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Federal Reserve Bank of St. Louis
August, 1947
MMORANDUM FOR FORKCM All)
There are at the present tiae the following groups studying European
•Id:
(1)
(2)
(3)
(4)
(5)
(6)
The
The
The
The
The
The
Krug COB®ittee
Harriaan Committee
Kourse Gosmlttee
Herter Coasaittee (Sailed yesterday on the Queen Hary)
Bridges Cowaittee (Sailing September 10}
State Department Policy Coaralttee headed by George F. Kenar
This is too many eoia^ittees doing the same work and, unless it is
coordinated fairly soon, will defeat its own purpose.
The world situation is critically approaching a crisis — it will
probably not cone as soon as many of us fear. Greece may turn out to
be the powder kef. If it does, both Britain and this country may be
at war certainly within the next year. If this can be tided over, we
can expect s series of revolutions and a good deal of bloodshed in a
good many areas of the world, but no war in which the United States will
be directly involved. As the leading country in point of resources, and
as the major country th«t suffered the least in the last war, it appears
to me vital that the United States assume responsibility for preventing
as much bloodshed and suffering as Is possible.
The President will, in due course, set up an over-all coaamittee
consisting of the Secretary of State as Chalraan, Secretary of the
Treasury, Secretary of Coaaerce, Secretary of Agriculture, and the
Chairman of the Board of Governors of the Federal Beserve System and the
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Chairman of the Board of the Sxport-I^ort Bank to be the cabinet-level
coaaittee responsible for seeing what can be worked out*
Congress is in an unhappy frame of mind and the American people
are completely unprepared for the explosion which may develop. It
would seem to me that a non-cabinet officer with business experience
should be found to head a group making the recommendations to Congress*
I would suggest the following namest
(1) Walter Comings. President* Continental Illinois national
Bank & trust Co* in Chicago
(2) Fowler MeCormick, President* Internstio al Harvester Co*
(3) John U. Caulklns. former President Federal Reserve Bank of
San Francisco
(-4) John A. Colemac* Former Chairman Hew York S^ock Exchange
(5) Cardinal Spelliaan, Hew York City
(6) Charles P* Taft, President, Federal Council of Churches of
America
(7) Rev. John F, Slaaons, Minister. First Congregational Church,
Los Angeles, California
I have spoken to all of these men with your permission and they are
all willing to serve* It is too early to appoint any of these individuals
I
in isy opinion, but it is not too early to lay the groundwork* I have
deliberately ondtted a Jewish selection because I understand Mr, Hannegan
will arrange that matter with you in due course. I have merely carried
out your wishes in accord with agr suggestions and will be glad to confer
with you further or assist in any way*
If you so desire, I will become Chairman of the group* If not, I
will be happy to serve as a laeraber or oan be oaltted fron the list without
.
any feeling on ay part at all.
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Subject* Guaranties to United States Companies Operating Abroad
There may be a need in the European Recovery Program for some form
of guaranties to U.S. companies arising out of the political necessity
of ensuring approximate equality of treatment between American and
foreign companies in programs of expansion of physical plant and
facilities abroad that are an integral part of the E.R.P. The most
important single case is the petroleum equipment expansion program of
the E.R.P.
There will certainly be strong political pressure for ensuring that
established U. S. companies abroad are able, if they so desire, to undertake further direct investments whenever increased direct investments in
competing foreign companies are made possible by direct U.S. loans to
their respective governments. The goal of this Government would generally
be to ensure the preservation of the preexisting competative relationships
between the U.S. companies on the one hand and the foreign companies on
the other hand. This might be accomplished in several ways:
(a) through stipulations in the bilateral agreements between the
U.S. and the foreign government concerned that there would be
equality of treatment between U.S. and other companies in
the expansion programs.
(b) through some form of U.S. Government guaranties to the U.S.
companies concerned*
The argument for the use of Government guaranties rests in the last
analysis upon the assumption that anything short of this will not ensure
the necessary equality of treatment and bring out U.S. direct investments
abroad.
Types of guaranties. Broadly speaking, there are three major types
of guaranties that might be used in the E.R.P. They are:
(a) Normal business and credit risk guaranties.
\
00 Abnormal business and credit risk guaranties, e.g,/ guaranties
against risks of rationalization and confiscation.
(c) Exchange risk guaranties.
Normal business risk and credit guaranties. These types of guaranties
are open to several objections which, in my opinion, argue conclusively
against their use.
In the first place, they would open the gates to indiscriminate U.S.
direct investments abroad by making such investments largely immune to
the ordinary requirements of business jefiflfcdence and operating competence.
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- 2In the second place, they would almost inevitably injure the established
U.S. firms abroad by bringing in competitors operating under the advantage of
guaranties covering their entire investments*
b. Abnormal business and credit risk guaranties. The special interests of
U.S. firms already established abroad and the obvious economic waste of the "normal"
business risk and credit guaranties should ensure that they will not be seriously
considered. The appeal that guaranties against "abnormal" business and credit
risks, especially the risk of nationalization and confiscation^would have to
American business firms already operating abroad is apparent. Nevertheless such
guaranties would, in my opinion, be almost as objectionable policyjwise as "normal"
business and credit risk guaranties. They (if coupled with exchange transfer
guaranties) could easily lead to overinvestment abroad by in effect guaranteeing
the U.S. companies against any risk of capital loss (together with guaranteeing
earnings on their investments at equity rates).
Exchange transfer guaranties. If any type of business and credit risk guaranties are ruled, out^the guaranty technique is limited to the field of exchange transfer guaranties. Several issues are posed by this type of guaranty:
(a) Should the guaranty be blanket, extended to all foreign investments and
sales by U.S. firms, or specific, i.e., limited to the new direct investments that
are the counterparts of the foreign investment expansion brought about directly
by 2.R.P. loans.
(b) Will a transfer guaranty by itself provide sufficient incentive to ensure
the necessary additional direct investment abroad?
A program of blanket transfer guaranties extending to all foreign sales and
investments would, in my opipn, largely defeat the purpose of guaranties in the
E.R.P. framework by promoting a general and undirected flow of investments and
expansions of exports from the U.S. To be directly useful in the E»R.P., the exchange transfer guaranties should be limited to earnings arising from the additional
direct investments, and be worked out on an individual basis. Each guaranty should
cover all rather than part of the earnings from the specific investment and cover
an extended period of time - at least long enough to ensure a fair 'return on the
investment.
Whether a specific transfer guaranty system by itself will provide sufficient
incentive to ensure the necessary additional direct investment abroad will turn,
I believe, largely on the appraisal by U.S. firms of the ultimate risks of
nationalization and confiscation. Whenever these risks are not considered undue,
an exchange transfer guaranty should prove adequate to bring forth the requisite
direct investment*
The vulnerability of a specific transfer guaranty system as compared with
a blanket coverage program lies in the certainty that it would be attached as
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- 3-
highly discriminatjig in favor of established interests* This sort of attack
would stem inter alia from powerful banking and export interests, which have
been increasingly anxious to see this Government take over the exchange transfer
risk. The only way this line of criticism could be minimized would.in my
opinion, be through a very sparing use of specific guaranties*
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EXPORT-IMPORT BANK OF WASHINGTON
Date
TO:
Wm. McC. Martin, Jr.
Chairman of the Board
•
Statement of the Secretary of the Treasury on the
nWKsK RSC JVbRT H&ORa*
fne President, la hi* aeaaage, has laid before 700 the ^dministration*s proposal for * torepemn Recovery Program aad in greater detail the
Secretary of State has described the need for assistance t® Europe «IKI the
fnannor in which, anrt «xt«nt to which, it 1* r»cari^nd«d that Aaeric&n
*a«i«t«nc« b« giv»n« Tht financial **p*$ts of th« J^rograa hav» boon ear**
fully crjn»id»r»d tgr th« ffetlonul /idyisory Council oa International Monetary and
Financial Prt>bl»^» Aa Chairman of th« Council, 1 ntlcowi thin opportunity
to diacuss tli«9« aspects and also to ooontnt on th« financing of tho
Booomy Fw>gsf*Mi»
In the first part of v& statoswnt X shall r<nri«if th« principal
financial aapecta of th» Program,
X shall ttwn aay southing about th«
financial atopa which «• aimll «xpect the Suropaan countrliis thamaalvoa
to take, T3» r^raaindar of ^r eosMsnta idll be concerned with the financing
of the AM Prograa*
Hie first letter which I wish to take up is the qpestlon of the fora
»•
in which aid should be granted to iorope, ie couW provide this aid as
grants-in-aid or we eould wake loans wiiicii we would expect to be repaid or
a combination of both. The criterion for selecting oas or the other device
is the capacity of the participating countries to earn, in the years to
00**, the dollars which would be needed to pay interest and principal, the
pejrtisipating countries hare, oirwr a period of years, assumed the obligation
of making large annual pavuwnts of interest and amortisation on dollar loans
sad credits, both public and private. IB should take care not to insist
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-2-
that these countriea contract additional dollar debts which will overburden
their balance of paywente to the diaadvant&gB of future trade and private investment*
If the entire aid for Europe were to be on a loan baaia, it would
be tactically impossible for them to neot the additional annual charges from
their «&mtn$i of dollars, even after trade and investment return to normal.
This weans that a propar pert of the aid we giro ahould be in the fora
of grants-»in~*id, Inporta of current supplies of food, fertiliser, and
fuel, and raw Materiel* not used lor capital development, should bo provided
on a grant basis, except In the caeo of thoeo countries which clearly can
afford to pay for them on a oash or a loan basis. OB the other hand, capital
equipment and ran aaterlals to bo tiaod in connect ion with capital development
will s*rv* to increase the productive capacity of the recipient eotiatriea*
They are tSiua morn lilefcly to provide •sane of repayment and ao can more
properly be financed en a loan basis, unlesa the proapectivo balance of
peyw*nte of the recipient country wOBee it unlilwly that It will be able to
•»ot even rolntlvelr ****& additional fixed dollar ehargea.
file International Bank aay be expected to finance part of the capital
requlrewenta of the European countries, partloiil&r3y where they require the
financing of permanent additions to their equi|*aent* It la not' likely, howover, that the Bank oan aarry t*ie whole part of the Program which properly
ought to bo put on a loan baaia*
'm propose, theroforo, that when the Admin-
istrator for Economic C ioperatlon deoldM, alter oonsultlng the Sati^nal
Advisory Council, that it la doair&blft to extend aid on a credit baaia, he
will allooato th« fundii to th« gx;,,<ort»:&&port Bank of Washington, which will
thon nuke the loan ma dlreetod and an terns epecif led br the A<teiini«trator
in eon»tatatlon with the Setional Adviaory Council*
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i.
» 3 **
It is also important that the American basins 3» enterprises INI given
opportaniV to participate in the Heeovery Prograa lay making n»w investments
ebroed, or ^ expanding existing facilities where ths Program calls for ad*
ditional capital equipaent. In this way they will contribute to the restoration of &irop*f wnlle at the sent tine they will be carrying out their own
lamsvawj for expansion abroad. Private investment will save the taxpayer
aonsy In the long run. ?Je smst recognise that new inrestoenta would be sade
at a tiji» of peculiar uncertainty and that the investors mi ht have 8000
dlffl«ttl1y to cofwurting thytr earmiiige ar ^ietr original principal into
dollare. 1b facilitate thia inveatwnt, ^wrefore, it will probably be neoeeaary for tint Government to guarantee the convertibility Into dollara of
local currency earned IT theae enterprises or for the repatriation of the
original Inveetaant* IftiUe we aay eagject that the pertlcijsetii* eountriee
will try to mice doUara available, It ie poeeUble that they will not have
adequate dollars to permit conversion* ft* Economic Cooper&tlon Admlnietration
ehouM not be expected to goarantee Aaerlean ooapaniea aaklag these inrestnenta
against nenaal rlak», but Merely to give them a transfer guaranty* He propose
that not sore than 5 percent of the Hinds appropriated by Congress ibr the
Prefren should be obligated for these guaranties, and that the guaranties
themeoilves should not lie extended more than 14 years from the tto» the Act
goes Into effect*
Sow people i»v* argued that the participating countries should pay for
i
part of the Progres bf* using ^ their 0>ld and dollar assets In the tmited
States, «sA by liquidating the /^erlcan inveatasnt* of their own cltisens.
I used not labor the point that the European countrits vast have sons geld
and dollar reserves to finance their International trade* The suropean
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-4-
Recovery Pro gran is not intended to cover the entire Import requirements of
these countries. They will continus to export goods and services to the
United States sal ta other gantries, and will use these earning to pay for
essential imports ever mad above those s*ds available unler the Program,
They will also naed eeae dollars to pay for a ditional gpods obtained in
other parts of the world* They will need balances to carry on ordimty
cosMttroial operations daring the life of the neeovery Program, and they
certainly will seed balances if they are to return to nonaal operations after 1951* It would be folly on our part to-force the European countries to
use up their gold and dollar balances to a point where they would net have
adequate funds to operate smoothly through ordinary channels* Sgr insisting
that the participating countries exehaust thsir g&ld and dollar balances,
we would merely add further inttabili%r to their monetary systems* As a
patter ef fact, all of the participating countries except Switzerland, Turkey
and a»rtui?al have already reduced their dollar balances below the point of
safety*
Uhen we torn to tae pessibili^ of liquidating lurepean investasnts
la the United States, we oust also look at the probla* in terns of its
leai run coneequenees. These investvnts annually earn a dollar income,
•which will be used to cover part ef the cost of the Program, and which will
be usod in the future to neet part of the cost of imports after the Program
ends, without these invsetwanta, the balsnee««of**payasnts situation of the
particlpatinf countries will be worse in the future* X doubt very wuch that
it iwuld be wise policy for the fmi&ed states to expect European countries
to Ui^iidate ^ie properly owned In the IMited States by thsir nfttiaoals as
a condition for ? eceiving aid from this Qoverneent*
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Federal Reserve Bank of St. Louis
- 5 -
Bven if these co jj*tri*« could liquidate all of the property owned ty
their eitisdaa in the united States, they could not pay for mare than a
•Hall part of th* Program. Hi estimate that aa of last June 33 the dollar
assets held t$r parsuns in the recipient countries amounted to abcait 14*8
billion. Of thl* amount $1.5 billion consisted of direct iuwataaatat and
a considerable part of tfae remainder also consists of holdings which would
be difficult to liquidate. Sams of these assets are already pledged for
loan*, while lor m«ny of the countries Intolved the Aaotmta held lure are
negligible.
;
3am of the g0wmoeittaf howawr> will decide to liquidate aant or all
of their holdings so aa to pay for imports. In practice thia may be an
alturmtlvw to bo rowing from the United States* m certainly should not
object to the aowtsMnbs using these ftanda. the question of policy for us
to decide is the extent to which we can help these countries in obtaining
control of these assets. £& the ease of unbloetosd assets, th© only way the
loyopsan govvnwHita can ?*et control of thea under present circtsnstanees is
throu^i the tt»laatary action of their citizens. In fact, a consitierable
portion of the aaseta foraerly blocked in the united States na^s been unfrozen
•»•
in this wagr* yftille we do not have exact data on unblocked assets, we believe
the asouat la comparatively avail.
A l*rge jaart of the holdings are still blacked because their owner* have
not complied with the repaireasnts of their own f&vernaenta for certification
that there la no eaesy interest in these assets, and this certification is
required b ths United states Treasisy before the assets are unblocked*
The national Advisory Council ant ths aastcutivw departments eoneerned with
this matter have given very careful study to thia problem, end I aav*? discussed
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it at length with representative* of some of the leading banks. We recognise
that the problem la peculiarly difficult, because conflicting public and private interests enter the picture at several points, and for this reason ws
wish to obtain guidance from the Congress*
(In final draft, any r»caiMSS.rti
tlons approved by the me nill he Inserted hire*)
It will not be possible to obtain all the goods needed Air the Recovery
Program In the tilted States, nor would It be desirable to ettt*spt to do so.
See* eoasBditiea are In short supply here and purchasing abroad would loave
ears available for our own population and would In aaay instances reduce the
net cost of the jPuogrsfs* For cxa&pls, to get the needed amounts, SOSMI wheat
**y have to be bought 1ft Canada, and aowe i»troleiia 1m 7<m»»uel*. Moreover,
In this wanner we can vake It poaslbls for countries In the «st«rn Hspisphere
to supply 2*ri*r aamints of foods and s*t*rlail» to Surope and at the ssae tias
maintain essential Imports fru« the 'Milted States* These countries toe need
dollars* If wje procure froa the» a part of the sup$>l!*s for the iuroaeam
rrogren, t^s|r tan them spend the dollars for the goods which we normally e*»
pert to thee*
It la ths opinion, therefbrs, of the national Advisor/ Council that the
I
So^noalo Cooperation Administrator should be authorised to expend funds for
tht .youuieweHt of supplies for the Beoorery Frogr«« outside of ths TMited
States where this would relieve pressure upon goods and services la short
supply in ths United States9 or where buying §»ods in a foreign cenintry
waulit assist it la isaintaljiing Its usual ijtports froa tte United States.
m woald not, of cowed, favor the we of dollars to buy gooos abroad where
ths available supplies in the united States at reasonable prices are aaple
Ibr our needs as well as for the reo^ilreMnts of foreign countries.
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In any
ease, all purchases would be aade according to an agreed program, and cmr
administering agency m>u3d control the ua» of the funds appropriate* by Coa~
gross* In addition to .purchases in the Western Hemisphere, there are special
instances where It aey bo In our int«rast to procure certain essential products
in one pBrti&pating country for delivery to another, making p«5"a*nt In dollars.
F r «uuipl«, no ml ht bigr st@«l or coal in oas participating eountrjr for
d«liT«ry to anotbar. Ths dollars which aro rsiMilTSd would thsa bs ui«4 ty
tba supplyliig country to pay for imports froa ths t'nitod v>tat«sf and sine*
ibts* iaports would b« ccnrwrod in th« agrood n»cov«ry Prograa, oor dirsct
axpsndlturts fcr aid to ttos supplying country would bo reducod.
If ths Rocorsry program is to be successful, adequate asesur«s fcr swnetary stabilisation Most be taken promptly and with Tiger fey the i&ropean
countries. At the Paris meting the 16 participating countries undertook "to
apply any necessary asasures leading to the rapid achlaveiaBnt of internal
financial monetary and economic stability wriile maintaining In each coisntry
a high level of ew^loywsrst.* They hsto reoognised tliat j'eogrerj is not possible as long as inflation continues, and unless production is increased*
the naaswres w&ieh should be taken '?n»t vary so«ewhat from euuntry to country,
I
tout the general outline Is clear* Budgets sm*t be la^u^it into balance as
rapidly as praetle«l»lst so that the necessary «aepenses of gowrnesnt can bo
net without increasing the public debt and without increasing direct inflationary pressures*
In most countries modifications In tax structures and
control of expenditures will be called for* As deteralned steps are taken,
the trend toward budgetary balances, increased production, and steadying
frices will all interact upon one another to facilitate stabilisation*
*
fl» &d»inistr&tion proposes t^at each count r/ reosiring aid from tbe
United States sha 1 enter into an agreement with thia Oov*r aent which will
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ea?w the tana* on w. ieh aid win bt gtwra. Each aur*paan signatory will
undertake to adopt the financial and monetary n06*ur** which aro necessary
to stabilise it* currency and to maintain and establish proper rataa of **~
Chang*. ftes* agreasanta will also cover such matters a* cooperation with
other countries, the propar 00* of tha good* *uppli*d, sad tbe establisha*nt
of a separate account fl»r tha Ideal currency a<juiralant to th* aid auppllad.
Itoraoror, aaeh co Jiitiy would bo raquirad to supply tha Unltad Statoo Oowm-'
aattt with full information about aiy fortinoal aapoet of tho Heeowry Program
and to giro a raport on tho Program to Ita own pcopla. on tho beaia of tho
inforwitioa iftich ttio G>operating eountrloa will giv» uaf and al«o Iron tho
roporta of our own o.ffleaa in theao eauntrla*, «a can bo inforaad about tJio
situation and so bo In a position to tliacuss with tha country tha ooaatn*«i
ifcieh it haa takon or cm^i to tate to eontrilxito to tho rocovaxy of £^iropo
and Its own etabililgr.
m havw a diract intcraat in a.^aurin^ that tha aid wo provid« to ^uropa
raaioBu * mmlmniB oontrlbiition to tho roductlon of inflationary proaauroa and
tilt rastoration of stability* Ite thia end no proposa that »«ch participating country will dapoalt in a spacial account tha local currancy equivalent
<
at tho official aawhan^ rato to tho dollar coot to thia QovwrriBwat of tha
gp<xis auppliad throu^i .jranta-in-aid, m awet *@o to it that ta&sc accounta
are drawn upon only for cunatructlre, stabi lining purpose*. But at tho aaa»
tint wo mat a^id to« fatal orror of rogardia tho accounts aa liitlo *«ib«
Troasuriai11 in oach country which w* will spend as wt aea fit*
In many
imtanoas it will probably be boat ol^wr to lot tho account*- r«*ain idl*
or to authariie tha use of thla local enrroncy to *ff»ct a not roduction in
tho j^awar-saent's e^bt* fhsro m*y bo inatsnoas, howovar, in which it night
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also be used for reconstruct ion or develo^nunt, or other purposes which would
contribute ta th* increase of production In tha country.
In the view of the
national Advisory Council, such expenditures should be undertaken only In
agrieasnt with this Government*
Tfeft adjustment of SOB* exchange rates may be expected at *M point la
the coarse of Suropean neoovery. Inflation in Europe la certain instances
has given rise to eurreneles overvalued fro* « lang-rua point of view,
this state of affairs has tended to ehsek exports, wiills iapwrta havw b»«n
rslAtlvwl^ cheap.
