1950 compatible with the trust agreements that were executed? Mr. FERNANDEZ, I fully realize that, legally speaking. That is the only rea- son I would vote against it, if I did vote against it, because it violates the con- tracts. But I think that can be worked out in the conference committee and the matter settled. If it goes to conference, I hope they will give the gentleman’s State what it wants and give my State definite protection for these people in northern New Mexico. My question awhile ago to the distin- guished chairman of the committee was not quite as satisfactory as it was in the record made in the committee. As the gentleman knows I have been fear- ful the State corporation might force these lands to be sold on the auction block. It would be under strong pres- sure by wealthy men who would like to have this land, and the legislature will be under great pressure. I did not get the same assurance from the gentleman awhile ago that I got in the committee. In the committee I asked the distin- guished chairman these questions, and got these answers: Mr. FerNANbEz. I feel very strongly that 1 would rather nothing be done about these land grants than that they should be put under the auction block. The CHAIRMAN, If Congress directs a liqui- dation of these trusts, the real property owned would have to be sold and converted into cash and the cash turned into the treas- ury. That would result in your property being subjected to the auction block and sold. Mr. FERNANDEZ. Yes. The CHAIRMAN. And that is what you do not want done? Mr. FERNANDEZ. That is right because you will undo the very thing you did before. You just march up the hill and march down again. You give these people a little land on which to graze their milk cows and their goats and their sheep. Then you take it away from them and you put them back where they were before. The Cuairman, On the other hand, if they passed the btll which I have introduced the funds and the property would be turned back to the New Mexico corporation and could be administered? Mr. Fernanpez. That is correct. I am in favor of it provided the temptation is not given to the State to sell them because they are under tremendous pressure from people who want these lands. The CHARMAN. That cannot be done under my bill without the consent of the Secretary of Agriculture, and I am sure he would not give his consent for this property to be trans- ferred to private ownership. Mr. Frernanprz. That is the assurance which I have been given and if that is the case, I am unqualifiedly in favor of this bill. Mr. Chairman, I ask unanimous con- sent to withdraw my motion. Mr. KEATING. Mr. Chairman, I ob- ject, and rise in oppositon to the motion. Mr. Chairman, I rise to supplement the remarks of the gentleman from Kansas (Mr. Hore] with YFegard to the opinion rendered by the Solicitor of the Depart- meni of Agriculture. There have been many occasions in the past where I dif- fered with the Department of Agricul- ture and probably with his Solicitor, if he gives them some of the advice on which they apparently have been acting. I CONGRESSIONAL RECORD—HOUSE do not think, however, in this case it is necessary for us to decide whether or not the opinion of the Solicitor of the De- partment of Agriculture is right. He is the recognized legal adviser to the Sec- retary of Agriculture. What is it that he says to us? He says: There is no legal or moral obligation tm- posed on Congress that would require the return of the asseta covered by the transfer agreements to the States or corporations for use in rural rehabilitation programs. Whether or not that is correct is not the question before us. The question is whether this Congress, in the face of that solemn declaration by the legal adviser of the Secretary of Agriculture, is going to give away $50,000,000 to cer- tain States that claim to have a prior right to that money by reason of certain trust agreements. The place to decide the claims on these funds as against the Federal Government is a judicial tribunal and not here in the Congress, a legisla- tive tribunal. We have no right as the Congress of the United States to give away $50,000,000 which, if it is not given away, will revert to the Federal Treasury, without a determination by a court that those funds do not belong to the Fed- eral Government and it is legally required to dispose of them in some other manner. The Solicitor of the Department of Agriculture says, and very properly, and certainly this cannot be gainsaid, “that a legal conclusion must always be tested in relation to the facts upon which it is predicated.” The statute under which this fund was originally set up declared as follows: That the Congress hereby declares that the present economic depression has created a serious emergency, due to widespread un- employment and increased inadequacy of State and local relief funds, resulting in the existing or threatened deprivation of a con- siderable number of families and individuals of the necessities of life. Then he goes on to argue, which again cannot be gainsaid, that the distressing condition referred to in the statute which he cited does not today exist, and that the statute must be read into any grant of funds. The fundamental legal ques- tion to be determined here is the extent of the authority of Congress over this residue of funds granted to these States for a particular purpose when that pur- pose can no longer be effectuated. It seems to me that the Congress has the right and, under the decision of the So- licitor of the Department of Agriculture, has the duty to revest these funds in the Federal Government and to order that they stay there until some State can prove in a proper legal action that it is entitled to those funds as against the general taxpayers of the United States. If no State can prove such a legal case, then these funds should be used by the Government for its general purposes, thereby reducing the deficit we are now facing. It is for that reason I think the gen- tleman from New York (Mr. Epwin ARTHUR HALL] has given us the right an- swer to the problem. If his amend- ment fails, then certainly the amend- ment offered by the gentleman from 2693 Kansas is preferable to the committee bill. But if any bill emerges which does anything other than to leave these funds right where they are or which seeks to distribute this $50,000,000 to certain favored States, it should be defeated. We are trustees of this $50,000,000 and have no moral or legal right to give it away. Mr. COOLEY. Mr. Chairman, will the gentleman yield? Mr. KEATING. I yield. Mr. COOLEY. When did the gentle- man become trustee in this trust agree- ment executed between the Corporation and the Department of Agriculture? Mr. KEATING. The Congress of the United States is the trustee of the funds of this country. The people are looking to us to protect their money. Mr. COOLEY. These funds do not be- long to the Federal Government, and the Comptroller General has so held. Mr. KEATING. The Agriculture De- partment claims they do. That is the legal question which has not been de- cided. Until it is, we are violating our fiduciary responsibility if we vote this gratuity. The sum may not seem large according to Washington standards but the principle involved is fundamental. The CHAIRMAN. The question is on the motion of the gentleman from New Mexico [Mr. FERNANDEZ]. The motion was rejected. The CHAIRMAN. The Chair recog- nizes the gentleman from Arkansas [Mr. Haysl. Mr. HAYS of Arkansas. Mr. Chair- man, there were two questions in my mind when I began to study this prob- lem. First, what are the legal and moral requirements; and second, if the Hope amendment is compatible with those standards, is it the most businesslike way to deal with the problem? I agree that if the gentleman from North Caro- lina [Mr. Coo.ey] establishes his moral and legal claim, the bill should be passed even though it means millions of dollars thrown into an unwise an ineffectual procedure. In other words, unless we can answer the first questions satisfac- torily we would have to do the honorable thing, regardless of cost to the Treasury. But I am unwilling for this trust fund to be dissipated to satisfy the demands unless I am convinced that the gentle- man from North Carolina is on sound ground in advancing the moral question. I am not convinced. In order to get some of the vital facts, let us look at the origin of the fund. This is a Federal fund. In all of the statements that have been made today, not one assertion has been made that a single dollar from a State source went into this fund. Mr. POAGE. Mr. Chairman, will the gentleman yield? Mr, HAYS of Arkansas. I yield. Mr. POAGE. I would make the state- ment that every dollar of this is State money. It is true that the Federal Government gave the money to the States at one time, but it ceased to be Federal money the minute it gave it to the States. Mr. HAYS of Arkansas. We are not in disagreement on that. It was Federal
2694 relief money every dollar of it in the first place. The point that the gentle- man is not answering to my satisfaction is that when it was reconveyed by the State corporations to the Department of Agriculture it became our duty, as policy makers for the Department of Agriculture, to operate that trust fund for the ends that are in that law. There is not any other answer than that. Now, let me urge this point that has not been brought out yet; the gentleman from North Carolina [Mr. Coo.ey] is right when he says that North Carolina has a claim to that money in 1950. I want his State to have it, according to the trust agreement’s terms, but I point out, and it is supported at page 41 of the hearings, that the Attorney General of North Carolina said that his is the only State in which there was a fixed date for the return of the money. In every one of the agreements, as far as the record is concerned—and if I am mistaken, I will yield to be corrected— the moncy is to revert to the States only when the trust fails. We do not fal in that trust if we make a revolving fund out of this money and make rehabilita- tion loans to farmers who need the money and who need to buy farms under the Bankhead-Jones Act. And that is what we have been doing. No one will deny that the United States is very much in ti.e business of rehabiltation. If the gentleman from North Carolina [Mr. Coo.Ley] wants a law establishing cate- gories for the States, I will support him, because I am anxious that that agree- ment be carried out, and let North Car- olina get its money, but I must oppose his efforts here to revive the corpora- tions and break up an integrated Federal plan which is carrying out the trust agreements much better than 43 States acting independently would ever do. Now, my friend the gentleman from Texas |Mr. Poace] does not deny that this fund was originally a Federal fund. The States did not contribute to it. But he insists it should be returned to the States, because the Congress made the mistake later of ordering liquidation. What he says would have weight if the Government were out of the rehabilita- tion field, or if Mr. Hore were submitting a formula that denied any State its share. Mr. Hopre’s amendment would correct the mistake and at the same time maintain a single program avoiding a return to the chaos we had when the show was run by 43 different corporations. Surely we have learned a lesson from that ex- perience. Although 20 of these corpora- tions hive expired, Mr. Coo.ry’s bill would revive them or invite the States to set up some other State agency. The CHAIRMAN. The time of the gentleman from Arkansas has expired. The Chair recognizes the gentleman from Massachusetts [Mr. HESELTon]. Mr. HESELTON. Mr. Chairman, it seems to me the arguments just made by the gentleman from New York [Mr. Keatinc] and the gentleman from Arkansas [Mr. Hays] are completely un- answered, either in law or in morals or in ethics. It is true I happen to represent CONGRESSIONAL RECORD—HOUSE one of the States that apparently will get nothing from this fund, although I understand a great deal of money was sent in there after the funds were appro- priated. However, it never seemed to me that we should sit, as a legislative body, after the purposes of the trust had been carried out, and arrogate to our- selves the power to sit as a court of equity in order to do justice or equity. I agree that that should be done in our courts, and that we should follow out the in- structions of the Judgments entered by the courts. Certainly if it were to be suggested that we were to take on more judicial functions there would be many a lawyer rising and protesting. I sug- gest that is exactly the situation we find ourselves in this afternoon, and I hope we will govern ourselves accordingly. Mr. FERNANDEZ. Mr. Chairman, will the gentleman yield? Mr. HESELTON. I yield. Mr. FERNANDEZ. Has any consid- eration been given to the fact that when these State rehabilitation agencies were established they could be considered merely as an agency of the Government? Mr. HESELTON. There is not any question It isin the public records that Massachusctts and New Mexico and one other State were so considered in the way they handled their funds’ I think this is a complex, legal problem, with a great deal of equity woven into it. I want to see North Carolina or any other State treated properly, but there is a place to decide that issue, and that is the courts, not here. Mr. COOLEY. Mr Chairman, will the gentleman yield? Mr. HESELTON I yield Mr. COOLEY. The gentleman prefers to have 43 law suits instituted? Mr. HESELTON. That is not neces- sary; one law suit could handle the whole thing. Mr, COOLEY. All right; let me ask one further question. By virtue of what law can these funds possibly under any circumstances revert to the Federal Treasury? Mr HESELTON. I think the very fact that the purposes of the trust have been completed 1s sufficient. The money or the assets are in the hands of the Treasury. Mr, COOLEY. Where did the gen- tleman get that information? Mr. HESELTON. From the commit- tee report. Mr, COOLEY. The gentleman could not have gotten it from the committee report, because it is not in the commit- tee’s report. Mr. HESELTON. I read Mr. Bran- nan’s statement, and I assume that he knows what he is talking about. Mr. COOLEY. Mr. Brannan’s state- ment? Mr. HESELTON. Certainly. Mr. COOLEY. The facts are that the money is in a separate trust fund. Mr. HESELTON. I believe it was the Solicitor who wrote the letter, but the letter as signed by Secretary Brannan, a report on the bill. Mr. CASE of South Dakota. Chairman, will the gentleman yield? Mr. HESELTON. I yield. Mr. MARCH 2 Mr. CASE of South Dakota. How could it possibly revert to the Federal Treasury in the case of North Dakota where under a decision of Comptroller McCarl the State of North Dakota had to pass an act of the legislature in order to turn it over and then require it to come back to the State? Mr. HESELTON. I do not know. I think that is why we should let it go to the courts. The CHAIRMAN. The Chair recog- nizes the gentleman from Kansas |Mr. REEs]. Mr. REES. Mr. Chairman, I rise in support of what is described as the Hall amendment. The Hall amendment is similar to an amendment that I have on the Clerk’s desk, and that amendment is the bill in- troduced by the gentleman from Kansas IMr. Hopel, in the Eighticth Congress. The gentleman from New York IMr. Hau}, I think, has submitted that bill as his amendment except that some rather minor changes have been made. I want you to Know that what you have before you 1n the so-called Hall amend- ment is really H R 6210 of the Eighti- cth Congress, introduced by the gentle- man from Kansas |IMr. Hope), upon which hearings were held by the House Committee on Agriculture. I have the hearings before me I may say to the gentleman from North Carolina, who indicated a few minutes ago that no hearings had been held on this pro- posal and that 1t came as a surprise to his committee He will recognize that this amendment is practically the same as the Hope proposal of the Eightieth Congress that was proposed, as I under- stand—and if Iam wrong the gentleman from Kansas will contradict—was re- quested by the Department of Agricul- ture at that time. You are talking about approximately $50,000,000 here. Where did that $50,- 000,000 come from? It came from the Treasury of the United States, the Fed- eral Treasury in the first place; and, as I understand, the only reason these States are making these claims is be- cause they say that it was apportioned, or part of it was allocated, to the States. But it was Federal money all the time. You are not taking anything away from the States, not at all. We are told here this afternoon over and over again that the purpose for which these funds were allocated has long since expired. The thing we were going to use it for or that the States were expected to use it for has not been done. All we are now doing under this amendment is putting $50,- 000,000 back in the Federal Treasury, the place from whence it came and where it belongs. If this House or the Con- gress decides at some other time to al- locate funds to the various States let it do so in an orderly manner by a direct record vote. Let us not have any ma- nipulation of taxpayers’ funds. We were told in 1946 that Congress should see that this money would be returned to the Treasury of the United States. That is, any unused funds. Here is an opportunity to cover back into the Treasury $50,000,000 of funds that are not yet expended. It is surplus
1950 in so-called trust. You should see it is paid back to the Treasury and then see that it is properly accounted for. The CHAIRMAN. The Chair recog- nizes the gentleman from North Caro- lina (Mr. CooLey]. Mr. JENNINGS. Mr. Chairman, will the gentleman yield? Mr. COOLEY. I yield to the gentle- man from Tennessee. Mr. JENNINGS. As I understand it, this money originally went to the States for the purposes recited in the act from the Federal Government under a con- gressional act? Mr. COOLEY. Yes. Mr. JENNINGS. Somebody fs trying to inject a moral bugaboo into this thing by saying it is purely Federal money. Where does the Federal Government gct its money except from the people of the States? Mr. COOLEY. The gentleman is cor- rect, and the money was given to the State corporations. When it was de- livered to the State corporations it lost its Federal identity and the Federal Gov- ernment has no earthly right to it. Mr. CHELF,. Mr. Chairman, will the gentleman yield? Mr. COOLEY. I yield to the gentle- man from Kentucky. Mr. CHELF. It scems to me that the bulk of the argument that has been made against the gentleman’s bill today has been by Members of those States who would receive little or no money back. It is very much like the illustrious DEwEy Sort, describes communism; if you have not got anything you want, to share it with everybody. If you have got a little somcthing—then you want it. That’s democracy. Well, Kentucky has over $600,000 in this fund and we would like to get it, because after having read the clause in question in the contract, I feel that we are morally and legally entitled to the fund. Mr. REES. That does not apply to the State of Kansas. Mr. COOLEY. No. Mr. REES. We have $1,000,000. Mr. COOLEY. It is more than I thought. But if the gentleman wants to breach a contract that Secretary Claude Wickard made with the people of his State, he has a right to do so. This has the great seal of the Republic of America on it and certainly some credit and con- sideration should be given this contract. I do not think we ought to let the pcople lose faith in the Federal Government. Mr. JENNINGS. One other observa- tion. The State of Tennessee has money in this and I have no compunctions whatever about getting what belongs to my people. Mr. COOLEY. I thank the gentleman. In reference to the great legal argument we have heard from the gentleman from Massachusetts, I do not know where his information comes from. Everybody familiar with the situation knows that these are continuing trusts. They are actually in operation today and the Farm Home Administration is handling the fund today. Under no law can these funds possibly revert to the Federal Treasury. I am surprised at the gentleman from Arkansas, great and brilliant lawyer that CONGRESSIONAL RECORD—HOUSE he is, having so little regard for a legal contract which no doubt was drawn while he was associated with the Solicitor’s office. Maybe the gentleman drafted this himself. Mr. POAGE. Mr. Chairman, will the gentleman yield? Mr. COOLEY. I yield to the gentle- man from Texas. Mr. POAGE. The gentleman from Arkansas said that there was a difference between the contract of North Carolina and the other States but all the other States have this provision that in the event the authority of the Secretary of Agriculture or his successor shall cease, then the money goes back to the State. It has ceased in every other State. Mr, COOLEY. Yes. The only differ- ence between the North Carolina agree- ment, and the other agrecments is that our people were smart enough to put a definite termination date in it, to wit, May 20, 1950, which is near at hand. As the gentleman from Texas [Mr. Poace! has pointed out, your contract and every other contract has a fixed date of termi- nation. The CHAIRMAN. The question is on the amendment offered by the gentleman from New York [Mr. EpwIN ARTHUR Hav] as a substitute for the amendment offered by the genticman from Kansas (Mr. Hope]. The question was taken; and on a divi- sion (demanded by Mr. Epwin ARTHUR Ha.) there were—ayes 9, noes 88. So the amendment to the amendment was rejected. The CHAIRMAN. The question is on the amendment offered by the gentleman from Kansas [Mr. Hope]. The question was taken; and the Chair being in doubt, the Committee divided, and there were—ayes 60, noes 80. Mr. HOPE. Mr. Chairman, I demand tellers. Tellers were ordered, and tue Chair- man appointed as tellers Mr. CooLey and Mr. Hope. The Committee again divided; and the tellers reported that there were—ayes 63, noes 78. So the amendment was rejected. Mr. COOLEY. Mr. Chairman, I ask unanimous consent that the remainder of the bill be considered as read and open to amendment at any point. The CHAIRMAN. Is there objection to the request of the gentleman from North Carolina? There was no objection. The remainder of the bil] is as follows: Sec. 2. (a) The Secretary of Agriculture (hereinafter referred to as the “Secretary’’) is hereby authorized and directed to take such action as may be appropriate and neces- sary to liquidate, as expeditiously as possible but within 6 years from the effective date of this act, trusts under the transfer agree- ments with the several State rural rehabilita- tion corporations, and is hereby authorized and directed to negotiate with responsible officials to that end. (b) The Secretary, insofar as is necessary to protect the interests of the United States and the corporations shall proceed forthwith to the conversion to cash of investments constituting the trust assete by sale of real and personal properties, and by collection of loans and accounts receivable according to the tenor of such obligations, 2695 (c) An application for the return of such properties shall be made to the Secretary by the State rural rehabilitation corporation pursuant to appropriate resolution of its board of directors. The application shall contain a covenant, binding upon the cor- poration when accepted by the Secretary on behalf of the United States, that the corpo- ration will abide by the determinations and apportionments of the Secretary provided for in this act and the payments made by the Secretary pursuant to this act, that the returned assets and the income there- from will be used only for such of the rural rehabilitation purposes permissible under the corporation’s charter as may from time to time be agreed upon by the corporation and the Secretary; and that not to exceed 3 percent of the book value of the corpora- tion’s assets will be expended by the corpo- ration for administrative purposes during any year, without the approval of the Sec- retary of Agriculture. If the rural rehabilita- tion corporation of any Btate has been dis- solved and is not revived or reincorporated or, for any other reason, is unable to make such application or to accept and administer such properties, the application and subse- quent agreements may be made by such other agency or official of that State as may be designated by the State legislature. The Secretary may transfer the trust funds or properties of such corporation to such suc- cessor agency or official if adequate provi- sions are made by the State lesislature for holding the United States and the Secretary free from llability by virtue of the transfer to such successor agency or official. (ad) Except as hereinafter provided, upon receipt of appropriate application meeting the requirements of this act, the Secretary shall do all things necessary to return to each such applicant all right, title, and interest of the United States in and to all cash, real and personal property, or the proceeds there- of, held on the date of the approval of this act by the Secretary as trustee for the ac- count of such State corporation, except that the Secretary may deduct from the funds of each such State corporation the expenses incident to completion of such transfer: Provided, That such transfer shull, insofar as possible, be accomplished in a manner consistent with the provisions of the trust agreement with each State rural rehabilitu- tion corporation. (e) In the event no application ts made, as provided for in this act, within 6 years from the effective date hereof or disclaimer or release of interest under the trust transfer agreement by any State through its Iegisla- ture, the Secretary shall cause all proceeds from assets held under or for the account of the transfer agreement with that State to be covercd into miscellaneous receipts in the United States Treasury. Sec. 3. The provisions of this act shall ap- ply also to all properties and assets of Stute rural rehabilitation corporations held by Federal agencies other than the Department of Agriculture under the provisions of Ex- ecutive Order No. 9070, or otherwise. For the purposes of this act the assets of other corporations, derived through the use of Federal Emergency Relief Administration funds, and made available to them through State rural rehabilitation corporations or otherwise acquired by them for rural re- habilitation purposes, shall be considered as & part of the trust property of the State rural rehabilitation corporations in their re- spective States. Src. 4. For the purposes of this act, the Becretary shall have the power to— (a) employ on a contract basis (without regard to the provisions of the oivil-service laws or the Classification Act of 1928, as amended, but the contract shall in each case specify what civil service and related laws, if any, shall be applicable to the employment
