When we finally did bring the Moroccan contract to a conclusion, using Austrian prefabs, and 75 percent financed with Austrian shillings-unfortunately, after it started, the political situation in Morocco became quite uncertain and therefore it was decided to terminate some 360 out of 500 units in the contract. So, we are actually proceeding at this time with 140 units in Morocco which we are going to complete.

The additional Austrian prefabs are being stored at Trieste and we hope to use them in areas such as Crete and Turkey.

If we had additional Austrian credits, we believe that we could find a use for additional Austrian prefabs beyond that. Similarly, in Finland, where we do have a small amount of currency available to us, we plan to buy-I believe it is 50 prefabricated houses for erection in Iceland, if we can keep the costs within reasonable limitations. Mr. POAGE. May I ask there-and I do not think it is out of order to ask it-you discontinued building houses in Morocco. Is that due to the fact that there no longer is a need for housing in Morocco ? Mr. ARRINGTON. We do at the present time have a sizable continuing need in Morocco but the duration of our continued stay in Morocco is open to serious question and therefore we do not feel we would be justified in building any substantial amount of housing

there.

We had another project planned by the Navy Department for, I believe, 330 units at Port Lyautey in Morocco, which was also canceled.

Mr. HEIMBURGER. What is the status of currencies repaid to the United States under section 104(g) of Public Law 480; and have you explored the possibility of using these currencies for military construction?

Mr. ARRINGTON. That refers to the economic loan program and our counsel, Mr. Mayer, has been making quite a study of that.

I would like to suggest that he answer.

Mr. MAYER. As you know, section 104(g) of Public Law 480 provides for loans to promote multilateral trade and economic development in foreign countries.

When these loans are repaid, there is some question as to what can be done with the currencies that are thereby made available to the United States.

I understand that a joint committee of all of the executive departments interested in the use of these currencies has been looking into it, and so far I understand that there is no administration position as to whether these currencies may be reused. If they could be reused for the various purposes for which other foreign currencies are now available, then presumably we could use them for family housing, but I understand that the various departments have not yet reached a coordinated position on this question.

Mr. HEIMBURGER. That leads me to another question.

Yesterday we had the representatives of the Export-Import Bank before the committee explaining their administration of the funds available under the so-called Cooley amendment, with which I have no doubt you are familiar.

They mentioned yesterday that at least one loan has been made to an American business firm for the purpose of constructing some prefab housing in a foreign country. Have you, sir, explored with

the Export-Import Bank people the possibility of that sort of maneuver in connection with your military housing?

Mr. MAYER. No, sir, we have not. I am not quite clear as to whether we could use that vehicle.

Mr. HEIMBURGER. I do not think you could use it as a Government agency, but I think that a private American firm wanting to construct some housing in X country, to lease to the military, could use it.

I just suggest that as an avenue of exploration if you haven't gone into it.

Mr. ARRINGTON. We have had some discussions with an organization that has been interested in building houses for us in the Philippines and I believe they did mention there would be a possibility, in the event they were the successful builder, of their using such funds. Mr. HEIMBURGER. I do not remember where the Export-Import Bank said this housing was to be built. But they have established the principle that these funds could be used for loans to American firms to construct housing in a foreign country.

Just one more question: In your opinion would any additional legislation be necessary or desirable?

Mr. MAYER. In my own opinion, speaking as a lawyer for the Department of Defense, I believe that the present legislation is adequate to authorize the use of these repayment currencies for family housing and the other purposes set forth in Public Law 480. However, as I have stated, the administration, and the various executive departments interested in this problem, have not reached a coordinated position and therefore I am constrained to say that certainly additional clarification would be highly desirable on this point.

Mr. HEIMBURGER. Obviously, something is necessary before you can use the barter program again to any extent for your housing. Mr. ARRINGTON. Yes, sir.

So far as the status of funds under section 104 (g) I believe Mr. Alenier has obtained some recent information on that.

Mr. ALENIER. The Treasury Department has advised us that of $670 million disbursed by BOB, only $1 million has been repaid to date.

