Mr. HOFFMAN. Now Mr. Bissell would like to make a commen

NEED FOR PREVENTING RELAPSE OF PRODUCTION IN PARTICIPATIN COUNTRIES

Mr. BISSELL. May I make one comment on the issue you raise on the level of industrial production? I think the major part of th problem takes the form of preventing a relapse in the case of thos countries that have achieved a sizable recovery since the war. As on individual, I would certainly agree that our goal, in answer to your first question, as to how far they should be built up, should not b set extravagantly high.

Mr. CASE. When you speak of "relapse," do you mean the kind of relapse that the Commerce Department said we were going to have with so many unemployed right after VJ-day?

Mr. BISSELL. I mean a different kind of relapse in this case. mean the kind of relapse that would occur if those countries were shut off from their source of food or raw materials, where there is a very direct and almost mechanical causation. We have been extending foreign aid in Europe on a very substantial scale. Moreover-and this is notably true both of the United Kingdom and Belgium-they have been drawing upon sizable reserves that they possessed at the end of the war of dollar exchange. One of the reasons the Belgian recovery is as well advanced as it is is that during the war, partly from exports of Belgian currency, they accumulated reserves which they were not able to spend, and my information, which is very superfluous and imperfect at this stage of the game, is that the Belgians are very close to the end of their resources, and if they are forced very sharply and drastically to curtail their imports before they have had time to build up their exports, the picture there would change extremely rapidly.

Therefore, I believe it is not inconsistent that we should provide, in appropriate form, further financial assistance to countries, even where their recovery is already well advanced. It seems to me our objective in that case would be to achieve, as rapidly as possible, a state of affairs in which the cessation of American aid will not cause that kind of economic collapse. And quite frequently the goals we will be setting will be goals in terms of purely industrial production that has largely been achieved already, and our true goal will not be to further increase industrial production so much as it will be to enable them to maintain their industrial production and pay their own way while they are doing it.

As to the other comment, I would like to suggest that we know, at least as to the rate of recovery in agricultural production in Europe and recovery of mining, that it has proceeded far less well than the recovery in industrial production.

Mr. STEFAN. On account of the drought?

Mr. BISSELL. On account of the drought in the case of agriculture and the lag in coal production, which I think we have all heard talked about a great deal.

NEED FOR DOLLARS TO BRING ABOUT BALANCED TRADE OF PARTICIPATING COUNTRIES

Mr. CASE. In other words, boiled down, what you are saying is that we should give those people American taxpayers' dollars to import materials until they get their export of goods up to such a point that consumers in the United States will become purchasers in such a degree that we won't have to take any more of the taxpayers' dollars to balance their trade?

Mr. BISSELL. Consumers in the United States and other places in the world.

Mr. HOFFMAN. Or, to put it another way, until we are certain that their economy is stabilized on a fairly high level, because it is just good business.

Mr. CASE. When the consumers in the United States, after paying high taxes to get sufficient surplus in some way to become purchasers of those exports of the other countries or imports for us, then what will happen to the production in this country?

Mr. BISSELL I think in large measure the form in which American consumers will buy the products of Europe will be indirectly-that they will be buying as, for instance, before the war, tin and rubber in the Orient.

Mr. CASE. But those are raw materials; those are not manufactured goods.

Mr. BISSELL. But our purchases there may make it possible for the exporters of Europe to purchase those raw materials from the producing areas. And, of course, as you know, that was the pattern of trade as to many parts of our foreign trade before the war.

Mr. HOFFMAN. The record is perfectly clear that if we want to do an export business, those countries have to be prosperous, which means we must take imports. It is a two-way street. I would say in the main if these countries in Europe can achieve what I would think a very reasonable goal, I would agree it is not our business to step over there and stay with this job until the American standard of living prevails throughout Europe. That is impossible.

Mr. CASE. Well, Mr. Bevin in his statement to the Herter committee suggested that.