In sons cas«s countries havs resorted to export subsidias,
throogi »ps«lal exoh«nf^ rataa, or hav» used other asasyrss in conflict with
•
mar owa long-range intarat tonal eeonoiilB pro^paiu
15» dsjt^rain&tion of an a^roprlata oxch&n^e rat* is a wry complex
nsttar Involving as It do«s the widsst ran^» af prios, coat, and balanes ofpayiwnt cor« iterations. Ttet difficult Us in setting exchange rates under
pr«s«nt conditions ar» such that, although th« rates of eoae of the partieipa ting oountrls* will wirtainl^r have to im adjusted, the timing of th«s*
adjustitmnts will vary from country to country. 4«soording^f it would not bt
9>od policy for us to insijrt upon an aeross-tivH-board aodlfleation of exchange
rats* before ws extend aid. His rtvision of rat«s of indlvld\jal countries
should lastoad bs considered as a part of a developing progras of internal
and external stabilisation in conjunction with fmitod Statoa assUtanes)*
To ontivs) that this will bo undertaken, ths recipient countries will bi
asl»d to agr^o that when, in th© opinion of ths- nnltod States 3ovornnMiAtf
thulr sxehango rates are Imposing an unjustiflabl* burden on their balance
of permits* they will oonault with ths International UoiKtary ftjud about
•
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-10 revision. Countries milch are not aealjers of thw Fund would :* expected to
consult with our Clov*ri»eat directly, The National Advisory Council in Tasking
i
continual studies of the exchange rat* problem and would be the a eney of the
United States to act for It In this aatt«r.
After progress has been Made toward Interim! stabilisation in the European
countries by balancing budgets, Increasing production, and expanding trade,
ths tis* aey 1* .ripe for making stabilisation loans which would give greater
assurance to the people of the participating countries that tbs sta iliaatitsn
will be perasnent, there Is greater confidence in the stability of sonsy if
the bal» oe of parents of a country is in equilibrium and if there is gald
or dollars In the vaults of the central bank* it this point in the ?rogreji
it would be well worth while to gl** them this additional assurance by extending a loan to provide isonetary reserves*
If ths loan is given preniturely,
the reserves might be dissipated throo^i normal balftnoe-of-pa^-wents deficits,
A stabilisatioii loan to bs effective siiotiM eons when there is reasonable
assurance that the Internal situation of ths erotitiy conoernsd is satisfactory,
and that it will be able to aaintain its exchange rate at a stable level f er
a considerable period of tliss. It is not likely that this situ^tian will be
reached iaaediately, Hut it is possible that in the eonree of 194$, and
probably In 1949f SOBJS Gauntries will be In a position to use stabilisation
loans effectively. At the a muriate tins Congjre s oay then be requested
to appropriate a ditlonal funds to be used by the Q*S. Stabilisation Fund to
mak« these loans*
I should now 111^ to t«m from the problww whish are facing mrope to
the problem which we isast faee in financing this Frogresu
It wotild serve no
gpod purpose to ask th* tJaropean countries to put their own nooses in ordw
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Federal Reserve Bank of St. Louis
-u~
if wo, oursolvws, adoptod s*thod* * ich wight * eoBtuats inflation in tl*
Qnitod States or Bpaot our own economic stability«
It is ^r f i» opinion
that wo should finanoe the Htaropean Hooowery ftregm within a balanced budget.
m oan finaaoo tho programs of interim aid and recovery witnout unbalanoing our bwlg*t fwr toi fi»«al y»ar 1948 if « do rwt tato haatr UleoB«id«T*d Maaitraa to raduca taxaa* You will r«eall tliat lit* Fraaidtont la»t
Angwt a«ti«at«4 feat m mmM eloM tht fineal y»*r ending ^m 30t 1948,
with a aarpl*» of |4*7 billian «tclu«iv» of th« o«at of th* Mt«mny Program.
Wt ar« now working 0ft th« rariaed «atlaat«» wiiich will be «ub*nitt*d with tte
l¥wiid«it«» bodf^ gtattaant. iot th« oaUuok now is that the rwe*i|*t« will
bo hi;^»r than anticipated in Augart, largely b«cau«« of thi infl&timiary
•UttAtLoiu fhc S^cmtary of 3t«t» has *«ti«at^ that 1597 billion woniM I*
i^tir«4 for the Ittterim Aid Fmgrmi and that about f US billion irould be
0xpand«d on tbs 10ng-rai^» program daring th» curront fiscal yaar*
It Is
claar that if we do not uawisoly redaoo tanw ths Reoorwr/ Pro gran can bo
financed wfctain a balanowd bttd«st and that SOM surplais idll still bo available for dobt r«duction.
At this tins it is not |iraetioablft to forooast ths bndgstaxy situation
for thu fiscal y@ar of 1949.
That tsan bo dom better after tho'cmrront studios
sad sstijoitss on ths budget 01*0 o&splotod with respoet to both roesipts and
•xpsndituros, lot I OB confident that, so loaf as wo purouo a sound fiscal
polio/, wo sb»ll bo abls to ooror ths oost of ths Swtwyoan noaoTsry H*ogra«
in fiscal 1949 out of enrront reran us a.
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Federal Reserve Bank of St. Louis
MK?sf^yfE^y
AMD mfBoyim saying
the European 'Recovery Program &s sutosdtt^ to th* CoRgrees, both in
its late&t «ad i» th* ]U»f»i&ge of tfes Bill providing for the prsfrs«3f ole&rly
define* the ftnetioa th*t KxpovV-foport Itek »f Ifes&iagtoxi wiH perform under
the program*
Xm the «*ord« of the Bill:
•ftoect it is detemdried th?*t aeaiat«uga^ sbouJld be extended under the
f«wi#i*m9 of thii Aet am credit t*n«v the AdMitti«trator simXl allocate
fmidfi fer tiie parp(09« to the I&^rt-^Xiiiport Bmik of I«ehi».-ft©»t *hloh lUudl^
a^t«ltte»t«jrtdiag th» yrotiaioas of the ^Ep0rt-Im|5ort Bank Act of 1%5 (59
$t&t« 5^6)| aa aaeade^.f ^ake Mid edKlalster th© ereuit «*.» dlr^ct^d, aad oa
terms npe«ifl«4t by the Atataifftr&ter la consultation with the paid Smti^aal
JUIvicory €4^ua011#*
f|-5@ fi«nfc9 aa the efent of the iawlxii»tr&iorA will exteiid all cr^dita
tke.t are to tee greeted tmder tise progjnut except poseibly iti the ease of the
»*le oft credit 0f Cto*er*UMet~owaed properlgr*
In ib^ letter iast^ac^p p-irtiea-
l&riy iten» such &e »r4.pa» It would appear tbfct the feaeml imtent of t^e Sill
is to permit the jUbiiiil»tr&tor9 if he fee the seller, or other ag^ac^ owning
tr*e ^r^per^jr to e»t^r iato * eootr^<?t of »*Ie eud provide tiiereia for re,|m3r*
sent to ttie seller of tfee pir«efea»e prleo ®B t»ime»
fbe preciee saua^r in whioii th* sgeacy relmtionfihip betv*e& tlie
Atei&i&triitor «ad the BaaJc will funotlcm will depend oa the working arrangea«nt tliet 10 estebliiAteti between the two ageacles*
X» the light, h^*«ir»r> of tfee e.towed purpo** of all ooaoemed th*tt it
10 mot Iatemd.e4 t© dmpliuat© ttoe f«eilltitt0 of existing Oorenuieiit agecicifcsst
it i* a«mnM»d tiie.t th* Adsiiiiiitrator wiH utilise tiie 0ertl<2e0 ^d faeilitiea
of the Beak to the 9MXJLKua exteot ooneistent with his ttt&tutory ^blig^.tian^*
ffettn, it in &&mng«4 tfeat the ag«9a«^r r«l*,tion»hip will develop in the following
•^^iTIWHW*flB^Bwm^^gr^
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Federal Reserve Bank of St. Louis
-2.
Upaa th* a^p01at»«Kit of the A&oini*tr*tor, fe* &nd hl« staff wad the
Board of Slrectara of the Bank and it* staff will forsswl&te * general pattern
for its* eate&jULahaeat of credit* md®r the. pragraa* Theae pr*liii&&xy &rr&»g«~
ftenta will inelud« preparation of the for* of erttdit eo»eiti!i«nt? fijdng of
f«Himl t«r&a «ad «oodlti<m* *ppllQ6bl* to all erudite und*r th* pfogrs»f
agrws&mit &9 to »ethoii» of allocating fuii-aa to tM Bank &nd oth«r g«c«riil
prsm^iir®© I'-sr tiw famctloEiiig of th« r©Iiatl«?i*»iiip«
At s*^ ii^^ afWr r«c»lpt of «t p«xtlcul&i* r«qu«»t far &aaifrUiae*|| th«
A^iai^tratar migiii muJL u^asi th« B«jsk for aiiirieii and *»«i»t&BO«i if prftliaia&xj
^ii^l^iia iadiofrttttt tru»t « poaalbl* credit is imT^lved*
JUT tar «u«h prAlialo&iy
saaly8i«> tbe Ad«ioi0trator will rafer the aitttt«r to tha Matioaal Aaviaary
C^^acil* lurking dimetly with tha Ateiaivtrator ar te asy ®y«ntt an a
p»vtlolpaAt 1m th* m\abim@ry of tha Natlonttl AdTiaorjr Councilt tha Bank will
Join IB isiifily^ijaf tha ?®cp&&t«
Whati «* dat^rmio&tloB ima b»$m m^d« % the
Ada^aittrfetor ami the Button.*! AdYlaoiy Cotmcdl th&t a credit is to ba gr«at«df
tha Msiiai®trat^r will fo-mally raqiiAst taa B**a* to aatabliah tho «radlt*
la
him r®%meitf tha AtiMAifttrator will «pa«UY tha aa^uttt of the cr»ditf tlia
<
tMBLejflei&xyj th» g«n@rfel parpos»f the tam^ int«i**»at r&tef to$*th«r with ®^y
g-ppeial eonditiontt that are conaldared nac«s*aiy«
Sioea the Bank will li&va
.pwrti^ipfettd 1ft th« analysis of tha ©r«dit# thia r^iuaat or diraetioa of tba
A&$iiifteit0r will )ba largaly & fontality for th« porpoii* of eo»pljiEi »ith
th* statute*
In in.G$@rdim@@ with gaaaral pToe»dttma previously agreed upORf the Bank
will «®tmbli»h the credit,
Th* Baak will di«bur«e the or^lit ami adaiai8t»r
it in &0e0rd^^e with the general proe®«tor«s previously Agreed tipen ualea«
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Federal Reserve Bank of St. Louis
- 3»
catadltioee &ri»e calling for elwaage* in adBiaistr&tJUtti la which «?«at tb«
Ad»iBl»irfttor will direct »uch efc&iigw*
ahuog^fi will b@
feft^ar
Ae ,lm th* Rtftklng of tlur er^ditf tto«
eciamilt&tlat b©t'w@«n th& Sank and th* idmiaistriitor
aa^ tli» 4ir®etlaia will probablor b« iaor« for r^tsord purpo»«» tly^ for tfe*
•S»rp@«* of giving the Biaait in,«truoti^ns on a «utt%er of irhieh It hfe» so ^r«^Oii*
iMrtbiipN
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Federal Reserve Bank of St. Louis
•
4
Draft
re-vised
Strictly confidential
August 26,
1947
FINANCING THE MARSHALL PLAN
In financing the program for carrying into effect the principles
of the Marshall plan, it is desirable to survey:
(1)
The funds which other countries have actually or poten-
tially available to raeet their needs;
(2)
The credit facilities already provided by the United
States and other countries for national or international needs;
(3)
The gaps which are not cowred by these two sources of funds;
(4)
Suggested general procedures which night be followed for
filling these gaps, with some estimate of the amounts required;
(5)
The relation between financial requirements and the United
States budget,
These will be reviewed in order.
Financial Resources of Other Countries
Countries outside the United States now report 18 billion dollars
of gold and dollar balances.
This is exclusive of the holdings^ of the In-
ternational Monetary Fund and the International Bank for Reconstruction and
Development, and is also exclusive of gold which may be hoarded by the
nationals of these countries either at home or abroad, or dollar balances
held by those nationals but unre ported, and investments abroad.
In the case of France, for example, the amount of gold hoarded
within the country has been estimated at more than three billion dollars.
As to French dollar balances, Mr. J. S. Richards, director of the U. S.
Treasury Foreign Funds Control, testified before a Congressional Subcommittee on Appropriations this spring that the amount not included in
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Federal Reserve Bank of St. Louis
- 2-
reported figures was in the neighborhood of seven to eight hundred million
dollars.
The same thinga is true for Holland and in smaller amounts for
other foreign countries.
The amount of foreign investments in the United States is estimated
by our Department of Commerce at approximately 7^ billion dollars as of the
end of 1945.
Thus all told the amount of foreign funds is at least another
10 billion above the 18 billion gold and dollars officially reported.
The changes in officially reported gold and short-terra dollar assets
over a period of years from 1939 to March 194? is shown in Chart I from the
August 1 Monthly Review of the Federal Reserve Bank of New York.
On August
7th the British Chancellor of the Exchequer Dalton revealed that Britain1 s
gold and dollar reserves totalled 2,400 million dollars.
The decline shown
i
in the overall figures for early 1947 represents in part gold payments to the
International Fund which were called for in February*
These gold end dollar balances represent, on course, the monetary reserve of these countries against their heavily expanded bank credit, and so are
only partly available to meet current demands.
The maintenance of substantial
monetary reserves is especially important in view of the need for currency stability.
Confidence in their currency is a first need in Europe* s', utilization
of its own resources end adequate reserves will be a part of every program of
currency stabilization.
These aggregate figures are, of course, considerably affected by the
improved gold and dollar position of a number of European neutrals such as
Switzerland and Portugal.
Hence some breakdown of the figures by countries is
necessary to show where the so-called dollar shortage exists.
Chart I.
This is shown in
Table I gives the figures upon which the chart is based.
Liberated
western European countries as a group have in their official holdings no more
reserves than they require and in some oases will need more when they stabilize their money*
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Federal Reserve Bank of St. Louis
••>
CHART I.
FOREIGN GOLD AND SHORT-TERM DOLLAR ASSETS
- 3-
GOLD
U.S. DOLLARS
BILLIONS
OFDOLLAK3
6
BILLIONS
OF DOLLARS
26
LIBERATED WESTERN
EUROPE*
ALL FOREIGN COUNTRIES
(EXCL.U.S.S.R.)
"NEUTRAL^EUROPE**
LATIN A M E R I C A
—
2
LEADING STERLING A R E A
COUNTRIES(EXCEPT UK.)
AUG'4f
AUG % 46
DEC'S*
DECUO+OEC'**
DECM6
AUG'39
OEC'44
AUG'39
AUG'41
CANADA
J7771
AUG'4I
AUG*43
AUG*46
MAR47
DEC'45
w/.
DEC'4t
Source: August 1st Monthly Review of Federal Reserve Bank of New York.
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Federal Reserve Bank of St. Louis
MAR'47
MAB'47t
TABLE I - FOREIGN GOLD AND SHORT-TERM DOLLAR ASSETS
'fin Dill ions of dollars]
Aug. HI
Aug. '45
Aug.»46
Mar.* 47
13,5
14.0
12.6
1SCT
8.0
3,9
TO"
6.7
6.5
4.7
0.7
o.-e-
Aug.«39
All Foreign Countries (l)
Gold
Dollars
Total
10.8
3.1
20.2
20.5
2.8
0.9
2.4
0.8
5.5
18,1
Western Liberated Europe (2)
Gold
Dollars
Total
"57%
TTs-
""377
TTS"
T^
"Neutral" Europe (3)
Gold
Dollars
Total
1.0
0.5
175
0,8
0.8
ITS
1.7
0.5
2.2
2.0
0.6
2,6
0,6
~275
0.7
0.4
0,8
0.5
171
ITS
2.8
1.1
3.9
3.0
1.2
"TO
2.4
1.1
~£^
1.4
0.1
1.2
0.2
174
Latin America
Gold
Dollars
Total
Some Sterling Area Countries (4)
Gold
Dollars
Total
United Kingdom
Gold and dollars
(1)
(2)
(3)
(4)
0.6
0.0
0.6
0.2
0.2
~o7T
0.8
0.1
0.9
1.3
0.1
174
Tar
!•*
Dec.' 46 Mar. f 47
Dec. '40
Dec.«45
0.4
0.4
1.5
ITS
17^
Dec. '44
Dec.H5
Dec.H6
2.3
2.3
2.6
Excluding U.S,S.R,
Belgium, France, Denmark, Netherlands, Norway.
Portugal, Spain, Sweden, Switzerland,
British South Africa, Australia, New Zealand,
India, British Malaya, Egypt,
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Federal Reserve Bank of St. Louis
1.7
0.8
-
Dec.»38
Canada
Gold
Dollars
Total
3.8
4
O.DV
0.9
0.7
- 5*
From the foregoing figures it is clear that Europe as a
whole is far from stripped of gold and dollars^ though in the distribution of the. > gold and dollars the neutral countries are in a
far better position than the western liberated countries.
The other important point in interpreting the figures is
that the availability of these gold and dollar assets, and more largely
of the hoarded gold and privately held dollars or investments, depends
on the confidence tho nationals of these countries have in the policies
their governments follow and especially in the stability of their currencies.
This principle was illustrated in the case of France in
the middle '20s. The condition of Franco appeared to be desperate,
*
but when Poincare stabilized tho currency and the government stopped
borrowing from the central bank, Fronch money began returning from
abroad and coming out of the ground.
Franco went into a period of
prosperity with ample funds provided by her own citizens and without
the need of any foreign credits•
(2) Credit Facilities Already Made Available
4
•
Dollars already made available for foreign countries under
existing credit programs total twenty-three billion dollars.
Of this
approximately eleven billion dollars has been drawn down through
July 1947 leaving a total of twelve billion dollars thus far unutilized
and available to meet needs which may arise.
programs are shown in the following table.
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Federal Reserve Bank of St. Louis
The details of these
- 6-
TABLE 2 - POTENTIAL SUPPLY OF ADDITIONAL DOLLARS UNDER EXISTING PROGRAMS
(in millions of dollars)
Available or Potentially available
TJ,S, Government lending
Export-Import Bank loans
Lend-lease "pipeline" credits
Surplus property credits
Ship sales credits
Loan to United Kingdom
Monetary stabilization credits
.
.
.
Unutilized
3,500
1,500
1,150
210
3,750
287
International Institutional Lending
International Bank
International Fund
•
U.S. Gov, Relief and Special Aid
U.U.R.R.A.
Post-U.N.R.R.A. relief
Relief in occupied areas
Greek-Turkish aid
Philippine aid program
International Refugee Organization
Grand Total
Funds drawn
through July *47
.
3,266(o)
3,396(d)
100
58
3,166
3,338
2,700
••
J.,000(e)
22,857
10,967
11,890
(a) Shipments held up, balance not likely to be utilized; (b) March Z\a 1947;
(c) U,S. capital subscription of $3,175 million plus dollars paid in "by other
countries through March 31, 1947, Authorized lending power of Bank is $8 billion;
(d) U.S. quota of $2,750 million plus gold paid in by other countries through
May 31; (e) Estimated approximate costj (f) Appropriations for fiscal year ending
June 30, 1948, as accepted by Congress; (g) $100 million made available in surplus
materials.
Sources: Miscellaneous, including Export-Import Bank reports, Daily Statement of
U.S, Treasury, Treasury Bulletin, Survey of Current Business, reports of the International Bank, Budget for fiscal year ending June 30, 1948, etc.
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Federal Reserve Bank of St. Louis
- 7-
In considering the availability of these funds it should be noted
that in most cases their uses are rather closely specified.
Of the twelve
billion dollars, for example, half is in the hands of the International Bank
and the International Fund.
The International Bank has a broad charter en-
abling it to make loans for development and reconstruction, but only when the
borrowing country presents a sound program which gives evidence of capacity
to repay the loan over a period.
The International Bank is now organized
after some difficulty and going fonward with its program.
It has already
made some loans of two hundred fifty million dollars to Prance, one hundred
ninety-five million dollars to Holland* and forty million dollars to Denmark,
and more are under consideration.
The International Fund is more closely limited in its utilization
and its charter is interpreted tp mean that it can only be drawn upon for
temporary use in connection with fluctuations in the balance of payments.
It
is, therefore, not available for relief or for long-term deficits in the balance of payments, or for reconstruction and development.
It is rather a
kind of central bank for central banks to be called upon only when a country
lias worked out a financial program which offers a degree of perm^mence.^ It
should be a powerful aid in assuring the success of such programs when they are
put into action, for it has the effect of increasing monetary reserves available*
The Export-Import Bank is dedicated as its name implies to the financing of United States exports and imports.
This is a most useful function
in stimulating the flow of goods and credit, but again is not available for
relief or reconstruction and development.
In addition to the dollars which the United States has made available
and dollars contributed to the International Bank and Fund by other countries,
it should be noted that a number of European countries and particularly Canada,
Switzerland, and Sweden have extended substantial credits to meet the current
difficulties in Europe.
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Federal Reserve Bank of St. Louis
The principal such credits are shown in Table 3.
TABLE 3 International Posti/ar Loans and Credits Granted up to June 1947
by Countries^ Other Than the United States
(In millions of" dollar's)
Creditor Countries
Can. U.K., Swed.
OthSwit. Neth. Ar%. Braz. Czech. Belg. Den. Nor. France Russ. er
Total
Debtor
Countries
U.k. 1,250
France 242
Neth.
140
Belgium 100
Denmark
Finland
Norway
30
Czecho. 19
Poland
Greece
Russia
3
China
73
Austria
Hungary
Italy
Burma
Siam
Other
454
58
140
38
24
40
60
80
21
18
1
2
11
30
179
25
5
27
69
7
5
13
2
26
8
3
8
3
15
10
13
20
9
15
7
29
278
16
4
2
2
2
1
122
3
2
»
120
15
4
1,857
Source;
163
39
40
28
50
66
81
6
28
894
781
195
21
342
55
12
96
23
12
35
29
52
Figures through December 1946 from Seventeenth Annual Report of Bank For International
Settlements, and Interim Report on Financial Needs of the Devastated Countries by Department of Economic Affairs of the United Nations.