Mr. HEIMBURGER. So there isn't too much fund in the pot to worry about at the present moment.

Mr. ALENIER. That is correct.

Mr. HEIMBURGER. I have no further questions.

Mr. GATHINGS (presiding). With respect to the need for additional legislation, I wonder if you could suggest some language to our counsel, Mr. Mayer?

Mr. MAYER. I am not authorized to propose any legislation on this point since the administration's position has not yet been established. However, I could work with the committee counsel.

Mr. HEIMBURGER. Couldn't you just work with the committee staff? Mr. GATHINGS. Informally.

Mr. HEIMBURGER. As a drafting service and assist us in drafting some legislation?

Mr. MAYER. I would be happy to.

Mr. GATHINGS. Along that line, with respect to Public Law 480, I believe Mr. Arrington's statement said there was some authority in the

original act that was passed in 1954. Do you take it that that authority existed in 104(g) to provide this necessary housing, and then subsequently the Congress passed 104(1), which was passed recently.

Mr. ARRINGTON. If you are referring to 104 (1) of Public Law 480, I am not familiar with that, sir.

Mr. GATHINGS. That is the authority that was recently enacted. Let me ask you a little more about this.

On page 2 of your statement you state that:

We requested and obtained Public Law 968 of the 84th Congress authority to supplement the foreign currencies with as much as 25 percent in appropriated dollars.

I wonder if you would give us a breakdown and tell us, Mr. Arrington, just where that 25 percent authority in that 84th Congress act went, and to what countries?

Mr. ARRINGTON. I know the Air Force has used it in Spain.

Mr. ALENIER. The Air Force also used it in Morocco for site development costs.

Mr. GATHINGS. There was a net for that provision requiring 25 percent in dollars be made available to you to purchase certain supplies and equipment that would not be available in the country?

Mr. ARRINGTON. That is correct.

Mr. GATHINGS. Was there any other country besides Morocco?

Mr. ARRINGTON. Other than Morocco and Spain, I do not believe we have it in Great Britain nor Japan. I am not certain about Italy. I do not believe we have used appropriated dollars in Italy and that about covers the countries where we have projects either completed or under contract.

Mr. GATHINGS. This program is quite a saving to the taxpaying citizen of America, is it not, in that under this procedure just very few appropriated dollars are used?

Mr. ARRINGTON. Yes, sir; it does reduce the current outlay of appropriated dollars and provides a use for these situations generated by the commodity sales.

Mr. GATHINGS. How are these countries accepting that program? Mr. ARRINGTON. I would say in the areas where we have contracts to date they are accepting it very well.

Of course, a lot of considerations go into a decision by a particular country as to whether it will take additional commodities.

For example, according to my recollection of the history of the transactions in Great Britain, there was a sizable program negotiated back, I believe, about 1955, which was dropped because of the Battle Act provision to which the British objected about shipping 50 percent on American bottoms. Some months later a smaller program was proposed to the British Government. The British Government was very concerned about the need of our Air Force personnel for housing and went along with this smaller initial program, and I believe the first increment was something like $15 million worth of tobacco. The British accepted this proposal, not only because they had a use for the tobacco, but because they wanted to assist us in our housing operation.

In later programs I believe they have bought more tobacco and they have bought dried fruit, but recent conversations with the Department of Agriculture indicate that further sales to Great Britain areextremely doubtful.

Mr. GATHINGS. Are you running into any more trouble with countries other than Britain with respect to this 50 percent of the shipments going in American bottoms?

Mr. ARRINGTON. I have not been following that too closely in the last several years. I understand Denmark dropped a program at one point on that score and I imagine any nation with large maritime interests would find objections in that provision.

Mr. GATHINGS. That might include Norway.

Are there any questions?

Mr. Smith?

Mr. SMITH. Did I understand you correctly to say that there have been $600 million worth of these loans that have been made under these provisions and that only $1 million has been repaid?

Mr. ALENIER. That is right, sir.

Mr. MAYER. Under the loan program as it was originally set up, there was a 3-year period of grace in which no payments of principal were made to the United States, and that is why the repayments are a little slow in coming in.