Mr. HOFFMAN. I do not know what Mr. Bevin suggested.

Mr. CASE. Mr. Bevin explained to us when we were talking in England that England had not had an opportunity to build homes or to do some other things comparable with the standard in the United States, and he felt if their Government was to be stable it would be necessary to provide them with those opportunities.

Mr. HOFFMAN. I do not happen to subscribe to that. In other words, what I am talking about I can give you in percentage if you will give me time, but I am thinking in terms of 275,000,000 people in Europe with a national income of $133,000,000,000 or $134,000,000,000 as against 140,000,000 people in America with a national income of $200,000,000,000. That does not presume in the over-all any expectation of the American standard of living.

Mr. KEEFE. I do not want to create any false impression. I'am asking these questions to probe for some information. I supported this program in the Congress myself, and I want to see it work to the advantage of the people of America and not to the disadvantage of the people of America.

Mr. HOFFMAN. That is right.

DETERMINATION OF EFFECT OF ASSISTANCE UPON ECONOMIC STABILITY OF UNITED STATES

Mr. KEEFE. And that leads me to the next question that I would like to ask in relation to that provision in the organic law which saysProvided, That no assistance to participating countries herein contemplated shall seriously impair the economic stability of the United States.

Who is to make the determination as to when and if the shipment of goods abroad will or will not impair the economic stability of the United States? Where does the authority lie for making that determination?

Mr. HOFFMAN. If I read the enabling act correctly, that decision rests with the Department of Commerce. I would think, however, as a practical matter, we would be consulted on that.

Mr. KEEFE. Who drew these specifications that are before this committee now; who prepared them?

Mr. HOFFMAN. This outline of expenditures?

Mr. KEEFE. Yes.

Mr. HOFFMAN. The Department of State, I think, largely. I believe I am correct on that.

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

Mr. KEEFE. Necessarily, you could not have done so in your own organization?

Mr. HOFFMAN. No, sir.

Mr. BISSELL. I think, Mr. Keefe, the probable procedure that will be worked out within the executive department is that the Department of Agriculture for commodities in which it is concerned, the Department of Commerce for commodities in which it is concerned, and the Department of the Interior, in the case of coal and petroleum notably, will pass, as they do at present, upon all appraisals for the export of commodities.

Mr. KEEFE. Will they pass upon the export of commodities being shipped under authority of this act?

Mr. BISSELL. Yes, sir; because the Department of Commerce still retains, if I understand the act correctly, the export-licensing authority.

Mr. KEEFE. Then should the Department of Commerce, as a matter of fact, determine that the export of a certain commodity or a certain quantity of any given commodity might adversely affect the economy of the United States, it could refuse an export license and thus stop operations so far as this organization is concerned?

Mr. HOFFMAN. Yes, sir; that is correct; that is our understanding of it.

AUTHORITY OF DEPARTMENT OF COMMERCE TO PREVENT ISSUANCE OF EXPORT LICENSES

Mr. KEEFE. Then do I understand, also, that the Department of the Interior which makes surveys affecting the economy of the United States as concerns coal and minerals and petroleum products, and so forth, could make recommendations to the Department of Commerce which would effectively prevent the issuance of further export licenses? Mr., HOFFMAN. It is so obligated.

Mr. KEEFE. Then we have a situation where you propose an overall program here that is presented to this committee for the allocation of the sums to be appropriated for expenditure for the purchase of certain specific items falling in broad, general categories-agricultural and industrial raw materials, and so forth-to various countries, and you, as the Administrator, Mr. Hoffman, are charged with the responsibility of administering this program to see that it works?

Mr. HOFFMAN. Yes, sir.

Mr. KEEFE. But you are checkmated in your administration of this program by the fact that any one of these departments can say to you "No; we believe that the shipment of this amount of grain, this amount of coal, or this amount of petroleum products will adversely affect the economy of the United States, and we will therefore refuse an export license." Is that right?