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Federal Reserve Bank of St. Louis
1,503
1,076
330
172
201
107
120
94
114
40
281
73
16
8
130
120
15
4
4,404
•**»Up to December 1946 the debtor countries had utilized about
one-half
of these outstanding credits.
In the case of the Qcina.d.i.&n.
credit to Great Britain, five hundred million dollars remained unutilized on August 1, according to a statenent by Prime Minister
Attlee.
(3) Gaps in Credit Facilities
From the foregoing analysis of the funds in the hands of
foreign nations and made available already by credits, it is clear
that there are certain gaps which Vvre mr.y safely predict v.dll appear
in the requirements which will bo submitted by European countries.
The principal such gaps appear to be the following:"
(a)
Farm products ..and fuel.
A number of countries of
Europe are short of food, cotton, tobacco, and'fuel and the only present
method of obtaining them, aside from the three hundred thirty millien
dollar relief appropriation, is the use of their somewhat meagre
resources.
The general size of the need may be judged from our wheat
exports, far and away our largest item, which arc estimated for this
crop year at 500,000,000 bushels with a value exceeding one billion
dollars.
Exports of other farm products may total another billion
<
and a hr.lf to two billion. Of course, a considerable amount of''this
ivill be purchased by countries which can afford to pay for it.
Other
amounts are provided for by U« S. appropriations already made; so
that thu amount of additional funds required to finance the program
is relatively modest for this crop year, and next year should see the
amount reduced.
(b)
Occupied areas.
Appropriations for occupied areas both
for relief and for other economic aid a?..- included in the military
budgets.
There is doubt, howevor, v/hother these amounts are adequate
to finance a program which will lead to self support.
They appear to
bo limited more closely to maintaining the present situation.
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Federal Reserve Bank of St. Louis
.j.10 -
Probably a modest additional pjnount of funds put into those channels
accompanied by wise economic policies would assure earlier self support,
(c) Military aid. The loan to Turkey and Greece was largely
for the purpose of military aid. Probably some -a^d^t^onal amounts
be required.
(d) The United Kingdom*
The British situation is a case
by itself. Partly due to exceptionally unfavorable weather conditions,
partly due to inadequate economic policies, and partly to an underestimation of the difficulties, tho loan to Britain is being used up
far more rapidly than was anticipated, and will need supplementing.
This is probably the largest single -item in the European aid program.
(o) China, China again is a case by itself, and until
current investigations are completed it is impossible to say what,
if any, program can be worked out. Unless a program is agreed upon
which offers prospect of success no amount of money would bo effective.
If, on the other hand, a sound economic program is presented the
situation may come within the charter of the International Bank for
Reconstruction and Development,
(4) Method of Procedure
«
In order to fill the gaps which have been outlined and' aid
the economic recovery of Europe which is so essential to the maintenance of world peace, and to do this with a use of financial resources which avoids inflation in the United States and does not
defeat its very purpose by pauperizing the countries served, it will
be necessary xo utilize to the full resources already existing.
following comments as to procedure may be made;
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Federal Reserve Bank of St. Louis
The
- 11 (a)
Any success is dopende it on each country's mobilizing
its'Own resources, and tho establishment of confidence in their currencies is a first essential to their being able to do so.
This HIGCJIS
balancing budgets and stopoing printing press inflation which is continuing in several European countries.
(b)
Substantial amounts of American and other capital are
ready to go to foreign countries if they are properly encouraged.
This
is demonstrated in the case of Mexico where large amounts of Americm
money are now employed as a result of a favorablu atmosphere in spite
of heavy previous loans.
The principal conditions necessary to
at-
tracting American capital are currency stability, the reduction of
endless restrictions and regulations, and alloy/ing capital to make
and take home profits.
(c)
The Export-Import Sank can be used for facilitating
current trade, going one step beyond the activities of private banks.
(d)
The International Bank can be used as a spearhead for
economic reconstruction.
It has the most competent staff anywhere
available to examine the position of countries and to rap.ke sure that
funds arc wisely used.
It is international in character so that it
is not open to the criticism of being solely an American agency.
It
uses private funds and makes no call on the American national budget.
For these reasons tho International Bank is particularly qualified to
bo used to the full in meeting tho current situation.
The first pro-
ccduro in dealing with any country should bo to refer the case to the
International Bank for examination.
This examination will show
whether funds can wisely be used in the country in question and will
show whether or not the need is such thr.t other agencies arc required
in addition to the Intern at ion p.l Bank.
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•
(e)
There is probably need for a continuing agency for the
distribution of farm products and fuel.
As indicated above the amounts
called for need not be very largo and can diminish from year to year.
Other countries than the United States ought to participate in providing the commodities required.
(f) Military requirements are obviously a special case
calling for Congressional action,
^e^ds of occupied areas and of
the United Kingdom mi^ht be taken care of in part at least by the
agency just outlined, though they probably involve specific act?.on of
Congress.
(5) The Marshall Pl"n and the Budget
The goods supplid to Europe under the Marshall Plan have
to bo paid for, for farmers and manufacturers cannot be expected to
contribute their product.
This moans that to the extent aid is
financed by government money it becomes a charge against the national
budget and becomes in this vmy a factor in fiscal policy and in the
national economy.
A few major principles in relation to our public debt and
fiscal policy have novr become pretty well clarified, partly as a
I
result of the work of the Committee on Public Debt Policy which "has
published a series of reports on the subject.
These principles may
be cited as follows:
(a)
The National debt of 258 billion dollars, a substan-
tial part of which was financed by the creation of bank credit, remains
a highly inflationary force.
Inflation is still a major danger, and
with so much of the world's economic well*-being dependent on Americoa
stability, we must avoid increasing the debt o.nd begin to reduce it.
The present period of high income is one in which substantial payment
should be made on the debt.
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(b)
In the interest of preserving a dynamic economy, we
must also reduce at the earliest poa , ible moment the penalty which present taxes now place on enterprise and initiative.
Vfo cannot rU£ the
risk of continuing these wartime taxes indefinitely.
(c) Thus, our responsibilities for other countries must be
kept in relationship with our domestic responsibilities for a sound and
dynamic economy.
Y'/hat we spend abroad must somehow bo fitted into a
sound domestic budget, and if the foreign expenditures run into largefigures, consideration needs to be given to an offsetting reduction in
other costs of Government or to the - levying of special additional taxes
to cover these added expenditures.
The government budget for the current fiscal year reported
August 20 shows a prospective surplus of 4.7 billion dollars, presumably
available for debt retirement, for tax reduction, and for any additional
foreign lending or other contingencies.
It should, of course, bo noted
that the budget already makes provision of 4.3 billion dollars for
international affairs and finance, exclusive of the amounts that are
available through the Monetary Fund and the International Bank. ^This
I
4.3 billion dollar item is approximately 800 million dollars larger
than was included in the-President's earlier budget estimate in January,
1947.
The increase is the inclusion of 320 million dollars aid to Greece
and Turkey and a 500 million dollar increase in the estimated use of the
British loan.
The breakdown is shown in table 4,
TABLE 4. EXPENDITURES ON INTERNATIONAL AFFAIRS AND FPTAHCE IN 1947-48 BUDGET
" (in millions of dollars )^
(Subject to amplification)
Treasury loan to United Kingdom
$1,700
Export-Import Bank Loans
684
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Foreign relief
Greek-Turkish Aid
Other
TOTAL
1,168
320
429
4,301
- 14 -
With respect to the reduction of the debt, a general indication
of what is appropriate is provided by the resolution passed by the Senate
in the last session for a reduction of one per cent, or 3,^00 million dollars.
The tax/ reduction which was voted by the Congress in July and
vetoed by President Truman, would have provided a probable reduction in
revenues of some 4 billion dollars, or in terms of the current fiscal year,
2 billion dollars, because it would only be effective January 1st.
These
figures indicate the general magnitude of these demands upon the budgetary
surplus.
There may be a little more leeway in 1949 - if business continues
active.
SUMMARY
First, over against the world's need for dollars other countries
have themselves a substantial amount of dollars, though these dollars are unevenly distributed.
The liberated western countries show a continued
decline in their official dollar holdings to a point about half those of
1939.
In addition to official holdings it is notable that in many countries
there are large amounts of gold hoarded by their citizens and substantial
amounts of dollars in the Uhited States which their governments have not
bden able to recover from their citizens.
A restoration of confidence in
the currency of those countries would itself do a great deal to relieve
their difficulties with respect to funds as well as with respect to the
distribution of their product among their own people.
Second, the United States has already extended credits to foreign
countries totalling approximately 23 billion dollars of which some 11 billion dollars has been drawn upon and over 12 billion remains.
The bulk of
this is in the International BanTc and the Monetary Fund and in the ExportImport Bank.
These existing agencies have substantial means to meet the needs
of countries which put their houses in order and so qualify themselves for
credits.
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— 15 -
Third, the principal gap in the credit facilities now available
to meet European needs is for farm products and fuel.
irthile provision
has already been made for considerable distribution of these commodities,
present facilities cannot fully meet the need*
In addition there are
special situations in the occupied areas with respect to military aid
and, above all,
tion.
in relation to the United Kingdom, which require considera-
China at present has not qualified for aid.
Fourth, with respect to procedure, the first desideratum is that
each country should mobilize its own resources, and especially establish
confidence in its currency as a first step.
Then every effort should be
made to utilize the force of private enterprise and the government facilities already provided.
Only then should additional American taxpayers 1
money be employed.
Fifth, our government's budget for the current fiscal year
shows a surplus of 4.7 billion dollars available for the reduction of the
debt, for tax. reduction and for additional foreign aid.
The present
budget already makes provision for 4»3 billion dollars for international
affairs and finance, exclusive of the amounts available with the ^ibnetary
Fund and the International Bank.
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W. RANDOLPH BURGESS
55 WALL STREET
NEW YORK 15, N. Y,
August 26, 1947.
Strictly
Confidential
Dear Bill:
In working up material for the President1s
committee of nineteen on foreign aid, I have been
assigned the financial aspects, and the attached is a
second draft which vd.ll be considered at a meeting of
our subcommittee next Friday. Needless to say it will
need "further revision, and particularly the figures on
the use of credits and the budget figures on which I had
to do a little guessing.
»
I thought you would like to see a copy, and
I should be very happy to get any suggestions you may
have.
Sincerely yours,
Mr. William McG. Martin
Export-Import Bank
Washington, D. C.
TREASURY DEPARTMENT
WASHINGTON
OFFICE OF INTERNATIONAL FINANC*
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SEP 5 1947
Dear Mr. Martin:
I am returning herewith the letter from
•\f. Randolph Burgess to which is attached a copy
of a draft entitled "Financing the Marshall Plan,"
v;hich I have read v/ith interest.
Thank you very much.
Sincerely yours,
AV
Frank k. Southard, Jr.
7 >
Director, Office of International Finance
Mr. William McC. Martin
President, Export-Import Bank
Washington, D, C.
September 8, 1947
Dear Mr. PerkinsI
In the absence of Mr. Martin, who is out of
the country at the present time, I as acknowledging
receipt of your informal notes on the Marshall Plan.
These will be brought to his personal attention immediately on hi» return.
Secretary to Mr. Martin
Mr. Milo Perkins
723 - 15th Street,
Washington, D. C.
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I
V
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MILD PERKINS
September 3, 194?
Dear Bill:
After our recnt talk on ways
in which the Marshall Plan might be
implemented I put an outline of my
thoughts in writing. A copy is enclosed
for your information.
Yours,
c
c
September 1,
INFOEMAL NOTES ON THE MARSHALL PLAN
*7
MILO PERKINS
The most vital current issue in Washington is the Marshall Plan and what
might "be done to implement it. In his speech at Harvard, and in subsequent
comments on it, Secretary Marshall enunciated four important principles:
1. That henceforth we would put more emphasis on economic rehabilitation
and less on political negotiation.
2. That henceforth we would try to take an overall, rather than a piecemeal, approach to the problems of Europe.
i
3. That in extending any aid our policy would be to help those who help
themselves and that the Initiative for recovery must come from Europe itself.
k. That the Soviet Union and her Eastern European satellites were not to
be excluded from a European aid program.
The speech was well received in the United States. Europe promptly reed
her own desperate needs into Secretary Marshall's generalizations. Within a
week what was really a broad policy statement became known as the "Marshall
Flan." Many programs to implement this proposal are now in the making but the
thinking is still very fuzzy. Our State Department people are waiting for something concrete to come from Europe, and in the meantime are so preoccupied with
immediate matters that they haven't an adequate amount of time to do the long
range thinking it would be so desirable to do.
Their hours are spent with concern over such problems as how to save the
I.T.O. frcm utter emasculation; hew to get some token cut In tariffs out of the
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c
- 2Geneva parleys; how to step up industrial production in the Ruhr, particularly
of coal; how to prevent the shortage of dollars abroad from hurting United
States "business through a sharp cut in exports by winter; and hew to present
appropriation bills for foreign aid to a Republican Congress in such a way as
to get them passed in an election year. The majority of officials in the United
States Government concerned with the Marshall Plan, therefore, are not prepared
to take the bold steps which I think the present situation requires.
There is a growing minority however, supplemented by outside opinion which
takes a very different view of the matter. The inadequacy of our policies during the past two years has become more and more apparent to people and a surprising number are now ready to try a new approach that is basic and sweeping.
The thinking of this group is bold and Imaginative and, to me, highly significant. It runs as follows:
The withdrawal of the Soviet Union from the Earis Conference is probably
a more serious thing for the world than was Munich. Russia probably dared to
risk blame before the court of world opinion for her withdrawal because of her
conviction that Western Europe is not an economic unit, that it is1, incapable of
being integrated into an effective bloc, and that the Western world lacks the
bold leadership requisite to achieving an integration in any substantial area of
the world not now dominated by the Soviets.
The bold line of thinking starts then with the conviction that the great
challenge to the Western world today is to find strength through economic integration. It would leave the door open to Eastern European countries, or to any
separate republics of the Soviet Union, or to the Soviet Union itself, if any of
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- 3them subsequently cared to Join in whatever program the Western nations might
have worked out. Quite independent of them, however, it would do everything
possible to increase production in that half of the world where its actions
would not be subject to veto.
With this as a fundamental premise, this group feels that President Truman's
committee, under Secretary Harriman, to study what the United States can "spare"
for aid to Europe is a static and timid approach. Any estimate at the time of
Pearl Harbor as to what we might have "spared" to win the war would certainly
have been a figure that would have lost the war. The emphasis should not be on
how many dollars we can spare to aid Europe, but rather upon what kind of business climate the Western world can establish which would have a reasonable certainty of increasing production end trade. Looking at the problem largely from
an American point of view, the logic then runs as follows:
If the barriers to the free movement of people,money and goods, which now
exist in Europe were transposed to the forty-eight state boundary lines within
the United States, this country would be completely paralyzed in forty-eight
hours. No amount of government loans from the Federal Government t$ the State
Governments would be able to cure the basic sickness. The existence of these
barriers in a state like Montana for example, would make it impossible for the
people of Montana to send their copper and wheat, their metals and lambs and
cattle, or their wool to market in the other forty-seven states.
If the Governor of Montana were seeking a loan under such conditions from
the Federal Government for a billion dollars, he could do very little more with
it than put the people of Montana on dole. He could buy textiles and other
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c
- ij. goods which are not produced in Montana and distribute them to the population,
"but sooner or later the money would run out and Montana's situation would "be unimproved. The game could go on only so long as the Federal Government could
find additional "billions to put out. Production, meanwhile, would fall "badly
and living standards would go below the level of austerity.
This group feels that loans to European countries now present a parallel
situation unless they are definitely used to help create a trade climate within
which people, money and goods can move freely.
As a bold proposal, therefore, this group would convene a meeting of representatives of the United States, the countries of Western Europe, Latin America,
the U.K., and the English speaking peoples of the British Empire. They would not
go so far as to propose political union, but they would propose three major
treaty agreements, as follows:
1. The Free Movement of People
They would agree to a plan whereby any citizen of one of the countries included could go freely to any other member country for a period of six months
virtually on a post card, such as is now used by the Mexican Government to encourage tourist trade. There would be a simple declaration of intent to return
to the country of origin in half a year, backed up by the purchase of round trip
transportation plus a signed statement indicating awareness of the penalties to
be imposed if return were not made in six months. This wouldn't solve the basic
problem of necessary population shifts within the whole area, but it would be a
very good start, and it would save the time of men for the central Job of more
production which is now being wasted on complicated travel technicalities.
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- 52. The Free Movement of Goods
A one hundred percent outright customs union would be proposed with no
tariffs or "barriers other than transition import quotas for luxury goods while
the program was "being established. With the low productivity now existing in
the rest of the world, United States imports would probably not increase by more
than a billion dollars a year under such a proposal during the first couple of
years. The pressure groups wanting high U. S. tariffs might conceivably be
snowed under by an awakened citizenry determined not to let the Western world"
fall apart at the seams. A program this Imaginative might be easier to sell
than a twenty-five percent cut in the U. S. wool tariff.
3. The Free Movement of Money
The International Monetary Fund would next value with realism the currencies of the countries involved vis-a-vis the dollar and vis-a-vis each other
with international agreements on sanctions against deliberately inflated currencies after re-valuation, which could be enforced through the International
Monetary Fund. Some fifteen or twenty billion dollars would be pledged to
underwrite the absolute convertibility of these currencies for twenty years.
The bolder the move on this front the less chance there would be of the Fund
having to be drawn upon. When businessmen know they can get their money out of
a given area when they want it, they are quite happy not to take it out. Only
through this guarantee of absolute convertibility can there be the volume of
private investment from the U. S. to the rest of the world adequate to do the
Job before us. That volume of private investment under the conditions outlined
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- 6would far exceed any conceivable volume of government loans. These are the
dynamics of how a competitive enterprise system works.
If a conference of the eastern seaboard states had been called in i860 to
explore what they might "spare" for the industrialization of the western and
southern states, five hundred million dollars probably would have looked like
an astronomical figure. And yet in the sixty-five years which followed tens
of billions of dollars were invested in the west and the south frcm eastern seaboard sources under a set of economic conditions wherein people, money and goods
were able to move with freedom. As a great creditor nation, the U. S. now holds
a position with respect to the rest of the Western world which is not dissimilar
to that of the Eastern seaboard with respect to the rest of the U. S. in i860.
There is not much political chance of anything «JQ bold as this being accepted in the immediate future before the !U8 elections although there has been
virile support for such a program by eighty percent of the business men interviewed and about a fifty percent level of support from so-called liberal groups.
All the business men were one hundred percent in favor of this approach as an
ultimate goal, but some twenty percent felt that a customs union injWestern
Europe, possibly open to certain Latin American countries, should come before
U. S. membership in such a program.
It is my own view that while we may have another year or two of temporizing with the foreign lending situation, before 1950 the Western world will either
have to attempt something along these lines or watch the Communists make further
inroads in this whole area. Quite obviously a thorough program of popular education would be a prelude to U. S. support.
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I think there is a growing chance
- 7of getting it.
Responsible news reports on the Paris Conference now indicate estimates by
N
the technicians of roughly 7j billion dollars a year for four years as the amount
necessary to Implement the Marshall Plan. These reports also indicate that the
political leaders of Western Europe are deeply concerned that such a large figure
might receive a very adverse Congressional reaction in this country.
If the minority group opinion outlined in this memorandum were to become
the majority opinion and if a program were to be built around it, grants to
European countries for four years of some 3 billion dollars a year would still
be necessary. But private investment would doubtless take hold at a level which
would reduce substantially the drain on United States Government finances.
This is not to say that the new program would be easy. Differences in price
and wage levels among the nations of the Western world, their unequal monetary
reserves and trade balances with third countries, their divergent internal budgetary and monetary policies and their foreign exchange controls would all present very real hurdles.
I
These difficulties have to be weighed, however, against the even greater
difficulties this country would have to face if there were widespread economic
collapse beginning in Western Europe.
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I
Soorotftty Say**
loiter ?t 1947
Mr* ^raofc *ad «r. 8o*t!*ir<!
Praront §t*t«o of tit* .-'uropo** Booorory Pr*gr*«
I. ffco stoto ffeptrtftoiit lo fposotstlag tfco a*ia outltiw osf ttw ilf to tbo
Beroott of tilt Budget today. Accordingly, it io now ?>»clbl* to outltao
tho Program ts> raw idth r»**aiiabl« assurance that it *111 ro*eh tho Cabinet
In Ottb*t*ftti*Uy this fonu n* «r« •aannrislng tl*t Prograa und«r thrM
hi*4Ug»; 3»e»r«l JrUaUttoe, ' . '. T^AnUatlon,ftMriMulxi O««*nta. H
«l»o *%t»^i Ijtr-rfeo A »&f* 4«t«iMi pafeilai f^i«h has b*«n «pprav«4 If th«
Int*rti»p*rti»ttt*l Adrisoiy St««*ia« Co«iltt^.
t» JMM»»1 )rUnUtUtt
{*) rjj^ijiBpt»X INiMpnt.. for ^» £RP* ;>ir «if tli*4,ii«B Imp OOMI to
a tt•* of ^flailaSRU l^fwtisi* t^lli^Ni'ir S«r0f» m«f fur^ tfeMMtt eaaatriwi
ta t«m «wy £Kii tb*ir h»rlta^ <if fim* i:atitution». fltsM»« •lai» Sjropt
•cnno* pvnMst **lil« «11*j3«» vltbe^i ^SP **ni«tiuioft wt e«wt i»lp tteMi «*«t
ti» ^asle r^ttlrttiiiats «f rcttgray.