2696 after it has been made) such appraisers, ac- countants, attorneys, and other personnel as he may deem necessary, in the District of Columbia and elsewhere, to aid in the liqui- dation and transfer of the properties and assets pursuant to this act, and in the enter- ing into of agreements with the corporations, or other agencies or officials designated pur- suant to section 2 (c) hereof, regarding the rural rehabilitation purposes for which the prorerty and assets shall thereafter be uscd by them, and in determining that such agrced pureeses are being carried out. The fees, salaries, and expenses of such appraisers, ac- countants, attorneys, and other psisonnel shall be evuitably apportioned by the Secre- tary among the respective corporations and the amount so determined to be apnlicable to each such corporation shall be paid by the Secretary from the trust fund of such curpo- ration until the trust is liquidated, and there- after by the corporation or other agency or offic: designated pursuant to section 2 (c) hereof. Attorneys so employed, and their fees and expenses, shall be subject to the ap- proval and under the supervision of the Solicitor of the Department of Agriculture, (b) accept and utilize voluntary and un- compeneatcd services, and with the consent of the agency concerned, utilize the officers, employees, equipment, and information of any agency of the Federal Government, or of uny State, Territory, or political subdivi- sion, (c) make such rules and regulations and such delegations of authority as he deems necessary to carry out the purposes of this act Sec. 6 None of the properties or assets held on the dute cf the approval of this act by the Secretary as trustee pursuant to trust agreements with the various State rural re- hablilitation corporations may be used by the Secretary for any purpose after the effective date of this act, except for the purposes au- thorized under section 2 (d) of th!s act, and for loans made prior to July 1, 1949, and to be repaid in full no later than May 1, 1952, but otherwise consistent with the provisions of title II of the Bankhend-Jones Farm Ten- ant Act, as amended (7 U S.C. A. 1007), where necessary to supplement crcdit al- ready extended to borrowers from cocrpora- tion trust funds. SEc.6 The determination of the Secretary with respect to the assets to be returned to each State rural rehabilitation corporation or other agency or official designated pursu- ant to section 2 (c) hereof including, but not Hmited to interests in properties held jointly for such corporation and the United States, the partition of real property, the expenses incident to each transfer, the Mabilities ap- plicable to such properties, and all other phares of the transfer shall be final and con- clusive upon each State rural rehabilitation corporation or such successor agency or offi- cial designated pursuant to section 2 (c) hereof, and upon all officers and agencies of the United States. (b) The Secretary shall be saved harmless against any personal Mability he may incur in carrying out the provisions of this act. Src 7. Section 2 (f) of the act of August 14, 1946 (60 Stat. 1062), is hereby repealed. With the following committee amend- ments: Page 1, line 9, strike out “five” and insert “three.” Pave 2, strike out “shall” and insert “may.” Page 4, line 1, strike out “five” and insert ug ” Page 4, line 2, after “or” insert “upon re- ceipt of a” Page 4, line 6, strike out ‘miscellaneous receipts in the United States Treasury” and insert ‘‘the Treasury of the United States as a revolving fund to be used by the Secre- tary only within that State for the purposes of and subject to all the provisions of titles CONGRESSIONAL RECORD—HOUSE I, II, and IV of the Bankhead-Jones Farm Tenant Act, as amended. The committee amendments were agreed to. The CHAIRMAN. If there are no fur- thcr amendments, under the rule, the Committee rises. Accordingly the Committee rose; and the Speaker having resumed the chair, Mr. Gore, Chairman of the Committce of the Whole House on the State of the Unicn, reported that that Committee, having had under consideration the bill (H. R. 2592) to provide for the hquida- tion of the trusts under the transfer agreements with State rural rehabilita- ticn corporations, and for other pur- pos-s, pursuant to House Resolution 362, he reported the bill back to th. House with sundry amendments adopted by the Committee of the Whole. The SFEAKER. Undcr the rule, the previous question js ordered. Is a separate vote demanded on any amendment? If not, the Chair will put them en gross. The amendments were asreed to. The SPEAKER. The question is on the ecnsrossment and third reading of the bill. The bill was ordered to be engrossed and read a third tyme and was read the third time The SPEAKER. The question 1s on the passage of the bull. Mr KEATING. Mr. Speakcr, I offer a motion to rccommit, The SPEAKFR. Is the gentleman op- posed to the bill? Mr KEATING. Iam, Mr. Speaker. The SPEAKER. The Clerk will re- port the motion to recommit. The Clerk read as follows: Mr KEATING moves to recommit the bill to the Committec on Agriculture. Mr. COOLEY Mr. Speaker, I move the previous question on the motion to recommit. The previous question was ordered. The SPEAKER. The question is on the motion to recommiut. The question was taken; and on a divi- sion (demanded by Mr. KeatTinG) there were—ayes 50, noes 77. So the motion was rejected. The SPEAKER. The question is on the passage of the bill. The bill was passed. A motion to reconsider was laid on the table. Mr. COOLEY. Mr. Speaker, I ask unanimous consent for the immediate consideration of the bill (S, 930) to pro- vide for the liquidation of the trusts under the transfer agreements with State rural rehabilitation corporations, and for other purposes. The SPEAKER. Is there objection to the request of the gentleman from North Carolina? There was no objection. The Clerk read the Senate bill, as follows: Be it enacted, etc., That this act may he cited as the “Rural Rehabilitation Corpora= tion Trust Liquidation Aot, Szo. 2. (a) The Secretary of Agriculture (hereinafter referred to as the “Seoretary”) is hereby authorized and directed to take such action as may be appropriate and neces« MARCH 2 gary to liquidate, as exp-ditiously as possible but within 5 ycurs from the effective date of this act, tructs under the transfer agree- ments with the several State rural rehcbili- tation corporations, und 1s hereby authorized and directed to negotiate with responsible Officials to that end. (b) Tho Secretary, insofar as is necessary to protect the interests of the United States, and the corporations shall proceed forthwith to the conversion to cash of investments con- stitulting the trust avsets by sate of real and perconal properties, and by collection of loans und accounts receivable according to the tenor of such obligations. (c) An avplication for the return of such properties shall be made to the Secretary by tho State rural rehabilitation corporation pursuant to approprinte resolution of its board of directors. The application shall contain a covenant, binding upon the appli- cant when accepted by the Scerctary on be- half of the United States, that the applicant will abide by the determinations and appor- tionments of the Secretury provided tor in this act and the payments made by the Socretary pursuant to this act, thet the re- turned assets und the income therefrom will be used only for such of the rural rehabilita- tion purposes permissivle undcr the corporae tion's charter as may from time to time be avcreed upon by the xpplicant and the Secre- tary, and that not to exceed 3 percent of the book value of the corporation's assets will be expended by the applicant tor admin- istrative purposes during any year, without the upproval of the Secretary of Agriculture. If the rural rehabilitation corporation of any State has been dicsolved and is not revived or reincorporated or, for any other reason, 1s unable to make such application or to accept and administer such properties, the application and subsequent agreements (cone forming to the second sentence of this sec- tion) may be mude by such other avency or official of that State as may be designated by the State Icgislature The Secrelary may transfer the trust funds or properties of such corporation to such successor agency or official if adequate provisions are made by the State legislature for holding the United States and the Secretary free from Mability by virtuc of the transfer to such successor agency or official. (d) Except as hereinafter provided, upon receipt of appropriate application meeting the requiroments of this act, the Secretary shall do all things necessary to return to each such applicant all right, title, and interest of the United States in and to all cash, real and personal property, or the proceeds there- of, held on the dute of the approval of this act by the Socretary as trustee for the ac- count of such State corporation, except that the Secretary may deduct from the funds of each such State corporation the expenses in- cident to completion of such transfer: P70- vided, That such transfer shall, insofar as possible, be accomplished in a manner con- sistent with the provisions of the trust agree- ment with each State rural rehabilitation corporation, (ec) In the event no application is mnde, as provided for in this act, within 5 years from the effective date hereof or disclaimer or release of interest under the trust transfer agreement by any State through its lepisla- ture, the Secretary shall cause all proceeds from assets held under or for the account of the transfer agreement with that State to be covered into miscellaneous receipts in the United States Treasury. Sec. 3. The provisions of this act shall ap- ply also to all properties and assets of State Tural rehabilitation corporations held by Federal agencies other than the Department of Agriculture under the provisions of Execu- tive Order No. 9070, or otherwise. For the purposes of this act the assets of other cor- porations, derived through the use of Federal Emergency Relief Administration funds, and
1950 made available to them through State rural rehabilitation corporations or otherwise ac- quired by them for rural rehabilitation pur- poses, shall be considered as a part of the trust property of the State rural rehabilita- tion corporations in their respective States. Src. 4. For the purposes of this act, the Secretary shall have the power to— (a) employ on a contract basis (without regard to the provisions of the civil-service laws or the Classification Act of 1923, as amended, but the contract shall in each case specify what civil-service and related laws, if any, shall be applicable to the employment after it has been made) such appraisers, ac- countants, attorneys, and other personnel as he may deem necessary, in the District of Columbia and elsewhere, to aid in the liqui- dation and transfer of the properties and assets pursuant to this act, and in the enter- ing into of agreements with the corporations, or other agencies or officials, designated pur- suant to section 2 (c) hereof, regarding the rural rehabilitation purposes for which the property and assets shall thereafter be used by them, and in determining that such agreed purposes are being carried out. The fees, salaries, and expenses of such appraisers, accountants, attorneys, and other personnel shall be equitably apportioned by the Secre- tary among the respective corporations and the amount so determined to be applicable to each such corporation shall be paid by the Secretary from the trust fund of such cor- poration until the trust is liquidated, and thereafter by the corporation or other agency or official designated pursuant to section 2 (c) hereof. Attorneys so employed, and their fees and expenses, shall be subject to the approval and under the supervision of the Solicitor of the Department of Agriculture; (b) Accept and utilize voluntary and un- compensated services, and, with the consent of the agency concerned, utilize the officers, employees, equipment, and information of any agency of the Federal Government, or of any State, Territory, or political subdivision; (c) Make such rules and regulations and such delegations of authority as he deems necessary to carry out the purposes of this act. Sec. 5. None of the properties or assets held on the date of the approval of this act by the Secretury as trustee pursuant to trust agreements with the various State rural re- habilitation corporations may be used by the Secretary for any purpose after the ef- fective date of this act, except for the pur- poses authorized under section 2 (d) of this act, and for loans made prior to July 1, 1049, and to be repaid in full no later than May 1, 1952, but otherwise consistent with the provisions of title II of the Bankhead-Jones Farm Tenant Act, as amended (7 U. 8. C. A. 1007), where necessary to supplement credit already extended to borrowers from corpora- tion trust funds. Src. 6. (a) The determination of the Sec- retary with respect to the assets to be re- turned to each State rural rehabilitation cor- poration or other agency or official desig- nated pursuant to section 2 (c) hereof in- cluding, but not Imited to, interests in prop- erties held jointly for such corporation and the United States, the partition of real prop- erty, the expenses incident to each transfer, the liabilities applicable to such properties, and all other phases of the transfer shall be final and conclusive upon each State rural rehabilitation corporation or such successor agency or official designated pursuant to sec- tion 2 (c) hereof, and upon all officers and agencies of the United States. (b) The Secretary shall be saved harmless against any personal Mabtlity he may incur in carrying out the provisions of this act. Sec. 7. Section 2 (f) of the act of August 14, 1946 (60 Stat. 1062), is hereby repealed. Mr. COOLEY. Mr. Speaker, I offer an amendment to strike out all after the en- CONGRESSIONAL RECORD—HOUSE acting clause and insert the provisions of H. R. 2392, as amended. The Clerk read as follows? Amendment offered by Mr. Coorey: Strike out all after the enacting clause and insert the provisions of the bill H. R. 2892, as amended. The amendment was agreed to. The Senate bill was ordered to be read a third time, was read the third time, and passed, and a motion to reconsider was laid on the table. By unanimous consent, the proceed- ings whereby the bill H. R. 2392 was passed were vacated and that bill was laid on the table. EUGENIO MAISTERRENA BARRENECHE The SPEAKER laid before the House the following concurrent resolution (S. Con. Res. 77), which was read by the Clerk: Resolved by the Senate (the House of Rep- resentatives concurring), That the President of the United States be, and he is hereby, requested to return to the Scnate the en- rolled bill (S 204) for the relief of Eugenio Maisterrena Barreneche; that if and when the said bill is returned by the President, the action of the Presiding Officers of the two Houses in signing the said bill be deemed to be rescinded; and that the Secretary of the Senate be, and he is hereby, authorized and directed, in the reenrollment of said bill, to make the following correction, namely, on page 1, line 6, of the Senate engrossed bill, strike out the numerals “1940” and in lieu thoreof insert “1946.” The Senate concurrent resolution was agreed to. A motion to reconsider was laid on the table. EXTENSION OF REMARKS Mr. PATMAN asked and was granted permission to extend the remarks he made in Committee of the Whole today and include certain statements and ex- cerpts. Mr. DINGELL. Myr. Speaker, I ask unanimous consent to extend my re- marks in the Recorp and include an article, the sixth of a series by Blair Moody, the eminent correspondent of the Detroit News Staff, which appeared in the Detroit News January 15. The SPEAKER. Is there objection to the request of the gentleman from Michigan? There was no objection. Mr. KING asked and was given per- mission to extend his remarks in the . Appendix of the Recorp and include the text of a bill introduced by himself to amend the Tariff Act of 1930, together with a brief explanation of the bill and a statement of its needs. Mr. CURTIS asked and was given per- mission to extend his remarks in the Recorp in two instances and include a newspaper article in each. Mr. VELDE asked and was given per- mission to extend his remarks in the Recorp in three instances and include extraneous material. @PECIAL ORDER GRANTED Mr. HOFFMAN of Michigan. Mr. Speaker, a parliamentary inquiry. The SPEAKER. The gentleman will state it. 2697 Mr. HOFFMAN of Michigan. Will the House meet tomorrow? The SPEAKER. Yes. Mr. HOFFMAN of Michigan. I ask unanimous consent, Mr. Speaker, that following the legislative business of the day and any other special orders on to- morrow I may address the House for 20 minutes. The SPEAKER. Is there objection to the request of the gentleman from Michigan? There was no objection. LIQUIDATION OF STATE RURAL REHA- BILITATION CORPORATION TRUST AS- SETS Mr COOLEY. Mr. Speaker, I ask unanimous consent to extend my re- marks at this point in the REcorp. The SPEAKER. Is there objection to the request of the gentleman from North Carolina? There was no objection. Mr. COOLEY. Mr. Speaker, the gen- eral objectives of H, R. 2392 are, first, to define the interests of the Federal Gov- ernment and the various State rural rehabilitation corporations and States in the corporation trust assets; second, to provide for liquidation of the trusts and transfer of the trust assets to the re- spective corporations or other State agencies in compliance with the pro- visions of the transfer agreements en- tered into between the corporations and the United States or agencies thereof, if proper applications for such transfers are made by such corporations or other agencies designated by the State legis- latures in cases in which the corporations have been dissolved and are not revived or reincorporated; third, to specify the purposes for which the trust assets and the income therefrom may be used by such corporations or other State agen- cies in the future; fourth, to provide for protection of the Federal Government's interests in the trust assets and the in- come therefrom (a) by requiring that such assets and income be hereafter used only for rural rehabilitation purposes, and (b) by providing for a system of continuous checks by the Secretary of Agriculture, over the expenditure of such assets and income, to determine that they are not used for any other pur- poses. Unless otherwise indicated, all refer- ences in these remarks to the corpora- tions will include any agencies or officials designated by State legislatures to act in place of dissolved corporations which are not revived or reincorporated or, for any other reasons, are unable to make applications for return of their asscts as provided for in the bill, which is here- inafter referred to as the act. Section 2 (a): This section author.zes and directs the Secretary to take such action as may be necessary or appropriate to liquidate the trusts under the transfer agreements as expeditiously as possible, but requires that the liquidation of the trusts—as distinguished from the trust assets—be completed within 3 years from the effective date of the act. It, there- fore, imposes a duty on the Secretary to carry on expeditious liquidation of the trusts in the manner prescribed by cther sections of the act, but also gives him
