European counterpart procedures, no percentage is specified in the bilateral agreements with the exception of that with the Philippines, which provides that 5 percent of the deposits be reserved for United States use.

From the start of the Far East program on June 5, 1950, to September 30, 1952, Far East countries deposited the equivalent of $163,299,000 in their counterpart accounts. Of this total, the equivalent of $100,119,000 was withdrawn through September 30, 1952, to finance development programs and defense support activities.

TABLE XII.-Status of Far East local currency counterpart fund accounts under the Economic Cooperation Act of 1948, as amended, as of Sept. 30, 1952 [Dollar equivalents of the local currencies, in thousands of dollars]

1 On July 1, 1952, administration of the programs for Burma and Indonesia was transferred to the Technical Cooperation Administration, including responsibility for the utilization of counterpart funds.

Deposits of new Taiwan dollars only. Excludes mainland deposits consisting of gold and silver yuan and sales proceeds from ECA-financed goods safe-havened in Hong Kong at the time of evacuation. A portion of the Hong Kong sales proceeds amounting to the equivalent of approximately $3.5 million utilized for the benefit of the economy of Formosa.

Does not include the equivalent of $43.4 million counterpart funds available for use by Indonesia from local currency deposited to match aid furnished Indonesia from European program funds and reported in table XI.

Source: Mutual Security Agency.

GUARANTY PROGRAM

Although the Mutual Security Act of 1951 extended the geographic coverage of investment guaranties to include the Near East and Africa, Asia and the Pacific, and the American Republics, all guaranties issued by September 30, 1952, pertained to Europe (including Turkey). However, extensive discussions were in process with American investors for investment guaranties in countries outside Europe.

Industrial investment guaranties basically provide for the protection of American private investors against losses resulting from currency inconvertibility and from expropriation or confiscation. Through September 30, 1952, the total of industrial investment guaranties issued amounted to $37.5 million. The amount of all industrial guaranties, including those for forward contracting, as of this date was $38,000,000, of which $36,700,000 covered risk of inconvertibility of foreign currency receipts and $1,300,000 risk against loss from expropriation or confiscation. Total fees collected for industrial guaranties were $631,400, but no payments under the industrial guaranty contracts had been required.

Informational media guaranties in general insure convertibility of American investors' earnings from such activities in participating countries. Through September 30, 1952, these guaranties issued amounted to $14,000,000, while fees collected totaled $212,482. In contrast to new industrial guaranties, payments for conversion of foreign currency receipts into United States dollars amounted to $7,100,000 by the end of September 1952.

Under Executive Order 10368 the authority to make informational media guaranties was transferred to the Department of State from the Mutual Security Agency, effective June 30, 1952. The program continued to be operated by the Mutual Security Agency on behalf of the Department of State until August 15, 1952.

TECHNICAL COOPERATION ADMINISTRATION

The origin, concepts, and financial aspects of the Point IV program of technical cooperation have been discussed in previous semiannual Reports 13 of the National Advisory Council. The following is a summary of the background and current status of this program, which is directed toward laying the foundations for long-range economic and social development.

TABLE XIII.-Industrial and informational media guaranties, Apr. 3, 1948, to Sept. 30, 1952

Source: Mutual Security Agency and Department of State.

18 H. Doc. No. 250, 81st Cong., 1st sess.; H. Doc. No. 450, 81st Cong., 2d sess.; H. Doc. No. 658, 81st Cong. 2d sess.; H. Doc. No. 70, 82d Cong., 1st sess.

Legal authority for the Point IV program was furnished by the Congress in the Act for International Development, title IV of Public Law 535, approved by the President on June 5, 1950. The Act authorized the President to carry out programs of technical cooperation designed to enable the people of underdeveloped countries to make better use of their own resources by their own efforts. Accordingly, a Point IV administrative agency, the Technical Cooperation Administration (TCA), was established in the Department of State to plan and administer the Point IV programs. This was accomplished when the President signed an Executive Order on September 8, 1950, delegating to the Secretary of State the responsibility for carrying out Point IV programs authorized by the Congress in the Act for International Development. On October 10, 1951, the President approved the Mutual Security Act of 1951, which provided for the coordination of all United States foreign aid programs under a Director for Mutual Security. The operations of the Mutual Security Agency and the TCA were made subject to the over-all supervision of the Director for Mutual Security.

Technical cooperation and other economic development programs in certain underdeveloped areas where the chief responsibility had been assigned to the former Economic Cooperation AdministrationGreece, Southeast Asia, and the overseas territories of European countries have remained the responsibility of the Mutual Security Agency. TCA was made responsible for programs in the American Republics, the independent countries of Africa (Liberia, Libya, Ethiopia, Eritrea, and Egypt), the Near East (the Arab States, Iran, and Israel), and the South Asian countries of Afghanistan, India, Nepal, and Pakistan. In addition, on June 30, 1952, the programs for Burma and Indonesia, formerly under the direction of the Mutual Security Agency, were transferred to TCA for administration.

During the period covered by this Report, the Point IV program continued to expand, with further growth in its field staffs and substantial increase in the number of Point IV trainees in the United States. In fiscal 1951, the Point IV budget amounted to $35 million, approximately 80 percent of which was spent for improvement of agriculture, public health, and education. The emphasis on these three important fields continued in fiscal 1952 when, subject to the determination of the Director for Mutual Security, up to $211 million was made available for TCA programs. Included in these funds are $50 million for a special program of relief and rehabilitation for immigrants in Israel. For fiscal 1953, the Congress provided approximately $226 million for activities to be administered by TCA, including $70,228,000 for special relief programs in Israel. As of September 30, 1952, general agreements outlining the conditions under which assistance is provided had been signed with 35 countries.