(li) Tbt ^aropgan »1 tuition It «D» of dUruptian «ncl aislocaiton 4u«
to *rrA»x*»tion, braa^^.a lift tr«4of JtoMm «xhftuatian, lnt«i*mi f inaneIA!
tfiMqailUNPim, »»i political SavUbUHr*
{«) Th» ij^nnh to » «olttti<ia WM »«t Igr tto ^ier«taqry of 3t«t« la
t*»*t «f A»*]do«n *»*l«t*i»» en tb* b»«i« of »>^ntmiii twang ti» ooa«trlM
«f Inrofo «• ta th» r«v^lr<iMmt« of tb» «ita*tl<m and tte part tiaoae oouatri«« tiMMatlv** will taS« IA ardor to «!T* p«p»r •ff*€ttf ta ?.S, action,
Dp0ft this «t*tiaiftt ttiiiiMd tho r«ri» i*pert.
(d) Tha F«rl< ^»|»rt S» *eo*jjted «• ft r«»&rto*bU *ciil«r«8i«nt watch
•ttt«« th« Kurop««n ioroiloft and *xyae*3*** *o MOIKMU ro»«yyi>ry.jrog^a
*i»td at fr*«iog Sarop* fro« •h^aminl <l«ptmr«no« on c«t«id» aid IT tiMi moA
«T 1951. fhla ffvpffii ii IMMMM MI fowr *»J$r palntiif
(1) A •tyoag pnntwtion »f f»rt l^r «««b j»rtlcipating cjuntry.
(2) fH» «r*«tiofi «f internal flam**! «t»Hli%.
(I) T3*i ttwtlw* o>op»r*t L»n Ixtrmoj th« partiolpating 4eu&~
irlM.
(4} A *3latlaa «f tfet* 4«fleit witfl U» MMfi«Ki Conti»»fit.
Ailf litlf IJT th» «euntri«» «oae«r«>a4 »al mitaal btlp botvooa. tboa ii m basic
*«^ts^ti^3, Tfer«K» to bo actii»v*<4 fe^ 1951 oro oot for eorool*, oool, *lo«trlcity, oil r*f lniin» omdo srtwoly inland tvttimport, »ad ttorohant Hoots*
http://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Th* Import rooogBlxos that tho eraatioa of internal financial stability is
ft aooosssty condition to r*«av*iy. Tho ovar-all four-y**r total dollar
daf ioit la ootlaato* at t2a.4 billion, net iaeXudiag aiy stabilisatfc* loans.
Of tlti* awroat, $3,1 billion mi^t bo f in&rxssd through tho International
Bank or tiao aoaoy warkat.
(•) Appraisal of ibc Parle Roport. If anything, tho Swopo** probls*
in ow* »o*o grw %biw aatlinad ia tha Uo^rt, but tha prograw of action
propo«»a is jgoR*y*X3y e)\i«i »nd courm^iom, fhi« 4ooo not
tliftt tte 0UMi will aet roquim aodif ieaiian to oono prt*
2* f»S> ^f^idJ^tiaai
Ik ppopooal f^r a fl«5. »iWilJi*ti««a t» »{t«Uiijitor th*
ly tfeo stftt* Boftrt»o»tf hM boon a^rowoi IT tiw Advisory scoring Co»ittoo.
B«c«*»*J7 prtjrisixjw to oariy out tbt ygojitial h*to boom sot £®rth la trftft
lugljiliiti^ propwt^d Igr tHo Stftto BoportMOBl v^ltli «tU bo mibatittod to tho
ffcro** of U» HaAgOt on Bortrtior ?, In «pl*inijie t^o tegUlfttlw prorisions,
X0«sl 4<lvl4H»r of ti* stoto Boprlnofl^ st«to
is fully *«nrt thftt diffsr«Bt jaropooilo for
(o»i»f IQT tte H*rris«ai Coawiitoo **l tho $^§t% m?««%)t jMU that
tho «* ttor of arjpwsisatl^i is f«r d*t*r»i»tto» br tfco Pr*sid«nt aiwl tho
CoBfross am aooorMlngly win talos * '•aoatral'* position.
tho proponbl in <pootioB, prijsary responsibility for th* administration of tho grograsi in too mitotf Statoo la plaos4 in a aov agsnqy
oopryottion Ad*inistniti(» (1GA), as«Jo4 by an fe«ono»ii«
Ad»inistr<rtar to bo ai^aitttorl % Hit FrssiiioiH, IT *"i «ltb tbo
&nd oansont of tlw ^aatot sM to roooiw caiqpROOtSo* at tbo rato
of 1X5,930 par anno*, fb* a«ti»al oacsention of practieally aXX of th« pro*
gra« ia tbs tteitod §ta%ot» a.g,, dattmination of aimi3*bilitiasf
pioiu'Oioia'tt ote.—«i^W bo handXod IT axiatln« 9,S» agonoiaa with
Stato T>oparlMOi* pftrtiaipfttion at »*rly oil utafsa.
I
ftis fuaotioao of iCA abroad mml4 bo fa ad lad (a)
staffs ia Uia o.:>. Hobooiiao a«il lo^tti^tii ia tho
aoJ (b) t^am^ a spaoial 9*f * foppooo^tatl^of vltb AabassadoriaX rank, at
tbs ooot of tbs C^Htiaaiiif iuroaaaa •.aruaaJsat loiu ftao «U aotivitioo
abjffaa4i.i ••§•» ns0»ti*tt0» of a^paoswwits aad all eiihsr daolii^o: idtls
cipating oountrUa—WDald bo a«ndX«d by ^orsonissX maior Ilia diroet
of tbo ioototary of Stato «tH not of tho
dr*rt Xsfiola%i^nf offoeUv* Stato nopartasMt ooaffer^X of
of th» ECA is a^sarsd ^ a ela^sa ifcioh pxxrridasj »AU tbooo
fuaetiooi of tho A^felnistratter* i^ie.li iovolto tho foreign p^Xioy of tho
'Jnitad Statoo sliall bo ^»rfors»d aubja^t la tlto diraciion •«£ a^airol of
tlM Soorotaty of
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Federal Reserve Bank of St. Louis
&» aotod abovo, two •oawhat tilff*ro&t organisational fvopoaala bovo
o4tiiMMMi by tl>o HaiYfjaftfi Cowaiittoo and tl>o Badgpt
(*} Ha rria>nr C^gali^
eropCMMqr Thia plan cont«apl*U« tin oatabL
liaNsoat of 4 "rawi Ajwscgr t ^nf "oat Bubrtaat teller indatpwiiottt of tho QosJRrt
a*nt af Ui*» TH* t*ad of tho or-;Ar,U«tionf alao A ;rejid«ntUl appolst
awjbjoat to Sonata «<mf ii*atlo*t iKttOd bo a*da ohairaan of a i*owly-cr«at*d
rnt»*<iopart>o*nt*l Boni^l (la ^ilch th« 3Mr«tftf7 »f Stftt* would
lug !»!•}> whloli
«f f Ult
V> it« h^kl and vMyvwlbUi for *U ^IMd SUU* o^r&tiaxw la
la ft^an^tlott »ltli tlM HP. 4 »urf dlivctly rttapowiiblji t« th* o»v
(and noi to th« Stat* n^^rtwnit) m>ald b» >nip»d to MMfe
iityt 3<arwu vyo^tMna. fte .ial|»t Bkiroau h»« tubmittod to tht
i iiiSimrihiiai <p«&:SBS i«a»««*«4*tld«i *• to th§ »dBlnl«tratlt»
of tto» ^&F. (* «ORT «f tdM rofert h»» boon f or**w4od to yo« Igr ^» Dijpootor
of tho ^r»*u of tho HMii»t*) Thla i»aui •ndtot atto^to to
^rlto *ad do^rita of both tteo Stato fm^r^MaA and the
jropooal*, and OOMMI f *rtti with a third propoaal* Tho &*n it
aimilar to tbo 5ta*o r«ipt)f1aaf>nt prapooal ojccopt th*t It wo*iJ4
plaoo tho now ^conooiie C >oporation A<tainUtr»tUn dir«ctly uador tho Socroof Stato la fnr» ao woll as in fact— t^» AAiiala^rator maid t«tik
aftoi» tho Binder Soopotaiy of Stato, and hit ciopaty vould
and rank of an Aaalataat SooTVtafy of Stato.
ffea aoajot aoroam ob^*cv« t » -UM --Hata BajpurlaM* propooal
It daaa not gi^» Stato 5o?aart«oiit «n.>ugh control of tlao K&P, and objoota
to Hv liftrrteMi OoHsaittoo ^ropooal boea«aa it giro* th« !!tAta "wptrtwortt
ovon 1090 oaetfol of tbo ^IF than dooa ^Nt Stato t^fartam^ ytvpoaal.
aa»«ffta of the nro?oao4 iYogstt. of W,S« Aid
(a) J^ftipl rof AI4« It la iargovalbla to dot^mlao la adir&neo
fdr ¥ ''?our "if lf*i»»araar |rogr««» fbo ra<juir««onU until %bo and
of f iaaal y*wr liH can feo datomlivMl wit* p*ator prodaioit. f ho Dtpartsasat of Stata will jprobably jpropoaa a f igwro of about I? billlsi*, not
laelnd.ljg aqr itoa for atablHsatloii loan*. ?!» Stato Dopartntnt alao
mill |robab3|r propooo ttet an e*oi*«aU f l^wro for tbo f»^r or fl^i jroara
bo atata*. It will probab% bo Wotiwt a ran^ f iporo of 117 to Wl billion.
fbo ffaaost plan i» that AiaAa will bo pro*
vldod bf aimoa approir^tion It tmo not 70% boon dooidod wfeathor to aak
for an asitfccHPl»«tioii of a specific total aaovBt oe^orljaK tbo ontlro poriod.
(o) gbaraetor .aya|....gaaja. of AI4» fba l^ograo la ainod at
ooonowie roootiiy agfl IM woro" ocmtij«a*tlon of iroliaf . IB ganaral,
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Federal Reserve Bank of St. Louis
-4-
proeuraatnt <&ftnr»lt will lit uttd and »i*1ai« authority will bt rt%ittta*
to axpand funda oottiito tf tfa» $»$* Tfeit awth^rity i^ll prtbably bt
aonatinimad by iSengrtat* If it eannot bt obtalntdt tithsr tlM» capacity 0f
tht rttt of tbt mifftem Btai^ti« to ttalribtitt to tfet Europtan rtooT«iy
*1U bt tfeftrply mrt«ll««it tr t^it 0.S. irill bt eonfrontad wittt twptttt fti*
Quupttt a3Lt tt rSttttj*n cfta itQBtXH( tottfHV«tt ttMJB tt tfttt ott btJURK
ttiovldi INI ttaftatd
atr It
Tht
(2) Qr«ntt vi. tatai^ Tht *44 i^iloh It inralY^d i§ tao
to juttuyftxMin^It aa* ft f ix*4 <Aargt ta Suftyttn haUMtt of
for y«ar» t« ee»«t* flit feallc tf Ifct ail abouW lit in tlMi Ibfm ©f
aai i»djr t n*UtiT»iy tntil f*«t la tii* form adf loftm. Bit capacity
In dorUrt Is future It tht jtntral t**t ®f thu ttfvitAbUi^r tf
AM. In ptt^ltt it 1« lll»lr <*** ^* ^»^ «f ^l*» tayrwit t*tptf food, fwttlittr, *atf f»«l *?wJ of tu«t iudi»p»n»*bl« itamt tf
•qulpimt «ad rwr atterUU woyld bt bandlad on a grt&t b*tlt9 whilt
tt^ital •quipBwnt aai a portion »f th« ran flfttttialt would bt handled on a
Mar tot. £t^r »ffort tlKml^ bt »t4t tt
a §h»r« a» poj«lbl« o tbe loans tt tl»
fejaty aartett*
Xf s«w f am tf jpafma*«t aa» bt utilM tat
will bt villii^ t© utt toiir aim fo»te Ibr axfantiMi tf thtir
fatiUtiat*
(f } StfthUlaaUac LoAnai . tb§ B^pwi tbtsM inelud*
at th* an»t|riatt tlat* Ttett Ittat
bt ^Miigswi prlafcrUy tt lEtr to witk an orwMall rtablLUation tffti-t. If
tf fort it ta«otiMiftii thti« «^1S bt U&tlt witd tt <tr*w agilatt tht
alth^u^i nt atitt bt pptppti tt allaw MA drwrtngt tt bt «aat«
wfeith «%I4 bt att^MI tanaet bt fi>tilttti| an initial itqpttt f^r
$1*5 Mlllon tei bttn agrttd <i» at tht ttotanleal L»ral. It it alto
fait that Ust 9«S, trta^ay tlmOi aaotrtitt tbit authority. It i** not butn
rtaeidad wh»tbar f\m4t atiould bt prtvidM IT aaaaal app*»jri«tl&ii or br
dtbt tytataetitft,
(g) »ulUlat»yal Cl»»rli^ Arraa^^a»iita> Tbt i^aroptan ttoatritt haw
K»ng t^«a««lY»«t aed would no <to\ibt prtpttt tt ut tf titty
thourfit it wnl4 do any n^§f tha ^ati^abiUtr af tttti^ «t a mltiUt«ral
cltarii* vadtm to incl^d* all tf tlit parttelpating oountrUo. Hit
ill tldt union «®«£fi bt ttttltd «4til f*S, do liar a pr^vidad br
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Federal Reserve Bank of St. Louis
"" 5
fte boot technical o^iaicm la this Qtff»rio*J* I* that «• ti^iaK aot
ta tfao Coagro** *agr ml location of fmtf* for this parpooo* «* «^
o»orf oaotrex*p tho Strap*** eountrioo t«i tabor ix&o xult tt*tor»l olo&riag
<K*Rit»g&ta with o*cb otter* Oft insoaokm, tho irathorUy to
of thft $»$, »i«ht bt «•** to raUev* »on» of tt* d^ia«r »tr»«««9 within
iw»f» ito tqh IMP* cMMiag * l^rtiMpm of inilUl»t«r*l during—
for
of
A«
flip FlntattUl C«w«ltt*« b*U«v«« th*t
tx» «|Mtwi ih»Mi tutftmltt wOy uni«r tb* dir^t •orutiiv or witb th*
i»|p»vftl of
whUh «9ul4 giw am 9.S* brwd »>ntr^>l »wwr tht
pO.»7tn« with tht 14«* ef tnwt ^ing tiw oarr«n«l*s
ing
(i) IBMfe»W HftU?,> Sjc«te*n«» »**• f**djn»*a»i&* «r« g^i^ to
feo «»4o br aaei of tte jgurof*wn e^aafcTliio in Hw omtroo of thulr
It It H* . urt«m*nt of tho t»ohntoU«, feevmr, %)»% weh
ta tho la^ifttl^i of '•»
th*t thi tt*S. shoal* !**» W* right to rotmJUw tho p*rtlsii»*tiag ooontrito
o^M^lt with 14 or with tho lnt«rmti^Al Vowtorr Ft*** with roapoot to
of tfioir rotoo«
tf tho F»rti«ii»t
_
ta» I^w aatf U» lMtoiml o^ioftt tfaould
to toko fooltivo «t*p* to p^ ^ioij? lnt«rt»l fimn«i*l
In or4or* «t <Jo net boll^ro, r&wmr, th«t ^t u.s*
to on/oruo thon fey di*o«t
(li) BlUt^roI A€r*oo»Hit . M tra«te^, *«r»«Met will
«*«ii ^rUoi|*tlai count JT- ftewwi
will sot forth * oorioo of o -vitamU «olort^«»i IT
try to 4o %b« foUmrtac
(1) fo t*Jet too n»ota««ry f iaoaolal *«d otHor
mai toilBUti
and
(t) t«i SMWI ito feowt offort* to iwoh tho
(3) to eooporoto full? with otter partial f*tln« oowt*S«« in
of
(4) to oeopmto i^th ««KWP pwrtifll^t l«« ooantrioo in aotor»lnin« mo o«t tftilisfttloft of roog»«roo0$
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Federal Reserve Bank of St. Louis
(5) t& «»*i*r*t« to tli* *ff*«tiT« it** of
ta fa*ilit*t* tb> prow««*nt |p th* '.Jnitod State* *f
«ftt*ri&2*}
(7) to dopwit in a apeoial fteoran* lo«ftl c»rr«ncy
of «U In th» £0i« of gr*ni4i %gf th» I?att«d St«U«» and to uw this
la * »*nti«r «ot»Allgr «ro«d b«tw»«n tha two
(S) to isatorUlw o«rt*in oth*r aeter
Xt III
or C«rpor«tloo ulll b« ooordiwHW with th»
t mg^nelM. A« to
JJM this l ^ ^ K t i la iti
of l*iiwtit«liigv iR*<ofe *< tfei ^fffidd la
lo»?wf awd th« «** of BRT lomat
tho Int»n»t oo»l *rdc «r
Uh*i la lift ligl* «f tPtioaftl n«Miml
throu^i tilt Biiloml &f*t*efy trrumll^ *n4 xc
o%«lr«d on th* f lawwiAl *»p*ct« of tlw
t
It U not
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Federal Reserve Bank of St. Louis
I
'-
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Federal Reserve Bank of St. Louis
MILO PERKINS
12OO EIGHTEENTH STHEET, N. W.
WASHINGTON 6, D. G.
November 18, 1947
Mr. William McC. Martin
Export-Import Bank
Washington B.C.
Dear Bill:
The enclosed statement by Congressman Dirksen
contains such an interesting
suggestion, pages six to nine,
that I am taking the liberty
of calling it to your attention.
With all good wishes.
Sincerely,
Enclosure
.
Testimony of the Honorable Everett M. Dirksen before
the Committee on Foreign Affairs, House of Representatives on Interim and Long Range Aid, November 18, 1947.
I. Introduction
Nearly 1700 years ago King Pyrrhus joined battle with a
Roman Army at Heraclea. He won a victory but at great cost,
and even today the term "Pyrrhic victory" still means a costly
victory.
If peace and freedom shall ultimately be casualties
of World War II, it will have been a costly victory indeed.
Today we are confronted with the ironical task of providing
healing for the very countries whom we defeated in conflict,
and of continuing the struggle for a peace that is gradually
slipping away, and for freedom which has in large measure
been leached away since VE Day.
II. There Must Be Justification For Aid.
War is a form of political action which is justified
only as it relates to and involves the welfare of our country
and our people. What is now proposed is a different kind of
political action in which food is used instead of fireworks,
and money instead of munitions, to bring about construction and
not destruction.
But the goods and foods which it is proposed
to be provided must finally come from the people and it is to
them that our action must be justified.
III. The Problem is Moral.
Ruined cities have no significance except as people dwell
there; inflated currency means nothing except as people must
exchange it to live; Communism is important because it enslaves
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(
-2
(
people and more people; Ruhr coal has no value except as it
warms people or powers machines which provide goods and services
for people; imminent collapse in Europe has significance only
because it means hunger, despair and desperation for people.
Today, we are dealing with human beings - with people.
IVc
The Moral Problem Important To Us,
Continued stagnation might mean keeping other countries
on the backs of American taxpayers for an unknown number of
years; that stagnation might produce an economic corpse which
could infect the whole world; desperation born of hunger and
intimidation makes easy prey for Communism; enslaved people
no longer free to accept the produce of our soil and products
of our industries would compel a reordering of our own free
economy.
The collapse of freedom and human dignity in so
substantial a manner in Eastern Europe, and the determination
of the Soviet Union to swallow the rest of Europe, whether by
cold war or hot war, means that ultimately the westward thrust
of Communism would be aimed directly at us, if it succeeded
in its European design.
The Soviet Union is preaching the in-
evitability of war and it is preparing for it.
There ^s still
a chance -- no matter how slender it may appear at the moment —
to avert it and to set the stage for rolling back this evil
force and retrieving a sane, orderly and decent world.
Vo
There are Three Choices Before Us.
1. We can abandon Europe, abandon peace and abandon
hopea
If it is proposed to abandon Europe—and there are some
although not many who would follow this course—then let it
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r
- 3be an efficient job with a full appreciation of its implications.
Such a course would mean retreat from the Elbe, retreat
from Europe, the return of our troops, and the end of substantial
trade relations.
It would mean new burdens in our own hemisphere,
It would mean an immediate start on an insuperable army, navy and
air force.
agriculture.
It would mean, finally, regimentation of industry and
It would mean that the Kremlin would take over.
Czechoslovakia would be next on its list.
Austria and then Germany.
be reasonably easy.
of abandonment.
Then would come
Thereafter France and Italy would
Those, in my opinion, are the implications
To do so would be the greatest disservice to
mankind that could have been rendered by any nation in any generation of the world*s history.
2. The second choice—niggardly aid. We could provide
sufficient aid to appease our consciences but not enough to do
the job. One might call it going the "first mile".
But it is
the second mile that really counts and completes the journey.
If our aid is too little to live on and too much to die on, it
would be the most inefficient thing we could do because it
would bring neither vitality nor incentive nor good will nor
freedom from fear nor avoidance of the same result that would
be achieved if we were to abandon Europe.
It would be a slower
and more painful process of turning the Continent over to Communism.
3. The third choice — immediate, adequate, aggressive,
selective aid.
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Federal Reserve Bank of St. Louis
Whatever aid we render must be immediate because time
fights on the other side. Hope must be stirred and aid is the
vehicle for hope. The formula should be "Do it, do it now, do
it right."
It should be aggressive. Food, fuel and credit are
weapons in a cold war. Let us use them as weapons and quit
pretending. Let us publicize our aid. We are playing for
keeps.
Too long we have played the role of depositing a char-
itable gift on the back doorstep after sundown. These are
weapons for freedom and for peace.
It should be selective and there should be flexibility in
administering relief.
Selectivity requires a proper regard for
the inflationary effects of a supply program on our domestic
economy as well as a regard for the needs of the recipients.
The problem of food is not a matter for a day or a week or a
year.
Production is down in so many parts of the world.
