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provide these people with the necessary equipment and to pay for the added cost of communications, the Department's lowest estimate is $8,000.

Mr. TABER. Can you not get the equipment from some of these temporary agencies that are cutting down on their activities?

Mr. MACEACHRAN. We are constantly endeavoring to get equipment through the Procurement Division, but are seldom able to obtain usable equipment. For example, we are rarely able to get any file cabinets.

Mr. LUDLOW. How about typewriters? As Mr. Taber says, some of these activities are demobilizing or reducing in their personnel. Would not some of their typewriters be available?

Mr. MACEACHRAN. At the present time we have not received notification of any typewriters available for this purpose.

Mr. WOODRUM. You would have to pay for them anyway, would you not?

Mr. MACEACHRAN. We always have to pay the Procurement Division the value of the typewriter according to its condition.

Mr. LUDLOW. When a temporary activity goes out of the picture, why could not there be a transfer from that activity to yours without cost? Why should there be any cost?

Mr. MACEACHRAN. All equipment must be turned in to the Procurement Division of the Treasury Department, which is the clearinghouse.

Mr. LUDLOW. I am not talking about the modus operandi but, as a matter of fact, if it is not needed in some one governmental activity, why should it not be transferred to another governmental activity? Mr. WOODRUM. You cannot do it under the law.

Mr. MACEACHRAN. That is right.

The 1938 appropriation for the entire Department, $78,410, is already insufficient. That amount really represents, excluding the $8,000 which has been omitted thus far, a decrease from the Department's original recommendations of $17,825.

Another factor with which we are confronted this year, which was unforeseen at the time our estimates were submitted and approved by the Bureau of the Budget, is the fact that certain items of equipment have greatly increased in price. For example, we provided for 299 file cases in our original estimates, which were approved by the Bureau of the Budget at a cost of $4,722. The existing price has advanced to $8,600.

Prices on other items have gone up, perhaps not as much, but there has been a gradual increase all the way through in the matter of equipment.

The result is that without the provision of funds for these contingent expenses, we shall not be able to equip the new personnel. Mr. TABER. How many additional employees are you getting in this Division?

Mr. MACEACHRAN. There will be 38 new employees.

Mr. TABER. Are they transfers from the Tariff Commission?
Mr. MACEACHRAN. No, sir. These are new appointees.

Mr. TABER. Cannot the Tariff Commission do that detail work? Mr. MACEACHRAN. Mr. Darlington of the Trade Agreements Division is here. I cannot answer that question. He can answer it better than I.

Mr. TABER. It would seem as though you could get that work done by the Tariff Commission. They have a lot of clerks who are familiar with that sort of thing, who are not doing very much, anyhow.

Mr. DARLINGTON. The Tariff Commission for the most part does statistical work. The work of the State Department is more of a policy nature and there is a great deal of this kind of work to be done, in connection with the agreements which have been concluded, and in connection with the studies of the countries which may be taken up in the future. This is work which could not very well be put into the Tariff Commission.

The trade agreements program is headed up in the State Department. Its direction and control are centered there and the performance of these functions requires adequate personnel.

Mr. MACEACHRAN. I may say that the break-down of the 38 employees is as follows: 14 officers; 8 clerks; 12 clerk-stenographers; 1 mimeograph operator and 3 messengers.

Mr. WOODRUM. All civil service?

Mr. MACEACHRAN. No, sir. These appointments are without regard to Civil Service rules and the Classification Act. This will increase the total number of the personnel to approximately 90 people. Mr. WOODRUM. Have those people been put on yet? Mr. MACEACHRAN. Seven people have come on. We are hard pressed to find a place for them to work, to say nothing of equipment to work with.

Mr. LUDLOW. What kind of a merit test do you apply?

Mr. MACEACHRAN. Mr. Darlington can answer that better than I Mr. DARLINGTON. The people are looked over very carefully by four of us in the Division. We each interview the candidates before they are taken on and we each read the papers which they submit and ask them questions. We go into the matter very carefully; we must because we cannot afford to make mistakes.

Mr. LUDLOW. That is what I was thinking, it is a special kind of service.

