Mr. SMALL. Yes; in the $11 billion. They are, however, included in the $19 billion in the Secretary's letter. Soft goods, and so forth, are in that figure. The CHAIRMAN. I just wanted to bring out that you left out the soft goods. Mr. SMALL. Yes. During 1952, however, deliveries of hard goods will increase sharply to an estimated total of $38 billion including the mutual defense assistance program. Senator BRICKER. Was that delay evident in the stockpiling program as well as in the general procurement program? Mr. SMALL. This is the procurement program of the three military departments, and the stockpiling is not in it. Senator BRICKER. But has the delay you mentioned in the procurement program been also evident in the stockpiling program? Mr. SMALL. In the stockpiling program, in a time of shortage such as we are going through now, with increasing and rising shortages, the things we are short on, and getting shorter on, are the things we should have had in stockpile a year ago, or 2 years ago. Therefore, it becomes more and more difficult to put them in stockpile and take them away from the economy. Senator BRICKER. And you have the same delay in placing the orders? Mr. SMALL. Yes. Senator CAPEHART. In order to avoid the same mistake in the future, why were they not procured a year ago? Mr. SMALL. I think, Senator, the best answer to that probably is the chart which I will show you. Senator CAPEHART. If it is going to take too long I would rather not have it. Was the money appropriated? Mr. SMALL. Not enough. Senator CAPEHART. Did you use all of the money that was appropriated? Mr. SMALL. All of the money that was appropriated? Referring to the chart in order to be 100 percent sure I am right on this, as we moved from here, from fiscal 1947 to fiscal 1948, to fiscal 1949, to fiscal 1950, I have charted here the money that was authorized, and by the end of each year all of the money had been obligated-by the end of each fiscal year. Up to the end of 1948 that amounted to some $500.000.000. Up to the end of 1949 it amounted to $1,500,000,000 against the current stockpile objective of something over 8 billion. Senator CAPEHART. Our failure to stockpile properly, you say was due to a lack of appropriations on the part of Congress. Mr. SMALL. In great degree. Senator CAPEHART. To a great degree? You mean they did not appropriate enough money? Mr. SMALL. That is right. Senator CAPEHART. Did they appropriate the amount of money that was asked for by the defense establishment? Mr. SMALL. No, they did not. We also had some other problems then, involving the policies that we were only supposed to be stockpiling things which were in surplus. We were not supposed to take it out of the essential economy, or to take it away from industry. I cannot quarrel with that very much, since in that particular period, 1947 and 1948, we wanted to get the economy running full blast and did not want anything to hold it up. Senator CAPEHART. Did we stockpile all of the materials we needed from overseas? Mr. SMALL. Practically all of the strategic materials that are stockpiled do come from overseas. There are some that come from home, but the great bulk of them come from overseas. To give you a quick look at it, that is the present status. The black lines are the present status of the stockpile which shows you we are not or do not have national security as yet in this field. Senator CAPEHART. In stockpiling? Mr. SMALL. In stockpiling. Senator CAPEHART. For the record, as I understand it, the reason is that you have not had sufficient money? Mr. SMALL. Until this last year. Senator CAPEHART. You mean the last 12 months? Mr. SMALL. Since the beginning of fiscal 1951. Senator CAPEHART. Beginning July 1, 1950? Mr. SMALL. That is right. Senator CAPEHART. You have had sufficient money since that time? Mr. SMALL. That is right. Senator CAPEHART. And you have spent all of the money that has been appropriated since that time? Mr. SMALL. We obligated by the end of fiscal 1950, or shortly after the end of fiscal 1950, all of the money we had appropriated for fiscal 1950. In fiscal 1951 the Congress recognized the situation and gave us heavy appropriations, which have not yet been obligated in their entirety, and cannot be obligated that quickly. As I say, ever since the spring of 1950 the acquisitions for the stockpile have been growing increasingly difficult. Senator BRICKER. What is that book you have there? Is that statistics on the stockpiling program? Mr. SMALL. Yes, sir. It happens to be secret, but I will give you any information I can-keeping in mind that this is an open hearing. Senator BRICKER. What I was wondering is, How much of that can you furnish for each member of the committee? The CHAIRMAN. I am chairman of the committee that has jurisdiction over the stockpiling agency and I know that they did not give you the money you asked for. Mr. SMALL. That is right. Senator CAPEHART. That was prior to July 1, 1950. The CHAIRMAN. For 2 years I was chairman, and they did not get what was asked for. It was cut on the Senate floor. But that is neither here nor there, because it is all secret. Let us do this: When Mr. Small