By
the very law of averages we might well expect difficulties
later. In rendering selective aid we should enlistVbhe aid of
the Western world. It might be well to develop an immediate
program of food cooperation by encouraging a meeting of the
secretaries or ministers of agriculture for every country in the
Western world.
If and when the break between Eastern and
Western Europe becomes an accomplished fact, Western Europe will
depend more and more on the Western Hemisphere for food. Whatever
we do must be designed to serve two objectives, namely, curbing
inflation at home and doing an adequate job abroad.
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Federal Reserve Bank of St. Louis
- 5Selectivity requires emphasis upon and special treatment
for children. They are the hope of the future.
One of the
brightest and most satisfying programs now under way in Germany
is the program for feeding school children.
It will prove rich
in results because the lessons of democracy and good will are
being written on young hearts and minds as well as on paper.
It must be adequate. Anything short of adequate will mean
an inefficient program which does not reach the basic objectives
which we must ever keep in mind.
The program should be flexible. Food and supplies might
be procured at a higher initial cost which in the long run would
have the least inflationary effect on our own economy.
Whatever
agency is created to administer the program should, therefore,
have some latitude of operation,
VI.
a.
The Long Range Program.
Preliminary,
The Kremlin wishes to kill the Marshall Plan.
I have seen
thousands of articles in the files in Europe to that effect.
*
Efforts will be made to stir up political disagreement at home.
Note the Communist letter addressed to Members of Congress,
dated November 8, 1947.
That letter says in part, "The Marshall
Plan, under the pretext of helping Western Europe, proposes to
place Europe and the world under Wall Street's domination . . . .
The Marshall Plan is the 1947 version of the disastrous
Dawes-Hoover Plan of the 192Qfs . . , . . .Congress should defeat
all proposed measures for implementing any aspect of the Truman
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Federal Reserve Bank of St. Louis
•
-6-
Doctrine and the Marshall Plan." There you have it, fresh
from Communist Party He gel quarters in New York City in writing.
One would hardly expect the Kremlin to become so bold within the
bosom of our own country.
b. Need for exemplification of free enterprise system
In conjunction with the long range Marshall ?jan we must
do something more than talk about freedom and free enterprise*
We must exemplify it and show its sweet fruit in act ion»
Communism is not reticent in exemplifying its own methods*
In Austria, 340 plants have been gobbled up under the pretext that
they are external German assets and have been placed under a
special Soviet agency which will operate them right where they
are and integrate them into the Soviet state controlled corpora*tions.
What does the free enterprise system offer to roll back
this wave of industrial communization.
In the Soviet Zone of Germany plants are forced to borrow
from banks to buy materials.
the Soviet authorities.
The product is then taken over by
The plant has no income.
This bankrupt-
ing process continues under force until the bank takes over and
t
the plant is then incorporated in one of the Soviet s'tate
controlled companies.
Let us stop all pretense and bring home in concrete form
the lessons of freedom in those countries where there is still
a chance to retrieve freedom,
c.
A plan.
The aggressive exemplification of the virtues of our free
system could be brought about as an adjunct of the Marshall
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Federal Reserve Bank of St. Louis
- 7—
Plan.
It could be done by empowering the agency which admin-
isters the Plan to insure American capital and American enterprise which desires to go abroad and assist in developing needed
production and rehabilitation in foreign countries against
certain hazards which might result from governmental action by
foreign countries.
Enlisting the aid of private enterprise would go far toward
removing this load from the backs of American taxpayers.
There
are, however, certain hazards which prevent American capital
from going abroad, and the agency which administers the Marshall
Plan should be authorized to set up an insurance plan under
which in return for a premium American firms would be insured
against losses resulting from a legal inability to convert
foreign currencies into United States dollars under certain
•
circumstances.
1. Nationalization.
If American funds were invested in a type of business
or industry which was nationalized by the action of a
foreign government, the currency which such firm would have
to accept as compensation for the seizure of his property should
be made convertible into dollars at least up to the fair value of
the property.
It could be insured against this hazard.
This
is not designed to constrict the actions of any foreign country
in the field of nationalization but merely to insure American
capital and business
a contingency.
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Federal Reserve Bank of St. Louis
against losses that might result from such
- 82,
Depreciation Reserves.
Where an American company was operating abroad to
build up production for the needs of the people and it set up
depreciation reserves which could not be converted into dollars
because of limitations in the law, the agency administering the
Marshall Plan should in return for a premium be able to make such
amounts convertible into dollars by accepting an equal amount
of local foreign currency.
3*
Dividends,
Where dividends resulting from operations abroad were not
convertible into dollars a similar procedure should be followed.
4. General Comment.
Such a plan might require bilateral agreements with
countries receiving aid under the Marshall Plan.
It would probably be necessary to set up an initial revolving fund out of which the plan could be administered and it
would require the establishment of premium rates.
Premium
rates might begin at 1 or 2% and diminish as experience under
this proposal developed.
v
Business firms today cannot assume these currency risks
because they have no control over them and hence the expansion
of private investment to demonstrate the virtues
of our system
is not taking place,
Europe today needs private investment plus American
know-how to rebuild devastated areas and produce goods which
are so sorely needed.
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Federal Reserve Bank of St. Louis
- 9 •=
Private companies would still have to assume all the normal
risks of business.
Private investment is obviously preferable to government-togovernment loans and would greatly ease the burden on our taxpayers.
Maximum benefits from such an insurance plan would come to
enterprises that are modest in size and which cannot afford to
assume the risks that are herein enumerated.
Such a plan would aid in making the Marshall Plan succeed
and its ultimate cost would probably be no greater than the
insurance programs which we carry on now in the field of housing
and bank deposits0
In proportion as private investment succeeds, it would develop
more customers than the world has ever known and we would get
our share because we always have.
VII,
Conclusion.
The police state which today strikes fear into the hearts
of people everywhere in the world with its tyranry an£ its communization of business and trade will not wither away by talk.
The
time is here for militant economic action and for a demonstration
of the virtues of the free private enterprise system in elevating the living standards of impoverished people,, Here is a
field for aggressive action,- It is time for us to quit hiding
our light under a bushel.
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HOLD FOR RELEASE
HOLD FOR RELEASE
HOLD FOR RELEASE
DECEMBER 18, 1947
CONFIDENTIAL: The following'Message of' the President MUST BE HELD IN
STRICTEST CONFIDENCE and no portion, synopsis.or intimation is to be gwen
out or published'until reading of the Message has begun in either the
Senate or the House of Representatives.
The"same release applies to all newspapers, radio announcers
and news commentators.
EXTREME CARE SHOULD BE EXERCISED TO PREVENT ^PREMATURE
PUBLICATION OR RADIO ANNOUNCEMENT.
CHARLES G. ROSS
Secretary to the President
TO THE CONGRESS 'OF THE UNITED STATES:
A principal concern of the people of the United
States is'the creation of conditions of enduring peace throughout the world. In company with other peace-loving nations,
the United States is striving to insure that there will never
be a World. War III. In the words of the Charter of the United
Nations, we are "determined to save.succeeding generations
from the scourge of war."
We seek lasting peace in'a,world where freedom and ,
justice are secure and where there is equal opportunity for the
economic well-being of all peoples.
To this end, the United States played a leading role
in the founding of the United Nations. We have supported that
organization at all times to the best of our ability and we
have advanced a number of proposals for increasing its effectiveness in maintaining peace and security and in establishing the
economic, social ana moral foundations of peace.
We are working in the United Nations toward the ;
limitation and control of armaments and, in a step without
precedent or parallel, have offered to place our most-powerful
weapon under international control provided that other nations
agree to effective and enforceable safeguards against its use •
for destructive purposes.
The United States,,in the conviction that a prerequisite to peace in the future is the just settlement of past
differences, has labored to obtain fair ana workable treaties of
peace'for former enemy states so that they ...may resume their places
in the family of nations.
The United States has taken the lead in world-wide
efforts to promote industrial and:agricultural reconstruction
and a revival of 'world commerce, for'we know that enduring
peace must be based upon increased production and an expanding.-. .
flow of goods and materials among nations for the benefit of
all.
I
Since the surrender, of the Axis powers, we have provided more 'than' $15 billion, in the form .of .grants ana loans, for
aid to victims of 'the war, to prevent starvation, disease, and
suffering; to aid in the restoration of transportation and com- .
municatioris; and to assist in rebuilding war-devastated economies.
This assistance has averted stark, tragedy .and has aided progress
toward recovery in many. areas q.f the world.
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Federal Reserve Bank of St. Louis
(OVER)
- 2In these and many other ways, the people of the
United States have abundantly demonstrated their desire for
world peace and the freedom and well-being of all nations.
We must now make a grave and significant'decision
relating to our further efforts to create the conditions of
peace. 7.re must decide whether or not we will complete the job
of helping the free nations of Europe to recover .f»om the devastation of the war. Our decision will determine in large part
the future of the people of that continent-.
It will also determine in large part whether the free nations of the world can
look forY/ard with hope to a peaceful and prosperous future as
independent states, or whether they must live in poverty and in
fear of selfish totalitarian aggression.
Interest of the United States in European Recovery
It is of vital importance to the United States that
European recovery be continued to ultimate success.
The American
tradition of extending a helping hand to people in distress, our
concern for the building of a healthy world economy which can
make possible ever-increasing standards of living for our people,
and our overwhelming concern for the maintenance of a civilization
of free men and free institutions, all combine to give us this
great interest in European recovery.
The people of the United States have shown, by generous contributions since the end of hostilities, their great
sympathy and concern for the many millions in Europe who underwent the trials of war and enemy occupation.
Our sympathy is
undiminished, but we know that we cannot give relief indefinitely, and so we seek practical measures which will eliminate
Europe's need for further relief.
Considered in terms of our own economy, European
recovery is essential.
The last two decades have taught us
the bitter lesson that no economy, not even one so strong as
our own, can remain healthy and prosperous in a world of poverty
and want.
In the past, the flow of raw materials and manufactured products between Trestern Europe, Latin America, Canada
and the. United States has integrated these areas in a great
trading system.
In the same manner, Far Eastern exports to
the United States have helped pay for the goods shipped from
Europe to the Far East. Europe is thus an essential part of a
world trading network. The failure to revive fully this vast
trading system, which has begun to function again since the
end of the war, would result in economic deterioration throughout the world.
The United. States,, in common with other nations,
would suffer.
Our deepest concern with European recovery, however,
is that it is essential to the maintenance of the civilization
in which the American way of life is rooted. It is the only
assurance of the continued independence and integrity of a group
of nations who constitute, a. bulwark for the principles of freedom,
justice and the dignity of the individual.
The economic plight in which Europe now finds itself
has intensified a political struggle between those who wish to
remain free men living under the rule of law and those who would
use economic distress as a pretext for the establishment of a
totalitarian state.
The next few years can determine whether the free countries of Europe will be able to preserve their heritage of freedom.
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If Europe fails to recover, the peoples of these countries might
be driven to the philosophy.of despair — the philosophy which
contends that their "basic wants can'be met only by the surrender
of their "basic rights to totalitarian control.
• '
Such a turn of events would constitute a shattering
"blow to peace and stability in the world. It'might well-compel
us to modify our own economic system and to forego, for the sake
of our own security; the enjoyment of many of our freedoms and
privileges.
It is for these reasons that the United States has so
vital an interest in strengthening the belief of the people of
Europe that freedom from fear and want will be achieved under
free and democratic governments.
Origins of the European Recovery Program
The end of the fighting in .Europe left that continent
physically devastated and its economy temporarily paralyzed. The
immediate problem was to prevent widespread starvation and
disease and to make a start toward economic recovery. In the
first year and a half after V-E day, the people of Western
Europe, by their own diligent efforts and with the aid of the
United States -and other nations, made remarkable progress toward
these objectives.
At the beginning of 19^7> however, they were still
short of the goal of economic recovery. Their difficulties were
greatly increased during the present year, chiefly by a bittor
winter followed by floods and droughts, which cut Western Europe's
grain crop to the lowest figure in generations and hampered production of many other products.
Nevertheless, it was clear by last spring that Europe
had achieved sufficient political and economic stability to make
possible an overali plan for recover,,.
European recovery is essentially a problem for the
nations of Europe, It was therefore apparent that it could not
•be-solved, even with outside aid, unless the European nations
themselves would find a joint solution and accept joint responsibility for its execution. Such a cooperative plan would serve
to release the full productive resources of Europe and provide
a proper basis for measuring the need and effectiveness of
further aid from outside Europe, and in particular from the
United States.
These considerations led to the suggestion by tho
Secretary of State on June 5, 19^7, that further help from the
United States should be given only after the countries of Europe
had agreed upon their basic requirements and the steps which
they would take in order to give proper effect to additional
aid from us.
In response to this suggestion, representatives of
sixteen European nations assembled in Paris in July, at the
invitation of the British and'French Governments, to draw up
a cooperative program of European recovery. They formed a
Committee of European Economic Cooperation. The countries
represented were: Austria, Belgium, Denmark, Prance, Greece,
Iceland, Ireland, Italy, Luxembourg,- 'the Netherlands, Norway,
Portugal, Sweden, Switzerland, Turkey and the United Kingdom.
Although Western Germany was not formally represented on the
Committee, its; requirements as well as its ability to contribute
to European economic recovery were Considered by the Committee.
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(OVER)
The Recovery Program .Proposed By the Fur ope an Countries
The report of the European Committee was transmitted
to the Government of the United. .States late in September. The *•
report describes the present economic situation of Europe and
the extent to which the participating countries can solve their
problem by individual and joint efforts. After taking into
account these recovery efforts^ the report estimates the extent
to which the sixteen countries will be unable to pay for the
imports they must have. ,
The report points out that the peoples of. Western
Europe depend for their support upon international trade. It
has been possible for some 2?0 million people, occupying this
relatively small area, to enjoy a good standard of living only
by manufacturing imported raw materials and exporting the finished
products to the rest of the world. They must also import foodstuffs in large volume, for there is not enough farm land in
•Western Europe to support its population even with intensive
cultivation and with favorable weather. They cannot produce
adequate amounts of cotton, oil and other raw materials. Unless
these deficiencies are met by imports, the productive centers
of Europe can function only at low efficiency, if at all.
In the past these necessary imports were paid for
,by exports from Europe, by the performance of services such
as shipping and banking, and by income from capital investments
abroad. All these elements of international trade were so.
badly disrupted by the war that the people of Western .Europe
have been .unable to produce in their own countries, or to . .
purchase elsewhere, the goods essential to their livelihood..
Shortages of raw materials, productive capacity, and exportable commodities have set up vicious circles of increasing
scarcities and lowered standards of living.
The economic recovery of Western European countries
depends upon breaking through these vicious circles by increasing production to a point where exports and services can pay
for the imports they must have to live". The basic problem in
making Europe self-supporting is to 'Increase European production.
The sixteen nations presented in their report a
recovery program designed to enable them, and Western Germany,
to become economically self-supporting within a period of four
years and thereafter to maintain a reasonable "minimum standard
of living for their people vdthout special help from others.
The program rests upon four basic points:
(1) A strong production effort by each of the
participating countries.
(2) Creation of internal financial stability
by each country.
(3) Maximum and continuing cooperation among
the participating countries.
A solution of the problem of the participating countries' trading. deficit with the American
continents, particularly by increasing European exports.
The nations represented on the European Committee agreed
at Paris to do everything in their power to achieve these four
aims. They agreed to take definite measures leading to financial, economic and monetary stability, the reduction of trade
barriers, the removal of obstacles to the free movement of persons
within Europe, and a joint effort to use their common resources
to the best advantage.
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These agreements are a source of great encouragement.
When the representatives of sixteen sovereign nations, with
diverse peoples, histories and institutions, jointly determine
to achieve closer economic ties among themselves and to break
away .from the self-defeating 'actions of narrow nationalism,.
the obstacles in the way of recovery appear less formidable.
The report takes into account the productive-capacities of the participating nations and their ability to obtain
supplies from other parts of .the world. It also takes into
account the possibilities of obtaining funds through the International Bank for Reconstruction and Development, through
private investment, and in some instances by the sale of existing foreign assets. The participating countries recognized
that some commodities, particularly food, will remain scarce
for years to come, and the diet they have set as their goal for
1951 is less adequate in most cases than their pre-war diet.
The report assumes that many countries will continue restrictions on the distribution of shortage items such as food, cloth«-v
ing- and fuel,
When all.these factors had been considered, the
European Committee concluded that there will still be a requirement for large quantities of food, fuel, raw materials and
capital equipment for which the financial resources of the
participating countries will be inadequate. With successful
execution of the European recovery program, this requirement
will diminish in each of the four years ahead, and the Committee
anticipated that by 1952 Europe could again meet its needs
without special aid.
Appraisal Of The European Problem
The problem of economic recovery in Western.Europe
is basically of the character described in the report of
the sixteen nations, A successful European recovery program
will depend upon two essentials. The first is that each
nation separately and all the nations together should take
vigorous action to help themselves. The second essential is
that sufficient outside aid' should be made available to provide
the margin of victory for the recovery program,
The necessary imports which the sixteen countries
cannot finance without assistance constitute only a small proportion, in terms of value, of their total national production —
some 5 per cent over the four years of the program. These imports,
however, are of crucial importance 'in generating recovery. They
represent the difference between ever-deepening stagnation and
progressive improvement.
Most of the necessary outside aid, if it is to come
at all, must come from the United States, • It is a simple fact
that we are the only nation with sufficient economic strength to
bridge the temporary gap between minimum European needs and wardiminished European resources.
We expect that other countries which have it within
their power will also give what assistance they can to Europe,
Canada, for example, has been lending assistance to Europe fully
as -great in proportion to its capacity as that which we have
given. We also expect that international institutions, particularly the International Bank, will provide such assistance as
they can within their charters. But the fact remains — only the
United States can provide the bulk of the aid needed by Europe
over the next four years,
i
It is necessarily a complex and difficult task' to
determine the extent and nature of this aid.
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Federal Reserve Bank of St. Louis
(OVER)
- 6In some respects, the situation has changed significantly
since the report of the sixteen countries was completed. Some of
these changes have been unfavorable, including price increases in
the United States and other countries where Europe makes purchases,
a serious drought in Europe, and aggres-sive activities by communists
and communist-inspired groups aimed directly at the prevention of
European recovery*
There have also been favorable changes. In the last few
months coal production in the Ruhr district of Western Germany
has increased from 230,000 tons a day to 290,000 tons a day.
Similarly, coal production in the United Kingdom has risen
markedly in recent weeks. Iron and steel production has correspondingly increased. .Such increases in production, which
lie at the heart of industrial recovery, are of far-reaching
importance.
Further changes in the situation, now unpredictable,
are to be expected as European recovery progresses. • >
All our plans and actions must be founded on the
fact that the situation we are dealing with is flexible and
not fixed, and we must be prepared to make adjustments whenever
necessary.
Weather conditions -will largely determine whether
agricultural goals can be met.
Political events in Europe and in the rest of the world
cannot be accurately foreseen. We must not be blind to the fact
that the communists have announced determined opposition to any
effort to help Europe get back on its feet. There will unquestionably be further incitements to strike, not for the purpose of
redressirv the legitimate
^rievances
of *"particular -jCroups,
»•*
—•
i
3 but
for the purpose of bringing chaos in the hope that it will pave
the way for totalitarian control.
On the other hand, if1 confidence and optimism are
reestablished soon, the spark they provide can kindle united
efforts to a degree1 which would, substantially accelerate the
progress of European recovery.
,
Despite these many imponderables, the dimensions of
the necessary assistance by the United States can now be determined within reasonable limits. ¥o can evaluate the probable
success of a bold concept of assistance to the European economy*.
We can determine the principles upon which American aid should
be based. We can estimate the probable magnitude of the
assistance required and judge whether ,fe can, safely and wisely,
provide that assistance.
Extensive consideration has been given to these
problems., Congressional committees and individual Members of
the Congress have studied them at home and abroad during the
recent Congressional recess. The report of thc3 European nations
has been carefully analyzed by officials of our Government,
Committees of the Executive Branch and a group of distinguished
private citizens have given their best thought to the relationship between Europe's needs and our resources.
Program For United States Aid
In the light of all these factors, an integrated
program for United States aid to European recovery has been
prepared for submission to the Congress.
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- 7In developing this program, certain basic considerations have been kept in mind:
First, the program is designed to make genuine recovery possible within a definite period of
time, and not merely to continue relief indefinitely.
Second, the program is designed to insure that
the funds and goods which we furnish will be used
most effectively for European recovery.
Third, the program is designed to minimize
the financial cost to the United States, but at
the same time to avoid imposing on the European
countries crushing financial burdens which they
could not carry in the long run.
Fourth, the program is designed with -due regard
for conserving the physical resources of the United
States and minimizing the impact on our economy of
furnishing aid to Europe.
Fifth, the program is designed to be consistent with other international relationships
and responsibilities of the United States.
/
Sixth, the administration of the program is
designed to carry out wisely and efficiently this
great enterprise of our foreign policy.
I shall discuss each of these basic considerations in
turn.
r
Recovery — Not Relief
The program is designed to assist the participating
European countries in obtaining imports essential to genuine
economic recovery which they cannot finance from their own resources. It is based on the expectation that with this assistance European recovery can be substantially completed in about
four,years.
The aid which will be required from the United States
for the first fifteen months — from April 1, 19^8, to June 30,
19U9 — is now estimated at $6.8 billion.
These funds represent careful estimates of the cost
of the goods and services which will be required during this
period to start Europe on the road to genuine economic recovery.
The European requirements as they were stated in the Paris report
have been closely reviewed and scaled downward where they appeared
to include non-essentials or where limited supplies will prevent
their full satisfaction.
The requirements of the remaining three years of the
program are more difficult to estimate now, but they are expected
to decrease year by year as progress is made toward recovery.
Obviously, price changes, weather and crop conditions .and other
unpredictable factors will influence the overall cost of our aid.
