The CHAIRMAN. I would now like now to recognize Mr. Heimburger for a brief explanation of the charts and statements contained in this committee print.

STATEMENT OF JOHN HEIMBURGER, GENERAL COUNSEL OF THE COMMITTEE ON AGRICULTURE, U.S. HOUSE OF REPRESENTATIVES

Mr. HEIMBURGER. If all of the members of this committee have the Committee Print in front of them I will run through it very briefly to point out to you what is here so that it can be of use to you during the course of these hearings.

Table 1, "U.S. agricultural exports, calendar years 1957 and 1958," is self-explanatory. It merely shows all agricultural exports, both surplus and otherwise, for the calendar years 1957 and 1958. It is noteworthy only in that it shows exports were down 14 percent in 1958 compared to 1957.

Table 2, "U.S. agricultural exports, July-April," is the same sort of a comparison but on a fiscal year basis and carries the comparison 4 months further to April 1959, and it shows exports are down 7 percent in the first 10 months of the 1959 fiscal year compared to the same period for the previous fiscal year.

Table 3, "U.S. agricultural exports by country of destination, calendar years 1957 and 1958," is rather significant. It shows by countries the status of our agricultural exports, and of interest in that table is the fact that it shows that 70 percent of our decrease in agricultural exports has occurred in six hard currency countries into which the Department will not permit surplus commodities to move by barter.

The CHAIRMAN. Will you name those countries, please?

Mr. HEIMBURGER. Those countries are the United Kingdom, Japan, West Germany, the Netherlands, I believe, Italy, and Belgium. Mr. JOHNSON. Why did you leave Canada out?

Mr. HEIMBURGER. Simply because it is a different kind of country than the European countries. I would be glad to include Canada. I simply mentioned the six that added up to the 70 percent of the decline.

The CHAIRMAN. No barter transactions are carried on in those hard currency countries?

Mr. HEIMBURGER. Not without a special showing of additionality which is difficult to make.

Table 4, "Domestic exports; July-April 1957-58 and 1958-59," merely breaks the exports down by commodities to give you an idea of what each one has done.

Table 5, "U.S. agricultural exports under specified Governmentfinanced programs and total agricultural exports, calendar years 1957 and 1958," shows the exports under specified Government programs and how they compare for the calendar years 1957 and 1958.

Over on page 66, table 6, is a composite of all the title I agreements that have been made since the start of the program and the shipments that have been made under that program under each agreement.

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Table 7 is a breakdown of the table which appeared on the previous page showing the commodities involved in these various individual ̈ agreements and what percentage of these commodities have been shipped under the agreements.

Table 8 is interesting because it is the only table in the publication which shows the other charges than for the commodity itself which enter into a title I agreement.

Over on the right-hand side is the column "market value," which shows the market values of the surplus commodities in foreign currencies.

The next column shows the amount which was allowed for ocean transportation. The next column is the estimated Commodity Credit Corporation cost including ocean transportation, so by comparing that column with the market value column you can see the approximate amount of foreign currency we are actually receiving for the value of the commodities shipped overseas.

The CHAIRMAN. Does that show that the estimated cost is $5,078,500? Mr. HEIMBURGER. It shows, Mr. Chairman, that the market value of the commodities that we have sold under title I, the foreign currencies which we have received for these commodities, exclusive of the ocean freight which is simply an outpayment, is $770,400,000 for the agreements entered into between July 1958 and June 1959. However, those commodities will be reimbursed to the Commodity Credit Corporation at the rate of $1,155,900,000 because that is the cost of the commodities. That is the Commodity Credit Corporation's investment in the commodities. The $770 million is what they got for them in foreign currencies.

The CHAIRMAN. That $1,155,900,000 will wash out the transactions "at $770 million?

Mr. HEIMBURGER. That is correct, in foreign currencies, which will still be further depreciated as a table further on will show. Those are the sales for foreign currencies.

The next table, No. 9, merely shows the approximate quantities of commodities which have been included in title I agreements.