gets through testifying we can have an executive session, and then give you this information. I think it would be worth your while. Senator CAPEHART. I think it would be interesting. Have there been any benefits through ECA to our stockpile? Mr. SMALL. Yes, sir. There has been some increment to the stockpile and other help. The CHAIRMAN. In counterpart money? Mr. SMALL. Through counterpart money. Senator CAPEHART. How much have we been able to stockpile through counterpart money in dollars and cents? Mr. SMALL. Not a great deal since Korea. I think it was somewhere between 13 and 17 million. I will supply the correct figures for the record. (The following was received in response to the above:) 1 STOCKPILE PROCUREMENT BY THE ECONOMIC COOPERATION ADMINISTRATION 1 (Extract from Munitions Board report to Congress on stockpiling, January 23, 1951, covering the period July 1 through December 31, 1950) The Strategic Materials Division of the Economic Cooperation Administration has made purchase commitments, from July 1, 1950, to December 31, 1950, in the total amount of $8,975.212 with Economic Cooperation Administration 5 percent counterpart funds. These strategic materials purchases are for the United States stockpile and include industrial diamonds, coconut oil, cobalt, ferromanganese, mica, quinidine, fluorspar, and aluminum. Contracts were signed during this same period covering several developmental projects which involve the expenditure of $4,659,693 from the Economic Cooperation Administration strategic materials dollar fund and an equivalent of $13,854,680 of Economic Cooperation Administration 5 percent counterpart funds. These contracts provide for the delivery of strategic materials to the United States stockpile in either the form of repayment of the Economic Cooperation Administration advances, purchase options, or both. The materials involved are aluminum, copper, lead, zinc, cadmium, and industrial diamonds. There are a number of projects pending which indicate possible future expenditures of at least $40 million from the Economic Cooperation Administration strategic materials dollar fund and an equivalent of $80 million in Economic Cooperation Administration 5 percent counterpart. Most of these projects are for increasing the production of strategic materials, including copper, cobalt, bauxite, graphite, lead, zinc, beryl, mica, chrome, tungsten, columbite, tantalite, and tin. The pending projects also include proposals for various types of surveys, improvement of port and rail facilities, and power developments, all of which are deemed important to the strategic materials program. The Economic Cooperation Administration advances in dollars and 5 percent counterpart are to be repaid wherever possible by the delivery of strategic materials to the stockpile. A forecast of possible future purchases of strategic materials is difficult to make. However, it appears reasonable to assume that purchase opportunities will develop from time to time and should total at least $20 million in 5-percent counterpart funds during the next year, based on past records and future expectancies. It is expected that the activity of the Economic Cooperation Administration in Marshall plan areas with respect to strategic materials will continue along the same two general courses: (1) The purchase of these materials with the Economic Cooperation Administration 5-percent counterpart funds; and (2) The provision of the Economic Cooperation Administration dollar and 5-percent counterpart funds for approved projects to increase the production and supply of strategic materials generally with provisions for repayment in materials and/or options to purchase such materials for the stockpile. It is felt that both of these methods of procuring strategic materials are important direct contributions to the stockpiling program. The Economic Cooperation Administration will continue to consider financing projects for the exploration of strategic materials with repayment in materials when production is attained. Projects will also be considered which involve the improvement of transport facilities for the shipment and handling of strategic materials, with possible repayments for the stockpile. 1 This material supplied by the ECA. Senator CAPEHART. Between 13 and 17 million dollars? Mr. SMALL. Yes. The reason for that is in the ECA countries our purpose has been to increase their productiveness, so that they could support themselves and get away from dollar aid. The CHAIRMAN. Not only that, but we want to develop those countries to get the materials. Mr. SMALL. And they need the very materials we need to increase their productivity, so that again we have been all looking for the same thing. Senator CAPEHART. You mean the other countries have been looking for the same things we have. Mr. SMALL. That is right; and with their growing productivity they need manganese for steel, and they need tungsten for cutting tools, and so on. You would think it would be very easy to get the great bulk of these materials out of counterpart funds, but for the most part these particular things are things we are getting for dollars, and