Nevertheless, the inherent nature of this enterprise and the
long-range planning necessary to put it into effect on both sides
of the Atlantic require that this Government indicate its plans
for the duration and the general magnitude of the program, without
committing itself to specific amounts in future years. The best
estimates we can now make indicate that appropriations of about
$10.2 billion will be required for the last three years.
I recommend that legislation providing for United States
aid in support of the European recovery program authorize the
appropriation of $1? billion from April 1, 19^8, to June 30, 19!?2.
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Federal Reserve Bank of St. Louis
(OVER)
- 8Appropriation for the period from April 1, 1948,, to June 30, 1949 >
should be made in time for the program to be put into effect by ,.
April 1, 1948. Appropriations for the later years should be
considered subsequently by the Congress on an annual basis.
The funds we make available will enable the countries
of Europe to purchase goods which will achieve two purposes —
to lift the standard of living in Europe Closer to a decent level,
and at the same time to enlarge European capacity for production.
Our funds will enable them to import grain for current consumption,
and fertilizer and, agricultural machinery to increase their food
production. They will import fuel for current use, and mining
machinery to increase their coal output. In addition they will
obtain raw materials, such as cotton, for current production,
and some manufacturing and transportation equipment to increase
their productive capacity.
j- *.
The industrial goods we supply will be primarily to
relieve critical shortages .at a few strategic points which, .are
now curtailing the great productive powers of Europe's industrial
system.
The fundamental objective of further United States
. . aid to European countries is to -help them achieve economic
self-support and to contribute their full share to a peaceful
and prosperous world, Our aid must be adequate to this end.
If we provide only half-hearted and half-way help, our' efforts
will be dissipated and the chances for political and economic
stability in Europe are likely to be lost.
Insuring Proper Use of United States Aid
A second basic consideration with regard to this program
is tiie means by which we can insure that our aid will bo used to
achieve its real purposes — that our goods and our dollars will
contribute most effectively to European recovery. 'Appropriate
agreements among the participating countries and with the United
States are essential to this end.
At the Paris conference the European nations pledged themselves to take specific individual and cooperative actions to accomplish genuine recovery. While some modification or amplification
of these pledges may prove desirable, mutual, undertakings "of this
nature are essential. They will give unity of purpose and effective
coordination to the endeavors of the peoples of the sixteen nations.
•IT *
In addition, each of the countries receiving aid
will be expected to enter into an agreement with the United
States affirming the pledges which it has .given to the other
participating countries, and making additional commitments.'
"' Under these agreements, each country would pledge
itself to take the follovring actions, except where they are
inapplicable to the country concerned:
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(1) To promote Increased industrial arid agricultural
production in order to enable the participating country
to become independent of abnormal outside economic
assistance.
(2) To take financial and monetary measures
necessary to stabilize its currency, establish or
maintain a proper rate of exchange, and generally
to restore or maintain confidence in its monetary
system.
(3) To cooperate with other participating
countries to reduce barriers to trade among themselves and with other countries, and to stimulate
an increasing interchange of goods and services.
- 9(ij) To make efficient use, within the
framework of a joint program for European recovery,
of the resources of the participating country,
and to take the necessary steps to assure effi»cient use in the interest of European economic
recovery of all goods and services made available through United States aid,
(5) To stimulate the production of specified raw materials, as may be mutually agreed upon,
and to facilitate the procurement of such raw
materials by the United States for stockpiling
purposes from the excess above the reasonable
domestic usage and commercial export requirements
of the source country,
(6) To deposit in a special account the
local currency equivalent of aid furnished in
the form, of grants, to be used only in a manner
mutually agreed between the two governments,
(7) To publish domestically and to furnish
to the United States appropriate information concerning the use made of our aid and the progress
made tinder the agreements with other participating
countries and with the United States.
The United States will, of course, retain the right to
determine whether aid to any country is to be continued if our previous assistance has not been used effectively,
Financial Arrangements
A third basic consideration in formulating the
program of United States aid relates to the financial arrangements under which our aid is to be provided.
One of the problems in achieving the greatest benefit
from United States aid is the extent to which funds should be
made available in the form of grants as contrasted with loans.
It is clear that we should require repayment to the extent
that it is feasible and consistent with the objectives of
the program, in order that no unnecessary burden be imposed
upon the people of the United States. It is equally clear that
we should not require repayment where it v>rould impose paralyzing
financial obligations on the people of Europe and thus defeat
the basic purpose of making Europe self-supporting.
Recovery for Europe will not be achieved until its
people are able to pay for their necessary imports with
foreign exchange obtained through the export of goods and
services. If they were to have additional burdens to bear in
the form of interest and amortization payments in future years,
they would have to plan for an even higher, level of exports
to meet these 'obligations. This would necessarily increase .
the requirements of the recovery- program, and delay the
achievement of economic stability,
It is also important that an increasing portion of
the financial needs of Europe be met by dollar loans from the .
International Bank, and by the revival of private financing.
This prospect would be seriously jeopardized if the United
States, as part of the recovery program, were to impose all
that the traffic will bear in the form of debt obligations.
I recommend that our aid should be extended partly
in the form of grants and partly in the form of loans, depending primarily upon *the capacity of each country to make repayments, and the effect of additional international debt upon
the accomplishment of genuine recovery. No grants should
be made to countries able to pay cash for all imports or to
repay loans.
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- 10 ,:': At a'later date-.it may prove desirable to make available to some of the European countries special loans to .assist
them in attaining monetary stability. I am not now requesting
authorization for such loans, since it is not possible at this
time to determine when or to what extent such loans should be
made.
t
•As 'economic conditions in Europe improve and political
conditions.become'more stable, private financing'can be expected
to play an increasingly important role. The recommended program of United States aid'-includes provisions to encourage
private financing and investments.
Impact on the United States Economy
A fourth basic consideration is the effect of further
aid for Europe upon.the physical resources of the United States
and upon our economy*
The essential import requirements of the 2?0 million
people of Western-Europe cover a wide range of products. Many
of these requirements•can be.met by the United States and other
countries without substantial difficulty. However, a number
of the •commodities which are most essential to European recovery
are the same commodities for which there is an unsatisfied
demand in the United States.
Sharing these commodities with the people of .Europe
will require some self-denial by the people-of the United
States. I believe that our people recognize the vital importance of our aid program.and are prepared to share their goods
to insure its success,
VvHiile the burden on our people should not be ignored
or minimized, neither should it be exaggerated. The program
of aid to Europe which I am recommending is well within our
capacity to undertake.
Its total cost, though large, will be only about five
percent of the cost of our effort in the recent war.
It will cost less than three percent of our national
income -during the life of the program.
As an investment toward the peace and security of the
world and toward the realization of hope and confidence in a
better way of life for the future, this cost is small indeed.
A committee under the chairmanship of the Secretary
of the Interior was appointed last summer to study the effect
of a foreign aid program upon the natural resources of our country. Its study has shown that our resources can safely meet the
demands of a program such as I am now recommending. Such
demands could, not, however, be supplied, indefinitely. Our
program of aid to Europe, recognizes this fact. Our exports
to Europe will decrease during .the succeeding years of the
program as trade is revived along realistic patterns which
YO. 11 make available from- other sources an increasing share of
Eur op e ' s r e quir en ent s..'
Actually, our po-sition with respect to some raw •
materials of which we havte- inadequate domestic resources will
be improved since, under our program of aid to Europe, an increased amount of these materials will be made available to us.
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- 11 During recent months the Council of Economic Advisers
made an intensive study of the impact of foreign aid on our
domestic economy. The Council concluded that a program of the
size now contemplated is well within our productive capacity
and need not produce a dangerous strain on our economy.
At the same time, a group of distinguished private
citizens under .the chairmanship of the Secretary of
Commerce considered the extent and nature of foreign
aid which the United States can and should provide.
The conclusion of this group was that a program of the scope
I am recommending is a proper, wise and necessary use of United
States resources.
. The reports submitted to me by the Council of
Economic Advisers and the committees under the chairmanship
of the Secretary of the Interior and the Secretary of
Commerce all emphasized that specific measures should be
taken to prevent our foreign aid program from imposing unnecessary burdens on our economy.
If the United States were to supply from its own
production all the essential.commodities needed to meet
Eurppean requirements, unnecessary scarcities and unnecessary
inflationary pressures would be created within our economy. It
is far wiser to assist in finanein-• tho procurement of certain
•of these commodities from other countries, particularly the
other food-producing countries in the Western Hemisphere. The
funds we make available to aid European recovery therefore
should not be restricted to purchases within the United States.
Under the proposed program of aid to Europe, the
total exports to the whole world from this country during the
next year are expected to be no greater than our total exports
during the past twelve months.
This level of exports will nevertheless have an important impact on our markets. The measures I have already proposed
to the Congress to fight general domestic inflation will be
useful, as well, in cushioning the impact of the European aid
program.
The effect of aid to Europe upon our economy, as
well as its financial cost, will be significantly affected by
the arrangements we make for meeting shipping requirements.
The interest of the United States will be served
best by permitting the sale or temporary transfer of some of
our war-built merchant ships to the" European countries. Because
of world steel shortages, the sale or temporary transfer of
ships should be linked with a reduction or deferment of the
projected shipbuilding schedules of the participating countries.
These arrangements should be consistent with their long-range
merchant marine requirements. They should also be consistent
with our long-range objectives of maintaining an adequate
merchant marine and shipbuilding industry for the United States.
Making these vessels available to the European
countries will materially reduce the cost of United States aid
both by lowering shipping costs and by reducing the use of scarce
materials for new ship construction overseas.
Relationship to Other International Questions
A fifth basic consideration is the'relationship of
our aid to the European recovery program to other international
questions..
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(OVER)
- 12 I have already mentioned uhat the requirements and
resources of Western Germany were included in the considerations
of the sixteen countries at Paris. Our program of'United
States aid .also includes Vestera Germany*
The productive capacity of the highly industrialized
areas of Western -Germany can contribute substantially to the
general cooperative effort required for European recovery.
It is essential that this productive capacity be effectively
utilized, and it is especially important that the coal production of the Ruhr continue to increase rapidly.
Every precaution must of course be taken against a
resurgence of military power in Germany. The United States
has made clear on many occasions its determination that Germany
shall never again threaten to dominate Europe or endanger the
peace of the world. The inclusion of Western Germany in the
European recovery program will not weaken this determination.
As an occupying power in Western Germany, the United
States has a responsibility to provide minimum essentials necessary to prevent disease and unrest. Separate appropriations
will be requested for this purpose for the period through
June 30, 19li9.
Above this minimum level, amounts needed to assist
in the rehabilitation of Western Germany are included in the
over-all estimates for aid to European recovery.
Another significant area oi* the world which has been
considered in developing the recovery program is Eastern Europe.
A number of the governments .of Eastern Europe which were invited
to participate :in'the work of the Paris Conference on Economic
Cooperation chose not to do so. Their failure to join in the
concerted effort for recovery makes this effort more difficult
and will undoubtedly prolong their own economic difficulties.
This should not, however, prevent the 'restoration
of trade between Eastern and Western Europe to the mutual
advantage of both areas. Both the report of the sixteen
nations and the program now submitted to the Congress are
based on the belief that over the next few mvears the normal
pattern of trade between Eastern and Western Europe will be
gradually restored. As this restoration of trade is achieved,
the abnormal demands on the l^estern Hemisphere, particularly
for food and fuel, should diminish.
The relationship between this program and the United
Nations deserves special emphasis because of the central importance in our foreign policy of support of the United Nations.
Our support of European recovery is in full accord' with our
support of the United Nations. The success of the United
Nations depends upon the independent strength of its members
and their determination and ability to adhere to the ideals and
principles embodied in the Charter. . The purposes of the European
recovery program are in complete harmony with the purposes of the
Charter — to insure a peaceful world through the joint efforts
of free nations. Attempts by any nation to prevent or sabotage
European recovery for selfish ends are clearly contrary to these
purposes.
It is not feasible to carry out the recovery program
exclusively through the United..Nations. Five of the participating countries are not yet Members of the United Nations.
Furthermore, some European Members are not participating in the
program.
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- 13 We expect, however, that the greatest practicable use
will be made of the facilities of the United Nations and its
re la bed agencies .in the execution of the pro gran. This view
is shared by all the participating countries.
^,.
Our intention to undertake a program of aid for European
recover;/ does not signify any lessening of our interest in other
areas of the world. Instead, it is t v> :- means by which we can
make the quickest and most effective contribution to the general
improvement of economic conditions throughout the world. The workshops of Europe, with their great reservoir of skilled workers3
must produce the goods to support peoples of many other nations,
I wish to make especially clear that our concentration
on the task in western Europe at this time will not lessen our
long-established interest in economic cooperation with our neighbors
in the Western Hemisphere. We are first of all a member of an
American community of nations, in which cooperative action, similar
to that which the European nations are now undertaking, is-required
to increase production, to promote financial stability, and to remove
barriers to trade. Fortunately we in the Americas are further
advanced along this road, but we must not overlook any opportunity
to make additional progress. The European recovery program
will require procurement of supplies in many nations of this
hemisphere. This will act as a stimulant to production and
'business activity and promote the ^establishment of world trade
upon which the prosperity of all of us depends.
While our present efforts must be devoted primarily to
Western Europe, as the most important area in the world at this
time for the future of peace, we also have a special concern for
the war torn areas of Asia, In Japan and Korea, the United States
has supplied extensive aid to support life and commence reconstruction. Since the war's end, we have provided China with
varied and important assistance which has aided that nation substantially.
The United States should continue to do all it
appropriately can to assist in the restoration of economic
stability as a basis for recovery in the Far East. Extensive
study has been given during the last few months to the means
by which we might best aid in meeting the special needs for
relief and rehabilitation in China. I expect to make recommendations on that subject to the Congress during its next
session.
Administrative Arrangement s
I have set forth several basic considerations which
should govern our aid to the recovery of Europe. One further
consideration which vitally affects all the others is the necessity for effective administrative arrangements adapted to the
particular requirements of the program. If the work to be done
is not well organized and managed, the benefits of our aid
could be largely dissipated.
The administration of our aid will involve the performance of several major functions. The needs of the participating countries must be reviewed in close cooperation with them.
Continued relationships must be maintained with the United
llations and with an organization of the participating nations.
The requirements for each commodity or service under the program rnuct be carefully evaluated in relation to United States
supplies and domestic needs arid to the resources of other
nations which can help. Decisions must be reached as to the
best means of supplying aid arid the conditions of aid for each
country. Assistance must be given to facilitate the procurement,
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( OVER)
- Ill transportation, and efficient use of goods. A constant review
must be maintained over the use of our aid and the execution
of agreements. The results of the .program must be evaluated and
reported to all concerned — the President, the Congress, and
the people.
A
Y/hile these activities are complex, they are not comparable in magnitude or in character to our wartime supply
activities. Under this program, most of the operations can
be carried out through private channels and existing Government
agencies.
Nevertheless, the scope and importance of the program
•warrant the creation of a new organization to provide central
direction and leadership. I therefore recommend the establishment of a new and separate agency, the Economic Cooperation Administration, for this purpose. It should be headed by an Administrator, appointed by the President and directly responsible to
him. The Administrator should be subject to confirmation by the
Senate.
The Economic Cooperation Administration will sponsor
the European aid requirements as they are reviewed and adjusted,
with other governmental agencies, to form a practical program in
the light of available supplies and capacities. The Economic
Cooperation Administration will be responsible for initiating
the approved program project by project and nation by nation
and for regulations as to supervision, cooperative assistance,
and other policy matters which will guide the program at every
point. In keeping with the importance and nature of its task,
the new agene;/ should have flexibility in the determination of
operating methods, the use of funds, and the hiring of key
personnel.
The relationship of the Economic Cooperation Administration
to the existing governmental establishment is of crucial importance,
In the determination of programs for the several countries, the
assessment of individual projects, and many other matters involving our activities abroad, the Economic Cooperation Administration must work closely with the Department of State, Similarly on many actions affecting our domestic economy the
Administration must vrork v.dth, rather than supplant, existing
agencies. For example, the Department of Agriculture should
be relied upon for any required government action in the procurement and allocation of .food, and the Department of
Commerce for the allocation of certain other commodities
in short supply, and for continued administration of export
controls. The facilities of these agencies will in some
cases need to be strengthened, but no major changes in governmental organization to perform important domestic functions
will be required.
Under these circumstances, I expect that the Economic
Cooperation Administration will need only a small staff. No
vast new agency or corporation is needed to perform functions
for which government facilities now exist.
It is essential to realize that this program is much
more than a commercial operation. It represents a major segment
of our foreign policy. Day in and day out its operations will
affect and be affected by foreign policy judgments. We shall be
dealing with a number of countries in which there are complex
and widely varying economic and political situations. This
program will affect our relationships with them in matters far
beyond the outline of the program itself. Its administration
must therefore be fully responsive to our foreign policy. The
Administrator must be subject to the direction of the Secretary
of State on decisions and actions affecting our foreign policy.
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-15 The United States activities in Europe under the program
will constitute essentially an extension of our present relationships with the participating countries; In order to maintain
unity o£ United States representation abroad, our ambassador in
each country must retain responsibility for all matters requiring
contacts with the government to which he is accredited, including operations under this program.. - Some additional personnel,
technically.qualified to perform specialized functions'arising
out of the program, should be placed in the embassies to represent
ana carry out the responsibilities', of the Economic Cooperation
Administration.abroad.
^_,
In addition, I recommend that provision be made for a special
United States Representative for the European Recovery Program. He
would represent the United States at any continuing organization of
the participating countries and he would exercise general coordination of our operations in Europe under the program, .He should be appointed by the President, subject to confirmation by the Senate,
and have Ambassadorial rank. Because of the joint interest of the
Secretary of State and the Administrator in his activities,
the special Representative must serve both as the Presidentmay direct. The activities of this Representative in promoting
mutual self-help among the European nations will be of the utmost
importance in achieving the success of the European recovery program.
The administrative arrangements I have described are
in keeping with the character of the job to be done and will
provide the most efficient and economical means for its performance,
Conclusion
In proposing that the Congress enact a program of aid
to Europe, I an proposing that this Nation contribute to world
peace and to its own security by assisting in the recovery of sixteen countries which, like the United States, are devoted to the
preservation of free institutions and enduring peace among nations.
It is my belief that United States support of the
European recovery program will enable the free nations of Europe
to devote their great energies to the reconstruction of their
economies. On this depend the restoration of a decent standard
of living for their peoples, the development of a sound world
economy, and continued support for tho ideals of individual
liberty and justice.
In providing aid to Europe we must share more than
goods and funds, We must give our moral support to those nations
in their struggle to rekindle the fires of hope and strengthen
the will of their peoples to overcome their adversities. Wo
must develop a feeling of teamviork in our common cause of
combatting the suspicions, prejudices, and fabrications which
undermine cooperative effort, both at home and abroad.
This joint undertaking of the United States and a
group of European nations, in devotion to the principles of
the Charter of the United Nations, is proof that free men
can effectively join together to defend their free institutions against totalitarian pressures, and to promote better
standards of life for all their peoples,
I have been heartened by the 'widespread support
which the citizens of the United States have given to the
concept underlying the proposed aid to European recovery.
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(OVER)
".? 16 Workers, farmers, businessmen and other major groups have
all given evidence of their confidence in its noble purpose
and have shown their willingness to give it full support,
I 'know that the Members of the Congress have already
given much thoughtful consideration to the grave issues now
before us. I know that the Congress will, as it should, consider with great care the legislation necessary to put the
program into effect. This consideration should proceed as
rapidly as possible in order that the program may become
effective by April 1, 1948, It is for this reason that I
am presenting my recommendations to the Congress now-,, rather
than awaiting its reconvening in January.
I recommend this program of United States support
for European recovery to the Congress in full confidence of
its wisdom and necessity as a major step in our Nation's quest
for a just and lasting peace.
HARRY S. TRUMAN
THE WHITE. HOUSE,
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December 19, 1947.
Statement of Robert M. LaFollette, jr.
Before the Committee on Foreign Relations, United States Senate,
Hearings on the European Recovery Program,
28 January 19U8.
r
^
I.
Introduction,
I am appearing before you in ray capacity as a member of
the President's Committee on Foreign Aid, Secretary Harriman, who
sat with the Committee as its formal chairman, has discussed with
you some of the conclusions reached by the Committee* You have
heard comments comparing its estimates and recommendations with
those of the Executive Branch* The Committee report was sent to
the President on November 7, and was made available to you at the
same time. I shall not, therefore, occupy your time with another
summary of its contents.
In the three months since the Committee made its report, a
number of events have occurred which affect the prospects for
European recovery. Moreover, the program of the Executive Branch
has been prepared and presented to the Congress. Yfhat I therefore
propose to discuss is the relevance of these recent eventsVto certain
of the Committee's major conclusions, and the relationship between
our recommendations and the proposals of the Executive Branch.
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- 2I should add that the -Committee disbanded after having
filed its report. Therefore I do not have specific authorization
to speak for the Committee, and it is possible that not everyone
»
of its members would agree with each of the points I am about to
make. I am, however, seeking to give you what I understand to be
the consensus of their views, according both with the spirit and
the principles of the Committee1s discussions and its report*
As a preliminary to. the discussion of substantive issues,
I would like to make one comment on the manner in which the Committee
worked* As an active member who was present at all of its sessions
and who had close contact with the work of its staff, I can assure
you that it functioned in fact as well as in name as an independent
body.
Inevitably, some of the evidence on which the Committee based
its report was the same as that which the Executive Branch used in
framing its proposals.
The Committee drew heavily on the resources
of the government in collecting its raw material.
But it did not
confine itself to official sources; it undertook consultation on
a broad front with representatives of labor and of industry, and
•»• with
qualified experts in many fields. The Committee had the views of
representatives of the Executive Branch on at least one issue, but
the judgments contained in its report were wholly its own. Although
it was given the benefit, I am sure, of all available information, no
attempt was made to induce the Committee to accept or indorse the views
9N
of the Administrative and such pressure worjld have been resisted by
the members had it been applied.
