lation in such a way that the intent of the Congress and the State Department and the Agriculture Department will be in cooperation with each other in working out this matter of the certificates so that we can use them as they should be? Mr. MANN. I think the only problem, sir, is this problem of additionality and I do not think there is any doubt that we could move larger quantities of wheat than we are now moving if we would disregard the element of additionality. If the committee wishes to add here to that, as I believe it does, then I think it is logical, to me at least, to move as much as we can without violating that principle. We are able to do this under title I for example. In this way we can dispose of the maximum amount of surplus with the least damage to our relations with the free world and with the least damage to normal trade channels. Government-to-government barter, I think, in unusual situations where we might have a special need for certain metals for stockpiling, is something that obviously could be much more easily controlled than barter through private channels because in the latter case we have no way of knowing where the minerals will be bought or where the agricultural commodities will be sold, and when the transaction is on a large scale, if additionality is not required it can only result in displacing normal marketings. I for one, and this is something I have not discussed with my colleagues, but I for one would be willing to consider special situations where barter on a government-to-government basis might enable us to move surplus agricultural products in exchange for materials which we need and could stockpile. The CHAIRMAN. If you will yield. I cannot reconcile what you have said with the statement made by the Defense Department a few minutes ago which indicated disposal of surplus commodities by direct sales. Mr. MANN. Under title I, yes, sir. The CHAIRMAN. Here is what they say: Since it was not possible to obtain any sizable quantity of French francs through a direct sale to France under title I of Public Law 480, efforts were made to develop a "barter" type transaction and as a source of the required funds for housing in that country. Now, as I understand the statement by the Defense Department, it is that because they could not obtain sufficient French francs they had to resort to barter. Now we would want to know, and I particularly would like to know who is responsible for throwing down the barter transactions? Somebody is. Naturally, your agency would be the agency which would hear complaints-I understand you to say that you had one from Canada. Mr. MANN. Well, we have had several complaints across the board. The CHAIRMAN. All from Canada? Mr. MANN. No, sir, from Australia, New Zealand, and others, such as Peru and Argentina. Mr. HARVEY. If you would yield. The CHAIRMAN. Yes. Mr. HARVEY. There was a case that came to the attention of our subcommittee, and I am sure that you folks will recall it. 26363-58 -15 When we were in South America to follow the operations of Public Law 480 we found that Brazil was short on wheat due to the fact that Argentina was unable to supply at that time their normal quota. Mr. MANN. Yes, sir. Mr. HARVEY. And so Uruguay was another supplier and Uruguay, we determined, had supplied Brazil with all of her normal quota and at prices commensurate with the range they had been enjoying, and we picked up the difference there with wheat to supplement the shortage that Argentina was unable to supply. Mr. MANN. Yes, sir. Mr. HARVEY. And we were there in Uruguay and Uruguay complained, they registered a complaint to the State Department, I am sure you will recall, and the gist of the Uruguayan complaint was that by guaranteeing Brazil that they would get enough wheat from us to make up the deficit needs, that we prevented Uruguay from selling their wheat at a much higher price than they had normally enjoyed and that was the basis of their complaint. Do you recall that incident? Mr. MANN. I have been in this position only about 7 months, and I was not here at that time. Mr. HARVEY. That I think in essence is the story. Mr. MANN. That is the kind of situation where a third country cannot supply its usual exports and we do go ahead and sell, and the proof of that is that we sold nearly $1 billion worth of commodities last year under title I. Mr. HARVEY. Well, I am going to pass this criticism on to the State Department, quite frankly, and say that it appears that the State Department has been more interested in other people than they were in the United States as far as trade is concerned. That is all, Mr. Chairman. Mr. HILL. I would like to ask a question on that point. Rather, the question I was coming to bears exactly on what you said, and that was this you have barter power in your hands in dealing with foreign nations? Mr. MANN. Yes, sir. Mr. HILL. Is there any reason why you cannot use that as a pressure, as a trading lever to sell material for foreign currency? All I am trying to say is that barter should be of the greatest benefit to the State Department in making a deal for currencies if you use it properly. Is that not true? Mr. MANN. Well, I think in general that may be true, sir. Now, may I give an illustration to show how this thing actually works? Let us take country X Mr. HARVEY. May I interrupt? Mr. MANN. Yes, sir. Mr. HARVEY. I just wanted in conclusion to ask if that situation I described with reference to Brazil and Uruguay is a typical one? Mr. MANN. No, sir; not with respect to the price element, at least I have not heard any such complaints. The complaints usually are on the basis of "We have a 15-year history of having sold 100,000 tons of wheat each year to country X and since you have started Public Law 480 our sales to that country have dropped by one-half and we believe this is related to the fact that $1 billion worth of surplus commodities were put on the market and part of that went to country X and we contend this displaced our normal sales." That is a typical case. Mr. HILL. Off the record. (Discussion off the record.) The CHAIRMAN. Do you wish to answer that? Mr. MANN. I think that if we may go off the record it will be easier for me, too. The CHAIRMAN. All right. (Discussion off the record.) The CHAIRMAN. Mr. Mann, we appreciate your coming up with your associates, and we are sorry that we interfered with your 12 o'clock appointment, luncheon engagement. We may want to call you back. We hope to complete these hearings at an early date, but we shall not be able to do so today. Mr. MANN. Thank you, Mr. Chairman, very much. There is just one more statement I should like to make. The CHAIRMAN. All right. Mr. MANN. If we say and if the laws says-as I believe it doesthat these sales shall be in addition to normal dollar sales, then there must be some formula for determining what is additional. All I am trying to say is that in determining additionality, we do take into account all