(The information referred to is as follows:)

Representative group of projects showing estimated costs and distribution by kinds of currency

Mr. HAYS. Mr. Bentley.

Mr. BENTLEY. The next thing, as I recall, that was going to be furnished the committee was a list on a restricted basis, unless the committee decided to put it on the record, of those posts which could only be staffed by noncareer people. That is people with outside income. Do you remember that request? Actually it was made of Mr. Henderson. It is in the record here.

Mr. HUGHES. I don't recall.
Mr. HAYS. I recall it.

You better take that up with Mr. Henderson, Dr. Westphal. (The information referred to appears on p. 190.)

Mr. BENTLEY. Now, the next thing we requested, Mr. Hughes, and I am not sure whether or not you sent it up, but if you did I can't find it, and that was the amount of the savings in rental that would be engendered by this program.

Mr. HUGHES. I gave that, Mr. Bentley, to Mr. Westphal.

Mr. BENTLEY. Your estimated rental savings: $8,823,300.

Over what period of time was that? Do you have a copy of this? Mr. HUGHES. No, sir; I don't. I think that is cumulative. The amount of new capital assets that have been acquired since the inception of this program. I think that is correct.

The attached table shows there would be an additional estimated savings of approximately $621,000 a year as a result of the construction or acquisition of the $22,200,000 of office and residential properties projected throughout the world.

Mr. BENTLEY. That is a cumulative saving over what period of time?

Mr. HUGHES. If we acquired these projects that we are projecting here, in the next 2 years.

Mr. BENTLEY. Those are savings where we pay dollar rentals, now? Mr. HUGHES. That is right.

Mr. BENTLEY. As long as it is in the record, that is fine. I think that was a very important point to make.

There are two more questions I want to ask.

First of all, to what extent do we use local currencies in the operating costs of our buildings? I don't mean now acquisition and construction but I mean actual operating costs.

Mr. HUGHES. Do you mean the utility bills and all that sort of thing?

Mr. BENTLEY. Yes. Perhaps that is a little out of your shop.
Mr. HUGHES. No; that is very much in our shop, Mr. Bentley.

I would say offhand it is very nearly 100 percent because what we call operating expenses are the actual operating costs of the building, utility bills, the hiring of local employees for custodial and janitor services. Those costs are paid locally at the post and normally in the currencies of the countries.

I think it would be reasonable to say almost 100 percent.

Mr. BENTLEY. There seems to be some tendency on the part of at least two countries I can think of and there may be at other places that for reasons of climate or security or other factors they plan a relocation of their capital city.

To what extent will that affect the program in view of the strong possibility that in at least those countries we have made a substantial investment in real estate in the city that is presently the capital and

if the site is to be moved what happens to the property we have acquired there, assuming we would have to follow the Government? I am thinking specifically now of two countries. One is Brazil and one is Pakistan.

Mr. HUGHES. In the case of Brazil, it poses a really difficult problem for us. We can only assume the Brazilians will go through with their plans for Brasilia. If they do, in our opinion, Rio will continue to be an important consular post for many years. So the problem of the office building we think would resolve itself along these lines: First we would consolidate all remaining U.S. activity in that single building. Second, as originally designed, there were apartment facilities in the upper portion of the building, so if we have space left over it could be adapted for apartments again to utilize the remaining

space.

A third possibility would be to lease a part of the building to some reputable, responsible American firm.

Mr. BENTLEY. Lease or sell?

Mr. HUGHES. Lease.

Mr. BENTLEY. How about the residential properties?

Mr. HUGHES. We own in Rio, Mr. Bentley, probably one of the world's finest embassy residences. It is a big house and it is an expensive house. In our opinion it would be too big for a counsul general. I suppose we would have to sell it.

Mr. BENTLEY. For whatever figure you could get and probably a loss.

Mr. HUGHES. Yes. I suspect big houses like that at the time the change is made will become a drug on the market.

I might say we have acquired a new chancery site in Brasilia which is a gift by the Brazilian Government to our Government. We plan now to proceed with caution in Brasilia and perhaps start with a simple staging building

Mr. BENTLEY. You are willing to have all this on the public record, of course?

Mr. HUGHES. Yes.

A simple staging building, so when the capital moves there, we would have a place for the people who have to go to Brasilia, both living units and office space.

I might say we can draw on our experience in the case of Canberra, Australia, where the move of the capital of Australia to Canberra has been spread over 25 years, and only in the coming year, 1961, will the Australian Government complete the move of its military establishment from Melbourne to Canberra.

We think it will be spread out over a long period of time.

In the case of Karachi, we are about half through with the construction of the new chancery there. I won't say we had the possibility of a move specifically in mind, but, as you well know, that has been talked about for many years. Insofar as possible, however, we are constructing a building which could be changed very simply into a desirable commercial office building, and we might come out whole. Mr. BENTLEY. And how about residences?

Mr. HUGHES. The residence in Karachi, again, is a big house. I think again we will have some trouble in disposing of it if the move is made.

Mr. BENTLEY. Are there any other possible moves that the political sections indicate might come about in the future?