2698 leeway to consummate the liquidation in a reasonable and orderly manner. It does, however, require that all of the trusts be liquidated and that all of the trust assets be transferred to the corpo- rations within the 3-year trust liquida- tion period, if they make proper applica- tions for such transfers. This section also authorizes and directs the Secretary to negotiate with responsible officials re- garding liquidation of the trusts. It is, therefore, his responsibility to take the initiative in negotiating with, and in ren- dering advice and assistance to, officials of the corporations and States and other Officials interested in the matter, to the end that liquidation of the trusts will be accomplished in the most expeditious and practicable manner through transfer of the trust assets, in cash or in kind, to the corporations making appropriate applications therefor. Section 2 (b): This section provides that the Secretary shall convert the trust assets into cash insofar as is necessary to protect the interests of the United States and the corporations. This will necessitate the servicing and collection of loans and accounts receivable by the Secretary, until the trusts are liquidated within the 3-year trust-liquidation pe- riod, according to the terms of the obli- gations, but will not require the Secre- tary to convert property into cash un- less it is necessary to do so in order to effectuate collection or because joint in- vestment or joint security property is involved, or for other equally good and sufficient reasons. Accordingly, until the trust assets have been transferred to the corporations within the 3-year trust-liquidation period, as required by the act, it is assumed that the Secre- tary will continue service and collect the corporation trust claims through the Farmers Home Administration, and in so doing it would seem appropriate and advantageous for him to administra- tively adopt and follow, to the extent consistent with the provisions of the act and the best interests of the corpora- tions, the same policies and procedures as are legally applicable to claims ad- ministered by the Farmers Home Ad- ministration under the Bankhead-Jones Farm Tenant Act, as amended. On the other hand, if proper applications are received, the Secretary will be required to transfer to the corporations, as soon as practicable, within the 3-year trust- liquidation period, cash instruments per- taining to loans, presently owned corpo- ration trust real estate and interests therein, including mineral, reversionary and other rights, and other trust assests. Reserved mineral interests in joint in- vestment property could in many cases be apportioned on a divided or undivided interest basis. Authority to service and collect loans and accounts receivable pending expeditious liquidation of the trusts during the 3-year trust-liquida- tion period, should enable the Secretary to convert a large percentage of the trust assets into cash, since the great majority of corporation trust loans have been made for a term of 3 years or less. Section 2 (c): This section provides that each corporation may apply to the Secretary for return of its trust assets pursuant to appropriate resolutions CONGRESSIONAL RECORD—HOUSE adopted by its board of directors. This section also provides that if any corpo- ration has been dissolved and is not re- vived or reincorporated, or is for any other reason unable to apply for and accept the return of and administer the trust assets, then the required applica- tion and agreements regarding the sub- sequent use of the assets and income therefrom may be made by such other State agency or official as may be desig- nated by the State legislature. This section further provides that the Secre- tary may return the trust assets to such other State agency or official pursuant to such application, only if adequate pro- visions are made by the State legislature for holding the United States and the Secretary free from liability in connec- tion with the transfer. This section authorizes the return of the trust assets to such other agency or official desig- nated by the State legislature, only 1f the corporation has been dissolved and has not been revived or reincorporated, or 1s not hereafter revived or reincorporated within a reasonable time after the be- ginning of the 3-year trust-liquidation period, or is for some other reason unable or unwilling to act. This section further provides that each application for return of the trust assets must contain a covenant that the corpo- ration will abide by the determinations, apportionments, and payments made by the Secretary. Each application must also contain a covenant that the re- turned assets and the income therefrom will be used only for such of the rural re- habilitation purposes permissible under the particular corporation’s charter as may from time to time be agreed upon by the Secretary and the corporation. Such permissible purposes would include those authorized in titles I, and II, and IV of the Bankhead-Jones Farm Tenant Act, as amended, and for the rural re- habilitation purposes specified in the cor- poration’s charter. Since the act limits the use of the returned assets and income therefrom to rural rehabilitation pur- poses, as distinguished from relief pur- poses, their use should be confined pri- marily to the making of loans, acquisition of property, et cetera, rather than to the making of grants. The limitation re- garding future use of the assets is de- signed to prevent their use or dissipation for unauthorized purposes or in an un- authorized manner, as well as to preclude their use for purposes considered by the Secretary to be objectionable because of unnecessary duplication of or conflict with direct Federal programs. The de- termination of what falls within the scope of authorized rural rehabilitation purposes shall be subject to agreement between individual corporations and the Secretary, provided, however, that such determinations shall be consistent with the provisions of the act. This section also requires that each application for return of assets contain aconvenant that the corporation will not expend more than 3 percent of the book value of its assets for administrative purposes during any 1 year without the written approval of the Secretary. This 8-percent limitation applies to all ex- penditures of the corporation for carry- ing on its operations, but does not apply MARCH 2 to expenditures by the Secretary under the act in connection with the adminis- tration of the trusts in the process of their liquidation or in connection with the transfer of the trust assets or in connection with the exercise of the Sec- retary’s functions required or permitted by the act to be performed thereafter. Such expenditures by the Secretary should, however, be reasonable, and in- sofar as the liquidation and transfer functions are concerned, such expendi- tures, other than for special personnel provided for in section 4 (a), should not exceed the rate heretofore charged by the Secretary against the trust assets in connection with his administration thereof through the Farmers Home Ad- ministration, and no additional charge should be made against the trust assets for past services or for those covered by congressional appropriations. Each ap- plication should be required to contain an additional covenant to the effect that the corporation will not take any action or amend its charter or bylaws in any way which would affect the interests of the Federal Government under the act, without first obtaining the Secretary’s written consent. This section, taken as a whole, affords a basis for protection of the Federal Government’s interests in the trust as- sets by providing against liability or loss by it or the Secretary in connection with the handling, transfer, and disposition of the trust assets, by providing that such assets and the income therefrom shall be used only for rural rehabilita- tion, and by providing against their im- proper use or dissipation. Section 2 (d): This section provides that upon receipt of an appropriate ap- plication, meeting the requirements of the act, the Secretary shall do all things necessary to return to the applicant all right, title, and interest of the United States in and to all cash, real and per- sonal property, or the proceeds thereof, held on the date of the approval of the act or thereafter acquired by the Secre- tary as trustee for the account of the particular corporation, except that the Secretary may deduct from the trust funds of each corporation the expenses incident to the transfer. It is further provided that each transfer shall be ac- complished, insofar as possible, in a manner consistent with the provisions of the trust agreement with the corpora- tion of the particular State. This last- mentioned proviso requires a return of the trust assets in accordance with the requirements of the applicable transfer agreement, except as otherwise provided in the act. Section 2 (e) : This section as amended by the committee provides that in the event no application is made for the re- turn of the trust assets as provided for in the act within 3 years from the effective date thereof, or if a disclaimer or release of interest under the trust- transfer agreement is made during that period by any State through its legis- lature, the Secretary shall cause all pro- ceeds from assets held under or for the account of the transfer agreement with that State corporation to be covered into the Treasury of the United States as a revolving fund to be ysed by the Secre-
1950 tary of Agriculture within the State for the purposes of and subject to all the provisions of titles I, II, and IV of the Bankhead-Jones Farm Tenant Act, as amended. Although this section does not authorize any delay in the trust liqui- dation, it will keep the trust relationship alive during the 3-year period in any case in which an appropriate appli- cation for return of the trust assets is not received during that period, unless an appropriate disclaimer or release is made before the end of the period; but the trust relationship will terminate au- tomatically at the end of the 3-year trust liquidation period if no such appli- cation is received during the period, and the Secretary will thereafter cover the trust assets into the United States Treas- ury where they will be used to establish a revolving fund. Section 3: This section makes the pro- visions of the act applicable to corpora- tion trust assets held by Federal agen- cies other than the Department of Agriculture. It also makes the provi- sions of the act applicable to assets of other corporations derived through use of Federal Emergency Relief Admin- istration funds made available for rural rehabilitation and relief purposes and presently considered and administered by the Farmers Home Administration as corporation trust property or re- ceipts, although not specifically covered by the transfer agreements with the particular State rural rehabilitation corporation, thereby providing a solu- tion for the liquidation problems re- specting the assets of Dyess Farms, Inc., Dyess Rural Rehabilitation Corp., Cher- ry Lake, Inc., Georgia Pine Moun- tain Valley Rural Community Corp., and any other corporations which may be found to fall within the same cate- gory. Section 4 (a): This section author- izes the Secretary to employ such ap- praisers, accountants, attorneys, and other personnel as he deems necessary to aid in the lNquidation and transfer of the trust assets, and in the entering into of agreements from time to time with the corporations regarding the rural rehabilitation purposes for which the returned assets and income there-~ from may be used by the corporations, and in checking to determine that the assets and income are being used for such agreed purposes. While it may be necessary for the Secretary to employ certain key personne] to assist him in the performance of his functions and duties under the act, it is believed that the de- tail work of servicing and collecting out- standing loans, transferring assets, and so forth during the trust liquidation period, can best be performed through the Farmers Home Administration and its service agencies as at present. While it is realized that considerable work will be involved in carrying on the required negotiations with all interested parties, including representatives of the corporations, States and other Federal agencies, that the actual liquidation of the trusts and transfer of the trust assets will cover a 3-year period, and that many complex problems will be presented for decision, it is believed that a small staff CONGRESSIONAL RECORD—HOUSE of skilled key personnel should be able to do the job with the assistance of the Farmers Home Administration and regional attorneys of the Office of the Solicitor of the Department of Agricul- ture. It is also believed that after the liquidation of the trusts has been com- pleted, a small staff of such skilled per- sonnel should likewise be able to do the actual work in connection with the dis- charge by the Secretary of his duty of protecting the interests of the Federal Government in the returned assets and the income therefrom, including the en- tering into of agreements from time to time with the various corporations re- garding the purposes for which the re- turned assets and the income therefrom may be used by the corporations, and the maintaining of a system of checking to determine that such agreed purposes are being carried out. The number of key personnel employed to perform such functions should be kept to a minimum consistent with the job to be done. Any personnel employed under au- thority of this section would be employed by the Secretary on a contract basis, fixing their rate of compensation and other terms and conditions of employ- ment. In order to get qualified person- nel to serve in such key positions the Secretary is authorized to specify in their contract of employment what civil service and related laws shall be applica- ble to the employment. The fees, salaries, and expenses of all Personnel directly employed under authority of the act would be paid from corporation as- sets. Likewise, the amounts authorized to be charged under the act for services performed by the Farmers Home Admin- istration would be paid from corporation assets to the agency for use by it as ad- ministrative expenses in the manner which it deems most appropriate. Prior to liquidation of the trusts, all such pay= ments would be made by the Secretary out of the existing trust accounts. Thereafter, they would be made by the Secretary out of corporation funds trans- ferred to him in such amounts and at such times as determined by him to be necessary for his use in payment of such fees, salaries, and expenses for the pur- poses authorized by the act. An appro- priate Treasury account or accounts could be established for this purpose. Section 4 (b): This section authorizes the Secretary to use the voluntary and uncompensated services of the officers, employees, equipment, and information of any agency of the Federal Govern~ ment, or of any State, Territory, or po- litical subdivision in carrying out his duties under the act. As hereinbefore indicated, it is assumed that he will dele- gate certain authority and responsibility in the matter to the Farmers Home Ad- ministration. Section 5: This section limits the use of the trust assets by the Secretary after the effective date of the act, first, to use for such expenditures as may be necese sary in connection with the liquidation of the trust and transfer of the trust assets} and, second, to use for loans made prior to July 1, 1949, where necessary to sup- plement credit already extended. It does not, however, preclude use by the 2699 Secretary of payments made to him by the corporations to carry out his duties under the act after the trusts have been liquidated. Section 6: This section provides that all determinations of the Secretary with respect to the Hquidation and transfer actions shall be final and conclusive on all interested parties and section (b) thereof saves the Secretary harmless from any personal lability in carrying out the provisions of the act. Section 7: This section repeals section 2 (f) of the Farmers Home Administra- tion Act of 1946 (60 Stat. 1062). The re- pealed section requires the Secretary to liquidate, as expeditiously as possible, the trusts under the transfer agreements with the various State rural rehabilita- tion corporations and to negotiate with responsible officials to that end. Al- though this same requirement will be re- enacted by section 2 (a) of this act, it is also clarified and implemented by the other provisions thereof, and the repeal and reenactment of the provision is con- sidered desirable so as to have all of the pertinent provisions of law with respect to the corporation trust liquidation mat- ter set forth in a single act. EXTENSION OF REMARKS Mr. VURSELL asked and was granted permission to extend his remarks in the Recorp and include certain testimony recently given before the Ways and Means Committee with reference to the oll situation. SPECIAL ORDER The SPEAKER. Under the previous order of the House, the gentleman from Michigan (Mr. HorrMan] ts recognized for 10 minutes. Mr. HOFFMAN of Michigan. Mr. Speaker, I yield back the time that was granted me today. BPECIAL ORDER GRANTED Mr. HOFFMAN of Michigan. Mr. Speaker, I ask unanimous consent that on Monday next, following the legisla- tive business of the day and at the con- clusion of other special orders, in addi- tion to the time already granted me for that day I may proceed for 10 minutes. The SPEAKER. Is there objection to the request of the gentleman from Michigan? There was no objection. The SPEAKER. Under the previous order of the House the gentlewoman from Massachusetts [Mrs. Rocrers] is recognized for 10 minutes. THE VOICE OF AMERICA NEEDS AN . AMERICAN ECHO Mrs. ROGERS of Massachusetts. Mr. Speaker, this Nation wants peace. Our peace cry of 1950 is not President Wil- son's “Peace at any price.” The Ameri- can people have no intention of asking for peace at the cost of their Constitu- tion and their republican form of gov- ernment. We will not under any condi- tions lay down our liberties, so dearly won and £0 valiantly preserved, for even e. Yet the people of the United Btates are willing and eager to try any means short of war to attain peace. Our peace cry of 1950 is “Peace, by any good road,”
2700 It is no secret that I have long been an advocate of one of the most effective of these roads, psychological warfare; or to be more exact, psychological “peace- fare.” At this point it is necessary to answer a@ number of questions which have already arisen in your minds. Am I not aware that we have in the State Depart- ment a Voice of America? Am I not aware that several agencies of the Fed- eral Government are even now exploring the possibilities of this road to peace? Am I not aware that the official exposi- tion of 1950 America is being received by shortwave radio in scores of foreign countries? My answer {s this: I am, indeed, aware that the Voice of America exists and is heard throughout the world. I am, also, aware that interested agencies are care- fully studying psychological warfare. But questions beget questions. Are we of the House of Representatives aware of what is being said about the United States by the official radio networks of foreign countries? Are we of the House of Representatives aware of what is being said about the United States by our own “Voice of America? My answer to these last two questions is this: ‘We of the House of Representa- tives know little or nothing of what offi- cial foreign radio is saying about the United States and we know little or noth- ing about the opinions expressed on, by and over our own Voice of America.” It is true that every year—at about this time—gentlemen from the State De- partment appear before the Appropria- tions Committees with portfolios bulg- ing with exemplary broadcasts. Yes. We are annually introduced to the high- lights—and the highlights only—of the State Department's ‘‘peacefare” output. We do not know what foreign attitudes or utterances brought about these direct or indirect replies. They are not in those bulging portfolios. We do not know the quality of the day-by-day, week-by- week presentations of the Voice of Amer- ica. We cannot possibly know the full story of the State Department’s efforts until we find out what they are striving to overcome and how they do it. There have been several glaring—and to my mind, unforgivable—errors made by the Voice of America. Such errors must not be repeated in these days when the threat of the H-bomb and A-bomb are ever present like the mummy at the feast. I mention two of these errors. One: When one of our own broadcasts placed such productive States as Kansas and Nebraska in the midst of the great American desert. I do not know what objectionable foreign attitude this broadcast was intended to combat. I do know that, under the present conditions, such a broadcast would only invite total- itarian aggression. Two: When one of our own broadcasts depicted a foot race between Indian women as a typical cul- tural activity in one of our great Western States. I do not know what propaganda that particular broadcast was designed to counteract. I do Know that it coin- cided with the party line of the Krem- lin—that we are a backward Nation. CONGRESSIONAL RECORD—HOUSE The gentlemen from the State Depart- ment might well contend that Members of Congress have neither the time nor the experience to examine all broadcasts or even to spot-check them. I reply that Congress is so organized that it could arrange to cope with even the vast amount of material sent out over the microphones of the Voice of America. The resolution which I introduced last October—House Resolution 374—pro- vides for a membership in committee of loyal and interested Members, together with a staff of well-trained assistants. I have still another recommendation. Existing commercial radio networks would welcome the idea of broadcasting to the people of the United States a weekly program bringing out what for- eign countries said about us and what we did to reply to them. Such a pro- gram would capture the attention of the American people. They would like to know what foreign countries said about our shift in our policy toward the Na- tionalist regime in China and what we did to answer them, They would like to know what Hungary and Bulgaria are saying about the strange and tragic death of Captain Carpe of our Navy, and what Rumania is saying about the im- prisonment of Mr. Vogeler who was not allowed to have even counsel when he was tried. I remind the House that im- prisonment in those countries and the torture that is given to prisoners, includ- ing our own people who are imprisoned in those countries, is very unlike im- prisonment in our own country. Im- prisonment in our own country is like being in a hotel compared to imprison- ment in those countries. Our people would like to know what they are saying in those countries to their neighbors about the United States and how our own Voice is meeting this challenge, The people of this country not only would like to know—they are entitled to know. I denounce unwarranted secrecy in this free Republic. The passage of House Resolution 374 would strike at secrecy. <A Voice of America hour—like the Army hour or the Air Force hour—would go far to- ward making the Voice of America edit, weigh, and scrutinize each individual broadcast. Until we have a domestically broad- cast Voice of America hour, until House Resolution 374 is on the statute books— I can only say in the words of a great American whose name I am proud to share, the late Will Rogers, “All I know is what I read in the papers.” LEAVE OF ABSENCE By unanimous consent, leave of ab- sence was granted to Mr. AssrrtT, for Wednesday and Thursday, March 1 and 2, on account of official business. SENATE BILL REFERRED A bill of the Senate of the following title was taken from the Speaker’s table and, under the rule, referred as follows: 8.8159. An act granting the consent and approval of Congress to a compact entered into by the States of Idaho and Wyoming re- MARCH 2 lating to the waters of the Snake River; to the Committee on Public Lands. ADJOURNMENT Mr, COOLEY. Mr. Speaker, I move that the House do now adjourn. The motion was agreed to; accord- ingly (at 5 o’clock and 36 minutes p. m.) the House adjourned until tomorrow, Friday, March 3, 1950, at 12 o’clock noon. EXECUTIVE COMMUNICATIONS, ETO. 1280. Under clause 2 of rule XXIV, a letter from the Acting Director, Bureau of the Budget, Executive Office of the President, transmitting a report of per- sonnel ceilings as determined and fixed pursuant to section 607 of the act, as amended by section 14 of the Federal Employees’ Pay Act of 1946 (Public Law 390, 79th Cong.) for the quarter ending December 31, 1949, as required by the Federal Employees’ Pay Act of 1945 (Pub- lic Law 106, 79th Cong.), was taken from the Speaker’s table and referred to the Committee on Post Office and Civil Serv- ice. REPORTS OF COMMITTEES ON PUBLIC BILLS AND RESOLUTIONS Under clause of rule XIII, reports of committees were delivered to the Clerk for printing and reference to the proper calendar, as follows: Mr. THOMPSON: Committee on Merchant Marine and Fisheries. Report pursuant to House Resolution 44, Resolution to pre- scribe tolls to be levied for the use of the Panama Canal, and for other purposes (Rept. No. 1728). Referred to the Committee of the Whole House on the State of the Union. REPORTS OF COMMITTEES ON PRIVATE BILLS AND RESOLUTIONS Under clause 2 of rule XIII, reports of committees were delivered to the Clerk for printing and reference to the proper calendar, as follows: Mr. WALTER: Committee on the Judiciary. 8, 2084. An act for the relief of Jackson Riley Holland; with an amendment (Rept. No. 1726). Referred to the Committee of the Whole House. Mr. WALTER: Committee on the Judiciary. §. 2429. An act for the relief of Henrique Santos; without amendment (Rept. No. 1727). Referred to the Committee of the Whole House. PUBLIC BILLS AND RESOLUTIONS Under clause 3 of rule XXII, public bills and resolutions were introduced and severally referred as follows: By Mr. BENNETT of Michigan: H.R. 7503, A bill to aid the development and maintenance of American-flag shipping on the Great Lakes, and for other purposes; to the Committee on Merchant Marine and Fisheries. By Mr. BIEMILLER: H.R. 7504, A bill to ald the development and maintenance of American-flag shipping on the Great Lakes, and for other purposes; to the Committee on Merchant Marine and Fisheries. By Mr. BLATNIK: H.R. 7505. A bill to aid the development and maintenance of American-flag shipping on the Great Lakes, and for other purposes;
