EXHIBIT 62 [H. Rept. No. 1845, 80th Cong., 2d sess., Union Calendar No. 883] FINAL REPORT ON FOREIGN AID MAY 1, 1948.-Committed to the Committee of the Whole House on the State of the Union and ordered to be printed Mr. HERTER, from the Select Committee on Foreign Aid, submitted the following FINAL REPORT ON FOREIGN AID [SUBCOMMITTEE NOTE.-Only those parts pertaining to minerals and metals are presented in this exhibit] INTRODUCTION: NATURE AND PURPOSES OF THE FINAL REPORT The Select Committee on Foreign Aid was created by virtue of H. R. 296 adopted by the House of Representatives on July 22, 1947. The committee itself was appointed by the Speaker of the House on July 29, 1947, which was 3 days after the Congress had recessed for the summer. The first meeting of the committee was held in New York City on August 26, the night before the committee as a whole, with the exception of its chairman, sailed for Europe. In Europe the committee split into five subcommittees, each covering a given country or countries in western Europe. Each of these subcommittees has made a report on the particular area which it studied and those reports are embodied in the final report attached hereto. The committee has published 24 preliminary reports and supplements thereto, and a report on the projected imports of western Europe from the rest of the world, prepared in the main by the Tariff Commission. They have covered all the major points of the original resolution authorizing the committee. In addition, the select committee has had the assistance of the Foreign Affairs Committee in the preparation of three additional reports: Voluntary Foreign Aid, Economic and Political Conditions in the Far East: Japan, China, Korea by Dr. William Montgomery McGovern, and Japanese Resources and the Policy of the United States, by Dr. Edward Ackerman. The earlier reports of the committee through Preliminary Report Eight were published before November 22, 1947, so as to be of the most immediate assistance to the Congress in considering the special program for interim aid to France, Italy, and Austria proposed by the Administration. The later reports, Preliminary Reports Nine through Twenty-four and their supplements dealt with the longer-range program of foreign aid. Throughout, these reports attempted to relate political and economic problems. In preparing its final report, the committee has revised the preliminary reports that dealt with interim aid so as to bring them up to date as far as possible. It has grouped its reports about the four major headings of the authorizing resolution. The committee is confident that its preliminary reports have assisted both Houses of Congress to frame legislation and to conduct the hearings from a background of reliable data from the first-hand testimony of the members of the committee as witnesses before the Foreign Affairs Committee of the House and in some measure before the Senate Foreign Relations Committee. Many of its major recommendations for an independent agency and for methods of administration have been adopted, including its emphasis upon a single program to cover all foreign aid. The final report of the committee will, in its judgment, serve three continuing purposes after the adoption of the Foreign Aid Act of 1948: (1) To equip the Congress, through appropriate committees, for continuing studies both of the original applications and of the subsequent authorizations and enforcement of responsibilities to Congress for the execution of the aid programs; (2) to afford to the Administrator and to the other agencies of the Federal Government with responsibilities under the foreign-aid program, a broad and detailed study of the major factors affecting its success and the recommendations of the committee for administrative action and policies; and (3) to afford to the people of the United States as objective a guide as possible to the understanding of the scope, necessity, administrative mechanisms, methods of financing, and the necessary protections for the interests and the economy of the United States, for a program adequate to assist the recovery of Europe and other areas of the world. To that end the committee has authorized the publication of its reports in a single volume. In addition, the committee is printing as a separate committee print "European Trade Patterns," which makes available the extensive studies by the Tariff Commission and an analysis of these studies by the committee staff. The country studies which were undertaken by the subcommittees of the select committee, and Preliminary Report Eight, Proposed Principles and Organization for Any Program of Foreign Aid, were the major recommendations and summaries for which the committee assumed responsibility either as a full committee as it the case of Report Eight or through its subcommittees for the others. In addition to this the committee authorized the publication of the first interim-aid studies under the authority of the full committee. The remaining preliminary reports were, however, not considered in detail by the full committee, although they were circulated to the members for comment before publication. All these studies are being reprinted in revised form in the final report. These reports are presented in the final report by the Select Committee on Foreign Aid on the grounds that their substance is a valuable contribution to a consideration of the subject matter dealt with therein. They do not necessarily represent the views of all the individual members of the committee. We have included for the convenience of reference as addenda to country and commodity studies the latest statement of the executive branch for justification of requests for appropriations submitted to the House Committee on Appropria tions, April 8, 1948. These figures do not bear necessary relationship to the ones used in the reports of the select committee. They serve simply to show the changing character of the executive program and to give in the most recent form the European requirements which the executive branch proposes as a basis for appropriations in the period April 1, 1948, to March 31, 1949, as well as projections through June 30, 1949. The committee feels that especial thanks are owed to the consultants who cheerfully made available their expert knowledge to appraise the facts and interpretations presented here; to the executive departments for their cooperation in briefing the committee with studies prepared for each country visited; and to the Legislative Reference Service of the Library of Congress for continuing and most useful assistance from its staff experts as listed in the separate reports. Respectfully submitted. CHARLES A. EATON, New Jersey, Chairman. CHRISTIAN A. HERTER, Massachusetts, Vice Chairman. CHARLES A. WOLVERTON, New Jersey. AUGUST H. ANDRESEN, Minnesota. FRANCIS CASE, South Dakota. JOHN C. KUNKEL, Pennsylvania. JOHN M. VORYS, Ohio. CHARLES W. VURSELL, Illinois. W. KINGSLAND MACY, New York. E. E. Cox, Georgia. JAMES P. RICHARDS, South Carolina FRANCIS E. WALTER, Pennsylvania. GEORGE H. MAHON, Texas. OVERTON BROOKS, Louisiana. EUGENE