imports, supply-demand data, and other factors which we think have a bearing on the problem. We do not try, as far as I know, to follow any rigid magical formula, because each case is different and we have to be flexible. Mr. SIMPSON. Mr. Chairman, before we adjourn, one question, please. The CHAIRMAN. Yes. Mr. SIMPSON. When you barter for agricultural surplus commodities you deal with the Department of Agriculture and the Commodity Credit Corporation. Mr. MANN. Yes. Mr. SIMPSON. And so, when you barter some agricultural product that comes from the Commodity Credit Corporation, does the Department give the Department of Agriculture credit for those surpluses? Mr. MANN. We are not directly involved in barter and do not keep books on such transactions. I think the books are kept by the Commodity Credit Corporation in the Department of Agriculture, and how they adjust these things I do not know. Mr. SIMPSON. All of those transactions do represent costs, and I have discussed this and whomever I have talked it over with agrees that any Department that is getting surplus commodities from the Commodity Credit Corporation and which disposes of them, that that agency should be given credit for it, and that that Department should not get that, because it certainly is not fair to charge the cost of the agricultural products to the farmers without giving the Department any credit. Mr. MANN. I think that the bookkeeping problem that you refer to is strictly between the Commodity Credit Corporation and the private barter contractors. We do not enter into the transaction. Mr. Congressman, as far as title I is concerned, we are the negotiating agents. We negotiate title I agreements, the Department of Agriculture makes the commodities available, and we peddle them. However, as barter does not involve international agreements, we do not participate directly in this type of transaction. Mr. HOEVEN. Mr. Chairman, one question. The CHAIRMAN. Mr. Hoeven. Mr. HOEVEN. Was the State Department consulted about the new regulations on barter? Mr. MANN. Yes, sir; we were consulted. Mr. HOEVEN. Were the negotiations instigated by the State Department or by the Department of Agriculture? Mr. MANN. My colleague says that the Department of Agriculture initiated them, but we were consulted-in all fairness to AgricultureI believe they were informed of the strong protests from other countries and there may have been telephone conversations that I know nothing about regarding the views of the State Department. I do not know. Mr. HOEVEN. You do not know. You are not sure whether or not the State Department asked the Department of Agriculture to review the situation? Mr. MANN. I do not know. In view of the fact that conversations go over the telephone every day all day long, it is pretty hard to be sure of that. The CHAIRMAN. Thank you very much. Without objection, there will be inserted in the record at this point, communications we have received, as follows: A request from William M. Hynds, cotton consultant of Washington, D. C.; a communication from the Department of State, signed by Christian A. Herter, Acting Secretary. (The documents referred to are as follows:) DEPARTMENT OF STATE, Hon. HAROLD D. COOLEY, Chairman, Committee on Agriculture, House of Representatives. Dear Harold: I appreciate so much the opportunity of talking with you by telephone on Monday and sincerely regret that circumstances make it impossible for me to meet with your committee at this time. I want to reiterate, however, my personal support of the proposed amendments relating to a wider use of the foreign currencies in our educational programs with other countries. I am convinced of the need for and value of our educational activities in our relations with countries around the world. The personal approach through individuals and academic institutions provides a most effective avenue for reaching, helping, and influencing those with whom we deal and upon whom we depend in meeting our foreign policy objectives. I urge, therefore, your support of the use of Public Law 480 foreign currencies for the exchange of persons, aid to American schools abroad, and assistance to selected educational institutions abroad that will enable them to provide training in administrative, vocational, and technical education essential to the economic development of the less-developed countries. Warm personal regards. Most sincerely, CHRIS, Acting Secretary. WASHINGTON, D. C., April 24, 1958. In re request for special listing of new countries to which barter cotton may be exported without proof of additionality. Mr. WALTER BERGER, Administrator, Commodity Stabilization Service, United States Department of Agriculture, Washington, D. C. DEAR MR. BERGER: The last group I country listings were published on December 24, 1957. Therefore, a revised listing is now due, and I wish to request that the countries shown on the attached statement be included in the revised listings as a special group I listing under which cotton may be exported under barter without proof of additionality; provided, however, that such cotton must be exported no later than July 31, 1958, the end of the present marketing year. The countries shown on the attached statement are countries to which more than normal annual amount (10-year average 1947-56) of United States cotton has been exported during the first 7 months of marketing year 1957-58. Any new exports to these countries under barter during the remainder of the present marketing year will be in addition to the normal annual amount of cotton exported to such countries. You are familiar with the fact that the cotton now remaining in CCC stocks and available for sale are of the lower qualities, and the opening up of the special list of group I countries will afford the Commodity Credit Corporation an opportunity to dispose of an additional amount of cotton and will cause an increase in the normal annual amount of cotton being exported to such countries. Please bear in mind that all of the countries listed use their dollar balances to buy Mexican cotton as well as United States cotton, and the inclusion of the countries shown on the attached statement will result in a net increase in United States exports of cotton. I sincerely hope that you will give this matter serious consideration and will list these countries in a special group I listing when you issue your revised listings for cotton. Yours very truly, WILLIAM M. HYNDS. Countries to which more than normal annual amount (10-year average, 194756) of United States cotton has been exported during 1st 7 months of marketing year, 1957-58 NOTE. All of the countries shown above use their dollar balances to buy Mexican cotton as well as United States cotton. UNITED STATES DEPARTMENT OF AGRICULTURE, Mr. WILLIAM M. HYNDS, Washington, D. C. DEAR MR. HYNDS: Your letter of April 24 has been carefully considered. The elimination of the additionality requirement with respect to barter shipments |