1950 to the Committee on Merchant Marine and Fisheries By Mr. BYRNES of Wisconsin: H.R. 7506. A bill to aid the development and maintenance of American-flag shipping on the Great Lakes, and for other purposes; to the Committee on Merchant Marine and Fisheries. By Mr. CHESNEY: H R. 7607. A bill to aid the development and maintenance of American-flag shipping on the Great Lakes, and for other purposes; to the Committee on Merchant Marine and Fisheries. By Mr. CROOK: H.R 7508 A bill to ald the development and maintenance of American-flag shipping on the Great Lakes, and for other purposes; to the Committee on Merchant Marine and Fisheries By Mr. DAVIES of New York: H R. 7509. A bill to aid the development and maintenance of American-flag shipping on the Great Lakes, and for other purposes, to the Committee on Merchant Marine and Fisheries. By Mr. DAWSON. H R.7510. A bill to aid the development and maintenance of American-flag shipping on the Great Lakes, and for other purposes; to the Committee on Merchant Marine and Fisherics By Mr. ENGEL of Michigan. H.R 7511. A bill to aid the development and maintenance of American-flag shipping on the Great Lakes, and for other purposes; to the Committee on Merchant Marine and Fisheries. By Mr. GORSKI: H R 7512. A bill to aid the development and maintenance of American-fiag shipping on the Great Lakes, and for other purposes; to the Committee on Merchant Marine and Fisheries. By Mr. HAGEN: H.R.7513. A bill to aid the development and maintenance of American-flag shipping on the Great Lakes, and for other purposes; to the Committee on Merchant Marine and Fisheries. By Mr. JONAS: H.R 7514. A bill to aid the development and maintenance of American-flag shipping on the Great Lakes, and for other purposes; to the Committee on Merchant Marine and Fisheries. By Mr. LINEHAN: H.R. 7515. A bill to aid the development and maintenance of American-flag shipping on the Great Lakes, and for other purposes; to the Committee on Merchant Marine and Fisheries. By Mr. LOVRE: H.R. 7516. A bill to ald the development and maintenance of American-flag shipping on the Great Lakes, and for other purposes; to the Committee on Merchant Marine and Fisheries. By Mr. MANSFIELD: H.R. 7517. A bill to aid the development and maintenance of American-flag shipping on the Great Lakes, and for other purposes, to the Committee on Merchant Marine and Fisheries. By Mr. MARSHALL: H. R. 7518. A bill to aid the development and maintenance of American-flag shipping on the Great Lakes, and for other purposes; to the Committee on Merchant Marine and Fisheries. By Mr. POTTER: H.R. 7519. A bill to aid the development and maintenance of American-flag shipping on the Great Lakes, and for other purposes; to the Committee on Merchant Marine and Fisheries. By Mr. TAURIELLO: H.R. 7520. A bill to aid the development and maintenance of American-flag shipping on the Great Lakes, and for other purposes, XCVI——170 CONGRESSIONAL RECORD—HOUSE to the Committee on Merchant Marine and Fisheries. By Mr. ZABLOCKI: H.R. 7521. A bill to aid the development and maintenance of American-flag shipping on the Great Lakes, and for other purposes; to the Committee on Merchant Marine and Fisheries. By Mr. BARRETT of Wyoming: H R. 7522. A bill to extend the period dur- ing which certain per capita payments shall be made from the trust funds of the Sho- shone and Arapsho Tribes of the Wind River Reservation; to the Committee on Public Lands By Mr BLATNIK: H.R 7523. A bill to reestablish a Civilian Conservation Corps, to provide for the con- servation of natural resources and the de- velopment of human resources through the employment of youthful citizens in the per- formance of useful work, including job train- ing and instruction in good work habits; and for other purposes; to the Committee on Education and Labor By Mr. BENNETT of Florida: H R 7524. A bill to authorize the estab- lishment of a wildlife-management area in the Florida Keys, Fla., and for other pur- poses; to the Committee on Merchant Marine and Fisheries. By Mr. ELSTON: H R 7525. A bill to provide for the issu- ance of a special postage stamp in commem- oration of the seventy-fifth anniversary of the Cincinnati zoo; to the Committee on Post Office and Civil Service. By Mr. LECOMPTE: H.R. 7526. A bill to establish the United States Air Academy at or near the Ottumwa Air Base, Ottumwa, Iowa; to the Committee on Armed Services. By Mr. CRAWFORD: H.R. 7527. A bill to aid the development and maintenance of American-flag shipping on the Great Lakes, and for other purposes; to the Committee on Merchant Marine and Fisheries By Mr. O'HARA of Illinois: H R 7528. A bill to aid the development and maintenance of American-flag shipping on the Great Lakes, and for other purposes; to the Committee on Merchant Marine and Fisheries By Mr. WOODRUFF: H R. 7529. A bill to aid the development and maintenance of American-flag shipping on the Great Lakes, and for other purposes, to the Committee on Merchant Marine and Fisheries. By Mr. BOLTON of Maryland: H R. 7530. A bill to remove the limitation on the commencement of prosecutions for offenses arising from espionage, and for other purposes; to the Committee on the Judictary. By Mr. LEMKE: H.R 7531. A bill to aid the development and maintenance of American-flag shipping on the Great Lakes, and for other purposes; to the Committee on Merchant Marine and Fisheries. By Mr. O'BRIEN of Michigan: H.R. 7532. A bill to aid the development and maintenance of American-flag shipping on the Great Lakes, and for other purposes; to the Committee on Merchant Marine and Fisheries. By Mr. SASSCER: H.R. 7533. A bill to amend the provisions of section 4 of the act of June 20, 1949 (Pub- lic Law 108, 81st Cong.) ; to the Committee on Armed Services. By Mr. WHEELER: H. R. 7634. A bill to amend Veterans Regu- lations to establish for persons who served in the armed forces during World War II a further presumption of service connection for psychoses developing to a compensable degree of disability within 8 years from the date of separation from active service; to the Committee on Veterans’ Affairs. 2701 By Mr. WHITE of Idaho: H.R. 7685. A bill to authorize appropria- tions for the eradication and control of halogeton on public lands; to the Committee on Public Lands. By Mr. JUDD: H.R. 7536. A bill to ald the development and maintenance of American-flag shipping on the Great Lakes, and for other purposes; to the Committee on Merchant Marine and Fisheries. By Mr. BIEMILLER: H. J. Res. 432. Joint resolution to establish a Special Bipartisan Coal Commission; to the Committee on Education and Labor. By Mrs. BOLTON of Ohio: H. Res. 499. Resolution to condemn the ab- duction of Greek children by Communist guerrilla forces and seek the return of these children to their homes and parents; to the Committee on Foreign Affairs. MEMORIALS Under clause 3 of rule XXII, memorials were presented and referred as follows: By the SPEAKER: Memorial of the Legisla- ture of the State of Mississippi, requesting the United States engineers and Congress to open all spillways of the Federal Govern- ment to relieve floodwaters of the Mississippi River; to the Committee on Public Works. PRIVATE BILLS AND RESOLUTIONS Under clause 1 of rule XXII, private bills and resolutions were introduced and severally referred as follows: By Mr. BATES of Kentucky: H.R. 7637, A bill for the relief of Edmon Burgher; to the Committee on Post Office and Civil Service. By Mr. BRYSON: H.R. 7538. A bill for the relief of Mrs, Frank Bridges; to the Committee on the Judiciary. H.R. 7539, A bill for the relief of Mary Alice Floyd; to the Committee on the Judi- clary. By Mr. LANE: H.R. 7540. A bill for the relief of Louise Peters Lewis; to the Committee on the Ju- dictary. By Mr. McMILLAN of South Carolina: H. R. 7541. A bill for the relief of Benjamin F. Short; to the Committee on the Judiciary. By Mr. SASSCER: H.R. 7542. A bill to authorize the Secre- tary of Agriculture to quitclaim 5 acres of land near Muirkirk, Md., to the William Fran- cis Smith Post, No. 285, American Legion; to the Committee on Agriculture. By Mr. YATES: H.R. 7643. A bill for the relief of Petar N. Stojnic; to the Committee on the Judi- clary. i PETITIONS, ETC. Under clause 1 of rule XXII, petitions and papers were laid on the Clerk’s desk and referred as follows: 1947. By Mrs. NORTON: Petition of Bay- onne Merchants Board of Trade, Bayonne, N. J., petitioning the Federal Government for a downward revision of the Federal war- time excise taxes; to the Committee on Ways and Means. 1948. By Mr. WHITTINGTON: Petition of the Legislature of Mississippi, asking legis lation relative to the cause, prevention, and treatment of multiple sclerosis; to the Com- mittee on Interstate and Foreign Commerce. 1949. Also, memorial of the Legislature of Mississippi to Congress and the Corps of En- gineers, to open all spillways to relieve flood- waters of the Mississippi River; to the Come mittee on Public Works.
2702 SENATE Frinay, Marcu 3, 1950 (Legislative day of Wednesday, February 22, 1950) The Senate met at 12 o’clock meridian, on the expiration of the recess. The Chaplain, Rev. Frederick Brown Harris, D. D., offered the following prayer: Our Father God, for another day, for another morning, for another chance to serve this troubled age, we are truly thankful. We beseech Thee this day to free us from fear of the future, from bitterness toward our fellows, from cow- ardice in face of danger, from failure before opportunity, from weakness when Thy power is available. Fill us with love that knows no barrier of race or class, with courage that cannot be shaken, with faith strong enough for the darkness, with strength sufficient for our tasks, with wisdom to meet life’s complexities, with loyalty to Thy king- dom’s goal. In the dear Redeemer’s name we ask it. Amen. THE JOURNAL On request of Mr. MacNuson, and by unanimous consent, the reading of the Journal of the proceedings of Thursday, March 2, 1950, was dispensed with. MESSAGE FROM THE HOUSE A message from the House of Repre- sentatives, by Mr. Maurer, one of its reading clerks, announced that the House had passed the bill (8. 930) to provide for the liquidation of the trusts under the transfer agreements with State rural rehabilitation corporations, and for other purposes, with amend- ments in which it requested the con- currence of the Senate. COMMITTEE MEETINGS DURING SENATE SESSION On request of Mr. Macnuson, and by unanimous consent, the Finance Com- mittee was authorized to meet this after- noon during the session of the Senate. On request of Mr. Lona, and by unani- mous consent, the Subcommittee on Clas- sification of the Committee on Post Office arid Civil Service was authorized to meet this afternoon during the session of the Senate. CALL OF THE ROLL Mr. MAGNUSON. Mr. President, I understand the Senator from Mississippi [Mr. EasTLanp], under a unanimous- consent agreement entered into last night, is entitled to the floor at this time to complete his unfinished remarks of last evening. Mr. WHERRY. Mr. President, will the Senator from Mississippi yield to me to suggest the absence of a quorum? Mr. EASTLAND. Mr. President, will yield for that purpose, provided do not thereby lose the floor. Mr. MAGNUSON. I suggest the ab- sence of a quorum. The VICE PRESIDENT. The Secre- tary will call the roll. CONGRESSIONAL RECORD—SENATE The roll was called, and the following Senators ansWered to their names: Aiken Hayden Martin Anderson Hendrickson Maybank Brewster Hull Millikin Bricker Hoey Morse Bridges Humphrey Mundt Butler Hunt Neely Byrd Ives O’Conor Cain Jenner Robertson Capehart Johnson, Tex. Russell Chapman Johnston, 8.C, Schoeppel Chavez Kefauver Smith, Maine Connally Kerr Smith, N. J. Cordon Kilgore Sparkman Darby Knowland Stennis Donnell Langer Taft Douglas Leahy Taylor Downey Lehman Thomas, Okla. Dworshok Lodge Thomas, Utah Eastland Long Tobey Ellender Lucas Tydings Ferguson McCarran Watkins Flanders McCarthy Wherry Frear McClellan Wiley Fulbright McKellar Williams George McMahon Withers Green Magnuson Gurney Malone Mr. LUCAS. I announce that the Senator from Connecticut | Mr. Benton], and the Senator from Colorado [Mr. JOHNSON] are necessarily absent. The Senator from Iowa (Mr. GILLETTE] and the Senator from Florida [Mr. HoL- LAND] are absent by leave of the Senate on official business. The Senator from North Carolina [Mr. GrRanHAMN], the Senator from Arizona [Mr. McFar.anp], the Senator from Montana [Mr. Murray], the Senator from Penn- sylvania [Mr. Myers], the Senator from Wyoming [Mr. O’ManHoney], and the Senator from Florida [Mr. PEPPeR] are absent on public business. Mr. WHERRY. I announce that the Senator from Montana [Mr. Ecton], the Senator from Massachusetts [Mr. Sat- TONSTALL], and the Senator from Mich- igan |Mr. VANDENBERG] are necessarily absent, The Senator from Iowa [Mr. HicKEn- LOOPER!, the Senator from Missouri [Mr. Kem], the Senator from Minnesota [Mr. TuyeE], and the Senator from North Da- kota [Mr. Youne] are absent by leave of the Senate. The VICE PRESIDENT. A quorum Is present. Under the unanimous-consent agree- ment, the Senator from Mississippi [Mr. EasTLAND] is entitled to the floor. TRANSACTION OF ROUTINE BUSINESS Mr. MAGNUSON. Mr. President, will the Senator from Mississippi yield to me so I may make a unanimous-consent request for consideration of routine business? The VICE PRESIDENT. Does the Senator from Mississippi yield to the Senator from Washington for that purpose? Mr. EASTLAND. I yield, so long as my right to the floor is not jeopardized thereby. The VICE PRESIDENT. Is there ob- jection? The Chair hears none. Mr. MAGNUSON. Mr. President, I ask unanimous consent that Members of the Senate may present petitions and memorials, introduce bills and joint reso- lutions, and submit matters for the Rec- oRD, without debate. MARCH 8 The VICE PRESIDENT. Without ob- jection, it is so ordered. FINANCIAL STATEMENT OF SECRETARY OF SENATE (8. DOC. NO. 148) The VICE PRESIDENT laid before the Senate a letter from the Secretary of the Senate, transmitting, pursuant to law, a statement of receipts and expenditures of the Senate for the fiscal year ended June 30, 1949, which, with the accom- panying statement, was ordered to lie on the table and to be printed. CONTINUATION OF FEDERAL AID TO CITIES UNDER FEDERAL AID HIGHWAY ACT Mr. HUMPHREY. Mr. President, I present for appropriate reference, and ask unanimous consent to have printed in the Recorp, a resolution adopted by the City Council of the City of Minne- apolis, Minn., favoring the continuation of Federal aid to cities under the Federal Aid Highway Act. There being no objection, the resolu- tion was referred to the Committee on Public Works, and ordered to be printed in the Recorp, as follows: Resolution requesting Congress to continue the annual aid to cities under the Federal Aid Highway Act Whereas cities have been receiving $112,- 600,000 annually under the Federal Aid Highway Act, and Whereas a bill has just been introduced to continue this aid; and Whereas relying on this aid, the city of Minneapolis has entered into a program in- volving the construction and improvement of streets, highways, and bridges in the city of Minneapolis; and Whereas it is imperative, in order that the city may proceed with this program, that Federal aid be continued; and Whereas one of the most important proj- ects which is now being undertaken and con- structed, relying upon substantial Federal aid, is the grade separation program in south Minneapolis, which involves the condemna- tion of property and the removal of several grade crossings in said city; and Whereas this grade separation has bcen needed for 70 years; and Whereas this grade separation would never have been undertaken had it not been that the city and the railroad company affected relied upon a continuance of Federal aid; and Whereas this project is now under way and, if 1t cannot be completed, the city of Minne- apolis and the railroad company will be in a worse position than if it had never been undertaken, and Whereas this project cannot be continued and completed unless Federal aid under the Federal Aid Highway Act is made continu- ously available; and Whereas many other projects in the city of Minneapolis involving the construction and improvement of Federal routes on streets, highways, and bridges, in the city of Minneapolis, which are of critical importance in the proper defense of the United States, are dependent on the continuation of this aid: Now, therefore, be it Resolved by the City Council of the City of Minneapolis, That it urgently requests the continuation of this Federal aid in an annual amount of not less than $112,500,000; be it further Resolved, That the city engineer of the city of Minneapolis be authorized to present this resolution to the Public Works Commit- tee of the House of Representatives, or any
1950 other committee which may investigate this matter; be it further Resolved, That a copy of this resolution be sent to each Member of Congress from the city of Minneapolis, or any congressional district of which the city of Minneapolis is & part. Passed February 24, 1960. C. L. SWANSON, President of the Council. Approved February 27, 1950. Eric G. HOYER, Mayor. Attest: Cuas. C. SwaNson, City Clerk. AMENDMENT OF DISPLACED PERSONS ACT—PETITIONS Mr. KiLGORE. Mr. President, I pre- sent for appropriate reference and ask unanimous consent to have printed in the REcorp, a telegram from the National Farm Labor Union, A. F. of L., signed by H. L. Mitchell, president, and a letter from Anna Lord Sirauss, president of the League of Women Voters, of Wash- ington, D. C., endorsing the amendment in the nature of a substitute submitted by me on behalf of myself and other Sena- tors, to House bill 4567, to amend the Displaced Persons Act of 1948. There being no objection, the telegram and letter were ordered to lie on the table, and to be printed in the ReEcorp, as fol- lows: Marcw 1, 1950 Senator Hartey M. KIvcore, Senate Office Building, Washington, D. C.° National Farm Labor Union,A.F of L, fully endorses provisions substitute bill offered to liberalize Displaced Persons Act of 1948 in line with policy of American Federation of Labor on this subject. H. L. MircHe.u, President, National Farm Labor Union, A. F. of L. LEAGUE OF WOMEN VOTERS OF THE UNITED STATES, Washington, D. C., March 2, 1950. The Honorable HARLEY M KILGORE, United States Senate, Washington, D.C. Dear SENATOR KiucorE The League of Women Voters has for several years been active in support of legislation which would represent a bona fide effort on the part of the United States in helping to solve the dis- placed-persons problem. We are gratified to see that you and a large bipartisan group of Senators have proposed an amendment to H. R. 4567, in the nature of @ substitute. In our opinion this amendment is deserving of full support. If adopted, we believe it will result in a constructive step by our country in contributing to the final solution of this issue. Sincerely yours, ANNA LorpD Strauss, President. BILLS INTRODUCED Bills were introduced, read the first time, and, by unanimous consent, the second time, and referred as follows: By Mr. LANGER: 8.3170. A bill to authorize an appropria- tion for the construction of a water and sewage disposal system for the village of Sanish, N. Dak.; to the Committee on Public Works. By Mr. THOMAS of Utah (for himself and Mr. WATKINS) : 8.3171. A bill for the relief of Mehdi Omana; to the Committee on the Judiciary. By Mr. RUSSELL: / 8.3172. A bill for the relief of Warren C. Baggett; to the Committee on the Judiciary. CONGRESSIONAL RECORD—SENATE 8.3178. A bill to authorize the Adminis- trator of Civil Aeronautics to undertake a project under the Federal Airport Act for the development and improvement of Chat- ham Field at Savannah, Ga., during the fiscal year 1950; to the Committee on Interstate and Foreign Commerce. By Mr McCARTHY: 8.3174. A bill for the relief of Theodora Dovalis; to the Committea on the Judiciary. By Mr MURRAY: 8.3175. A bill to provide for the acquisi- tion of land and the construction thereon of buildings and appurtenances essential for forest fire control operxtions of the Forest Service, United States Department of Agri- culture, at or near Missoula, Mont., and for other purposes; to the Committee on Agri- culture and Forestry By Mr. LEAHY: 8.3176. A bill to authorize the Board of Commissioners of the District of Columbia to establish daylight-saving time in the District; to the Committee on the District or Columbia. By Mr MORSE: 8.3177. A bill for the relief of Franco Con- tanzo (also Known as James Scotto), to the Committee on the Judictary. (Mr. THOMAS of Utah introduced Senate bill 3178, to restore national coal production, which was referred to the Committee on Labor and Public Welfare, and appears under a separate heading ) By Mr MAGNUSON: 8.3179. A bill to amend the Bankhead- Jones Farm Tenant Act so as to provide a more effective distribution of mortgage loans insured under title I, to give holders of such mortgage loans preference in the refinanc- ing of loans on a noninsured basis, to adjust the loan limitations governing title II loans so as to provide more effective assistance to production and subsistence loan borrowers, and for other purposes; to the Committee on Agriculture and Forestry. By Mr LEAHY (by request) ; 8.3180. A bill to amend the District of Columbia Teachers’ Salary Act of 1947; to the Committee on the District of Columbia. (Mr. LUCAS (for himself and Mr. Myers) introduced Senate bill 3181, to extend for 1 year the Housing and Rent Act of 1947, as amended, which was referred to the Com- mittee on Banking and Currency, and ap- pears under a separate heading.) EXTENSION OF FEDERAL RENT CONTROL Mr. LUCAS. Mr. President, on behalf of the Senator from Pennsylvania [Mr. MYERs] and myself, I introduce for ap- propriate reference a bill to extend for 1 year the Housing and Rent Act of 1947, as amended, and I ask unanimous con- sent that an explanatory statement of the bill by the Senator from Pennsyl- vania together with a letter and two telegrams be printed in the Rrecorp. The VICE PRESIDENT. The bill will be received and appropriately referred, and, without objection, the statement, letter, and telegrams, will be printed in the RrEcorp. The bill (S. 3181) to extend for 1 year the Housing and Rent Act of 1947, as amended, introduced by Mr. Lucas (for himself and Mr. Myers), was read twice by its title, and referred to the Com- mittee on Banking and Currency. The explanatory statement, letter, and telegrams referred to are as follows: EXPLANATORY STATEMENT BY SENATOR MYERS on Brix To ExTenp Fepera, RENT CONTROL to Jury 1, 1981 Mr. MYERS. Mr. President, a bill is being submitted today, jointly sponsored by the senior Senator from Ulinols [Mr. Lucas] and 2703 myself, which proposes to continue Federal rent control for a year beyond the present July 1, 1950, expiration date of the rent- control law adopted by the Eighty-first Con- gress last March, I am satisfied that every Member of Con- gress is by now aware of the instant public reaction to the interpretation made Febru- ary 25 of this year that the Appropriations Committee of the Senate had voted, in ef- fect, only the funds needed to wind up the affairs of the Housing Expediter by the end of this coming June. In the short time which has elapsed since that announcement I have received a great deal of mail, not only from Pennsylvania, but from people all over the country, telling me that the removal of Federal rent con- trols in their communities at this time would result in calamity because their housing shortages have not yet been licked. I am satisfied, Mr. President, that we must continue rent controls at least through the middle of 1951. I’m not happy about this. Iam sure no Member of Congress supports rent control simply for the sake of control itself. But, Mr. President, difficult as it is to draw up—and hard as it is to aaminister— a rent-control law, I honestly believe, that the act we adopted in the last session of Congress has worked well, and with a mini- mum inconvenience to everybody involved. I have intended for some time to submit a bill proposing rent-control extension, but frankly, I have refrained from doing so up to now because I realized that the Senate Banking and Currency Committee, which has jurisdiction over rent-control legislation, has been extremely busy working on the middle- income housing bill and other important legislation. So I've been hesitant about interrupting this important work because the real solu- tion to the rent-control problem lies in end- ing the housing shortage, and the middle- income bill represents the kind of program which will help us tremendously in filling our housing needs. The rent-control law of 1949 is not due to expire for almost four more months, and I had felt that the Banking and Currency Committee would have found adequate time to study the rent-control problem and come up with the facts after we had completed our work on middle-income housing. However, in light of the question which has been raised by the action of the Appro- priations Committee, I feel now that the Banking and Currency Committee should undertake as soon as possible to get its hear- ings started on rent control, because I am convinced that the facts will incontestably show that the law must go on beyond the middle of this year. I have consulted with the chairman of the Senate Banking and Currency Committee, Senator MaYBANK, and he will take up the whole matter of hearings at the committee meeting next Tuesday, March 7. I believe that we have a way right now of proving the need for rent-control extension. The rent control law we adopted last year, as you recall, contained a local option provision which permitted people in any particular area to decontrol their rents locally when it was felt that controls were no longer needed. Most communities, most States, have not chosen to lift controls even though the law made it readily possible for them to do so. Tam satisfied that this failure to exercise the local-option provision is a convincing demonstration that the housing shortage is still acute in entirely too many places. ‘We have seen too, I regret to say, what has happened in the communities that have lifted their rent controls prematurely. Rents in those communities have risen. Not all of the rents have gone up, it is true. But there are still landlords—not many landlords, but a few, who spoil things for everyone—who will
