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In the case of the cotton council, they match the contributions, and their foreign cooperators match the contribution made by the Department in foreign currencies.

We do have a minimum percentage which is that the United States trade group should contribute at least 5 percent of the amount contributed by the Department.

Mr. GATHINGS. You say in your statement that about $45 million in currencies has been tentatively earmarked for agricultural market development under the existing agreements and that approximately $10 million to date is being obligated for approved projects together with contributions by private trade organizations that are cooperating of $3 million.

Mr. FRASER. That is against the $10 million of local currency that has actually been committed, so they have contributed approximately one-third, you see.

Mr. GATHINGS. Yes. This committee deals with quite a lot of promotional work. We recently studied a bill for the promotion of livestock, and so I am glad to see this effort, as long as we can increase the use and consumption of our agricultural commodities.

On the next page of your statement, page 8, you say that about half of the foreign currencies expected to accrue under the existing agreements will be loaned back to the importing countries for use in economic development projects agreed upon with the International Cooperation Administration.

Now, that is an ICA program, so do you think that the ICA should bear a part of the cost and it should not be charged up to the farmers? Mr. PAARLBERG. Well, under the law the Department of Agriculture is fully restored with respect to commodities shipped under title I, so the Commodity Credit Corporation does not show on its books any loss from title I operations.

In that respect, the books of the Commodity Credit Corporation do not indicate this as a cost chargeable to the operations of the Commodity Credit Corporation. The Department of Agriculture makes a separate accounting of the many programs that we have and, under the method of accounting that we follow in our own computations, a part of the cost involved in Public Law 480 is reflected as the cost of the foreign programs. I would agree with you that it is not appropriate to charge to Agriculture the full cost of these operations.

Mr. GATHINGS. But when you look at it the dollars involved are charged up to Agriculture, although your books reflect it is otherwise? Mr. PAARLBERG. That is right. This is, I think, sometimes unfortunately presented in an incorrect manner and it is not fully understood by all people. Sometimes it is reported hastily and some people are interested in tacking on to it all the costs that they can possibly scrape up, and there is a tremendous amount of misinformation as to the allocation of these costs, which is unfortunate.

Mr. GATHINGS. Thank you; that is all.

The CHAIRMAN. Mr. Simpson?

Mr. SIMPSON. I would like to ask concerning the disposal of wheat how that affects the International Wheat Agreement and what is the attitude of Canada on our action.

Mr. PAARLBERG. When we sell wheat, this appears in the accounting with respect to the International Wheat Agreement. For some years, Mr. Congressman, the price of wheat in world trade has been between

the maximum and the minimum so in that respect the International Wheat Agreement has not greatly influenced either the price or the volume of American wheat that moves abroad.

It is only when the price tries to break through the ceiling or tries to fall through the floor that the International Wheat Agreement becomes important in influencing the price or the volume. That has not been the case now for some years.

As for the other part of your question, the attitude of other countries, particularly Canada, with respect to these movements, we think that we have made a great deal of progress in properly presenting the effect of our export programs to the Canadians and to other people. We think it is much better understood now than it was.

We think that with our program we are moving these excessive supplies of wheat into use outside of the normal channels of trade, and that we are increasing rapidly the consumption per capita in areas that would otherwise not have wheat.

We are not reducing the amount of wheat that moves into the commercial trade, either in the United States or Canada. It is to the interest of the Canadians and the United States to pull down these stocks and move them outside of the ordinary dollar routes. We are beginning, I think, to make some progress in carrying that point across to the other countries.

Mr. SIMPSON. And it is your opinion that our present unpopularity with Canada is not brought about by the operation of Public Law 480 in disposing of wheat?

Mr. PAARLBERG. I would not say that. I would say there is some misunderstanding in other countries with respect to the manner in which our program operates. I will say that we are making some progress in achieving some better understanding abroad with respect to the effect of our program.

We feel that we are doing a good job and that we are protecting the dollar movement of wheat.

I would not say that this view is shared unanimously in the other countries around the world. I think there is some misunderstanding with respect to the manner and the effect of our surplus sales of farm products under Public Law 480.

Mr. SIMPSON. I understood somebody to say awhile ago that there was one contract for a period of 7 years that has gone through; did I understand correctly?

Mr. BERGER. I believe I made that statement: that there was one, on a particular strategic material in which we were vitally interested, and I am almost sure I think there was a 7-year contract on that one. Mr. SIMPSON. Well, why anybody would give 1 for 7 years to repay on, I do not know. The statute of limitations would expire in that long, and I would like an answer.

Mr. BERGER. I do not know the answer to that one.

Mr. SIMPSON. Well, I do not know why any Government agency would do that, for 7 years, as the time in which to repay. That material might go into Communist hands in that length of time, and I cannot understand why the Agriculture Department or the United States Government would give anybody 7 years to repay for something. I cannot get it through my head.

Now, we had testimony before this committee last year to the effect that to dispose of the agricultural surplus would take 9 years to get rid of it. Is that correct?

Mr. PAARLBERG. I do not know how long it would take. It depends on the size of the crops and the size of the crops in the other countries of the world; and it depends on the state of the markets and the level of the price supports, and many other things. So we would not be able to give any precise figures as to the number of years required. Mr. SIMPSON. Now, about the military housing: There is about $100 million or $180 million involved in military housing; in the event of the evacuation of that country by the United States Government forces, would not that military housing revert to that country— is that still correct?

Mr. PAARLBERG. That would vary by the country, Mr. Congress

man.

Mr. SIMPSON. There is this military housing question of about $100 million that is being built, and if we now were to evacuate and leave those countries, does that military housing revert to them?

Mr. PAARLBERG. I will ask Mr. O'Leary the answer specifically on that, Mr. Congressman.