Mr. HOFFMAN. That is right, sir.

Mr. KEEFE. Then we have a situation, as far as the picture presented to this committee is concerned, that we have a buildup that has been prepared by the State Department.

Mr. HOFFMAN. Yes, sir; by the Interdepartmental Committee.

Mr. KEEFE. The Interdepartmental Committee. I understood you to say it was prepared by the State Department.

Mr. LOVETT. By the executive branch.

Mr. KEEFE. I assume the executive branches are working cooperatively in connection with this thing, and, as you testified, of course, this is a fluid operation and must necessarily be so, and your conclusions and the figures here submitted are not to bind you as to any one particular item, but the situation must be fluid enough so that you can exercise the judgment vested in you as Administrator.

Mr. HOFFMAN. Yes, sir.

Mr. KEEFE. And then you propose to have a sort of roving ambassador to synchronize with the State Department and these special directors to be sent over to each individual country to synchronize the whole program?

Mr. HOFFMAN. That is provided for in the enabling act.

Mr. KEEFE. That is in the enabling legislation?

Mr. HOFFMAN. Yes, sir.

AUTHORITY FOR CREATION OF CORPORATION

Mr. KEEFE. Now, the enabling legislation indicates that you, the Administrator, with the approval of the President, are authorized to create a corporation?

Mr. HOFFMAN. Yes, sir.

Mr. KEEFE. Do you expect to do that?

Mr. HOFFMAN. I cannot answer that, sir. I do not know. Up t now, I would say I do not see why we cannot operate as we are, bu that might be necessary later.

Mr. KEEFE. Well, up to the present moment, you have no inten tion of creating a separate, Government-owned corporation to ad minister this program?

Mr. HOFFMAN. Not as of this moment.

Mr. KEEFE. You expect to continue the administration under th organizational set-up that has been presented here?

Mr. HOFFMAN. If you mean by that the organization chart tenta tively presented, the answer to that is we are making substantia changes in that organizational set-up.

PRESIDENTIAL DETERMINATION OF QUESTIONS

OF FOREIGN POLICY

Mr. KEEFE. Well, in the basic legislation, as I understand it, the ultimate determination of questions between your administration and the State Department are to be resolved by the President. Mr. HOFFMAN. Yes, sir.

Mr. KEEFE. In other words, the basic foreign policy of the United States which is interpreted and handled directly by the State Department and its representatives abroad might conceivably come into conflict with the ideas of this administration that you head?

Mr. HOFFMAN. Yes, sir.

Mr. KEEFE. And in such event, the final determination of the policy must be left to the President?

Mr. HOFFMAN. Yes, sir.

DEPENDENCE OF ASSISTANCE PROGRAM UPON STATUS OF PRODUCTION

Mr. KEEFE. I am just thinking, as one not too well versed in this thing, that you lay out a program here that calls for the shipment of so much coal, the shipment of so much steel, of so many tractors, of this, that, and the other, all down the line, and the funds are obligated to carry that program forward; arrangements are made for the purchase of the coal, petroleum products, steel, and what have you; arrangements are made for the transportation, and the stuff starts to move and it is on the way; it is on the trains moving to the seaports or is at the docks or is on ships in the so-called pipe line that we hear so much about, and now how do you stop that in the event suddenly somebody should come up with the fact that here is a coal strike that is cutting down our supply of coal here and here is a need to supply fuel to our own people in the form of coal, petroleum products, etc.? How do you stop that?

Mr. HOFFMAN. I would think in a situation like that the Department of Commerce, in view of its responsibility, would have the problem, No. 1, not to issue any further export licenses; No. 2, to cancel those licenses which had been issued but under which shipments had not been made and see whether or not there could be any curtailment of those shipments.

Mr. NITZE. On the coal question, there is an embargo on the shipment of coal right now, and on oil the Department of Commerce has issued different allocations that have been cut down in the third quarter and probably will be cut down in the second quarter.