2704 sky-rocket their rents and indulge in rent- gouging when they know their tenants can find no other place to live. I want the Banking and Currency Com- mittee, Mr. President, to look into this. I want the committee to give us the facts about the need for rent control. As I say, I am gatisfied that the facts produced will show that rent controls will have to go on for a time longer, at least. In closing, Mr. President, I would like to submit at this time just a few of the com- munications I have received as evidence of the still present need for control. BaLta-Crnwvyp, PA., February 27, 1950. Hon. FRANCIS MYERS, Scnate Chamber, Washington, D. C. Dear Sir: The news, that the Senate Ap- propriations Committee has recommended the termination of all rent controls on June 80, is alarming. Recently the results of a housing survey were published. They showed that while much progress has been made in the build- ing of homes and apartments, rentals are far beyond the means of the pensioned and low- income groups. I am an office worker. In the 4 years I have occupied this apart- ment my rent has been increased three times, a total of $21. In addition, I was forced to personally replace antiquated and inade- quate equipment in order to have constant and satisfactory refrigeration. Leases are being continued on a month to month basis in anticipation of the lifting of rent controls. It is desirable to end Government controls as soon as possible, but the indications are that some form of policing is still necessary in this particular field to prevent undue hardship, and I respectfully request your consideration of the two mentioned groups when the committee's action comes up for Senate approval. Very truly yours, (Miss) Hager McCrea. —_— JOHNSTOWN, Pa., February 27, 1950. Senator FRANCIS MYERS, Senate Office Building, Washington, D. C.: We respectfully solicit your vote and in- fluence to oppose any legislation designed to remove rent controls. Respectfully, L. W. GramaM, Recording Secretary, Local 2632, United Steel Workers of America. New York, N. Y., February 28, 1950. Hon. FRANcis MYERrs, Senate Office Building, Washington, D. C.: Would appreciate your reading the follow- ing telegram to the Members of the United States Senate to insure inclusion in the record: “Protest action of Senate Appropriations Committee in eliminating the supplemen- tal appropriation for the Housing Expedit- er’s office. This is legislation by appro- priation and was calculated to prejudge and influence future congressional action on rent control. If the reduced appropriation stands, effective enforcement of rent con- trol will end now instead of June 80 as voted by Congress. Neighborhood workers know a crisis in housing still exists for the great mass of wage earners, High rental houses may be available but not shelter for the low-income groups. Members of Con- gress know the tragic experience in decon- trolled areas where rents have been in- creased nearly 40 percent on housing units priced @30 a month or less. We urge the CONGRESSIONAL RECORD—SENATE Senate to make the full supplemental ap- propriations and continue rent control un- til American families are in a bargaining position in relation to housing and are as- sured of a roof over their heads. “Committee on social education and ac- tion, National Federation of Settlements and Neighborhood Centers. Francis Bos- worth, Chairman.” This represents what I know to be true in Philadelphia as well as in settlement neighborhoods throughout Pennsylvania and the Nation. FrienDs’ NEIGHBORHOOD GUILD. Francis BosworruH. AMENDMENT OF DISPLACED PERSONS ACT—AMENDMENTS Mr. FULBRIGHT submitted amend- ments intended to be proposed by him to the bill (H. R. 4567) to amend the Dis- placed Persons Act of 1948, which were ordered to lie on the table and to be printed. Mr. FULBRIGHT submitted amend- ments intended to be proposed by him to the amendment in the nature of a sub- stitute intended to be proposed by Mr. Kitcore (for himself and other Sena- tors), to House bill 4567, supra, which were ordered to lie on the table and to be printed. INCREASE IN BORROWING POWER OF COMMODITY CREDIT CORPORATION— AMENDMENT Mr. MAGNUSON. Mr. President, 1 serve notice on the Senate and those in- terested that on behalf of the Senator from Oregon [Mr. Morse] and myself, I submit an amendment intended to be proposed to the bill (S. 2826) to increase the borrowing power of the Commodity Credit Corporation. It is substantially the same amendment which I proposed last year to the agricultural bill relating to reciprocal trade agreements and the importation from other countries of ag- ricultural products on which we have price supports. The VICE PRESIDENT. The amend- ment will be received, printed, and re- ferred to the Committee on Agriculture and Forestry. SURVEY OF ECA IN EUROPE BY SENATOR McCARRAN (8. DOC. NO. 141) Mr. McCARRAN. Mr. President, as chairman of the Joint Committee on Foreign Economic Cooperation, I have presented a survey of the ECA in Europe to the joint committee, and am author- ized by the joint committee to ask unani- mous consent that the survey may be printed as a Senate document. I send the survey to the desk and ask unani- mous consent that it may be printed as a Senate document. I have conferred with the Parliamentarian respecting it, and I am advised that it complies with the rule. The VICE PRESIDENT. Is there ob- jection to the request of the Senator from Nevada? ‘The Chair hears none, and it is so ordered. ANALYSIS OF ECA PROGRAM (8. DOC. NO. 142) Mr. McCARRAN. Mr. President, the staff of the Joint Committee on Eco- nomic Cooperation, of which committee I have the honor to be chairman, pre- sented to the committee an analysis of MarcuH 3 the ECA program, and I am authorized by the joint committee to ask unanimous consent to have it printed as a Senate document. I now ask unanimous con- sent that the analysis may be printed as a Senate document. The VICE PRESIDENT. Is there ob- jection to the request of the Senator from Nevada? The Chair hears none, and it is so ordered. WHERE SHOULD ECA GO FROM HERE?— STATEMENT BY SENATOR McCARRAN Mr.McCARRAN. Mr. President, I ask unanimous consent that my own state- ment of explanation, entitled ‘‘Where Should ECA Go From Here?” may be printed in the body of the Recorp. There being no objection, the state- ment was ordered to be printed in the REcorp, as follows: Wuerz SHOULD ECA Go From HERE? STATEMENT OF SENATOR M’CARRAN One of the major problems facing the Senate and the Congress this year is the de- termination of what action to take with re- gard to the continuation of our Foreign Assistance Act. Let me hasten to say that it is not a question of whether or not the ECA should continue, and let me express the opinion, also, that it is not simply a ques- tion of determining how much money the ECA should get. The foreign assistance program was in- augurated because there existed certain fundamental problems and maladustments in Europe which, we believed, if left alone would result in danger to the United States. Statistical evidence, confirmed by my own observation during the 8 months I spent in Europe last fall, indicates that conditions have improved since April 3, 1948, and Europe is a more comfortable place to be in than it was at the end of the war. A report on my trip to Europe has been submitted to the Joint Committee on Foreign Economic coop- eration, of which I am the chairman, and 1s being issued as a Senate document. Never- theless, I doubt whether anyone today be- lieves that in the case of any of the basic problems and maladjustments with which Europe is confronted, the solution has been found and the work done. The iron curtain still cuts off western Europe from the food- stuffs and raw materials which it formerly obtained from the east and prevents it from selling its manufactures in southeastern Europe. The economy of western Europe has not yet been made over to adjust for these fundamental changes Furthermore, in certain countries, governments friendly to us are still in constant danger of overthrow by the Communists, and there is no question but that the mass of the people of Europe suffer from poverty and deprivation which it 1s difficult for Americans to realize. Under the circumstances I am firmly con- vinced that to stop economic aid now would involve the loss of much that we have gained in Europe so far, and bring on a crisis com- parable to that existing when Secretary of State Marshall made his address at Harvard in June 1947. When I say that we must consider where ECA should go from here, I do not mean that the primary problem is determining the amount of money to be appropriated. Before we can do that, it is necessary for us to con- sider whether the ECA operation to date is bringing us to the goals we had in mind at its outset and, what is perhaps more im- portant, do we find in 1950 that the job to be done in Europe is somewhat different than we conceived it to be in 1947 and 1948. Let me emphasize that there has not been before, nor will there be again, so favorable an opportunity for a searching examination of the ECA program. Industrial production
1950 in Europe has passed the prewar levels. Agricultural production 1s approaching pre- war volume. It is no longer necessary to concentrate primarily on keeping the patient alive. We have time now to consider whether our course of treatment is really getting the patient back on his feet. We should examine the lessons to be learned from the nearly 2 years of experience with ECA operations. We should recognize that since ECA began, our foreign policy has been broadened and our objectives in Europe have been made more concrete by our ad- herence to the North Atlantic Treaty. It is high time for us to consider where we want to go and what changes in our approach to the problem are desirable. With this situation in mind, I set the staff of the watchdog committee to work on this problem. I saic to them, “You have been studying the ECA operation for nearly 2 years and have visited all of the participating countries. Give me a report indicating the principal things that you feel should be done about the ECA program now” Such a report has been prepared which is passed on to the Membeis of the Congress by the Joint Com- mittee on Foreign Economic Cooperation, not as an expression of the committee’s views, but rather as an informative and provocative document which will be helpful in consider- ing the various aspects of economic assist- ance to Europe with which we are confronted. The report does not indicate that the For- eign Assistance Act of 1948 should be sub- stantially done over It concentrates on seven aspects of the EC/ program which re- quire detailed study at present, and suggests five legislative changes. I would like to call your attention to some of the large~ issues that are involved. Perhaps the first thing we should look at is the economic integration or unification of Europe. The Foreign Assistance Act from the very beginning recognized the advantages to the countries of Europe of making Europe into one big market. No American can ques- tion the fact that a Europe in which fac- tories were located in areas of greatest natu- ral advantage, if given the Deneflts o° a vast mass consumers market, would be able to take advantage of mass production methods and would thus increase output far beyond its present potential. The present industrial pattern is based on vertical nationalistic economies with industries propped up and protected to keep them going regardless of their inherent economic disadvantiges. Let us look at the postwar record of one basic industry, for example, the European steel industry. The ECA had at the ond of 1949 authorized the exponditure of $167,000,- 000 on European steel mill projects. No one can question that the European steel indus- try needs new equipment and that a lot of this equipment can be obtained only in the United States. I am told that uhe most revolutionary de- velopment in stcel manufacturin, during the last half century has been the continuous strip miJl_ This machine originated tn the United States and permits the rolling of steel] sheets in very large quantities at very low costs, and is used by all of the important American sheet producers today. In Europe at the beginning of the war there were only two such mills—-one in Eag- land and one in Germany. The mill in Ger- many hes since been shipped to Russia as reparations. It is pretty generally agreed thut no one can compete in the manufac- ture of steel sheets today without a con- tinuous mill It is quite natural then that all of the steel-producing countries of Eu- rope showed a great interest in building con- tinuous mil!s as soon as the war was over, The ECA has allocated $137,C00,000 to seven corporations in six European countries which include such mills in their reconstruction projects The continuous mills themselves cost less than this amount. None of these CONGRESSIONAL RECORD—SENATE mills is yet completed and some will not be in operation for 2 or 8 years. I call your attention particularly to the places in which these plants ave being built with our dollars: Austria, one plant............ $10, 000, 000 Belgium, one plant......-..-. 2,000, 000 France, two plants......--.-.. 61, 000, 000 Italy, one plant. 12, 000, 000 Netherlands, one plant..- - 23,000, 000 United Kingdom, one plant_.-. 27, 000, 000 Let us see if this distribution of American dollars appears to conform to a policy of promoting the industrial integration of Europe. We know that steel production is a large- scale operation and that costs of coal and iron ore and the availability of water trans- portation should be the determining factors in the location of plants. We should expect to see steel production in the new Europe, which we are financing, concentrated in fac- tories of the most econumical size in the lo- cations with the greatest natural advantages I call your attention particularly to the fact that not one of these continuous mills is being bullt in Germany, which is gener- ally regarded as having greater natural ad- vantages for steel manufacture than any lo- cation in Europe. That means that the Ruhr, where steel sheets could presumably be produced more cheaply than any place else in Europe, will be kept out of this im- portant branch of production because it will be unable to compete without a continuous mill. If European producers of machinery, electrical equipment, and other manufac- tured goods are to regain their place in the markets of the world, it will be necessary for them to have access to steel sheets at the minimum possible cost. If sheet costs are kept higher than necessary for any reason, not only will the steel industry of Europe sulfer, but her technical, engineering, and precision industries generally, in which she has always been preeminent, will be handi- capped. On the other hand, it is necessary to rec- ognize that every major power in Europe re- gards the possession of steel-manufacturing facilities within its borders as essential to its national defense. Consequently, the fact that Austria, for example, has had a steel industry for 100 years does not prove that Austria js a good place in which to manu- facture steel. Her industry got its start un- der the Hapsburgs, when Austria was still a major military power. Italy expanded her steel-producing capacity under Mussolini for military reasons. It does not follow that Italy's steel plants should be rebuilt with new machinery in an effort to enable them to compete with England, France, and Austria, It is generally agieed that Europe does not need any additional steel-rolling capacity beyond that already authorized. We find ourselves, then, at the end of 2 years of ECA operation in a situation where we have invested all the dollars that should be invested in European steel production for the time being, and facing the fact that much of this investment has not advanced the economic unification of Europe. It has, in fact, probably impeded such unification, All of these continuous mills are large, all are being bullt with Government sanction and most with substantial Government financing. Each gives employment to large numbers of people It is difficult to conceive that an Austrian Government would permit rolled-steel products to he imported into Austria because they could be bought more cheaply than they could be made at home, while Austrian steel workmen were unem- ployed and while its fine new factories stood idle. It is inevitable that once these facto- ries are built, the governments which have sponsored them will be driven to imposing trade barricrs and providing subsidies to keep them going. 2705 I do not say that the money we have spent for building these rolling mille is wasted or charge the ECA with bad adminis- tration because these expenditures have been approved. The reason why these plants have been authorized is that the ECA has been confronted with short-run, national, political situations which had to be given priority over long-run considerations of eco- nomic unification. You could not ask a government which was maintaining itself by only a few votes over the Communist opposition to make decisions which would lay it open to charges that it was not doing everything possible to build up an industry which provided employment, was necessary for national defense, and in which national pride and prestige were involved. My point is that if we are to make sub- stantiol progress toward the unification of European industry we will have to make a change in our approach. Consider for a few moments the problem of bringing about a transformation of European industry so that production for the entire market would be concentrated in plants of the most efficient size grouped at the lowest cost locations. There are two possible alternatives for achieving greater unification. One way would be to formulate a sort of master plan based on detailed engineering studies of cost factors for the major industries for va- rious possible locations. Such a plan should indicate that the steel plants should be here and here, the rayon plants there and there, the automobile factories at certain locations, and 80 on. Such a task is a formidable one; many re- gard it as hopeless; but let me emphasize that if it 1s to work the factories must ultimately be located at the most efficient locations, re- gardless of national interests, for otherwise Europe will remain a high-cost producer, un- able to compete with the United States and the new manufacturing industries of Latin- America and Asia. The other and more desirable way of get- ting the desired integration would be to re- move all restrictions on the movement of goods and capital across the national borders of Europe and eliminate all subsidies and supports which governments give to their industries. Then factories would be bullt by private managers in the lowest-cost places without the necessity for prior development of a master plan, The important thing is that whichever ap- proach is made there has to be some sort of government for western Europe superior to the individual national governments which can enforce decisions which particular coun- tries will find unpalatable. Unless this 1s done I do not believe the economic integration of Europe can ever be brought about. The Organization for Euro- pean Economic Cooperation (OREC), which is the existing organization of the Marshall plan countries in Europe, will never be able to do this job. Its responsibilities are defi- nitely limited to the economic fleld and its actions must be unanimous. Issues which involve national security or transcend inter- nal political interests of one of its member governments are not left for it to decide. Moreover, even the issues which it does decide are the result of careful compromises to which unanimous consent can be obtained. Each nation is under strong pressure to vote for every other's projects for fear that its own programs may be blackballed if it 1s too critical. In any event, it 1s clear that the amount of money which the Congress appropriates for the ECA is not the factor which will determine the extent of economic unification that will be achieved during the next fiscal year. The determining factor will be the adoption of an approach designed to accom- plish the end desired, and then to take the political and organizational steps that will make the progiam possible. Unless these things are done, an appropriation of United
2706 States dollars comparable !n amount to what we have given in the past 2 years will ace tually, in my opinion, retard economic in- tegration rather than advance it. It ig necessary to recognize, however, that we should offer an incentive to the countries of Europe to integrate their economies. One way to accomplish this objective would be to set up a corporation comparable to the RFC, with Marshall plan countries represented on its board, but with the United States having the majority control as long as we put up most of the money. Such a corporation could deal directly with European businessmen who wished financial aid for industrial develop- ment, but it would establish certain stand- ards to insure that each project would pro- mote the integration of European industry. An appropriation could be made to provide capital to this corporation. The capital would be replenished as the need arose, but there would be no invitation to divide it up among the countries and spend it the first year, It would be used only as satisfactory projects were approved. No factories would be constructed as part of an annual national program. Only propositions which could pass @ careful screening as to their soundness from the point of view of the western Euro- pean economy as a whole would be financed. It is unlikely that many projects meeting such standards would be ready the first year. This would not retard European recovery for, let me remind you, European industry has already exceeded its prewar level of output and we are justified in extreme caution in the approval of further industrial expansion. I would like to mention briefly certain other aspects of the ECA program where the results have fallen somewhat short of the hopes that were envisaged at the beginning. First is the matter of encouraging Ameri- can private investors to supply capital and managerial assistance to European industry. During the first year of the ECA, $300,000,000 were available to guarantee the convertibility into dollars of private American investments in the participating countries, and for the current fiscal year $150,000,000 are available. Nevertheless, as of last December 31 there had been, during the entire life of the ECA, &@ total of 15 such guaranties made, amount- ing to less than 84,000,000. It seems clear that a new and different approach in this field ia necessary if private investment is to be encouraged to take its legitimate part in the industrial future of Europe. The risks encountered in foreign invest- ment during a period of cold war are great. As European recovery becomes less a matter of feeding the hungry and more a problem of building an efficient economic machine, the advantages to be derived from increasing the participation of American private capi- tal becomes more and more apparent. Cer- tainly wo should give every careful thought to the possibility of strengthening our guar- antee provisions to sce if some real progress cannot be made in this direction. I have a feeling also that not enough thought has yet been given to certain man- made obstacles to private investment, where tle principal factor is the decision of the United States as to precisely how far it wants to go. I refer particularly to the situation which exists in several Marshall plan coun- tries where a major, although in most cases not the controlling, political party favors public ownership of basic industries. In such instances, there is strong resistance to any effort to American businessmen to invest in a country for fear that if American owners get a foothold it may handicap the public ownership program. As a result of this sit- uation, there has been some feeling that our own State Department has been reluctant to push American interests aggressively for fear of antagonizing important political groups in participating countries. We should not obligate the United States Treasury to guarantee private investments abroad until we are sure we want such in- CONGRESSIONAL RECORD—SENATE vestments and