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II. The Objective.
The basic conclusion the Committee reached is that it is in
the interest of the United States to launch a program of economic
assistance to Europe on a large scale. It advocated tne principle
of annual appropriations, but emphasized that, with whatever reservations were required to take account of unforeseeable developments,
some reasonable assurance must be given to Europe of the United States1
intention to carry through a program. This is necessary in order
that the undertakings assured by the European countries may not be
hindered by uncertainty.
The conclusion that the United States should launch such a
program is based upon the belief, first, that its objective is nearly
as important as was the defeat of Germany and Japan in the war, and
second, that there is a good chance of achieving its objective with
the means at hand.
The objective is in one sense political but it
includes much wider interests. It is to maintain the effective
independence of the nations of western Europe and to create conditions
favorable for the preservation of freedom arid democracy within these
i
nations. The achievement of this objective is vital to tne U. S.
-
because, if the Y.estern European nations and their dependencies fall
under communist control,, we may not be able to maintain our own
/
effective independence. At the best, the cost of so doing, in terras
of both economic resources and of the strain on our social institutions,
wen Id be far greater than that of preventive economic action now.
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-aIn recent public and Congressional discussion of these broad
issues, the validity of this objective seems to be substantially accepted*
It has never been certain, however, that economic aid alone would be
*.
sufficient to preserve the external independence and the internal free-
•
dom of the Western European countries.
But the evidence of events in
Europe since the Committee's report was written is, on the whole, encouraging. Waves of strikes inspired by the coiaLunists for openly
avowed political motives failed to bring down the governments in power
and accomplished probably far less than the communists expected. I
am convinced that both the interim aid now being supplied and, above
all, the hope that an effective recovery program would be launched,
played a large part in strengthening the morale of the moderate parties
in both countries. It is encouraging that there has been a break in
the ranks in the communist controlled Confederation of Labor in France.
Given an improvement in economic conditions which would afford relief
to European consumers from the pressure of a far more violent inflation
than we have suffered, I believe the power of the communists to disrupt
production through their control of organized labor will be rapidly
\
weakened.
*•
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IH. European Self-Help.
At least as grave as the doubt that economic recovery will
be sufficient to save democracy in Vies tern Europe is the doubt
V
that a program of American aid will in fact effectively achieve
that recovery. A second major conclusion of the.relates to this
question.
It is that only the Europeans can save Europe* Nothing
the United States can do will be effective unless the Europeans do
much more.
Plainly, the burden of increasing production will fall almost
wholly on them. The volume of assistance recommended by the
Committee would amount to only about 6 percent of the national incomes of the receiving nations in the first year. As the volume of
assistance declines and European production grows, it will be a
diminishing proportion.
Moreover, the salvation of Western Europe depends upon European
policies as well as upon European production.
Ihe Committee was
convinced that the inability of the European nations at this time
to pay their own way grows more largely out of economic and social
I
disorganisation than out of wartime destruction or even out> of adverse
external economic circumstances, such as the high price of imports
and the loss of foreign investments. All over Europe economic disorganization takes the form of inflation* The inflation has disrupted
the process of exchange between country and city* It leads to the
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- 6misdirection of resources from more to less urgent uses. It impairs
incentives, and the restrictions which it calls into being (or keeps
in being) interfere, much more than conventional tariffs, with
international trade. Not only the very possibility of recovery, but
the length of time it will take, and the size of Europe's foreign
exchange deficit in the meanwhile will depend among other things,
upon public policy. If Europe is to be saved, the Europeans must
act vigorously, to bring inflation under control in ways that are
well understood but far from painless» It was the judgment of the
Committee last fall that this would require a curtailment of investment progress, the balancing of budgets, and measures of monatary
reform*
These are not policies invented by Americans, but are those
which the European countries themselves determined at the Paris
Conference to be necessary. Indeed, this single, unified effort to
put Europe1s house in order is the firstMihe great achievements of
Secretary Marshall1s proposal*
Since so much depends upon European action and initiative,
it is encouraging to observe that the governments of the participating
countries are not waiting for the enactment of a United States program
of assistance before they move to attack their own problems. In the
last five months, decisive action has been taken in England, France,
Italy and even Austria to cope with inflation.
In England, sales taxes and profits taxes 7fere substantially
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- 7increased in November. Subcidies to keep down the cost of food
and clothing were stabilized, with the result tha't any further
•,
price increases will be borne; consumers. The cancellation of
certain subsidies in 19U8 was announced. The government set about
reducing domestic capital formation, both public and private.
The
rate of capital expenditure is expected to be about l£ percent lower
by the end of 19U8 than at its peak in mid 19U7* Finally, there is
some indication that the British Treasury is permittirg interest
rates to move up. It is encouraging that all of these actions are
aimed at the excess of demand over supply which is ttye. cause of the
inflation.
At the same time, progress is being made on the supply side
of the problem.
British steel production by the end of the year was
higher than ever previously achieved. Much more important, British
coal production recovered remarkably in the last quarter and exports
of coal on a small scale were resumed in December. Only two months
previously, expert and well informed observers doubted that such
results could be achieved at least for many months. Even in the
textile industry, which has been one of the laggards, output was increasing at a promising rate.
In France, Schumann's moderate government has introduced and
successfully passed several drastic fiscal and monetary measures.
(These implemented a program originally proposed by the Ramadier
government, under which cost of living subsidies had already been
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~ 8C
eliminated.) Government expenditures in 19U8 are being out 10
percent below those in 19U7. Since this is in the face of price
increases, it implies a larger reduction in the volume of resources
that v/ill be absorbed by the government. The most drastic of
Schumann1s measures is a heavy direct tax or forced loan levied on
19U7 profits and incomes. Finally, as in England, capital expenditures
are being sharply reduced. These measures, taken so soon after the
disruptive communist -led strikes in December, required great political
courage. It will not be easy to collect the heavier direct taxes in
a country in "which the relationships between economic groups are so
strained and in which the effectiveness of administration has been
impaired first by war and then by shortages and inflation. But, at
the very least, the passage of the legislation is a long first step
in the direction of sound policy.
The Italian government adopted a deflationary program beginning
in September 19^7 which has actually been effective in reducing wholesale prices by some 20 percent and raising the value of the lira in
free currency markets.
The principal means that have been used to
achieve these results have been a compulsory restriction in th^ volume
of bank credit, a capital levy, increases in sales taxes, and reductions
in government expenditures. In Austria, a forced reduction in the
volume of currency in circulation and bank deposits was carried through
in December 19^7, and the budget for 19U8, will be very nearly in
balance. In both Austria ana Italy the domestic sale of imported
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< ;
relief commodities has the effect of withdrawing additional funds
from circulation and supplementing the deflationary domestic policy
I mentioned above.
In still other countries in Europe, concrete progress has
been made. The Belgian government last fall placed its domestic
cost-of-living subsidies on a sounder basis and reduced their amount.
Hie Greek government has legislated a major reform of the tax
structure and tax increases which will nearly balance the budget for
the current fiscal year. The Swedish government proposes to curtail
capital formation, including public construction, and to impose
additional taxes*
The Netherlands appears to be the only independent nation in
which the government is making little or no progress toward a more
deflationary fiscal and monetary policy* Its difficulties have been
particularly great because of the large amount of physical reconstruction, the cost of the war in the Netherlands East Indies, and
the loss of revenues from that area. Far worse is the state of affairs
in Western Germany, to which I shall refer later. But in the light
of the favorable developments practically everywhere in Europe, outside of "r/estern Germany and, perhaps The Netherlands, I believe we
can rely upon the Europeans to take the steps which are so essential
to their own recovery and which, indeed, will make a larger contribution
to it than anything we can do.
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- 10 -
The recent speech of Prime Minister Bevin, calling for
joint action on effective steps toward the economic unification of
Yfestern Europe, is. also greatly encouraging. Without detracting in
any way from the courageous statesmanship which is demonstrated by
this whole series of recent events, I am firmly convinced that these
drastic and unpopular measures would not have been initiated,
certainly not at this time, if European political leaders had not
had every hope that their actions would be buttressed by the adoption
of a constructive program for Western European recovery by the
United States*
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-n IV. The Economic Need for Aid
Although the Committee was convinced that the fate of
Europe rests mainly in the hands of the Europeans, it was also
convinced that recovery would, be dangerously delayed if not
jeopardized in the absence of substantial help from the United
Stages. One reason for this conclusion is that the necessary
adjustments in the economy of Western Europe will take time* If
its accounts are ever to be balanced, it must be by expanding
exports, not be reducing imports.
To cut food rations further,
limit supplies of raw materials, and forego essential items of
industrial equipment, would forestall recovery. Yet the European countries cannot sufficiently expand their exports overnight
to become self-sustaining*
In order to reach this goal, they
must redeploy their economic resources into the export industries
or reduce their home consumption of exportable goods and they
must then find markets in which the additional exports can be sold.
This will be difficult or impossible unless they control inflation
and curb the competing demands for resources for internal use«
Even if the policies that would lead to the desired rise iai exports
could be expected to become effective at once, the physical shift
of labor and increase of output in export industries would take
time. If they are to undertake this job, without which they
cannot become self-sustaining., the European countries must have the
additional breathing space which the recovery program will giv» them.
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- 12 Another reason assistance is so necessary does not
concern the difficulty of shifting resources to new uses but
rather the inadequacy of the resources presently at the command of the European nations.
For the moment they are simply
too poor to recover rapidly. They suffer in varying degree
from wartime destruction of resources and from the low rate of
output which is inevitable when materials are short, and when
incentives have been weakened and markets disorganized by continued inflaikm. Especially in certain areas, current production simply is not adequate in over-all volume to sustain a
tolerable standard of living and at the same time permit
essential capital formation. By a tolerable standard of life,
I mean one which will not give rise to further drastic social
disintegration, and by necessary capital formation, I mean that
which must be attained if production and exports are to expand
sufficiently to enable the participating countries to pay their
way. Today in Western Europe there is a close race between
recovery and social disintegration.
The program which the Com-
mittee advocates is designed to provide the additional economic
assistance required to expand production more rapidly and thus
assure victory for recovery. The role that our assistance will
play in this connection is that of making additional economic
resources available to the European countries so that production
can expand more rapidly.
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.
- 13 V. Germany.
One area in Europe today illustrates most vividly both the
impossibility of recovery "without outside help and the crucial part
that must be played by sound policies, domestic and international.
It is Western Germany. I wish to lay some emphasis upon the Connnittee^
views about Germany because there is, on this subject, a difference
in emphasis (though, I am convinced, no difference of opinion) between the Committee's Report and the published program of the Executive
Branch.
Nearly everyone agrees in principle (the European countries,
the Executive Branch and the Committee,) that the recovery of Germany
is essential to the recovery of Western Europe, But it was the view
of the Committee, if I interpret the sense of its discussions correctly,
that in practice our present policies were simply not achieving German
recovery. The index of industrial production for the two Western
zones is below £0 percent of the 1938 level. It is far lower than
the index for any other West European area.
(Even Austria is doing
somewhat better. Italian production has recovered to within threet
fourths of the prewar level,) All of Western Europe, but particularly
the Scandinavian Countries, Belgium, the Netherlands and Italy, have
long depended upon Germany for coal, steel and many items of machinery.
Under the circumstances, one need not be an expert to arrive at the
conclusion that stagnation in Germany is dangerously retarding recovery
in the rest of Europe.
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-3JU -
The •worry of our former Allies about InBOtGerman recovery is
•wholly understandable.
Apart from military fears, they know the
more food, fertilizer, coal, or steel that is consumed in Germany,
the less there is available for them. The Committee did not suggest
giving German needs any priority over those of the rest of Europe;
it did recommend that general recovery be placed ahead of individual
national interests. For example, if a ton of Gerroan coal would
produce about the same amount of steel in France and in the Ruhr,
the coal should go to France.
But if the coal would produce more
steel in Germany, or could produce some important product in Germany
in place of a less vit'al product elsewhere, then the coal should stay
in Germany.
These remarks refer to controversial issues which can be
resolved only through delicate negotiation with the European Governments. But by no means all questions of German economic policy fall
into this category. The central fact about our relationship with
Germany, which was emphasized in the Committee's report, is that we
are one of the occupying powers, that is^ a part of the German Govern\
ment. In our capacity as an occupying power, we are partial!^ or
wholly responsible for decisions in many areas of German domestic
and international economic policy in which our interest is identical
with that of the other occupying powers and of the whole of Western
Europe* Unfortunately, we are at least partially responsible for
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- 15 errors of omission and commission which are seriously retarding
German and thus European recovery.
In the field of internal policy, it is in Germany that inflation has taken the most violent form. Currency reform, long
planned and generally admitted to be urgently necessary, has been
postponed in the attempt to secure the agreement of the Kremlin.
Officially, prices are under rigid control (in many cases we are
enforcing prices set by the Nazis before 1939)* but the black
market is the only functioning market. The disruption of trade
between country and city and the breakdown of money exchange into
barter has proceeded further in Germany than anywhere else in Western Europe. Neither the other Western occupying powers nor Germany's
neighbors would object to vigorous efforts in the direction of monetary
reform and the balancing of demand with supply.
In the field of international policy, the United States has
insisted that Germany be a dollar area and the German administration
has refused to accept payment for German coal in other European
currency which could not be used to buy imports for Germany elsewhere in Europe. For months the use of Belgian and Dutch ports for
German exports and imports and the full use of the waterways in
northwestern Germany have been delayed by the inability of the
occupation authorities to negotiate satisfactory foreign exchange
arrangements with the Belgian and Dutch Governments.
In short, the
military government has adopted policies of precisely the sort that
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Federal Reserve Bank of St. Louis
- 16 we are insisting the free governments of Europe shall abandon.
The Committee was well aware that the responsibility for these
mistakes is widely diffused through our Government. It does not
rest mainly upon General Clay, the Department of the Army, the State
Department, or on the Executive Branch alone. One root of difficulty
was the political attitude toward Germany in this country and elsewhere at the close of the war. Another has been our natural desire
to minimize the cost of the occupation and the consequent pressure
upon General Clay to cut dollar costs* Still a third cause of trouble
has been the divided responsibility for the administration of Germany
and the commendable desire of all Western occupying powers to avoid
any action which would make true unity for Germany harder to achieve.
Whatever the explanation for the present state of affairs, the
Committee was convinced that, in this area, as elsewhere in Europe,
sound policies are an essential condition for recovery and that unsound policies will inevitably increase the cost of the whole program
to the United States. It is necessary that the policy and behavior
of the United States in its capacity as an occupying power in Germany
and Austria be consistent with its policy in its capacity as the
principal source of economic assistance to the whole of Western Europe,
The penalty of a failure to secure sound economic administration of
German affairs will be not only to delay and impair the recovery of
Western Europe generally but also to leave the United States Treasury
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- 17 -
saddled for an indefinite period with the cost of supporting a
German economy still unable to support itself. Germany is a grim
illustration both of the manner in which ill-conceived policies
can frustrate recovery and of the folly, even from the standpoint
of economy, of niggardliness^ in granting assistance.
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VI. The Amount of Aid.
In my remarks up to this point, I have tried to explain the
basic economic circumstances which make it impossible for the Europeans
to balance their accounts with us and with the rest of the world while
they are achieving recovery. This leads logically to the question of
how much assistance the Europeans need and how much it is in the interest
of the United States to furnish. This is a question which can be
answered only by reference to our capabilities as well as to European
needs.
The Committee assessed both needs and capabilities as carefully
as it could within the limits of time and basic information available.
Especially on the question of the availability of goods in the United
States, it sought advice widely throughout industry.
Its specific
recommendation, as you may remember, is that for the. first 12 months
of the program, $5 3A billions of funds should be provided from the
United States Treasury.
I do not think it would be useful to review at length the
statistical comparisons between the Committee^ estimates and those
of the Executive Branch which, I understand, have already been presented
to you. The differences between them can be summarized very briefly*
The amount of $6.8 billions requested as an authorization in the program
of the Executive Branch is not comparable with the Committee's figure.
The former is made larger by the use of a 15-month period and the
inclusion of an allowance for relatively long-terra forward obligations
over and above the cost of procurement and shipment within the accounting
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- 19 -
period involved. At the same time the Executive Branch figure is
reduced by the. exclusion of an allowance for a large part of the
i
assistance to Germany, which is to be covered in a separate appropriation
requested by the Department of the Army.
I believe that the figure
which, as a measure of the siae of the Executive Branch program, is
most nearly comparable with the Committee's recommendation of $5 3A
billions is that of $5*96 billions, which is the Executive Branch
estimate of the burden on the Treasury for fiscal 19U9»
It includes
the whole cost of Germany, but excludes the allowance for forward
/
obligating authority. Thus, the request of the Executive Branch is
slightly, but only slightly higher than the amount recommended by the
Committee »
On the other hand, it should be pointed out, however, that
the remarkably small difference in the two estimates conceals much
larger difference between their components. The Committee's estimates
of both European imports from and exports to the Western Hemisphere
are lower. It was more pessimistic about the cost to the Europeans
of "invisible" items, mainly shipping and other services*, and much
more pessimistic about the foreign exchange position of the dependent
territories. In considerable degree these difference offset one another but they resulted in a higher estimate by the Committee than
by the Executive Branch for the balance of payments deficit of the
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- 20 -
participating countries with the Western Hemisphere as a whole* It
was only because the Committee allowed for more financing by the Interi
national Bank and other non-Treasury sources that it finally arrived at
a smaller estimate of the burden on the United States Treasury,
Practically all of these differences reflect the Committee's
desire to be conservative in its appraisal of what could be accomplished,
especially during the first year. Its estimates of European imparts
were lower primarily because it was more cautious about the availability
of supplies, notably Argentine grain. Its lower estimates of European
exports and its more pessimistic estimate of the position of the dependent territories reflect a belief that it would prove difficult
drastically to increase exports from Y/estern Europe and from the
African and Far Eastern dependencies to the United States in the
immediate future.
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VII, The Nature of the Estimates.
I shall not attempt to justify here all the estimates put
forward lay the Committee. Much of the evidence in support of them
is set forth in the report, which must stand or fall on its own
merits* But I would like to make several comments, based on the
experience of the Committee, on the validity of such calculations
and the considerations that should determine the final decision.
To begin with, it must be recognized that there is, inevitably,
a wide margin of error in any calculation of the amount of assistance
needed to accomplish the objectives of the program* Nor is this
surprising. The nature of the uncertainties involved can best be
understood if it is realized that the calculation of the amount of
aid needed is in almost every respect analogous to the planning of
a military operation* It is beset with all the same difficulties}
ignorance of the terrain, inadequate knowledge of the plans of allies,
lack of information as to the immediate actions of the enemy, and no
way of taking account of acts of God*
The analogy is weakest in connection with the ignorance of
the terrain. A military planning staff usually has good "maps, whereas,
in estimating aid, it is impossible to assemble much of the factual
evidence as to needs and capabilities, at any rate until an administrative agency is actually in operation to gather such information.
It is not that the Europeans withheld revelant facts but rather that
in any economy which is not completely planned and controlled, no one
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has readily at hand a complete calculation of needs for consumers1
goods and producers' goods* Nevertheless, in the absence of such
information, it is impossible to draw up a complete list of the total
import needs of 17 countries and to defend in detail the essentiality
of every item on it*
In the main, however, the margin of error is inherent in the
nature of the calculation and would still be very wide, even if all
the relevant information were in hand* As the Committee«s report
emphasized and as I have re-emphasized, the amount of assistance that
will be required will be affected by the policies followed by the
European Governments* Also it will be influenced by the strategy and
tactics of the enemy, that is by the degree of success or failure of
the communists1 campaign to sabotage European recovery* Finally, it
will be affected most of all by acts of God, in particular by the
weather and the size of next summer's crops in Europe, at home, and
elsewhere in the -world*
No one can pretend, in the face of these uncertainties, to
know precisely what resources will be required for this operation to
achieve its objective* We realized, however, that a decision* for at
least the first year of the program would have to be made by the
United States Government this winter on the basis of little or no
better evidence than that available to the Committee, Accordingly, the
Committee recommended as low a figure as seemed reasonable for an
authorization or appropriation.