The CHAIRMAN. Let me go back to table 8. Does that indicate the total market value for the agreements through June 30, 1959, was $3,307,500,000?

Mr. HEIMBURGER. That is right. That is what we have received in foreign currencies, or will receive when they are all delivered. The CHAIRMAN. But we had invested $5,078,500,000.

Mr. HEIMBURGER. That is correct. Mr. O'Leary has just told me they get about 70 percent of the ocean freight back in foreign currency also, so the figure would be somewhere between the $3,307,500,000 and the $3,701,200,000 in the amount of foreign currency received for commodities which cost the Commodity Credit Corporation $5,078,500,000.

Mr. POAGE. How do you get the ocean freight back?

Mr. HEIMBURGER. I do not know the answer to that. Will you save that question for the proper people when they get up here?

Table 9 merely shows the commodities that have been involved in these various Public Law 480 agreements and table 10 is the familiar one of the planned uses of the foreign currencies which will be received. The committee has seen that table many times.

Table 11, which comprises several tables, was prepared by the General Accounting Office and it is based on the Treasury Department's monthly report of the status of Public Law 480 funds. The purpose of this table and it will be discussed by the General Accounting Office when they appear here Thursday-is to show both how these funds are distributed by the Treasury, and the difference between the agreedupon conversion value of the foreign currency and the going market price of that currency.

If you will take the top line there for Argentina, for example, the fourth column shows the collection rate. That is the rate at which the agreement with Argentina states that we will accept pesos, and it is 13.9525.

The column before that shows the market rate of pesos in December of 1958 at 69.70.

If you will go over to the far right hand column you will find the discounted rate applied by the General Accounting Office to the Treasury balance in these commodities showing how much that Treasury balance is worth in dollars at the current market rate contrasted to the value which the Treasury has put on it at the agreement rate, and why the figures are exactly the same in this case I do not know. I picked out a poor sample. If you will go to the next one you will find Argentína pesos valued by the Treasury at $17 million as actually worth $4 million. But why the figures in the first column are the same, I will have to let the General Accounting Office explain when they get on the stand.

That is the purpose of this table being in here, Mr. Chairman.

The CHAIRMAN. I understand that pesos in Argentina are based on 69.70.

Mr. HEIMBURGER. That was the market value in December 1958. The CHAIRMAN. What rate did they give us?

Mr. HEIMBURGER. Taking the first Argentine agreement, we allowed

them the rate of 13.9.

The second one in the column was at the rate of 18 to the dollar. Mr. POAGE. It was utterly impossible for us to take 18 pesos and buy a dollar.

Mr. HEIMBURGER. In December it took 69.7 pesos to buy a dollar. The CHAIRMAN. Take Brazil. You show 50.06.

Mr. HEIMBURGER. That was the exchange rate in December. The rate agreed up in the title I agreement is 50.06.

The General Accounting Office will go into this table at any length you want to have them go into it. It was my intention to point out to the committee what was in the table.

Mr. McINTIRE. Referring to Brazil, do I understand the contract was made in 1955? Is that what that means?

Mr. HEIMBURGER. That is the date of the contract; yes.

Mr. McINTIRE. Perhaps I should ask this question of the General Accounting Office, but was the cruzeiro worth 50 at that time and has it been devalued since?

Mr. HEIMRURGER. I am sorry, but I am not prepared to answer the question.

Mr. McINTIRE. What I am getting at is that at the time of the contract this was the current rate?

Mr. HEIMBURGER. It may or may not have been. These countries have their currencies pegged for various purposes and seldom are we able to make an agreement that is on the street rate.

The CHAIRMAN. In some instances the currency in foreign countries has deteriorated and that has brought about the difference?

Mr. HEIMBURGER. That is correct. That is true in many countries. I think it is also true that in order to make an agreement at all our negotiators have to agree to the artificially pegged import rate of currency which many foreign countries do have. They have four or five different rates of exchange, as you well know.

The CHAIRMAN. Suppose that we leave the rest of that for the General Accounting Office.