EUROPEAN PAYMENTS UNION

As indicated in earlier Reports of the National Advisory Council, the European Payments Union (EPU) was set up by the Organization for European Economic Cooperation (OEEC) in September 1950 to act as a clearinghouse and a source of credit for member nations in facilitating intra-European trade. The system of multilateral settlement under the EPU permits each member to clear its current trans

actions with the participating countries as a group. The net deficits or surpluses of each member remaining after the clearing operations are settled in part by credits and in part by gold payments. Each member is given a quota which limits its intra-European imbalance which may be financed under these terms. The Bank for International Settlements acts as Agent for the Union and calculates the monthly net, or multilateral deficits and surpluses of each member with respect to all the other members.

When the EPU was established, effective July 1, 1950, no limit was set for the duration of the agreement. It was, however, provided that Article II of the Agreement, the Article which establishes the quotas, should continue for 2 years only, and that its provisions should be reviewed in the spring of 1952 with the view to determining on what conditions it should be continued after June 30, 1952. The Council, during the period covered by this Report, reviewed the significant developments in the EPU over the past 2 years and discussed various aspects of United States policy relating to this institution. This review led the Council to reaffirm its earlier position vis-à-vis the EPU with respect to the coordination of the financial policies and actions of the EPU with obligations undertaken by the United States and other member governments to the International Monetary Fund as well as with the commercial and financial policies set forth in the General Agreement on Tariffs and Trade (GATT). The Council emphasized the importance of the EPU in furthering the development of transferability among European currencies and in promoting the liberalization of trade among participating countries, including trade needed for the present large-scale European defense program. The Council also unanimously agreed on the following general principles that should guide the United States Government in its future relations with the EPU: (a) While primary responsibility for EPU must remain with its members, during the defense build-up the United States should continue to support effective measures to provide for a satisfactory functioning of the EPU. Its present form is to be considered as transitional to a system of nondiscriminatory multilateral trade with convertible currencies, and leading to full integration, and possibly political federation, of certain members. The United States policy vis-à-vis the EPU should be reviewed annually. (b) The United States should continue to oppose discrimination against the United States designed to improve intra-European balances of payments. (c) The United States should uphold its general policy favoring the strengthening of weak currencies of EPU members, and of discouraging pressures on stronger currencies, which would weaken them for EPU balance-of-payments purposes.

PROGRAM OF ECONOMIC AND FINANCIAL AID TO YUGOSLAVIA

The tripartite program of economic assistance to Yugoslavia agreed upon at the 1951 conference in London-and considered by the Council in July of that year was planned to relieve the economic difficulties being encountered by Yugoslavia during fiscal 1952. According to the terms of the agreed program, Yugoslavia received approximately $120 million during that period as balance-of-payments support from the United States, the United Kingdom, and France. A second conference was convened in Washington early in 1952 to discuss the

possibility of extending the tripartite program of aid to Yugoslavia for another year.

The Second Tripartite Conference on Economic Assistance to Yugoslavia recommended the continuation of economic assistance to Yugoslavia during fiscal 1953, although at a reduced volume of total aid. The participating countries, under the new program, agreed to extend aid amounting to about $99.0 million, of which the United States would contribute $78.0 million, the United Kingdom would contribute $12.6 million and France would furnish $8.4 million. The National Advisory Council considered the international financial policy aspects of these recommendations and approved the extension of the proposed program in the amounts and with the conditions. outlined in the final conference report.

GERMAN DEBT SETTLEMENT

The London Conference on the Settlement of German External Debts completed its deliberations and published its final report early in August 1952. Since that time United States, United Kingdom, and French representatives in the Tripartite Commission on German Debts in London have been negotiating with the German representatives the several agreements through which the proposed settlement is to be put into effect. These include bilateral agreements by each of the three powers with Germany on the settlement of their respective claims for postwar economic assistance, in addition to a general intergovernmental agreement establishing the over-all framework for settlement of both the private prewar claims and the governmental claims. When completed, these agreements will be referred by the Tripartite Commission to the creditor governments for approval.

EXPORT-IMPORT BANK

New credits authorized by the Board of Directors of the ExportImport Bank during the 6 months ended September 30, 1952, totaled $510.5 million-$115.1 million for strategic materials, $79.6 million for development, $61.0 million for commodity purchases, and $254.8 million for other credits-substantially more than in any corresponding 6-month period since 1946. The Bank, during this period, also allocated $7.2 million to specific projects in the Union of South Africa and the Republic of Ecuador from credits previously authorized. This activity represents a significant rise not only in the dollar amount of new loans but also in the number of countries to which loans were extended, and increased total postwar net credits authorized by the Bank to $3.9 billion as of September 30, 1952. On major credits and those involving important considerations of United States foreign financial policy, the Bank continued to consult with the National Advisory Council.

Austria

The Board of Directors in April established a line of credit of not to exceed $6 million to assist the Austrian Government in financing shipments of United States raw cotton. Drafts evidencing advances under the credits are payable on or before 18 months after their respective dates. They carry an interest rate of 2% percent per annum and are unconditionally guaranteed by the Austrian National