. 610 for $4.245,000,000 for the carrying out of foreign assistance as authorized by title I of Public, No. 472, approved April 3, 1948.

We have with us Mr. Paul G. Hoffman, the Administrator appointed to head the Economic Cooperation Administration. We should be glad to have a statement from you at this time, Mr. Hoffman.

Mr. HOFFMAN. Mr. Chairman and gentlemen, since assuming office as Administrator of the Economic Cooperation Administration 10 days ago I have found myself confronted with a number of pressing problems. As soon as I was sworn in, the authorization of expenditures by the State Department under the Interim Aid Act ceased. I had to assume responsibility for any further expenditures under that program as well as for initial expenditures under the new program. Up to date my Administration has authorized the expenditure of some $62,000,000 (including some $5,000,000 for ocean freight) to continue shipments of food, fuel, and fertilizer to certain European countries. I have also necessarily had to devote much time to recruiting competent personnel for the key positions in our new organization. The fact that we had over 14,000 applications for positions has not made this task less complicated. It is people who make an organization and selecting the best equipped person for each important position. takes time. We have also faced the minor problem of operating in temporary quarters while preparing to set up shop in the Maiatico Building.

Whatever success I may have had to date in meeting the responsibilities of this new office is due solely to: (1) The quality and quantity of preparatory work carried on by various agencies of government in the past several months and, (2) the willingness of the heads of

(1)

other departments to make available to ECA some of their top-flight personnel.

I wish I could advise you that while attempting to meet other responsibilities during the past 10 days I have found time to make myself thoroughly familiar with the tremendous volume of detail offered in justification for appropriations under the Economic Cooperation Act of 1948. That I have not been able to do. But I do have considerable familiarity with the financial dimensions of the program due to my having served as a member of the President's Committee on Foreign Aid, better known as the Harriman committee, last summer. Furthermore, even before I formally took office I requested Mr. Richard Bissell, who served as executive secretary of the Harriman Committee, and Messrs. Calvin Hoover and Edward Mason, who were members of the committee, to join me in a consulting capacity. Among their assignments I requested that they appraise the program from the standpoint of its over-all cost and also that they analyze a number of the more important estimates of European requirements such as those for grain, steel, coal, and freight cars. Mr. Bissell is prepared to testify on behalf of Messrs. Hoover, Mason, and himself as to these schedules of expenditures. I am prepared to join these three gentlemen in testifying as to the reasonableness of the over-all cost of the program.

I

Five billion three hundred million dollars is a lot of money, yet of three responsible and independent estimates of probable financial requirements for the program, it is the lowest; the other two reports are those of the Harriman committee and the International Bank. am speaking with utter sincerity when I say to you that my great fear is that even with the most careful planning and the most rigorous supervision of expenditures, this amount may prove insufficient to accomplish the degree of recovery we seek.

As a businessman there is one aspect of this program that deeply concerns me, namely: The implication that the Administrator may be held rather rigidly to these schedules. As I have already stated, I am impressed by both the quality and quantity of work that has gone into preparing this program. But this recovery program is something quite different from a departmental budget which covers the cost of familiar activities. In ECA we have little in the way of precedent or experience to guide us. We know precisely what we want to accomplish, namely: Increased production in all of the nations covered by this aid program. That must be brought about primarily by increased output per man-hour both on the farm and in the plants. But just how this can be accomplished we can't be too sure today.

Furthermore, we'll undoubtedly be confronted with changes in conditions both abroad and here that no one can forsee. If we're to avoid wasting millions of dollars we must quickly terminate programs that are not proving resultful. We must be prepared to shift our plans quickly to meet changing conditions. In other words, close supervision and high flexibility are both essential if we're to get the most out of our dollars. You can be sure of this that getting the most out of our dollars is something we're most determined to do.

The CHAIRMAN. The estimate that has been sent up here is entirely in wide open form and it has absolutely nothing in it which would limit the Administrator as to almost any activity he might wish to engage in in connection with this assistance program.

Mr. HOFFMAN. Mr. Chairman, may I speak off the record for a few minutes and tell you a little more clearly what I have in mind, if that is permissible?

The CHAIRMAN. Yes.

(Statement off the record.)

SELECTION AND APPOINTMENT OF TOP PERSONNEL

The CHAIRMAN. Have you at this point reached the stage where you are able to tell us something about your top personnel?

Mr. HOFFMAN. Yes; I think I can give you some general idea as to the kind of people they should be.

First, very valuable preparatory work was done and detailed charts were prepared; but again we are aproaching this task with the thought that those were suggestive rather than in any sense directive. That was made clear.