Mr. HUGHES. In Libya the capital was in Tripoli. It has been moved to Benghazi, and they are also in the process of building a new capital at a place called El Beida.

Mr. BENTLEY. You see, Mr. Hughes, if I can break in for just a second, it won't be just a question of what we are getting, but if these moves are made in Brazil, Pakistan, or anywhere else, there will be a lot of countries who own residences trying to unload. It would mean the large houses will be even more of a drug on the market than normally. It means if you do try to dispose of it, it will amount to a very substantial loss, I should imagine.

Mr. HUGHES. I suspect so, Mr. Bentley.

Mr. BENTLEY. There is nothing we can do about it, assuming the right of the government to change its mind or the capital as it sees fit, other than to try to foresee these things and not get burdened with real estate that couuldn't be disposed of whenever possible. But, of course, an office building or chancery is one thing and an ambassador's residence is something else.

Mr. HAYS. Mr. Hughes, in this line item distribution for fiscal years 1961 and 1962 that we asked you to send up, your totals, as I read it—and I want to see if I am correct on this-your totals are $11,350,000 for 1961; is that correct?

That is page 2, the bottom of the page.
Mr. HUGHES. $11,350,000 in 1961.

Mr. HAYS. And $10,850,000 for 1962.

Mr. HUGHES. That is correct.

Mr. HAYS. And $6,455,000 in U.S. dollars.

Mr. HUGHES. That is correct.

Mr. HAYS. And $15,745,000 in foreign exchange?
Mr. HUGHES. That is correct.

Mr. HAYS. That is $22,200,000?

Mr. HUGHES. That is correct.

That is the construction and acquisition portion. On page 3 are the remainder of those items which we call capital account items: housing, architect and engineering fees, capital improvements, and new furniture.

Mr. HAYS. Your grand total is $28,950,000.

Mr. HUGHES. For the capital items, yes, for the 2 years.

Mr. HAYS. That includes everything: acquisition, construction, and capital items.

Mr. HUGHES. That is correct, sir.

Now, Mr. Chairman, on page 4 we have the operating accounts because, as you know, we also pay the long-term leaseholds, the regular repair and maintenance of Government-owned property, the operation costs of the buildings abroad, and the administrative costs of this program.

So you have a gross line item program for 1961, totaling $24 million, the same as for 1962, with a reserve item to make a gross program of $25 million annually.

Mr. HAYS. And your grand total is $50 million, which is the figure we talked about but what I wanted to get at was actually your new construction. Construction, acquisition at $22,200,000. The rest of

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it is rentals, repairs, administration, and lease payments, as well as some furniture and capital improvements.

Mr. HUGHES. That is correct.

Mr. HAYS. Now, these capital improvements to existing properties; you have $800,000 on page 3.

Is the Embassy in London included in that?

Mr. HUGHES. No, sir; not in that account.

Mr. HAYS. Where are you carrying that? Is that this fiscal year? Mr. HUGHES. No, sir; that is done out of previous fiscal years. Actually that contract was let in fiscal year 1957, I believe, Mr. Hays.

Mr. HAYS. I finally was able to get into this fancy Ambassador's residence the last time I was in London. I was never able to make the grade before since Mr. Whitney has been there and somebody said they were going to build a garage there. They were talking about building a garage for quite a few thousand dollars.

Mr. HUGHES. A garage, Mr. Chairman?

Mr. HAYS. A garage and servants' quarters at the Ambassador's residence. That is the way it was explained to me.

Mr. HUGHES. We built that 3 years ago. We had a property some distance from the residence where the chauffeur and the others lived for years, but when we moved the residence to Regents Park, we sold the old building and built a gatehouse at Regents Park residence. That was about 3 years ago, Mr. Chairman, but I don't know of any projected new item.

Mr. HAYS. They seemed to be talking about it. Maybe they haven't brought it up to you yet.

How much did this gatehouse cost?

Mr. HUGHES. I believe that was somewhere around $40,000, Mr. Hays.

Mr. HAYS. You had to renovate that whole building. Was that done at the same time?

Mr. HUGHES. Yes, sir; almost at the same time. It came as the final phase of the renegotiation of Regents Park house.

Mr. HAYS. How much was the total cost, altogether?

Mr. HUGHES. I believe that was about $200,000.

Mr. HAYS. This is another interesting item to me.

You have been over to Paris. Have you made any decisions on what you are going to do there?

Mr. HUGHES. Mr. Chairman, since we had our last hearing here I have spent 2 weeks in Paris discussing the problem at length with our Ambassador and the other people at the Embassy. We did not officially contact the French authorities but we did arrive at an agreement, between the Department and the Embassy, to see if it would be acceptable to the French authorities to put on the Rothschild site a suitable office building which would make it possible to consolidate our total Embassy in Paris in two buildings within walking distance of each other. Such a solution would permit us to dispose of certain other properties which we now occupy.

Now, of course, I think it is fair to say that Ambassador Houghton still feels that we ought to convert the Rothschild house into an embassy residence. We discussed all aspects of the problem. He and I left our conversation with the thought that we would try to ap