Mr. TABER. Do you mean that even the clerks and stenographers are not civil service? Are they taken without civil-service examination? Mr. MACEACHRAN. They may be appointed without regard to the Civil Service.

May I say a word here in connection with the regular appropriation of the Department, to indicate the unforeseen expenses that are met, that are now being thrust upon us, due to the reorganization of the Department, which has only commenced, and the fact that the Department is terribly short of space in the Department of State Building? In order to carry out this reorganization we are having to erect partitions, a thing we rarely had to do before. In the last few weeks our encumbrances have reached approximately a thousand dollars in connection with the erection of partitions in an effort to build these cubicles for people to work in so as to separate the different parts of an overcrowded room.

In addition to that, a reorganization of this kind involves the changing of our dictograph communication system. While we keep this expenditure down to a minimum, we have obligated approximately $750 thus far in the present fiscal year.

Our present appropriation cannot contemplate the provision of the equipment, and so forth, for these 38 new employees. Mr. WOODRUM. Very well.

THURSDAY, JULY 15, 1937.

INTEREST PAYMENTS ON AMERICAN EMBASSY DRAFTS

STATEMENT OF HON. SOL BLOOM, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF NEW YORK

Mr. WOODRUM. We have before us an item for interest payments on American Embassy drafts. Mr. Bloom, of New York, would like to make a statement on this item. We shall be glad to hear you at this time, Mr. Bloom.

Mr. BLOOM. Mr. Chairman and Gentlemen: I come here with reference to Public Law 771, which has been recommended by President Coolidge, President Hoover, and President Roosevelt, and has passed either one branch of the Congress or the other various times but has been lost because the two Houses have not acted together on it.

At the last session both Houses passed the bill and the President signed it on June 24, 1936. It is now Public Law No. 771, Seventyfourth Congress. That law authorizes that the sum of $44,403.15 be appropriated for the payment of interest on certain drafts drawn on the Secretary of State by the American Embassies in Russia and Turkey, and transfers which the Embassy in Turkey undertook to make by cable communications to the Secretaries of State during the period from 1915 to 1920, payment of which was deferred on account of lack of applicable funds at the time the drafts or transfers were presented for payment. The merits of this matter were carefully considered by the Committees on Foreign Affairs and Foreign Relations when the bill was before those committees and the claims were regarded as just ones. When, however, the appropriation authorized by Public Act No. 771 came to the Appropriations Committee I understand the committee rejected the item.

Mr. WOODRUM. What does the bill provide?

Mr. BLOOM. I can explain it to you in 3 minutes. At the beginning of the World War the United States took over the representation in Russia of the interests of the British, French, and Italian Governments, and in Turkey of the interests of those three governments and also the interests of the Russian Government. In discharging these responsibilities money was of course necessary for the purpose of relieving the nationals of the countries represented, and it could only be obtained through drafts on the Secretary of State and advances of money made by the United States pending reimbursement by the Governments for whose interests the money was expended. To make it possible for these advances to be made, the Congress provided a revolving fund from which payments could be made and which could afterwards be reimbursed by collections from the interested governments. From December 23, 1915, to April 21, 1917, alone the American Embassy at Constantinople drew drafts totaling approximately $4,500,000 for expenditures on behalf of the nationals of the foreign governments which the Embassy was representing in Turkey. In the disturbed conditions many of the drafts drawn by the Embassy were not presented for payment until after the revolving fund had ceased to be available and could not be paid until Congress had provided appropriations for the purpose. Long delays ensued and, after

the principal had finally been paid, owners of the drafts claimed interest for the period elapsing between presentation of the drafts and their final payment. Those claims were presented to Congress, which recognized the justice of them and made the necessary appropriations for their payment.

The drafts for cable transfers covered by Public Act No. 771 represent interest on moneys used by the Government for the same purposes and in the manner which I have already described. The interest is at the same rate and for identically the same purpose as Congress has heretofore approved as being just and has made appropriations for payment. There is no question whatever about the justice of these claims or the fact that the Government cannot honorably refuse their payment.