Mr. SMITH. Do you have any knowledge of any housing in Peru with these sort of funds?

Mr. ARRINGTON. No, sir.

Mr. SMITH. Do you know of any that is being generated under Public Law 480?

Mr. ARRINGTON. No, sir; we have no knowledge of Peru.

Mr. GATHINGS. I notice from your statement you try to design these houses in keeping with the particular country design. You refer to the red tile roofs.

Mr. ARRINGTON. Yes, sir.

Mr. GATHINGS. I know in general those red tile roofs are used considerably and they are very beautiful.

These houses are of fairly permanent construction, are they not? Mr. ARRINGTON. Yes, sir.

Mr. GATHINGS. They have up to four bedrooms?

I notice the average size of these houses is a little more than a thousand square feet.

Mr. ARRINGTON. That is correct.

Mr. GAITHINGS. The rooms must be pretty small. The biggest part of them might be two bedrooms.

Mr. ARRINGTON. Some houses are larger than that and some are smaller. It is a rather modest space allocation. On the other hand, it is substantially larger in size than the housing that we had previously been getting in France under the rental guarantee program and considerably larger than is obtainable on the private French

economy.

Mr. GAITHINGS. How many are detached?

Mr. ARRINGTON. As I recall about two-thirds of the French.

Mr. GAITHINGS. What is the size of the lot ordinarily, in depth and frontage?

Mr. ARRINGTON. That I could not tell you.

Mr. GAITHINGS. It varies, I imagine.

Mr. ARRINGTON. Yes.

Mr. QUIE. Will the gentleman yield?
Mr. GAITHINGS. Yes, Mr. Quie.

Mr. QUIE. This appears to be about $20 a square foot. How does this compare with the cost of French construction of a similar building?

Mr. ARRINGTON. It is very difficult to discuss French construction of similar buildings because I would say that the standards here are somewhat higher than are normally employed in the French economy. Perhaps Colonel Wilhoyt might have some comment on that.

Colonel WILHOYT. I can only offer that costs are generally higher than we find elsewhere in many places throughout the world in our construction. We could research that and provide it for the record. Mr. QUIE. How would that compare with similar construction in this country?

Colonel WILHOYT. Construction costs would be higher but just in what proportion, I am not prepared to say at this point.

Mr. ARRINGTON. One reason the French costs ran as high as they did is because there has been very substantial inflation each year in France. Mr. QUIE. Mr. Chairman, may I ask one other question?

Mr. GATHINGS. Surely.

Mr. QUIE. This goes back to one comment that you made, too, Mr. Chairman, on the savings to U.S. taxpayers. Do you mean that this is a savings to the U.S. taxpayer because we do not have to put any more dollars in, but if you follow these transactions back to their beginning we put the dollars in when we purchase the surplus foods, so actually, is this costing less money by doing it this way than if we made a direct appropriation? I am taking into consideration we have the surplus and have to use it somewhere else.

Mr. GATHINGS. Fifty percent of these Public Law 480 funds are used for economic development in these various countries and this particular part of the program really helps the American taxpayer in that he would have to pay rent on houses. They would have to pay for their housing anyway with American dollars. If the housing is made available, in this way it would be beneficial.

Mr. QUIE. It is beneficial in that this is a use we have of the surplus commodities?

Mr. GATHINGS. Yes; there are about 10 uses. This is the best use of all as far as the American taxpayer is concerned because 50 percent of that money goes into economic development of the specific country. Mr. QUIE. In other words, we get some value, where we would otherwise give it away.

Mr. GATHINGS. Yes.

Mr. SMITH. Mr. Chairman, I would like to have Colonel Wilhoyt explain this cost. You said that the cost in France was higher than in America. I understood that the labor rates in the United States were about twice what they are in France. Tell us about this. Where does the extra cost come in?

Mr. ARRINGTON. May I comment on that, sir?

Mr. SMITH. Yes.

Mr. ARRINGTON. Labor rates, as I understand it, in France, are ostensibly cheaper, but there are other additional charges for retirement and all sort of workers' benefits which increase the hourly rate.