Mr. HEIMBURGER. There is no particular significance in the next table. Table 12 simply shows all of the exports under Public Law 480 to date, and the program under which they were exported-titles I and II, meaning donations and barter.

Table 13 shows the total of surplus distribution in the past.

Table 14 shows the commodities which have been distributed under this program and table 15 shows the needy persons in the United States who have received commodities.

Table 16 deals with the same subject, breaking down by commodities and fiscal years the amounts of food which have been donated. As you know, not all food is donated under title II. An amendment to section 416 of the Agricultural Act of 1949 was included in title III of Public Law 480 when it was enacted and therefore although domestic distribution is essentially under the Agricultural Act of 1949, because of this amendment-which has not been substantially changed-was included in Public Law 480, it is frequently referred to as distribution under Public Law 480. That is why both domestic and foreign donations are included in here.

On page 76 we have some data relating to barter. I do not know that I need comment at length on these.

Table 18 is a summary of the barter contracts that have been entered into under Public Law 480, showing the purpose for which the imported materials are being used; whether they have gone into the strategic stockpile, the supplemental stockpile, the Atomic Energy Commission, and that sort of thing.

Table 19 shows the commodities which have been exported under barter.

Table 20 shows the countries into which these commodities have gone.

Table 21 shows exports by calendar years under the various governmental programs, including barter.

Table 22 is of substantial significance. It shows the countries which benefited from our barter programs by being able to sell strategic and other materials to the United States.

Table 23 is of substantial interest. It was a special table compiled by the Department of Agriculture, in the first instance, at the request of the chairman more than a year ago, and has been brought up to date since. It shows among other things the total value of the agricultural commodities given in barter, the value of the bartered material at the time the contract was made, and the present world value

of the materials. This is interesting because it is frequently said that we have bartered for a lot of materials that are essentially worthless and that we do not need, but from a glance at the final column it will be seen that the contract value of all barter materials up to the date of this report was $979,700,000. That is what we gave for them in surplus commodities, and those at present world value on the 3d of March, when the report was made of this year, was $1,035 million, somewhat more than was given for them in surplus commodities.

The other more significant figures are the bottom two lines which compare the cost of storage per year of the materials which have been surplus given in barter of $109 million compared to the cost of storing those materials which have been received in barter, which is somewhat over $4 million, and for some reason unknown to me that $4,400,000 figure for the cost of storing these materials includes interest on the French housing loan. Just why, I am not sure.

The CHAIRMAN. It cost about $105 million less to store the strategic materials than it would have cost to store the commodities?

Mr. HEIMBURGER. The commodities given in exchange; that is correct.

Beginning on page 80, table 24 appears, which is not really a table. It is a list compiled by the Department of State at the committee's request, some 5 months ago, of the known and recorded trade agreements between friendly and free world countries, countries friendly to the United States, and the Soviet bloc countries, to indicate what, if any, increase in Soviet free world trade there has been in the past 2 years or so since we have begun curtailing our surplus exports programs, and without going into any detail I want to merely point out at our request because this was such a large job, the State Dapartment limited it to these commodities-grains, cotton, and tobacco. They did not undertake to list all the trade agreements between the Soviet bloc and the free world countries. The date of this table is as of the end of 1958, the calendar year, and it is interesting to notice how many of these new trade agreements between the Soviet bloc and the free world countries have been entered into in the last 2 years.

That table continues and that is the last table in the book, Mr. Chairman.

The CHAIRMAN. Are there any questions? If not, we will call the witnesses that we have before us.

Before I call the first witness, I would like to say that we are today starting a study of the programs which operated under Public Law 480 with the idea of determining just how well the programs have operated and how effectively they have operated.

You will recall when the last extension of Public Law 480 was presented to the House, I stated at that time the programs were of great magnitude and had been remarkably free from criticism. I think at that time I had not received a single complaint from any source about the operation of the programs.

If there are any complaints from any source, we want to afford an opportunity to every person to make his complaint or criticism and submit it to this committee before we report this extension.

I think, generally speaking, it has been a very profitable program and I think a very effective program. My recollection is it has been