In the first place, in this country, we have a director of operations. I am very happy to say that Mr. Richard Bissell is acting in this capacity now. He does not know it, but no matter how hard he tries I do not believe he is going to be able to wiggle out of that job, because he has shown extraordinary capacity; and he has familiarity with this problem such as we must have if we are to get into this program quickly. He supervises the development of the programs for these countries and also the procurement of the supplies that are called for under the program. He has that general supervision of the home operations.

The CHAIRMAN. Could you give us a statement of his background? Mr. HOFFMAN. Several years ago, when we were trying to set up the organization CED, and had had various people suggested to us, individuals who were well-grounded in economics but who also had some sense and that is a combination you do not always findDick Bissell was right at the top of the list. So I hunted up Mr. Bissell. I found that Mr. Bissell was at that time employed by Mr. Lewis Douglas in the Maritime Commission. I went to Mr. Douglas and tried to convince Mr. Douglas that he ought to lend us Mr. Bissell for some special work that we wanted done. He assured me that under no circumstances could I have Mr. Bissell, except over his dead body, which convinced me that Mr. Douglas had a very high opinion of Mr. Bissell.

I do not know whether Mr. Bissell has spent much time in the Massachusetts Institute of Technology or not, but I think he was formerly attached to that institution. He has spent most of his time in business. The next time I tried to get Mr. Bissell for a special job, I found out he was working for the United States Steel Corp., doing investigations

for them.

The next time I ran into him he was still on that job. And the next time I ran into him--and that, by the way, was in connection with the Harriman Committee work, because I was on that committee and when it came to recommending a man who combined hard sense and a broad knowledge of international economics, whom we had to have, Bissell's name came first. So we all said, "We have to have Bissell." We finally decided that two or three of us would have to tell Mr. Olds that we had to have him and he would have to get along somehow without him.

Mr. Chairman, my entire experience has been in business. I have seen many men operate. I have never seen a job of work turned out of higher quality, and of greater quantity, than the job of work turned out by the Harriman Committee during the weeks we were meeting. Also, never have I seen an executive secretary-and much of the work always falls on staff-an executive secretary who was able to reconcile the apparently irreconcilable differences among the 19 individualists who comprised that committee. We all had very stanch views. Most of us had very hardened views on various subjects. But when we got through I think a miracle was accomplished. And that report, by the way, was not a pussyfooting report, as you all know. It was a very forthright report and it was signed by all 19 members of that committee.

So when I found myself in this job, the first thing I did was to get on the telephone and start trying to find Mr. Bissell, because I knew that I could not carry on this job without him. I telephoned Cambridge, could not get his home, but finally I did get Mr. Mason, who is here today also, and he agreed he would track Mr. Bissell down for me. Mr. Bissell called me, and I said, "Don't talk to me, but get a plane and come on down here." Well, planes were not flying and he came down on a train and has been here since.

I just say to you that I think I am a very responsible person when it comes to giving testimony as to individuals and I say that Mr. Bissell is extraordinarily well-informed in the economics of this situation. He is as able an administrator as I have ever seen in action and, as I say, somehow, we have got to keep him, even if it takes congressional action. Mr. Bissell has charge of operations.

Now, on the fiscal front

The CHAIRMAN. You are going to put on controls?

Mr. HOFFMAN. Are you talking about controls domestically?
The CHAIRMAN. No; I mean on this fellow here.

Mr. HOFFMAN. We are going to put on the toughest kind of supervision we know how to put on; that you may be assured of.

The CHAIRMAN. Have you gone any further than that?

Mr. HOFFMAN. Yes, sir. Of course, there is this whole group of problems that are of vital importance in the fiscal and monetary field. There I think we are fortunate in having been able to get Mr. Wayne Taylor who has in the past been Under Secretary of the Treasury and also Under Secretary of the Department of Commerce and President of the Export-Import Bank, to come into our organization and take responsibility there. It is his responsibility to handle the fiscal arrangements with the various countries, with the State Department helping in working out these bilateral agreements. Mr. WIGGLESWORTH. What is his title?

Mr. HOFFMAN. We have not thought about titles yet, Mr. Wigglesworth.

Mr. WIGGLESWORTH. He is head of fiscal and monetary activities? Mr. HOFFMAN. I think he will be at the head of that section and, as I say, if there is a better man than Mr. Taylor, I do not know him. We intend shortly to bring in on a consulting basis, but without pay-because I am sure we can do it-some of the very top men from the financial world who are acquainted, who are well versed in international finance, to help us in the matter of policy; because there are many problems that are not yet answered in the field.