that the legal obstacles have been cleared away. I believe the Congress should give further attention to the matter of obtaining stra- tegic materials from the ECA countries. I think we will all agree that the provisions of Public Law 472, as amended, and that the discussions in this Chamber prior to the enactment of the Foreign Assistance Act clearly indicated that the United States Con- gress expected that as we assisted Europe with our dollars and commodities, Europe would help us to get certain critical mate- rials vital to our security. There was no idea, I think, that these materials would be supplicd in sufficient volume to compensate for our aid. It was rather a belief that all of us were contributing to a common cause; that the United States was vulnerable as to certain materials, partly because we had de- pleted our supplies during the war and partly because we did not possoss certain items which are vital to our industry; and that consequently Europe should help us to over- come our most serious weakness. The ECA itself reports that progress in this field ‘has been slower than anticipated ” Certainly the results are meager. We have obtained a little over 848,000,000 of such materials in nearly 2 years, and we have invested Just over $6,000,000 in overseas proj- ects for expanding the production of these muterials. I believe that the major difficulty here lies outside the ECA. It seems to me that the executive branch has never been able to de- cide just what we wanted to do in this field. Military stock piling is not the entire objec- tive, and there has never been developed & broad, coordinated program which indi- cated just what ECA should try to obtain. It is doubtful if our future supplies of certain commodities can be assured if the matter is regarded as strictly a commerctal problem. The countries which control stra- tegic material supplies think of them as giving them advantages in international po- litical bargaining. The ECA gives us an unprecedented opportunity to negotiate effectively for what we need. The issues are complex, but the first step is to determine what we really want. The investigations by the “watchdog com- mittee” staff, as well as a survey by the De- partment of Commerce, indicate that our control of trade between the MCA countries and the area behind the iron curtain is not satisfactory. The biggest single difficulty is that most of the countries of western Furope which receive our aid have not accepted in its entirety our Hst of prohibited and re- stricted commoadities. Today American firms are being denied export licenses for ship- ments to Russia and her satellites which competing firms in Belgium, the United Kingdom, or Germany are free to accept. Certainly, before we embark on a third year of ECA, this situation should be straightened out. One aspect of the ECA program about which I have always had a sort of uncom- fortable feeling is the effect of our present policies on our future exports, particularly our exports of farm products. There can be no question, it seems to me, but that our foreign-nid program has helped American exports and has helped the American farmer. If the imports of western Europe from the United States had been confined during the last 2 years to the quantities that could be paid for by that area with its own money, the volume suppHed by us would have, in- deed, been smal}. Iam aware also of the argument that in the long run the ECA program, if it succeeds, will benefit the American farmer and the American exporter, because a@ prosperous Eu- rope with a high standard of living will be ea better customer than a pauperized area living at the subsistence level. MARCH 3 The thing that bothers me, however, is the fact that the way the ECA program operates, it puts constant pressure on the countries of Europe to buy as much of every~ thing outside the United States as possible, Take cotton, for example. During 1949 the ECA allocated $575,000,000 to the purchase of cotton. In justifying its appropriation request, the ECA estimated the requirements of Europe for cotton, wheat, copper, and other commodities. The appropriation is not earmarked, however, to purchase the esti- mated amounts of these products. Once the country gets its total allocation of United States dollars, it has every incentive to buy everything it can from a nondollar source, If a country can get more cotton from Egypt or Indta than it originally planned, so that it can use fewer dollars to buy American cotton, it can spend the dollars thus saved to buy something else. Furthermore, stress is continually being laid by the ECA, and by the European countries, too, on the fact that the way to close the dollar gap is to develop nondollar sources for as many of Europe's requirements as is possible. This puts us in a position with regard to our farm price-support program where we are spending the United States taxpnyers’ dollars on the one hand to maintain an exportable surplus of cotton, and on the other hand to stimulate cotton production in Evypt and India so that Europe can be sup- pled from nondollar sources. It does not scem to me that we should be doing both of these things at the same time. We must take a realistic view of the situa- tion. If it 1s to be the United States policy in the future to maintain a volume of pro- duction of certain agricultural crops which is larger than our home market can abrorb, and to hold the prices of these crops above the world-market level, then we should maintain for ourselves an appropriate share of the European market for our exports of these crops Every year that we give Europe @ bonus for buying as many agricultural products outside the United States as pos- sible, we add to the future cost and com- plexity of our farm price-support program. There is a relatively stmple means avail- able for correcting this situation. That is to offer as part of our foreign aid (in the past this has run to somewhere near 50 per- cent) bales of cotton, pounds of tobacco, bushels of wheat, et cetera, rather than dol- lars of equivalent amount We could do this by appropriating funds to purchase des- ignated quantities of these commodities in the United States to be apportioned among the countries of Europe in accordance with their requirements. These supplies would be just as helpful to the people of Europe as if they were procured in the old way, and we would eliminate the incentive to expand production of these items in nondollar areas. Another most difficult problem confront- ing the Congress in connection with ECA is determining what its relation should be to our military commitments in Europe which have been entered into since the ECA was originally conceived and put into operation. It seems to me that we cannot escape the conclusion that our relationship with, and our responsibilities toward, the countries of western Europe are substantially different in 1960 than they were in 1948 when the ECA began. Our position when the recovery pro- gram was inaugurated was comparable to that of a neighbor helping out some families in the next block who had suffered a dis- aster. Our objective was to help them get back on their feet. We did not want to in- terfere in their internal affairs except to make sure that our money was prudenily used. We felt that after 5 years we would be glad to have our neighbors go their own way. They were our friends and, on all basic principles, we were confident that we were in agreement.
1950 I cannot escape a feeling that the North Atlantic Treaty changed all of this. We are no longer related merely as friendly neigh- bors to the countries of western Europe. We are now partners in a common undertaking. This common venture is more serious and more far reaching than any economic project. We have undertaken to develop with our partners a plan for mutual defense, and we expect to fight side by side if that unfortu- nate occasion should ever arise. Under these circumstances, we must all face the question of whether or not we can maintain this military partnership and avoid an economic partnership, and whether we can continue our military partnership be- yond 1952 and terminate our economic part- nership at that time. If we should conclude that we can keep our military relationships with western Europe and our economic relationships in separate compartments, then we must use extreme care to make sure that the ECA program is not put into a tight compartment. That ts, we must not define its objectives so narrowly or impose such restrictions on the disburse- ment of its funds that it tends to become an end in itself and grinds on like an automaton as long as the money lasts, regardless of how we are getting along with our over-all pro- gram of foreign relations. Our experience with ECA operation in the past does not give us much reassurance on this point. At the present time, there are @ number of instances where countries re- ceiving our aid are refusing or delaying ac- tion on such matters as negotiating a trade treaty or removing discriminations against American businessmen. When such mat- ters are brought to the attention of the ECA and the Department of State, the reply is generally to the effect that issues which are not definitely part of the recovery program cannot be allowed to interfere with that program. It seems to me that we should make the adjustments in the ECA operation necessary to insure that a country cannot get money from us when it cooperates in compartment A but refuses to cooperate in compart- ment B. Let me emphasize that I think that this new role of the ECA in our foreign relations, although it does not make its Job less diffi- cult, does tend to make its job less expensive. The ECA is no longer the whole team; it is now one player on a larger team. In certain cases, economic aid may be less vital to a country if it can be assured of our military backing. It should be borne in mind that ECA in the beginning, in addition to providing food, fuel, and materials to the countries of western Europe, also made an important psycholog- ical contribution. It was the symbol to all that the countries of western Europe were not to bo left alone and that the United States was concerned with their future. Since the North Atlantic Treaty, the per- formance of this psychological function can be shifted from the shoulders of ECA. Our willingness to participate in a defense pro- gram for western Europe gives adequate ussurance to our friends that we are behind them and puts potential aggressors on notice as to our objectives. In more concrete terms, before our ad- herence to the North Atlantic Treaty, it would have been exceedingly difficult to cut off aid to any participating country even though its economic status was much im- proved, without causing an antagonistic re- action on the part of the country involved. Now the value of the United States military packing should assu > continued cooperation of countries which may become capable of sustaining themselves without United States economic atid. This diccussion is Hmited to presenting certain fundamental issues with which we are concerned as we prepare to act on the ECA CONGRESSIONAL RECORD—SENATE program for next year. The final point I want to make is that we can do much to solve many of the problems currently con- fronting ECA without writing a lot of specific legislation. This we can do by changing the basis on which the appropriation is authorized. The two previous appropriations to the ECA have been based on the anticipated dol- lar deficits of the participating countries. This approack seems to me to have two fundamental disadvantages. First, the big- ger a country’s deficit, the more money it gets, 50 that there is a constant pressure on a country to maintain a deficit. Second, an allocation of United States dollars made on the basis of a deficit is necessarily inflexible. Even though the ECA screens a country’s requirements very carefully, once an amount has been agreed upon as the necessary deficit, it is very difficult to make adjustments on the basis of the country’s performance. I believe that the ECA would do a better job and that the Congress would protect the interests of the American taxpayor more effeculvely if a program for spending United States money for foreign aid met the follow- ing tests: 1. The allocation of dollars to each coun- try should be linked to specific, constructive courses of action rather than to the country’s dollar deficit. A country which is making basic changes in its industrial structure, such as closing out a high-cost industry; which is undertaking a major revision of its tax structure, or which has removed many of its trade controls, might be assured of sub- stantial United States aid as it progresses with these efforts. 2. Ald should be given in such a manner that the standard of living and general well- being of the country are primarily the re- sponsibility of {ts own government—not of the United States, The people of a country should feel that the decisions which determine how much they have to eat or how much is spent for road building, power development, or indus- trial reconstruction are made in Europe and not in Washington. A country should de- vote itself primarily to constructive, far-see- ing action toward solving its basic problems rather than lobbying with OEEC, ECA, and other Government officials for more United States dollars. One of the major shortcomings of the present method of distributing American aid is that it is too easy to place the blame for @ reduction in the standard of living in a country on the United States. As long as appropriations are based on dollar deficits, this dunger persists. If, after negotiation with the ECA and action by the United States Congress, a country gets fewer dollars than it had expected, its government will hold the United States responsible. We should make our assistance available in such a way that dollars are available to every country which can qualify for them. Then, the first responsibility is on the Government of each country t: initiate a course of action which will entitle it to a share. 3. The aid program should be administered in such a manner as to minimize the incen- tive for a country to ask for more money than is necessary. This objective can be approached, at least, if aid is allocated only to countries that un- dertake a program which involves some in- ternal sacrifice. Under the present system, if a country lacks raw materials and ma- chinery, we provide the money to buy these items and that country has every reason to ask for as much as possible. If, on the other hand, we say to a country which lacks raw materials and machinery that dollar assist- ance will be provided only if it will remove trade barriers, which protect one of its un- economical industries, and will develop a program for shifting the laborers involved to Other occupations, the Government of this 2707 country will have to give very serious study to the matter of its dollar request. To qual- ify for our money, the Government would have to arouse local antagonism and take po- litical risks. Presumably, it would not ask for money unless the money really was needed and the sacrifices involved were worth while. I suggest, therefore, that our next appro- priation be authorized along the following lines: Congress should authorize a definite sum to finance a European payments union. Such a union has been sponsored by the ECA and is now under discussion in Europe. I believe that a European clearing union would do more to stimulate intra-European trade than anything which has been tried so far. An appropriation under this authorization should be available only for this purpose. I suggest also that a definite sum be aue thorized for the procurement of United States agricultural products to be supplied to Europe. This appropriation authoriza- tion would reserve for American farm prod- ucts a commensurate place in the European market. In addition, I believe the Congress should authorize a specified amount to provide cap- ital to the international RFC, I have previe ously mentioned This sum should be big enough to assure the countries of Europe that we are ready to underwrite any project which will really help to bring about an in- tegrated European industry producing at the lowest possible cost. It should recognize also that until a new approach is made to this matter in Europe, vory little money can be properly spent Furthermore, the condi- tions under which this money can be spent should be laid down in the authorization for such a corporation. I believe that it is essential that the Ad- ministrator of the ECA should be given a certain number of dollars to be spent for other programs. These could be economic or political or both. This does not mean that we should set up a $200,000,000 con- tingency fund, but that there be available to the Administrator a fund on which he could draw to finance such projects as the consummation of the Benelux Union if the United States believes it desirable to do so. At present, !t appears that neither Belgium nor Holland is willing to take the final plunge because of the possible repercussions on their respective economies. I want to emphasize that I am not ad- vocating that the ECA be given a biank check. However, we have reached the stage in our foreign-assistance program where we do not protect the taxpayers’ interest ade- quately if we give most of our attention to scrutinizing procurement programs for the individual participating countries. The thing that will determine whether or not our money is well spent is whether or not the countries that get our help take advan- tage of it to eliminate their fundamental weaknesses and cmbark on programs that will permit them to become strong and self. supporting. I have already indicated that the ECA has already allocated 167,000,090 to rebuild- ing the European steel industry and that the results do not indicate that Europe will be fundamentally stronger as a result. Exch of these expenditures was carefully screened by qualified experts. I am sure that we are getting a dollar's worth of machinery for every dollar we spend. From now on, it {s not so much what commodities we buy as what the receiving nations do The way to protect the American tax- payer is for Conrress to ask the ECA, “If we put 60 many dollars into Italy next year, what are the Italians going to do that will really strengthen their country?” Presum- ably, Italy needs major industrial, financial, and agricultural re‘crms if she is ever to pay her own Way. Sae cannot accompli:h
2708 them overnight, but let us base our appro- priation on a definite program of construc- tive action along these lines rather than upon a detailed analysis of how many bush- els of wheat Italy will eat if we buy them for her. The United States is playing for enormous stakes today. The threat of war ever hangs over us. We should use our influence, exert pressure, and spend money to strengthen our position and the positions of friendly nations against threatened aggression. I believe that our Government should have a full kit of economic weapons avail- able to it during the next year for its con- duct of foreign affairs, in addition to our military resources. The purpose of the ECA appropriation is to provide our Govern- ment with this economic equipment. The first essential is to make sure that the eco- nomic devices wr provide will really be ef- fective. The danger is that the ECA program will lack flexibility, that it will not be properly coordinated with our over-all objectives, and that it may persist in following a pattern set in the fret 2 years of its operation which, in certain respects, no longer conforms to current realities. Finally, let me say that I am firmly con- vinced that the success or failure of our economic-aid program will not be deter- mined by whether we vote $3,000,000,000 or 62,600,000,000 or even $1,000,000,000 for the next fiscal year. We can spend $3,000,000,- 000 and accomplish little except keep the people of Europe relatively tranquil while they Wait for war to come. We can spend $1,000,000,000 to aid countries to carry for- ward significant programs for strengthening their economic structures and find that at the end of the year real progress will have been accomplished. The success of the ECA from now on will depend on the wisdom with which the Con- gress determines what its job 1s and the skill with which the job 1s carried out. EXECUTIVE REPORTS OF A COMMITTER As in executive session, The following favorable reports of nominations were submitted: By Mr. THOMAS of Oklahoma, from the Committee on Agriculture and Forestry: William B. Crawley, of Alabama, to be a member of the Board of Directors of the Commodity Credit Corporation; Knox T. Hutchinson, of Tennessee, to be a member of the Board of Directors of the Commodity Credit Corporation; Elmer F. Kruse, of Ohio, to be a member of the Board of Directors of the Commodity Credit Corporation; Albert J. Loveland, of Iowa, to be a mem- ber of the Board of Directors of the Com- modity Credit Corporation; Rolph 8. Trigg, of New Mexico, to be a member of the Board of Directors of the Commodity Credit Corporation; and Frank K. Woolley, of Indiana, to be a member of the Board of Directors of the Commodity Credit Corporation. LINCOLN DAY ADDRESS BY SENATOR SMITH OF MAINE (Mr. BREWSTER asked and obtained leave to have printed in the Recorp a Lin- coln Day address delivered by Senator Smrrn of Maine before the Portland Lin- coln Club, at Portland, Maine, February 10, 1950, which appears in the Appendix. ] POLISH FREEDOM—ADDRESS BY SENATOR IVES {Mr. LODGE asked and obtained leave to have printed in the Record an address on Polish freedom, delivered by Senator Ivzs, on the Justice for Poland program, which appears in the Appendix.) CONGRESSIONAL RECORD—SENATE ADDRESS BY SENATOR MARTIN BEFORE (Mr. MARTIN asked and obtained leave to have printed in the Recogp an address de- livered by him before the annual dinner of the Somerset County Chamber of Commerce, at Somerset, Pa.. on February 27, 1950, which appears tn the Appendix.| THE HOME OWNER AND HONEST MONEY—ADDRESS BY SENATOR CAIN (Mr. CAIN asked and obtained leave to have printed in the Recorp an address de- livered by him before the National Asso- ciation of Home Owners at Chicago, Ill., on February 22, 1950, which appears in the Ap- pendix. ] THE CONGRESS AND THE NATION'S HEALTH — ADDRESS BY SENATOR HUMPHREY {Mr. HUMPHREY asked and obtained leave to have printed in the Recorp an address on the subject The Congress and the Nation’s Health, delivered by him at the legisiative conference of the Democratic Farmer-Labor Party in Minneapolis, Minn., February 18, 1950, which appears tn the Appendix. | NATIONAL SECURITY—ADDRESS BY SENATOR JOHNSON OF TEXAS {Mr. KEFAUVER asked and obtained leave to have printed in the Rrecorp an address re- garding the place of the United States in the affairs of the world, delivered by Senator Jonnson of Texas at the breakfast of the American Association of School Administra- tors, Atlantic City, N. J., February 28, 1950, which appears in the Appendix.) COOPERATIVE HOUSING LEGISLATION— STATEMENT BY HERMAN T. STICHMAN [Mr. IVES asked and obtained leave to have printed in the Rrecorp a statement by Her- man T. Stichman, New York State commis- sioner of housing, with regard to Senate bill 2246, which appears in the Appendix. ] HOUSING LEGISLATION—ARTICLE BY GEORGE ERICSON [Mr. BRICKER asked and obtained leave to have printed in the Recorp an article en- titled “Middle Income Group Housing Help Decried,” written by George Ericson, and published in the Christian Science Monitor of February 25, 1950, which appears in the Appendix } SURPLUS POTATOES—EDITORIAL FROM THE WALL STREET JOURNAL [ Mr. WILLIAMS asked and obtained leave to have printed in the Recorp an editorial entitled “A Bigger Hole,” from the Wall Street Journal of February 28, 1950, which appears in the Appendix.] DOUGLASS BURNETT, OF SPARKS, BALTI- MORE COUNTY, MD. [Mr. TYDINGS asked and obtained leave to have printed in the Recorp an article from the Jeffersonian, of Towson, Md., of February 24, 1950, relative to Douglass Burnett, of Sparks, Baltimore County, Md., recently elected president of the Edison Pioneers, which appears in the Appendix.] FIRST SEMIANNUAL REPORT OF THE SECRETARY OF DEFENSE Mr. TYDINGS. Mr. President, I ask unanimous consent to have printed in the Recorp a letter addressed to me by the Hon. Louis Johnson, Secretary of Defense, with reference to a chapter in his semiannual] report which deals with savings and economy. I also ask unani- mous consent that chapter IV, Savings, Absorbed Costs, and Reductions, from MarcH 8 the first semiannual report of the Sec- retary of Defense, which accompanies his letter, be printed in the Rrecorp. There being no objection, the letter and excerpt from the semiannual report were ordered to be printed in the Recorp, as follows: THE SECRETARY OF DEFENSE, Washington, February 28, 1950. Hon. Mrurarp E. Trprnas,’ Chairman, Armed Services Committee, United States Senate. Dear Mk. CHAIRMAN: My first semiannual report to the Congress under the provisions of the National Security Act amendments of 1949 is now at the printer’s and should be in your hands in bound-volume form in ap- proximately 3 weeks. In view of the time lag involved in the printing process, I am taking the liberty of transmitting herewith one of the chapters of the semiannual report—this being the chap- ter which deals with savings, absorbed costs, and reductions. I am sending this chapter to you out of context in order to get it into your hands as promptly as possible. Since this is the chap- ter which deals with savings, its primary em- phasis is, of course, upon the subject of econ- omy. You will note that at the outset of the chapter the following statement appears: “Elsewhere in this report I have discussed the strengthening of our national security—for in all that we do security comes first, and economy comes second.” My purpose in quoting this sentence is to call your attention to the fact that the re- mainder of the report deals in detail with the various measures we have taken, and propose to take, in the interest of strengthen- ing our national security. The bound volume, which you will receive as soon as printing and binding can be com- pleted, will consist of 10 chapters, together with accompanying reports of the Secretary of the Army, the Secretary of the Navy, and the Secretary of the Air Force. For your in= formation the titles of the various chapters are as follows: Chapter I. Introduction. Chapter II. Mutual defense, Chapter II. Unification. Chapter IV. Savings, absorbed costs, and reductions. Chapter V. Improvement in fiscal proce. dures. Chapter VI. New weapons. Chapter VII. Military research and devele opment. Chapter VIII. Industrial preparedness. Chapter IX. Personnel. Chapter X. Health. It 1s my hope that the entire report will eerve a useful purpose in terms of a more widespread knowledge concerning the things which the Department of Defense, with the assistance and cooperation we have received in such bountiful measure from the Presie dent and the Congress, is seeking to accom- plish. With warm personal regards, I am, Sincerely youre, Lov JoHNSON. IV. SAVINGS, ABSORBED CosTs, AND REDUCTIONS During World War I a speedy victory, even at the expense of efficiency and economy, was the primary concern of the military services. We entered World War II without aunified Military Establishment. The costly 18imilar letters were sent to Hon. Carn Vinson, chairman, Armed Services Commit- tee, House of Representatives; Hon. Kenner McKe.iar, chairman, Committee on Appro- priations, United States Senate; and Hon. Cuagence CaNnwon, chairman, Committer on Appropriations, House of Representatives.