Mr. O'LEARY. That depends on the country, sir.

In some countries when properties are no longer needed by our Armed Forces, then they do become the property of the other country, and that is true of the United Kingdom.

There are other countries where it is the property of the United States Government, and when the military no longer needs it it is sold. The CHAIRMAN. Take the case of France, where there is construction of military housing now.

Mr. O'LEARY. I do not know what the circumstances will be there. The CHAIRMAN. My understanding is that when the military leaves, France will own the property. In other words, we give it to them, and nobody here salvages anything out of it.

Mr. BERGER. It is my understanding of the French contract—if I understand it correctly, and I am not a lawyer, and I have not read it for some time, but it is my understanding that the housing will go back to the French Government or the contractor, I do not remember which.

Mr. SIMPSON. There was testimony before this committee last year that the military housing built in foreign countries, when and if evacuated by this country, reverts to that country.

Has anybody tried to renegotiate that or to change it?

Mr. BERGER. I have put in the record a recommendation that we don't do any more of it, because I certainly don't think

Mr. SIMPSON. Now, talking about this barter, that which we get from the exchange of goods-do we get any funds that go into counterpart funds?

Mr. PAARLBERG. Title I sales generate currency, but in barter they are not generated; in the barter arrangement, we take over the commodity

Mr. SIMPSON. Then under the surplus commodity disposal-that does not involve any money of counterpart funds?

Mr. PAARLBERG. In title I sales, foreign currency funds are generated, and in barter they are not. They are compensated for in some other commodity.

Mr. SIMPSON. One other question, and I will be through, Mr. Chair

man:

I don't know whether you heard about it or not, about this $400,000 program for a boar-testing station-have you heard about that? Mr. PAARLBERG. I have no knowledge of that. We will be glad to look into that and report.

Mr. SIMPSON. I would like to know, and I would like to have you present to the committee the circumstances on that $400,000 boartesting station in Norway being built, and why Norway will not let any

Mr. PAARLBERG. We will look into that and make the response. (The information requested follows:)

We understand from ICA that search of available foreign aid records discloses no foreign aid financing of a boar or hog testing station. This is confirmed by the Norwegian Government which stated to the United States Embassy in Oslo that the hog testing station in Norway was built at a cost equivalent to $130,000, and that the cost had been defrayed by a combination of Norwegian Government and private funds.

The CHAIRMAN. I have one question.

This allowance, in the military housing, that goes to our Government during the time we occupy the housing, goes to our Government during the time we occupy it?

Is that not true?

Mr. PAARLBERG. That is correct.

The CHAIRMAN. Mr. Albert?

Mr. ALBERT. Is there any concern over the size of the foreign currency balance that has been building up?

Mr. PAARLBERG. There has been concern expressed about the size of this balance.

Mr. ALBERT. Could you put into the record the size of the balance of foreign currency under our account in the various countries? Mr. PAARLBERG. Yes; we can do that.

(The information requested follows:)

Under agreements entered into from the beginning of the title I program through March 31, 1958, the equivalent of $1,905.4 million in foreign currencies had been deposited to the United States account as of that date. Of this total, the equivalent of $760.8 million had been used, or is in the process of being used, leaving the equivalent of $1,244.6 million on deposit. The amount remaining on deposit in each country is shown below.

The commodity sales agreements specify:

(1) The amounts that the United States may use under subsections 104 (a), agricultural market development; 104 (b), purchase of strategic materials; 104 (d), purchase of goods for other countries; 104 (f), payment of United States expenses; and 104 (h), (i), and (j), information and educational programs; and

(2) The amounts that the United States is obligated to make available under subsections 104 (c), military assistance; 104 (e), grants for economic development and loans to private enterprise; and 104 (g), economic development loans to foreign governments.

Under agreements signed through March 31, 1958, an average of 34 percent of the currencies is earmarked for United States agency uses indicated in (1) above, and 66 percent is obligated for specified uses indicated in (2) above. These percentages vary greatly among countries. This is illustrated in appendix table XII, page 40, Seventh Semiannual Report on Public Law 480 Activities, House Document No. 323.

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This program has been criticized as having insufficient emphasis on the development of backward countries.

Is that a fact?

Mr. PAARLBERG. Actually, a high percentage of title I exports goes to the less developed countries.

Mr. ALBERT. Thank you.

The CHAIRMAN. Mr. Anfuso?

Mr. ANFUSO. Thank you, Mr. Chairman.

First of all, I want to say that I agree that this act should be extended and, as a matter of fact, such worthwhile results have been achieved by Public Law 480 that I am in favor of extending it for 2 years. That, I think, will permit you to make some very valuable contracts both under title I and title II, and title III.

However, I am constrained to disagree with you entirely with respect to the views expressed this morning regarding barter transactions.

I was happy to read, however, this part of your statement on page 10: I would like to make it clear that the Department favors the movement of agricultural surpluses through barter.

If that is a sincere statement, then I gather that if you could move agricultural surpluses through barter, that you will do it?

Mr. PAARLBERG. Yes, sir. If we can move additional quantities through barter, we will be happy to do it.

Mr. ANFUSO. In May 1957 you came with a directive which was intended to do exactly what you said now, to the extent that unless somebody could prove to you that additional products could be moved in that direction, then you would raise objections; is that correct? Mr. PAARLBERG. That is stating it in the negative. We could state it positively, that if we saw an opportunity to move additional agricultural commodities by means of barter, we would do it.

Mr. ANFUSO. Is it fair to state that this directive of May of 1957 has resulted in a decrease of cash sales and certainly a definite decrease of barter sales?

Mr. PAARLBERG. I do not think so. I think it is fair to say there has been a diminution of barter disposals and a sharp diminution,

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