thus reducing their needs for dollar aid from us. Senator CAPEHART. Would it be possible to secure all of the critical materials we need on an exchange basis, meaning that we ship to the respective countries materials that are made in the United States, or produced in the United States, and which are purchased by the Government and sent to them, and then they with their own currency purchase the strategic materials we need over here and ship them to us? Did you ever give any thought to that? Mr. SMALL. Oh, yes. You mean on the production-barter basis. Senator CAPEHART. For example, I am thinking of India at the moment. They want $300,000,000 worth of wheat. If we have the wheat, why do we not ship them $300,000,000 worth, and why, in turn, do they not ship us a like amount, purchased with their own currency, of $300,000,000 worth of manganese? Why does not Britain do the same thing on rubber in Malaya? Mr. SMALL. I am afraid I am not competent to speak to that. I think you should ask State the question. It is one that is constantly up, and they are constantly struggling with that problem. It requires action by other governments. Senator CAPEHART. But you say that it has been considered? Senator BRICKER. You have run into the embargo in India, have you not? Mr. SMALL. Yes. On certain things. The CHAIRMAN. On the atomic material they have certain problems in India. They could have done it if they wanted to. Senator BENTON. Did we not operate in the last war that way extensively? Mr. SMALL. In some instances. In other places we gave them dollars, and then refused to give them materials or things which they needed. They did not need the dollars as much as they needed things, and we would not let them have the things. Senator BENTON. My impression is we operated that way to a great extent in the last war, and that it was very effective. Mr. SMALL. Where it could be used it was effective. You cannot do it 100 percent by any manner of means. It has been flexible. Senator CAPEHART. So the ECA benefited stockpiling to the extent of $13,000,000 to $17,000,000 worth of goods? Mr. SMALL. Yes. In a very substantial number of cases they have as part of the program been helpful in increasing or getting projects underway which would increase the supply of these critical materials we are talking about. Senator CAPEHART. You mean, increase them on the basis they would sell them? Mr. SMALL. The funds advanced are usually repaid in materials produced by the project. The balance of production could be sold. The CHAIRMAN. Helping them with the railroads is a good example. Senator CAPEHART. Would it have been possible to have them deliver those strategic materials to us in payment or part payment for the loan to have built the railroad to increase their productive capacities? Mr. SMALL. Again I think that is a question for the other agencies to answer. Senator CAPEHART. There might be some cases in which it could be done, and others in which it could not be done? Mr. SMALL. Yes. Senator CAPEHART. You understand one of my pet peeves is that we give everything away and get nothing in return for it. Mr. SMALL. You are not alone in saying it. Senator CAPEHART. I am not alone, you say? Well, I am certain I am not. Senator BENTON. Could I ask a question, Mr. Chairman? The CHAIRMAN. Yes. Senator BENTON. In line with Senator Capehart's questions, Mr. Small, is it not true the way we have done this buying in the last 18 months has played a big part in pushing these prices up on such commodities and creating this world inflationary spiral which is at the root of some of our present difficulties today with other countries? Mr. SMALL. I question it, Senator. I have seen the statement in print, and it is a very easy convenient criticism of the way in which things are being done. I think in the morning Post this morning they had part of an editorial on that. They said there had been frantic buying, or something like that, for the stockpile. This is not true. Stockpile purchases are only a small share of total United States purchases in the world markets-too small in themselves to greatly affect world prices. We have not been buying frantically or recklessly. The stockpile is not a military stockpile. The stockpile is a national stockpile. For the most part, the substantial part, the stockpile is to take care of the essential economy of our country in the event of allout war. That is, the railroads, the utilities, the military, and so on. In many of the products that are on the stockpile list the military's direct share is negligible. Take tin. It is a very good example. I think I have said that somewhere in the statement. I do not remember. However, the military share of tin is negligible. We take very little tin directly. We buy food in tin cans, but our take of tin cans is small compared to the population of our country, and the military take, even if it took two or three times as much per capita, would still be minor. The other big use of tin is solder, which is used throughout industry and in all industry. Our share of the use of solder by industry is roughly comparable to the dollars of hard goods compared with our |