J. KEOGH, New York. A. S. MIKE MONRONEY, Oklahoma. I. ACTUAL AND PROSPECTIVE NEEDS OF FOREIGN NATIONS AND PEOPLES, INCLUDING THOSE WITHIN UNITED STATES MILITARY ZONES, BOTH FOR RELIEF IN TERMS OF FOOD, CLOTHING, AND SO FORTH, AND OF ECONOMIC REHABILITATION * D. BREAK-DOWN OF EUROPEAN REQUIREMENTS BY MAJOR CATEGORIES 1 SUMMARY The purpose of this report is to break down the import-requirement figures contained in the reports of the Committee of European Economic Cooperation (CEEC) into the following broad categories: (a) Food, fuel, and fertilizer. (b) Other raw materials. (c) Capital equipment. The continuing importance of the original CEEC figures arises from the fact that they formed the basis of subsequent revisions of estimates by the United States agencies, in terms of the presented requirements of Western Europe. They were scaled down to fit probable availabilities in many cases. But without detailed bread-down of the individual programs by countries and by projects or end uses, the requirements could not be adequately screened. This report does not provide an actual projection of either European requirements or trade balances because of the limitations inherent in the CEEC figures and in the nature of the problem itself. The Paris Conference compressed its requirements figures into a 4-year period with a view to establishing within this period the minimum possible gap between the needed European imports and the means of payment which might be obtained through increased exports and invisible items, such as tourist trade. It was realized that to attain the desired goal it would be necessary for the participating countries to hold their imports down to the minimum essential for recovery, but it was further necessary to make certain arbitrary assumptions about the projected fall in the price of imports, the rate of capital absorption, and the capacity to export that, in the view of the committee, are extremely optimistic. It is doubtful whether he European countries can increase their exports at the projected rate; it is also doubtful, however, that they can absorb capital at the rate indicated, and these factors may tend to offset each other in the trade balance. It should also be pointed out that the CEEC figures make no allowance for an improved rate of recovery which might result from a more rapid mobilization of the western German economy in helping to meet the deficit in European requirements for coal, steel, and manufactured items. Nor do they make allowance for the possible momentum of recovery which might result if the revival of confidence in the restoration of the European economies should bring about an improvement in the supply of private capital and uncover hidden dollar and gold resources. All this is not said in criticism of the methods by which the figures were presented, since the European countries apparently understood this to be the desire of the United States Government. It does, however, render the CEEC estimates little more than rough guesses as to orders of magnitude. The figures have real significance, however, in that they show the comparative magnitude of food, fuel, and fertilizer requirements as against the other requests. Even if there is a considerable revision of total amounts, it is not likely that the food, fuel, and fertilizer requirements would be substantially reduced in proportion to the other requirements. It is felt, therefore, that the following tables have some real use in estimating to what degree taking care of the food, fuel, and fertilizer requirements from dollar areas would lighten the over-all burden on the European economy so as to make possible commercial loans through either the Export-Import Bank (for (b) above, raw materials) or the Bank of International Reconstruction and Development (for (c) above, capital equipment). The import requirements of the 16 European countries participating in the first Paris conference and of western Germany for products of the United States total Preliminary Report Nine, November 22, 1947, revised March 27, 1948; W. Y. Elliott, staff director, and Howard S. Piquet, deputy staff director. $20,000,000,000 over the 4-year period, 1948-51. Of this amount, 42 percent consists of food, fuel, and fertilizer; 27 percent, of other raw materials; and 25 percent, of capital equipment. The import requirements of the same countries for products of all dollar areas total $35,000,000,000 for the same 4-year period. Of this amount, 49 percent is for food, fuel, and fertilizer; 30 percent for other raw materials; and 15 percent for capital equipment. The import requirements of the same countries over the same period for products from all areas (excepting trade among the participating countries themselves) total $57,000,000,000, of which 70 percent is for food, fuel, and fertilizer; and 30 percent is for all other categories combined. These statistics, which are based on prices as of July 1, 1947, are shown in chart I, and in table 5. REQUIREMENTS BY COUNTRIES The published CEEC reports are not sufficiently detailed to permit a similar break-down for each of the participating countries, even for 1948. Such a breakdown would be desirable if the requirement picture were to be placed in focus with the dollar-deficit position of each country. To make such forecasts for any extended period for any one country would be extremely hazardous because of uncertainties as to markets, prices, and the availability of commodities. Nevertheless, on the basis of preliminary data. arising out of conferences held last fall between United States and European technicians, it is possible to construct a rough picture of revised food, fuel, and fertilizer requirements for cach of the participating countries and western Ger many in 1948 and to relate these to the published balance of payment data for eight of them (United Kingdom, France, Italy, bizonal Germany, Netherlands, Greece, Sweden, and Denmark).2 These data are shown in chart II, and in table 6. In none of the countries would satisfaction of the food, fuel, and fertilizer requirements be sufficient to wipe out the country's net dollar deficit, and only in the case of the United Kingdom is it expected that there will be a net credit balance with nonparticipating countries outside of the American Continent. 2 See below, section headed "Comparison of CEEC and Administration Estimates," p. 71 for data received after this report was prepared. Considerable estimating is necessary in order to break the requirements figures of the CEEC down into principal commodity categories. Large gaps in prospective trade have to be accounted for since the technical commodity committees of the Paris Conference concerned themselves with only $35,000,000,000 of imports from nonparticipating countries out of an estimated total of $57,000,000,000 (for Report of the Committee of European Economic Cooperation, vols. I and II, published by the Department of State, September and October 1947, respectively (publications 2930 and 2952). 76100-48-pts. 4 and 5- -36 Belgium-Luxembourg, Norway, Switzerland, Austria, Portugal, Iceland, Eire, and Turkey |