1950 habits which grew up during that war, how- ever, have no place in today’s Military Estab- lishment; nor do they have any place in the unified Military Establishment of the fu- ture, whether tn peace or war. The National Military Establishment, as it existed before the Congress created the De- partment of Defense on August 10, 1949, was still suffering from costly war-born spending habits. It was like a fat man—and, like a fat man, was in poor condition until the fat could be transformed into muscle. In order that the newly created Depart- ment of Defense might be in condition of preparedness to accomplish our basic objec- tive of maintaining the peace, or to fight a war if we should again be the victims of aggression, it was essential for us to elimi- nate the excess overhead and the unnecessary duplications and overlaps that had existed in the past. Before the services could make effective use of their money, therefore, it was essen- tial that they get in condition. Even if ad- ditional amounts of money had been added to their budget, large percentages of it would have failed to produce added military strength. It is the process of getting in condition which has been going on during the period covered by this report. So much for preamble and simile. Else- where in this report I have discussed the strengthening of our national security, for in all that we do security comes first and economy comes second. In this chapter I shall discuss the vitally important subject of savings. In my view, it is mandatory that we effect savings in the Department of De- fense. These are my reasons: First, it is mandatory because of the urgent necessity of maintaining a healthy national economy—and, in order to maintain such an economy, our expenditures must be held to the lowest level compatible with our national security Second, it is mandatory because of the equally urgent necessity of making savings wherever possible in order to assure that money which would otherwise go into exces- sive overhead and waste can be used to in- crease our combat effectiveness. In other words, savings are important in and of themselves because each dollar that we refrain from spending means a healthier national economy, but savings are equally important as a source of money with which we can buy more planes, more tanks, and more ships. A particularly apt illustration of the sec- ond factor set out above was the recently announced decision to maintain an addi- tional aircraft carrier during fiscal year 1951, with the cost of maintaining this additional carrier to be met out of savings elsewhere in the Naval Establishment. This is a graphic illustration of our plans for converting fat into muscle. An illustration of the same general sort, with applicability to the Army, is this: As of the close of the period covered by this report, the Army had 4,400 more men in combat units than it had in such units on July 1, 1949. Much of this increase in combat ef- fectiveness was made possible by savings in the use of undue numbers of personnel for administrative and overhead purposes. This 4,400 increase in the number of men in com- bat units is even more striking when it is borne in mind that the total number of mren in the Army decreased by almost 20,00 men during this period. Over all, the readiness of the Navy has been improved and the active fleet is ready to go. It is manned at 67 percent of wartime strength with trained personnel who seek to make a career of the Navy. This repre- sents a substantial improvement over the situation 18 months ago when a larger active fleet in number of men and ships was manned at only 61 percent of wartime CONGRESSIONAL RECORD—SENATE strength with many of the ships either im- mobilized or in a reduced operational status because of heavy turn-over of personnel and @ serious imbalance in the skills and occupa- tions represented. In the case of the Air Force it is worth noting that on January 1, 1948, the Finletter Commission recommended 70 groups manned by 401,000 men. On that date the report also noted that the Alr Force stood at 337,000 men for 55 programed groups. However, due to requirements for the radar screen, increased function taken over from the Army, and or- ganizational changes tn our bomber groups, 502,000 men would be needed today for the 70-group concept or its equivalent—the re- quirement for an authorized strength of 502,- 000 men was recognized by Congress in the Selective Service Act of 1948. These organizational changes bring up & point which is worthy of comment, namely, the fact that the size of a group ts subject to change. As President Truman has pointed out, “The number of groups is a somewhat misleading measure of airpower since the character, size, number of aircraft, and other elements of the group are not fixed but con- stantly change as conditions require.” An example of the type of change to which the President referred is the programmed size of each B-36 Heavy Bombardment Group— which stood at 18 planes per group less than & year ago, and which stands at 30 planes per group today. In this connection it should also be noted that the programed size of nine groups which stood at 30 B-29's or B-50's per group 2 years ago, stands at 45 today. In addition, these groups include 20 B-29-type tankers which increase the effective range of each individual bomber, In our Air Force of today and as planned for 1951, we have 416,000 men manning 48 groups, but due to the organizational changes noted above, these 48 groups, according to Alr Force estimates, are equivalent to 5214 groups of the size envisaged in the previous concept of the 70-group program. With respect to our over-all economy pro- gram, I have stated on a number of occa- sions that within a year after the amend- ments to the Unification Act, we expect to be effecting savings at the rate of $1,000,- 000,000 a year. The target date is August 10, 1950. With more than 7 months remaining, I am glad to be able to report that we are already three-quarters of the way to our Ob- jective. This report covers not only these savings but in addition also covers absorbed costs and reductions. While the three cate- gories are not always capable of hard and fast lines of delineation, I want to mention at this point that decisions and actions taken account for (1) savings, (2) absorbed costs, and (8) reduction, with the grand total in excess of $1,500,000,000. I shall discuss this at somewhat greater length later in this chapter. Two different, but complementary, ap- proaches were used to achieve economies in the operations of the Department of De- fense. First, there was established the Manage- ment Committee, an action group consisting of one representative of each military de- partment of the rank of Assistant Secretary or higher, with my direct representative as chairman. This committee is exploring seven general areas in {ts economy program: (1) Curtailment of costly war-born spending habits; (2) elimination of excess facilities; (3) elimination of overlapping and duplica- tion; (4) simplification of procedures; (5) better use of manpower; (6) modernization of organization structure; (7) establishment of better management controls. Specific sav- ings directed by the management commit- tée result from such actions as the elim- ination of excessive administrative and pro- ficiency flying, elimination of unnecessary printing, reduction in number of adminis- 2709 trative motor vehicles, and other economy measures. Second, it was necessary to get the par- ticipation of all hands in the departments, who, because of their intimate knowledge of activities at the working level, could iden- tify economies that could be made without impairing military effectiveness and, in many instances, could actually suggest ways of in- creasing combat effectiveness with lesser ex- penditure of our resources. This all-hands effort, termed “reprogram- ing,’ was stimulated by the concurrent iden- tification by the Management Committee of specific areas where savings could be made. The results of our efforts to eliminate waste and inefficiency in the Department of Defense will not be confined to a single year, Indeed, the lasting and tangible benefits of our economy efforts in fiscal 1950 have al- ready been clearly reflected tn the fiscal 1951 budget. The most conservative estimates of the military departments on August 1, 1949, upon which the fiscal year 1951 budget was based, provided for certain forces and major maté- riel procurement within a $13,000,000,000 total. Because of the savings and economies instituted in fiscal 1950, the plans for 1951 have been modified to provide significantly more powerful military forces within the same dollar requirements, As compared with the estimates made by the military depart- ments on August 1, Navy strength has been increased by three attack carriers, three car- rier air groups, one cruiser, and one battle- ship in reduced commission. There will be two marine divisions instead of six battalion landing teams. The Army will be organized into 10 divisions rather than 9, and will also have 2 additional antiaircraft battalions. The Air Force will increase the number of planes per group in 8 additional bomber groups. Also, since August 1, 1949, $160,000,000 was added to aircraft procurement for the Air Force and $50,000,000 for the Navy. In addition to a 200-percent increase in the allocation for antisubmarine warfare equip- ment, 700,000 hours were added for flying in combat-type units in the Navy, and Army civilian-component allocations were in- creased by $6,000,000 to rebuild and modern- ize equipment for the National Guard and 816,000,000 for armories for the Organized Reserve. Army matériel procurement was increased by $41,000,000, including $10,000,- 000 for new type signal equipment for the mobile striking forces of the Army, $17,- 600,000 for heavy ordnance, including spe- clal prime movers, and 87,800,000 for mod- ernized portable bridges and other new engli- neer equipment. We will not retreat from our basic objec- tive of maximizing our national security and minimizing its cost. Our watchword must be economy and efficiency in every activity— with the size of our Military Establishment on as stable a basis as possible, subject to such increases or decreases as the interna- tional situation may warrant. Our goal con- tinues to be well-trained, well-equipped, ready land, naval, and air forces. PROCEDURES EMPLOYED BY THE DEPARTMENT OF DEFENSE In the remainder of this chapter, I shall discuss in greater detail just how we have carried out the program which I have out- lined above in general terms. Earlier, I mentioned that what we have actually been engaged in 1s the reprogram. ing of our budget. The cooperative work that was done by this office and the Com- mittees of the Congress, in the final phases of the enactment of the 1950 budget, were part and parcel of this reprograming proc- ess. During September 1949, the Congress was still considering the appropriation for the Department of Defense for the current
2710 fiscal year, and had indicated Its expectation of substantial savings. On this basis, in or- der to assist the Congress and the committees in their efforts to identify these savings, I advised the secretaries of the three military departinents to take a number of steps to identify, at an early date, areas where costs might be reduced. These steps included: 1, Reductions 1n individual ttems itn ac- cordance with the action being taken by the Congress. 2. Reductions to reflect the gradual release of l-year trainees tn compliance with the policy decision being made by the Congress. 8. Reductions to reflect actual and antici- pated lower commodity prices. 4. A review and report on all areas of pos- sible savings. 5. The adjustment of military and civilian personnel strength to that required for planned activities in fiscal year 1951. The Secretaries were advised that “In working out these savings it is expected that each department will make its adjustments in such a manner as to achieve the most effi- cient and effective military force within the limited funds avaftlable.” These initial steps led to identification of specific areas in which economies could be made and the results were made available, by the end of September, to the appropriate congressional committees. The net result of this process was that the 1950 budget, as enacted in October, contained reductions of $425,000,000 below the budget which the Pres- ident had recommended in January. The principal decreases developed cooperatively by the Congress and the Department of De- fense resulted from the curtailment of the 1-year enlistment program (a congressional policy decision), absorption of the cost of the radar fence, reductions in civilian personnel, price declines in subsistence, clothing, and fuel, reduction in administrative and profi- ciency type flying, and the substitution of commercial for military vehicles where prac- ticable.? 2Inasmuch as final congressional action on the Department of Defense fiscal 1950 ap- propriation bill was not taken until the end of October, the results of our review and re- programing efforts have had to be measured in terms of the 614,200,000,000 budget re- quested by the President. The appropriation bill finally enacted by the Congress provided new obligational authority for fiscal 1950 of 13,900,000,000. This did not provide for approximately $339,000,000 to cover costs of the Career Compensation Act or for $161,000,- 000 of public works projects included in the President’s budget as contingent items. Likewise the congressional appropriation did not allow for a number of other major added costs totaling approximately $260,000,000 not included in the President's budget. Had funds been requested and authorized for the public works contingent item and these ab- sorbed costs, the total Department of De- fense appropriation for fiscal 1950 would not have been 613,900,000,000 but approximately 814,700,000,000. This does not include 8266,- 000,000 of savings below the President’s budget jointly developed in our reprograming studies and by congressional committees and agreed upon around the end of September. We plan to absorb these added costs within our reprogramed $13,000,000,000 obligation- al ceiling for fiscal 1950 and we do not cur- rently plan to seek appropriations for the public works items. It should also be point- ed out that the final congressional appro- priation of @13,900,000,000 included an in- crease over the President's request of §736,- 000,000 for aircraft procurement and main- tenance in the Department of the Air Force. These funds have been placed in reserve by the President. This increase has not been included in the computation of savings, ab- sorbed costs, and reductions discussed in this report. CONGRESSIONAL RECORD—SENATE Both during the congressional considera- tion referred to above, and thereafter, we continued our reprograming. The primary objectives to be achieved in this reprograming were: 1. All possible reduction of overhead costs. 2. The elimination of nonproductive or unessential activities. 3. A channeling of funds into those activi- tiles which would strengthen the combat forces and increase their matériel support. 4, The phasing of fiscal 1950 activities to the levels that could be maintained in fiscal 1951. Meantime, target ceilings for fiscal 1950 were established for each of the departments at restrictive levels to achieve the above ob- jectives, and to insure the most rigorous pos- sible review of plans and programs within each of the military departments. These initial planning ceilings were: Army, $4,050,- 000,000 (a reduction of $357,000,000); Navy, $3,850,000,000 (a reduction of $376,000,000) ; and Air Force, $4,400,000,000 (a reduction of 196,000,000). (As is customary, the Presi- dent had in July established a tentative budget ceiling for the next fiscal year; in this case, $13,000,000,000 for fiscal year 1951.) Each of the military departments was directed to submit a revised program within these tentative ceilings as well as to demon- strate what could be accomplished within the amounts allocated and what significant program deficiencies might exist. Testifying before the House Armed Services Committee on October 21, 1949, I said: ‘‘The strains and stresses upon the national econ- omy which we have with us at the present time make it impossible for any service to get all that it wants, whether in dollars, in manpower strength, or in matériel. * * © But in considering the impact of the budget ceilings on the individual services, it should be borne in mind that the 1950 budget—and the 1951 budget as well—is based on an over-all plan for the defense of this Nation— & plan evolved by the best military minds in this or any other country. * * * The Department of Defense budget ceiling for 1951 has been set at $13,000,000,000. * * * This compares with the fourteen and four tenths billion (President’s initial fiscal 1950 planning ceiling) * * * last year. We will have to effect the maximum possible savings within the Department of Defense in order to meet the $13,000,000,000 figure, and we will also have to make those reduc- tions which the Joint Chiefs of Staff feel can best be made with the least impact on our military readiness. * * * Obviously, we are already making plans to shape the military establishment we will have during the remainder of fiscal 1950, in order that we may enter fiscal 195] with approximately the military establishment we will be able to maintain during that year. * * * The problem of effecting adjustments in the pro- grams of the three services is an extremely difficult one, and must, of course, be tied in directly with the strategic and logistic plan- ning which is the statutory duty of the Joint Chiefs of Staff. At the time of this testimony we were in the process of subjecting the reprograming submitted by the departments for fiscal 1950 to analysis and evaluation. Detailed hear- ings, lasting well into November, were held at which the top echelons of each service and each major organization in the services par- ticipated. These hearings revealed that the revised programs initially submitted by the military departments cut too deeply into the bone and sinew of the organisation instead of removing all of the fat. The Army initially allocated substantial portions of the reduction to its target ceiling to the new modern equipment necessary to the proper arming of its mobile forces. The Navy and the Air Force initially proposed MARCH 3 substantial reductions in alroraft procure- ment. As @ result of a critical project by project evaluation headed by members of my staff, recommendations were made cov- ering areas in which additional savings could be effected in overhead and in items of doubtful value, with these savings being ap- plied to reinstate important major procure- ment items, and to restore funds for main- tenance of civilian components and indus- trial mobilization. Following this review, 2 days of discus- sion were held with the Army, Navy, and Air Force Secretaries and their principal military assistants, resulting in concurrence on most recommendations. The major problem areas remaining were discussed at a special meeting of the Armed Forces Policy Counctl in mid-November. At this meeting the Secretaries of the military departments and their military chiefs expressed their agreement with the adjusted reprograming with the exception of a few minor points. Five days later at another meeting of the Policy Council, these remaining points were Tesolved. At each of the various stages of this process, adjustments were made in the amounts allocated as a result of the infor- mation presented by the three military de- partments and members of my staff. Re- vised budget ceilings have been established for each of the military departments—Army, $4,177,000,000; Navy, $3,985,000,000; and Air Force, $4,501,000,000. In addition to cover- ing the cost of certain classified projects and military public works not included in the original target ceilings, the revised 1950 pro- gram provides approximately 165,000,000 more in major military procurement than Was contained in the plans of the military departments in October 1949. It also pro- vides for more tactical flying by both the Air Force and the Navy than proposed in October. The figures set out above do not tell the whole story, of course. To these figures must be added the costs which the Depart- ment of Defense has absorbed out of funds appropriated, without asking for supple- mental appropriations as might have been done. We have absorbed a cost of $339,- 000,000 for pay increases of military person- nel, which was included in the President’s 1950 budget as a contingent item. In ad- dition, $257,000,000 of major costs, not in- cluded in the President’s budget, are being absorbed by the Department of Defense. The principal items of absorbed costs in this latter category are: Costs added by Classification Act of 1949__-....--- 2-2 - $29, 000, 000 Costs added by wage board actions....--..-----....---- 84, 000, 000 Costs added by higher freight and passenger rates._.__---. 14, 000, 000 Direct costa of operating Berlin Airlift in July and August and its subsequent roll-up_--_.__ 49, 000, 000 One-time inactivation costs of installations and ships... 71, 000, 000 Cost of additional classified project -.-.--------.-.-.--.. 10, 000, 000 The reduction in overhead and the elimi- nation of nonessential items in fiscal 1950 establish a pattern which, carried forward into fiscal 1951, permits the maintenance of more effective forces and the procurement of substantially increased quantities of modern equipment within the $13,000,000,000 ceiling for that year. SUMMARY OF SAVINGS AND REDUCTIONS All of the above decisions and actions ace count for a total of $1,592,000,000 in savings, absorbed costs and reductions. This plo- ture is shown below in terms of the major most elements of the Department of Defense.