These claims have been investigated with great care by the Department of State. Their payment has been recommended by succeeding Secretaries of State in the various administrations. At least three Presidents have recommended their payment. They have been examined carefully by both the Foreign Relations Committee of the Senate and the Foreign Affairs Committee of the House, and on the recommendation of those committees a bill was passed and approved by the President, which is now Public Act No. 771, authorizing appropriations for the payment of the claims.

These are very meritorious claims. These people loaned money to the Government of the United States without interest expecting that they were to be reimbursed within 2 or 3 days. Instead, they were not reimbursed for from 3 to 4 years during which time the Government had the use of their money.

The amount of this interest has been checked by the Department and it is the amount due at the rate of 4 percent which was the rate the Government was then paying.

Mr. WOODRUM. Was this matter presented to the subcommittee handling the State, Justice, Commerce, and Labor appropriation bills? Mr. BLOOм. That I do not know.

Mr. WOODRUM. It was in the regular budget before that subcommittee, was it not?

Mr. BLOOM. I believe it was; yes. We were surprised when we were told that this committee took out the item.

Mr. TABER. How much is the item?

Mr. BLOOм. The estimate is $44,403.15. That is what the State Department figures is the amount.

Mr. WOODRUM. It has never been before this subcommittee, so far as I know. Do you remember it, Mr. Taber?

Mr. TABER. I never heard of it.

Mr. LUDLOW. Who is the claimant, the Vienna Bank?

Mr. BLOOм. The claims to which Public Act No. 771 relates are the following:

Credit Lyonnais, Paris, France, interest..

Riggs National Bank, Washington, D. C., interest..
Brown Bros. & Co., New York City, interest.

$3, 569. 35

1, 607. 95

2, 763. 96

Bank of New York & Trust Co., New York City, interest-
Berg Bergamali, Manchester, England, interest-
Wiener Bank Verein, interest...

Mr. TABER. And this item is for interest, is it?
Mr. BLOOM. It is for interest.

Mr. TABER. What was the amount of the loan?

6, 216. 86

36. 36 30, 208. 67

Mr. BLOOм. The drafts and cable transfers on which this interest is due total about $317,000, and the period during which the several amounts which make up this aggregate amount remained unpaid by the Government ranged from 2 to 4%1⁄2 years, during which time the owners of the drafts were deprived of the use of their money without any compensation whatsoever.

Mr. LUDLOW. And what interest rate is provided here?

Mr. BLOOм. The rate of interest on which these claims are based was 4% percent, which is the rate the Government was paying for money at the time these transactions took place and is the rate which Congress approved in connection with other claims of this nature, payment of which was provided for several years ago. This is the rate which was deemed by the Department of State and the Bureau of the Budget to be fair and just.

Mr. WOODRUM. We will look into this matter, Mr. Bloom, and give it our consideration.

Mr. BLOOM. If it is necessary, Mr. Chairman, may I refresh my memory on certain of the facts and appear before the committee at a later time, if the committee wishes further information?

Mr. WOODRUM. Surely.

Mr. BLOOм. Thank you very much.

THURSDAY, JULY 15, 1937.

WAR DEPARTMENT

QUARTERMASTER CORPS

STATEMENT OF COL. EDMOND B. GREGORY, QUARTERMASTER

CORPS

CEMETERIAL EXPENSES

ESTABLISHMENT OF NATIONAL CEMETERY NEAR SAN FRANCISCO, CALIF.

Mr. WOODRUM. We have a supplemental estimate in House Document No. 286 for cemeterial expenses, under the Quartermaster Corps of the War Department. Please give us an explanation of this estimate.

Colonel GREGORY. This estimate covers the establishment of a new national cemetery near San Francisco, Calif. Two hundred thousand dollars of the amount is for the purchase of land and $125,000 is for the initial preparation of this land for use as a national cemetery.

Mr. WOODRUM. The purchase of this land is authorized by Public, No. 144, Seventy-fifth Congress, approved June 11, 1937. I suggest that you insert that act in your testimony.

Colonel GREGORY. I will do so.

(Said act is as follows:)

AN ACT To authorize the acquisition of land for cemeterial purposes in the vicinity of San Francisco, California

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That the Secretary of War be, and he is hereby, authorized to acquire by purchase, condemnation, or otherwise, such suitable

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