1950 Dezgartment of Defense—Summary of savings and reductions, fiscal year 1950—Estimate of Dec. 31, 1949, on basis of decisions and actions already taken {Based on new obligational authority—millions of do}lars} President's Cost category budget qa) Total, Department of Defense. ...... 14, 218 1 Miltary personnel costs. .......-------- 4, KZA 2. Maintenance and operation. . 4, O87 Daayor procurement. __.-- a 2, 804 Vublic works construction. ....-.-...--- tht B21 1, 020 403 Reserve forces. Other military requirements . -...----- Establishment-wide actiy ities Reserve for emergencies wT BR Absorhed a Totalbudget| Revised Savings, ab- chad includin, Department | sorbed costs President's | #bsorbe of Defense | and redue- budget costs program tions (2) (3) (4) (5) 13, 000 —1, 502 4,577 —37 3, 400 —50S 2, 520 435 244 212 765 56 065 —74 403 7 A brief explanation of the above items tis as follows 1. Military personnel costs: The $377,000,- 030 net decrease in this category results from « number of actions, principally the phasing out in this fiscal year of the 1-year enlistees (in line with the policy decision of the Con- #ress, expressed in the report on the fiscal 1950 appropriation bill), phasing of military personnel strength to the level that could b> supported in fiscal 1951, lower costs of subsistence and clothing, the extension of monetary allowance system to all military services in Neu of issue of clothing in kind, adjustment of enlisted rating structure, and reduction of unnecessary travel and trans- portation through closer control Approxi- mately $26,000,0C0 of added costs not included in the President's budget have been absorbed in this category to allow for increased rail transportation rates and for the phasing out of military personnel connected with the Ber- lin al lift 2 Maintenance and operation costs: The bulk of the $508,000,000 net decrease in this category arises from the dismissal of over 165,000 civilian employees? and the elimina- tion of their housekeeping costs, and the closing or reduction in status of 51 military installations surplus to our peacetime needs The annual rate of savings from the reduc- tion of pay roll and housekeeping costs of these employees will be well in exccss of half a billion dollars The savings directly realiz- able in fiscal 1950 are less than this amount, because most of the reductions apply for only a portion of the year and because of accrued annual leave payments. Purt of the savings which have been effected in the maintenance and operation costs of the Department of Defense have been used to absorb approximately $220,000,000 of addi- tional costs arising from the Classification Act of 1949, Wage Board increases in com- mercial and industrial-type installations, in- crenses in freight rates, roll up of the Berlin airlift, and certain one-time added costs in- volved in the inactivation or reduction in status of installations. 3 Major procurement’ Net decreases of approximately $435,000,000 have been made in major procurement programs from the amounts initially proposed in the President's budget. These have been determined after careful consideration of equipment require- ments for balanced peacetime forces. No re- ductions have been made in the Army’s major matériel procurement programs. In connec- tion with the Army's requirements, the re- vised program provides for continued em- phasis on modern antiaircraft equipment, tanks, electronic equipment, guided missiles, and tactical vehicles. In the shipbuilding field a substantial num- ber of naval prototypes, conversions, and new units are under way from prior year authorizations. Expenditures on this work will approximate 8300,000,000 in the current year Increased emphasis has been placed on antisubmarine warfare equipment and techniques. 3 By January 31, 1950, this figure increased to 157,000. The revised fiscal 1950 program provides for procurement of over 2,000 modern air- craft und continuance of a procurement pro- gram at approximately a $2,0C0,000,090 annual level In order to maintain a level rate of aircraft procurement at a $2,000,000,000 figure, cur program reflects a reduction of $306,000,0G0 below the President’s bucget-—a reduction of $180,000,000 for the Air Force, and $126,000,- 000 for the Nevy One of the considerations that entered into this action was the exist- ing backlog of orders in this field, a backlog that will stand at $3,400,000,000 at the end of the current fiscal year ‘This 83,400,000,000 backlog, when added to the $2,000,000,000 presently before the Congress in the 1951 budget, will give a grand total, as of July 1, 1950, of approximately $5,500,000,000 of un- expended aircraft procurement authority. 4 Public works construction: Of the $242,- 000,000 reduction in military public works activities, 8161,000,000 results from a decision to retrain from requesting financing during the current fiscal year. The remaining proj- ects have becn deferred, have been eliminated because of changed circumstances, or are being critically reviewed by the Department of Defense. 5. Reserve forces: Savings of $56,000,000 have been realized by utilizing extsting stocks of equipment and material in lieu of new procurement and by reflecting decreased costs of clothing, fuel, subsistence, etc These budgetary levels still permit the Na- tional Guard to increase its strength and the Organized Reserve Corps to increase partic- {pation in paid drills. 6. Other military requirements: Savings of approximately $64,000,000 are indicated in the area of other military requirements. The research and development program 1s being maintained at the same level as planned, in line with our continued emphasis on these activities. The principal decrease is reflected in a reduced allocation for plant studies and maintenance of stand-by plants and facilities where we believe substantial economies can be made, 7. Establishment-wide activities: These activities are being maintained at the same level proposed in the President’s budget al- though in many cnoses new functions are being performed without increased costs. The figures described above, if constructed on a project basis instead of on the major category basis outlined in the preceding pages, can be listed in the following form: Derivation of savings and reductions 1 [Rounded off to the nearest thousand] Fiscal year 1950 total Phase out of 1-year enlistee program -....-.----------- 2 678, 827, 000 Lowered cost of recruiting program _......----- ennnne 22, 255, 000 Price declines in fuel_._...- -  *26,360, 000 Price declines in subsistence and clothing-.....-....... 744, 863, 000 Phasing of milit: personnel to fiscal year 1951 level... * 80, 405, 000 Bee footnotes at end of table. CONGRESSIONAL RECORD—SENATE Lowered cost of printing and binding ~---- wane ee enw en en Inactivation of administrative vehicles and substitution of civilian-type vehicles for heavy military-type  ve- hicles _..-..-.------------ Inactivation of facilities sur- plus to peacetime needs_-__- Lowered cost of petroleum re- serves ..-.-.-----------..- Lowered cost of classified project...---.------.------ Restrictions on civilian travel. Bringing the rating structure of enlisted men into line with actual distribution and the structure plan for fiscal year 1951 .._...----------- Institution of the monetary maintenance allowance sys- tem in eu of issue in Kind. Reduced requirement for Air Force subsistence__..--.... Lower requirement for feeding indigenous persons overseas. Curtailing and closely exam- ining requirements for is- suance of change-of-station travel orders _..-.---.----. Lowered cost of quarters al- lowances for enlisted per- sonnel resulting from ad- jJustments in the rating structures____---.--------- Savings in flight pay through decreased number of pilots— Early discharges, releases of CAD officers, and lower re- quirements for recruit out- fits _------------ +. ------ - Reduced requirement for op- eration of aircraft..-.--..- Decrease in depot and base supply and maintenancc.-. Lower fuel requirements from reduction tn steaming hours of the active fleet and op- eration of a smaller fiset.-. Curtailment of the use of chartered tankers __...---- Rescheduling and combining cargo shipments. ._..---.-- Lowered operating expenses of ships other than fuel.____- Adjusting schedules for ship ovec-hauls, reevaluation of scope of work required for individual ships, and ac- complishment of increased self-maintenance by ships’ Decrease in the total commu- nications requirements for the Department of Defense including those resulting from the operation of AFSA_ Reduced procurement of or- ganizational clothing, mo- tor transport spare parts, general supply items, signal supply items, and curtalil- ment of repairs, upkeep, and improvements for Marine Lower level of support for courts martial, chaplain supplies, miscellancous schools, etc....---..----.-- Curtr ment of major repairs and replacements and gen- eral mairtenance of naval facilities .._..------------. Lower procurement in major categories as follows: Alrcraft._-.--------.---- Ships _....--- - Weapons -..-.-.----. -- Ammunition ....--- --- Guided missiles._...__ - See footnote at end of table. 2711 Fiscal year 1950 total 2 $2, 281, 000 #11, 390, 000 * 169, 195, 000 3500, 000 +2, 134, 000 2 393, 000 9, 940, 000 13, 797, 000 8, 683, 000 3, 172, 000 8, 653, 000 1,900, 000 1, 978, 000 9, 476, 000 4, 962, 000 4, 226, 000 2, 600, 000 2,000, 000 7,960, 000 8, 000, 000 19, 000, 0cO 6, 640, 000 1, 000, 000 709, 000 7, 21,600 806, 795, 000 34, 430, 000 4, 672, 000 9, 5600, 000 4, 200, 000
2712 Lower procurement in major categories as follows—Con. Vehicles (including pur- chase of civilian type instead of heavy mill- tary types) --~-------- Advance base Fiscal year 1950 total $86, 000, 000 20, 099, 000 96, 400, 000 3256, 437, 000 Miscellaneous major pro- curement _-..--------- Reduced or deferred public works construction...----. Savings through consolida- tion of reserve training facilities, joint use of facili- ties and inactivation of some smaller training ves- sels while at the same time extending the training schedules of some of the larger vessels which will accommodate greater num- bers of reserve personnel for training. .._--------------- Reevaluation of research and development projects_..... Cancellation of the quinquen- nial overhauls of reserve fleet vessels and reduced preservation and mainte- nance of other war reserves. Curtailment of information and education activities___ Employment of better traffic policies and procedures in the operation of a central military land traffic office... Reduction in cost of Air Na- tional Guard, ROTC, and Reserve ....--------------- Reduction of leased space after consolidation of activ- ities _..-------.----------- Reduction and unification of military attaché office staffs _-.._----~-~.-------- Lower cost of planned field exercises ..---.--~--------- Savings in maintenance and operation of hospital facili- 18, 488, 000 17, 187,000 13, 472, 000 830, 000 1, 610, 000 8, 813, 000 14,000 1, 436, 000 500, 000 6, 821, 000 General appropriation repro- graming by deferred maintenance, personnel re- ductions or turn-over, lower level of operation in order to absorb wage board and other pay increases........ Flying hours....--.----.---- Reevaluation of industrial mobilization -.....-------- Price declines in miscellane- ous supplies...----.-..-.- Portion of contingency item for Career Compensation Act not required.__-...... 156, 535, 000 57, 662, 000 25, 928, 000 2, 694, 000 61, 000, 000 Total -.-..--.----.---- 1, 692, 093, 000 2 Does not include a large number of items which will lead to future savings, including, for example, savings in fiscal 1950 resulting from the inactivation or change in status of 18 military medical hospitals, directed on February 1, 1950. This step will alleviate the acute shortage of physicians in the armed services and effect recurring annual savings, of abou’ 825,000,000 (permitting this saving in dollars or a transfer of effort to combat support, or both) without affecting the quality of medical services available to mili- tary personnel and thelr dependents. For & general discussion of items that will lead to future savings, of which this hospital illustration is an example, see below. 2 Reduction partially reflected in appro- priatior act. Nore.—Most projects listed are affected by the civilian personnel reduction. Civilian personnel savings in fiscal year 1950 will total $200,000,000—and $50,000,000 in terms of the annual rate of suvings. CONGRESSIONAL RECORD—SENATE A large number of the items outlined above clearly represent savings, many of which will continue in future years, A number of other items clearly represent reductions. Many items, however, cannot be categorized solely as either savings or reductions, since they contain elements of both. An examination of the project-by-project list set out above shows many areas of major savings—savings which, in the aggregate, represent an annual rate of $750,000,000,000 Examples of the items that enter into this total are our sav- ings in the field of civilian personnel (aggre- gating 8500,000,000, in terms of the annual rate of savings, and spread across substan- tially every item on the foregoing list), our savings through consolidation of the mili- tary attaché systems, savings in printing and binding, in clothing-allowance systems, in the use of administrative vehicles, in admin- istrative and proficiency fiying, and similar measures. In reviewing the items listed above, it should be borne in mind that there are many items that could be carried at sp’ cific dollar figures, if we were willing to proceed on a basis of conjecture, instead of on a basis of fact. We have preferred, however, to err on the side of conservatism in preparing this list—and have therefore included only those items which can be identified as of the pres- ent time. If we already had the performance budget in effect throughout thr Department of Defense—as authorized by act of Con- gress on August 10, 1949—it would be in- comparably easier to prepare a full and de- tailed list—but converting long-standing budgetary procedures into a performance budget is a complex and time-consuming process. It will be more than a year before we can identify all areas of savings in a manner which I consider adequate—but I do want to mentton at this point that there are moany items which are not specifically identi- fied on the foregoing lst, for the reason I have just mentioned. In addition to the items I have just been discussing, we have in process of study or implementation many other items which will yield substantial savings in future years. Among these items may be enumerated the following: The consolidation of oceangotng shipping; the results of our cataloging proj- ect; savings in the medical field in addition to those covered by the announcement of February 1 concerning general hospitals; further streamlining of the supply systems of the Department of Defense; further sav- ings in the ficld of land transportation, in- cluding improved trafic management, and further savings in the operation of the con- solidated Military Alr Transport Service; further savings through more effective utili- zation of military and civilian personnel; savings from improved joint utilization of research and technical facilities; savings through library consolidations; further sav- ings in the communications field, and major savings that should result from work now under way in training and educational pro- grams. In my opinion, the best evidence of the continuing character of the savings which have already been achieved ts the over-all comparison of the military program for fiscal year 1951 with the military program for fis- cal year 1950. I summarized this to the House Appropriations Committee on Janu- ary 12, when I said: “In the course of your hearings at this session your committee will find reflected in the detailed estimates reduced dollar re- quirements for many functions and activi- ties of the Department of Defense. These reduced requests reflect what we have already done and what we confidently feel we can do in the coming year in providing support for an effective military force at a lesser cost. ‘In closing I would like to sketch in broad outline the results of our efforts to achieve our common objectives. This budget con- Marcu 8 templates, as stated in the President’s mes- one That ‘total personnel assigned to combat forces will be the greatest since the com- pletion of demobilization following World War Ii.’ “That $2,000,000,000 will be available for aircraft procurment—about the same as the volume of orders placed under fiscal year 1949 authority and planned for use in fiscal year 1950. “That, military personnel will be slightly less in total number than in 1960—but re- quiring almost the same allocation of funds. “That the National Guard and the Alr Na- tional Guard will be continued throughout fiscal ycar 1951 on a level program at the strengths attained during the current fiscal year—and that the Organized and Volunteer Reserve forces will be continued at approxi. mately the current level. “That with the exception of shipbuild- ing—and aircraft procurement mentioned above—other major procurement will be in- creased. “That research and development and in- dustrial mobilization will be continued at about the same level as in fiscal year 1950. “This is the defense structure for which we request $13,000,000,000 this year as com- pared with the 814,200,000,000 which was requested for last year.” DISPLACED PERSONS The Senate resumed consideration of the bill (H. R. 4567) to amend the Dis- placed Persons Act of 1948. Mr. EASTLAND. Mr. President, yes- terday I stated that the record shows, without serious conflict, that subversives and Communist agents are coming into the United States, and that the admin- istration of the act by officials of the Displaced Persons Commission stationed in Europe is not in the best interests of the country, but that the welfare of the Nation is a secondary consideration. I expect today to read from the testi- mony of officials of the United States Government, which will substantiate in toto every statement I have made. Be- fore going into that phase of the matter, I desire to invite the attention of the Senate to the fact that the Subcommittee on Immigration of the Committee on the Judiciary was ordered by the Senate to conduct a thorough and full investiga- tion of the question of displaced persons, A large sum of money was appropriated by the Senate to conduct the investiga- tion. The committee held exhaustive hearings over a period of many months. We worked zealously and conscientiously to draft and report the best possible bill, under the circumstances, with due re- gard to the interests of displaced persons and with due regard to the safety and security of our country. We divorced ourselves from the propaganda dissemi- nated by the million-dollar lobby, which has attempted to mislead and deceive the American people into favoring the pas- sage of a measure which, I state candidly, would endanger the safety and security of every family in the United States. We have reported to the Senate the best bill we know how to write. Mr. President, the question is not whether displaced persons will be ad- mitted into the United States. The question is not whether we shall ac- cept our share of the displaced persons. Each of the two measures—the bill re- ported by the committee and the sub-