This does not mean that the objective could not be realized,
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under any circumstances, at a lover cost* Uncertainly does not
Justify the arbitrary selection of a figure that would be adequate
only under the most favorable conceivable circumstances. If the
course of prices should turn downward, if Europe should have excellent
crops next year, if communist opposition is completely ineffectual,
and if coal production continues to exceed expectations, it may be
apparent in retrospect that something less than $5 3/U billions would
have been adequate* On the other hand, if prices rise further, if
political disturbance and uncertainty continue, if the depletion of
the foreign exchange reserves of the sterling area this winter has
serious consequences, then $f? 3/U billions ivould torn out to be too
little* Just as conservatism in Judgment requires that Europe^ needs
and the availability of supplies should not be overestimated, so it
also requires that the estimate of cost should not rest upon the
•
optimistic assumption about each contingency that will affect the
course of events*
To this explanation of the extent and nature of the uncertainty
inherent in any calculation of the amount of aid required for European
•
recovery. I want to add two closely related comments on the general
question of cost* They are, first, that the risks involved in authorizing
or appropriating
too small a sum are real, and are greater than the risks
*
in the opposite direction and. second, that real economy can be achieved
only by tough, businesslike administration and not by setting too narrow
a limit on the administrators financial freedom of action*
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- 2U -
In relation to the first of these comments, it was certainly
•the view of the Committee that this should be a program for
reconstruction and recovery, not merely for relief* The most obvious
risk involved in an inadequate appropriation is that the program
will degenerate into mere relief* If the European nations do not
have some margin of resources over and above what they need to keep
their people alive, they will not be able to make rapid progress in
t&j expansion of production. If they are not, we will face next
year a situation in Europe very similar to that which now prevails*
TTe will be presented with the same choice between more relief on
the one hand and the probable emergence of totalitarian regimes in
Europe on the other* Food is a more urgent need than capital goods*
Cuts in the program below whatever turns out to be the necessary
minimum will be at the expense of the rate of progress toward solvency*
A second risk incurred through the provision of inadequate
funds is that of giving the administrator so narrow a financial
margin to work with that he can not help the European governments to
take certain chances which should be taken in the interest of a rapid ,
i
improvement. For instance, it is widely believed that larger food
rations and a bigger supply of consumers1 goods in Germany would
stimulate higher production and would, thereby, more than pay for
themselves* But the increase in production would not be achieved
overnight. Consequently, the German regime must be prepared to gamble
on the beneficial effects of a higher standard of living when the
experiment is first undertaken* Likewise, any country which abandons
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- 25 or drastically reduces exchange controls and restores the convertibility of its currency must have reserves to call upon* A
reduction in trade barriers may threaten a temporary flood of imports
which would place a strain on the international exchanges. The curtailment of direct allocation controls over the flow of materials in
any country may involve a temporary rise in imports while stocks are
being replenished* Generally speaking, if the European governments
must be encouraged by the administrator to take no chances, the
result may be to delay both recovery and a return to freer Markets
within the nations and internationally,
Still a third risk, if the authorization or appropriation
turns out to be too far below the amount required for recovery* is
that the threat of another crisis next winter will frustrate both
the administrator1 s pi*nrrt^g and that of the European governments*
A program of the magnitude contemplated must be assured of at least
a year* s trial if it is to have a reasonable chance of success* The
administrator must have time to assemble a staff, make commitments,
and set procurement in motion* The European nations ara undertaking
»•
various actions and adjusting their plans in the light of the program*
The threat of termination or curtailment well before the end of
the next fiscal year would make the necessary planning on both sides
of the Atlantic difficult* let, an appropriation so limited that
unfavorable circumstances could render it hopelessly inadequate
would, in effect, expose the whole program to the risk of premature
termination or curtailment*
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Federal Reserve Bank of St. Louis
- 26 This leads me to develop the second of the two comments
to nhich I referred. The deeper the Committee went into its
consideration of the European recovery program, the more its
members were convinced that great latitude must be left to the
persons in charge of its administration and that primary reliance
for economy must be placed upon them* The same circumstances that
make precise calculation of cost impossible compel the delegation
of considerable authority• The needs both of the whole group of
participating countries and of individual nations will depend
upon developments which cannot be accurately foreseen* Unexpected
success by one country in expanding its exports may reduce its needs
for assistance, and unexpected political difficulties in another may
leave it more dependent upon outside aid* The requirements of
participating countries will differ from advance estimates not only
by reason of developments not now foreseen but also because the
careful justifications required by an operating administration will
lead to conclusions different from those that are indicated in the
absence of such evidence* Similarly, the administrators must* be
free to take account of the appearance on the market of supplies
that have not been anticipated or to modify the program in the
light of shortages that develop with little warning. like a
general
military/staff, they must have freedom to make the best use of
limited resources*
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- 27 -
Competent administration and effective use of resources is
not merely a contribution to economy, it is the only way of keeping
the cost of the program to the minimum consistent with attainment
of its objective. Wholly aside from adapting his operations to
developments as they occur, there are many actions the administrator
can take nhich will have the effect of keeping down the cost* The
need especially for industrial items and capital equipment should be
carefully examined* Ltevelopment projects that are not directly
•
related to the building up of an export balance should not receive
encouragement or assistance* More broadly, there must be constant
pressure on European governments to carry out the policies they set
for themselves at Paris* In these and other ways the administrator
can actually help the European countries to become solvent at the
earliest possible date with the smallest amount of help from us* This
is constructive economy* Without such careful administration, the
dedal of adequate funds by the Congress will not insure that we
attain the objective at the least possible cost* Given such
I
administration and a proper desire on the part of the administrator
to economize, it should not be necessary for the Congress to jeopardize
the success of the *hole program by giving him too little*
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-28 -
VIII* Administration
the
If the success Qf/European recovery program demands that
its administration be flexible, the interests of the American people
demand that it shall also be responsible* The report of the Committee
laid great emphasis, which I have tried to reflect, on the discretion
which it believed the administrator should be given in the execution
of a complex and difficult task* At the same time it recognized that,
however great the need for flexibility, the need for constant and
vigilant control was equally essential* Such control can neither be
achieved nor maintained by hedging the administrator about with a
series of legislative limitations on his power* But if that power
is vested in a single man, if there is thus one person whom the
Congress and the country can hold directly responsible for the conduct
of the program, and if the .freedom of action which he is given fixes
that responsibility, then true control can be achieved without
sacrifice of flexibility*
The need for flexibility does not mean that limits on tl^e
•f
extent of the program or the power of the administrator cannot be
set* A limit on the over-all magnitude of United States aid, a
further limit imposed by the need to justify to the Congress the
annual appropriations which the program will require, and a final
limit growing out of the closest relationship between the Congress
and the administration of the plan, through existing Congressional
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-29 -
committees or a special joint committee created for this purpose,
will all serve effectively to define and continually to re-define
the activities of the administrator*
I have already indicated how the operating decisions which
an administrator of such a program will constantly have to make will
reqiirs considerable freedom of action* But these decisions oust be
made within the frame work of general policy dictated by American
interest* The operating job cannot be done effectively if each step
must be referred to a board or commission* But it is equally true
that the policies within which the program will be conducted cannot
best be formulated by the administrator alone*
The Committee therefore suggested the establishment of a board
of directors composed of the heads of the government departments
interested in and affected by the program, and such other persons
as the Congress may see fit to add* It is emphatically intended,
however, that this board should, like the board of directors of a
private corporation, be limited to the making of broad policy
decisions* To entrust the active, day-to-day, management of an
organization which hae executive rather than deliberative functions
to a commission would be a violation of the principles of good
administration* In order to insure that the administrator have the
prestige required for the effective performance of his duties, it
recommended that he be the chairman of the board of directors* In
view of the direct relationship between the conduct of the European
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-30-
recovery program and the foreign policy of the United States, the
Secretary of State should be a member of the proposed board of
directors; further, the administrator should maintain close and
cooperative relations with the Department of State concerning
important operating decisions which affect major aspects of foreign
policy*
I will not now review at length the details of the
administrative arrangements which the Committee proposed, and: which
are fully set forth in its report* The administrator should be
appointed by the President and confirmed by the Senate* The
organization he heads should have a chief representative in Europe,
responsible to him, who would deal with the permanent committee set
up by the participating European nations, and coordinate the
activities of the administrator's representatives in each country*
Reports on the organization's activities abroad should be made
directly to its administrator, although the Ambassadors in each
country and the Department of State in Washington should all be kept
fully informed* What is proposed, in short, is a truly independent
agency, responsible essentially for an operating job, guided in the
policies under which it operates on the one hand by the Congress and
on the other by a directing board of the relevant government officials
and such others as the Congress may see fit to add* The Committee
recommended that consideration be given, in the creation of the new
agency, to the use of the corporate form*
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-31-
The decisions on the amounts of the several commodities which
should be devoted to the European recovery program, as against the
needs of the United States and other foreign countries, should not
be made by the new organization*
These judgments and the exercise of control over exports
should remain with the regular Departments now exercising these
functions* However, the Committee felt that the administrator should
have final determination concerning export priorities and licenses to
the participating countries* The administrator should have responsibility for screening the Western European countries1 requirements
and the responsibility for their acquisition and delivery* The
Committee felt strongly that U* S. Government procurement should
be used as little as possible, although it recognized that in rare
instances it might be necessary*
The Committee took a firm position that it should be made
a condition of continued assistance under the plan that participating
countries take all practicable steps to achieve the production goals
>•
and the monetary reforms set by them in the Paris report and that
failure to do so would call for a cessation of further assistance
under the program*
Aid from the wnited States under the plan should not be
conditioned on the methods by which the participating countries reach
these goals, so long as the methods are consistent with basic
democratic principles* Continued adherence to such principles is an
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-32 -
essential condition to continued aid under the program, but the
Committee does not believe that this condition should extend as
far as adherence to any form of economic organization, or should
require the abandonment of plans previously adopted in a free and
democratic manner which call for a different form of economic
organization* While the Committee firmly believes that the .American
system of competitive free enterprise is the best method of obtaining
high productivity, it does not believe that this program should be
used as a means of requiring other countries to adopt it* In the judgment of this Committee, the imposition of such conditions by the
United States would constitute an unwarranted interference with the
internal affairs of friendly nations.
One other principle of administration I should mention is
that of dividing up the financing function in such a way as to make
good use of the facilities and experience of the International Bank
and the Export-Import Bank* The former is particularly well equipped
to handle the financing of capital equipment and the latter that of
raw materials and industrial supplies which could appropriately be the
basis of loans* In this way, the full responsibility for providing
equipment might be concentrated in one institution which is fully
competent to examine needs and exercise control over procurement and.
installation* The Export-Import Bank would assume an administrative
task it is staffed to perform but it should do so subject to the
direction of the administrator of the program* The financial resources
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-33-
of toe Export-Import Bank would, and those of the International Bank
might, have to be supplemented* If dependence is to be placed upon
them, they Bust not be prevented by lack of funds from playing
their part* Since the administrator would direct the lending activities of
r
one and be closely concerned with those of the other, he should be a
member of the National Mvisory Council*
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-3k-
IX. Economic Impact on the United States.
The final matter on which I shall try to convey to you the
views of the Committee is that of the direct economic effect of the
program on the United States. In remarks I have already made on the
risks involved in authorizing or appropriating too small a sum, I
referred mainly to the risk of failing to secure European recovery.
But the importance of the objective and the chances of attaining it
cannot be the sole criterion.
If European recovery were brought
about at the expense of serious damage to the economy of the United
States, our position in the world would be weakened rather than
strengthened by attempting to carry the program through. It is,
therefore, essential.to determine whether the program is one that
the United States can afford to undertake.
Unfortunately, no simple answer can be given to this question.
In the first place, the impact or cost of any assistance we grant
must be measured in several different ways, in terms of money cost,
of physical shortages, of depletion in natural resources, an\i, last
but not least, in terms of its inflationary influence upon our sconomy
as a whole. In the second place, what we can afford in terms of any
of these measures is very directly related to developments at home,
that is to the way our economy is functioning and to our domestic
policies. Since it is not possible, because of these complications,.
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-35-
simply to conclude that we can afford a large foreign aid program,
I shall enumerate those of the Committee's conclusions that seem
to me most useful in arriving at a general judgment.
To begin with, every American and, more important, every
European should be made ta understand that the current threat to
economic stability in the United States is an inflationary not a deflationary one, and the Committee denounced as sheer nonsense the
idea which prevails to some extent at home and abroad that we need
an export program to maintain employment. On the contrary its most
serious cost to us will take the form of a maintenance of inflationary
pressure.
I will not take your time to review the statistics on the
relative size of the prospective export balance and the gross national
product. The basic facts are that the export balance amounts to only
a small fraction of the gross national product, that it amounts to
less than outlays on plant and equipment or on construction, but that
it is unquestionably an inflationary influence.
t
V
Moreover, it was the view of the Committee that the dollar
magnitude of the export balance tended rather to understate than to
exaggerate the inflationary influence exerted by our heavy exports.
Basically, the reason is that many of the goods the Europeans most
desperately need are those we can least well afford to give them.
In particular, shipments of grain have had and will continue to have
an effect somewhat disproportionate to their dollar amount. Food
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-36-
prices occupied a strategic position in the present phase of our
domestic inflation. To date, the connection between exports of
food and the cost of living has been an indirect one. Exports have
boosted the price of grain and feed, but the price of grain is not
of direct importance in the cost of living. Meanwhile, the export
of grain has forced the liquidation of poultry and livestock and,
if anything, increased the supply of meat. We will begin in the very
near future, however, to feel the inflationary effect of reduced meat
supplies. That scarcity in the face of unprecendented domestic demand
will be highly inflationary and can fairly be related to exports.
Thus, the cost of the program in terms of inflationary dislocations
may be painfully high, if we are unsuccessful in reducing any of the
other inflationary pressures.
Although well aware of this danger, the Committee concluded
that the program should go forward.
One reason it did so was that,
even taking account of physical shortages, we can actually spare the
goods themselves without seriously impairing the operation of* our
economy. Although high food prices are violently inflationary, the
American diet is far better than it was before the war. A continuation
of exports to Europe would aggravate annoying shortages of industrial
products, especially of steel. But a program of the size contemplated
would still leave us with larger supplies of the most critical items
for domestic use than we enjoyed in 19U7* Our total exports under
such a program would be at least a billion dollars lower than last
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Federal Reserve Bank of St. Louis
-37-
year and production of such critical items as tinplate, sheetsteel,
and railroad cars is expected to be higher. In short, we can afford
to supply the physical goods; the question is whether processes of
extracting them from the American econoniy will be too seriously
inflationary.
The statement of this question inevitably raises issues of
policy. The extension of export control, which has already been
enacted by the Congress, was specifically recommended by the Committee.
It recognized that extremely limited priority powers and power to
«
limit specific uses of materials might be needed to expedite exports,
and suggested the necessity of power to issue limited orders to
control consumption of critical materials, and to require that
limited quantities of some goods, such as food, be set aside for
export.
It must be emphasized that these suggestions apply only to
the foreign aid program and not to the broad problem of inflation.
The Committee is convinced that inflation is a serious deterrent to
\
the stability of the American economy, but any consideration of a
program to control inflation would have been beyond its competence
and its terms of reference.
The Committee made two positive recommendations which I wish
to emphasize in closing ray testimony. The first is that funds provided
as European aid should be available for expenditure in areas outside of
the United States. It should be our deliberate policy, so long as inflationary conditions exist in the United States to minimize the impact on
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Federal Reserve Bank of St. Louis
-38-
our economy by maximimizing the flow of supplies to Europe from
elsewhere. The second is that the program should be financed
within a balanced federal budget. To unbalance our budget would
be to surrender our surest weapon against inflation*
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Federal Reserve Bank of St. Louis
February 10, 1948
!>*ar Mrs. 3oltoni
la response to the qu«*tl>r*s T'siaed 1» your letter of
February a, 194S> T submit th« following?
(«) Where does tfce latern* t itmel Hank fit la to the
. ..
The International Bank will rot participate. directly
in t,i .r. It is hoped, hdvtfv^r, thtt th* b»»jc will |>artlclpat«
indlrecUy 07 moKlns J«an« fro» lt« *wn fun it to tfe« European
C0u»tri*s Involved.
Is It your understand ln£ that under the E.R.P. program
•11 cr«Milt» should Tm «ail» ^ th.fifeaqtsort*!smart Bank,
or that c«rt air of the* would fall naturally Into the
proYlr.ce of the Ii5ter»^ti*>n»l 8nnfc? If th« litter,
vhat should determine th«t the r*o«e»t» of r&ropeac
be referred to the Itsternntional Bank?
In diaeuaelng the respective rol»a of the International Bank
and the $Ef»ort-X«r»ort Sank wider the praeram, It Is vef tinderstundi^g
that all credits yyof l^ifylf ..y?t.y». Isy the_ Cffiyyreay vill be extended
by tn« rtftport-J'ftport
J'teok* However, the Internntlonii Smk will be
afforded «5rj ojj.vwtwBity to extend »«y oredlta It la abl* ejad willing
to «ek«. He»oef the A4»lnl«trator »nd ^rport-Iinport Bank would itake
no er*<Hts if the TT»t,*>rr\j»tlor>^" ?»*mk v»i»0 abl* and willing to extend
( credits neeoed. '^hat it ?fee*r«lly overlooked in the dlaeuaai'^n
of the role of the international Hank lii the progre* Is the faot that
the &ankf by Its own llmit« tiona, ia tmable t* extend credits In the
aaounta needed by the ovwntrles Involved, either because of laek of
funds or inability of the Bank to extend credits which will neet the
reqwlr **««>« it of Its enarter*
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Federal Reserve Bank of St. Louis
- 2*
(e) Wore the International Bank adequately financed,
would you consider It to bo tha rightful agancy for
government lending?
As Its name lisplies, tha International Bank for fie construction
and Development is an international institution whose Board of Directors
10 eoffiposed of representatives of taember countries. Export-Isport Bank,
on the other hand, in an agency of the United Statoa Government. The
contribution ?sade by too United State* to the I&ternatlonal Bank la the
fora of a subscription to its stock was no different except la amount,
than the contribution raade by other washer countries. The United States
Government ha* not voted funds to the International Bank exempt to aeet
the stock subscription. The concept of the International Bank would
preclude Ita being utilised as a United State* governmental agency.
Its charter requires that It function as an International agency. It
la difficult for me to perceive how It could he adapted to us* as a
United State* government agency. Lending by the 0. S, Government,
except to the extent the Government way Jointly participate with other
Governments la an International body, should be handled by an agency
of the Halted States,
(d) ITader the provisions of the Export-Import Bank Act of
1945f Is the Bank set up to continue indefinitely la
the field of goveraneat lending, or eat uc to act ia
the emergency during which the International Bank la
not financially able to wake the loans?
The Export~Iwport Bank Aet of 1945 describes the Bank as "an
iadepeadeat agency of the United States11. The Aet provides that the
Bank shall have no power to nake loaas after June 30, 1953* Thi*
limitation was apparently imposed by the Congress ia order to give it
the opportxmlty at nueh tias to give full consideration to the question
whether the Bank will be needed after
The Bank's statutory purpose la to finance the foreign trade of
the Halted States. So long as there Is need for the Government to do
this, I presuaee the Bank will continue In existence. If by reason of
the lending activities of the International Bank or extension of credits
by private American baake or Industry, our foreign trade no longer aeeds
Governmental financing, the Bank would presumably cease to extend credits,
either fey voluntary action or by mandate of the Congress.
In stating la ay prepared statement that the Export-Import Bank
was only to extend long-term reconstruction and development credits
prior to the tiae the International Bank began operation©, I was voicing
the intent of the Congress as expressed in the hearings and debate* la
the passage of the Export-Import Bank Act of 1945* Such type of credits
are ordinarily sot needed to finance the foralga trade of the United
States. Bhort^tent credits for spool Ho items of equipment or for
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Federal Reserve Bank of St. Louis
~ 3*
commodities are th© types of credits that generally nay be said to
be more suitable for cur foreign trade. Accordingly, it van the in teat
of the Concrete and is the poliey of the Bank today to refrain froa
aaking long-tern general reconstruction and development loans. This,
of course, is different than raying that the Export-Ifaport Bank 10
only set up to aet so long aa the International Bank is not financially
able to make loans.
»
(e) Under the norsaal COUTP* of your business, aside from
contemplated S.R.F. aid, sbetst vhat percentage of your
credits ara government leans, and what percentage to
private interests?
In answering this question, it Bight be profitable to trace the
history of the Bank's1 activities. Front 1934, "hen the Bunk was created,
until 1939, the Bank e loans were largely to private industry, either
in the United States or abroad. When the war began in Europe, Governments in Latin-terries needed direct financial assistance and this was
furnished by the Bank under a specific Aet of the Congress. After the
war, it was hoped that all trade could be restored to private channels
and the Bank is daily attempting to direct its activities In such
direction. Hcwavar, the dislocation resulting fros the war and the
trend in £urope has necessitated Government to Government credits.
In this connection, It might ba pointed out that the International Bank
Is United to making credits to Oovernasnts or th* sge^clee thereof.
The E.8.?. would likewise h» so Halted. The Export-Iciport Bank Aet,
however, permits the Bank to Bake credits to both public and private
interests, including individuals as well as corporations and other
entitles.
t
The following table will give you soase Idea as tc the division
of our outstanding credits as between direct Government loans and Industry
credits. Bellarwise, of course, by far the greater amount of credits
are direct Government loans. Of course, we should not overlook the faot
that Government credits are to a certain extent Bade available by the
borrowing countries to their nationals, and we encourage borrowing Governments tc do this. In faot, in certain instances we hav« exacted
covenants from the borrowing Govarainents that they will aake the credits
available fear utilization lay private Interests in the borrowing country
to the extent practicable. By way of further consent on the following
table, we should state that in certain instances the foreign Industrial
entity which has borrowed from the Bank is Government owned in part or
whole.
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Federal Reserve Bank of St. Louis
• 4*
Qoyarpnsntg and Other Obligors at of
ffff«arr .31. 19^
Bmrtxi1 of
aov«rw**ta
47
43*
$1,707,085,063.77
$5.7$
Otbor OKUsora
$2
fTf
2S?T 8^5f 813-^7
U.J$
109
DOOI
Ht990f928f877.24
100.0$
If you ha** any etfetr t^etiona, or would lite MI to OOMI 19 and
discu*» a^jr aapoeta of tte aatt«r with you I will bo glad to do ao at
your coDTer\ieno«.
•
Siftooraly yours,
Wai. KcG. Kartin, Jr.
Qml rmii
HoBorabl* Franco* P. Bolton
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Federal Reserve Bank of St. Louis
of Bopvoaootatit^e
March 10, 1948
Mgr dear Mr, Secretary:
Thank you for your letter of March 6 presenting
the ease of Sizone G raany for a sizeable allocation
in the initial stages of the Suropean Recovery
Program, this is helpful to me and to our staff and
assists us in getting the proper perspective on the
problem.
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Federal Reserve Bank of St. Louis
Very truly yours,
Ife* JfeC. Martin, Jr.,
Chairman
t 6 MAR 1948
Mr. William IfeC. Martin, Jr.
President, Sxport-Saport Baak @f Washington
731* Fifteenth St., M.W.
Washington, P.O.
Dear Hr. Martins
Th® allocation of fuads during the first three month period of
the l&aropean Becovery Program is presently under consideration by the
ERP Advisory Steering Goiasiittee, and the same subject has been under
consideration by the working staff of the latioaal Advisory Council.
A preliminary and purely tentative program, contained in two
tables, copies of which are enclosed, provided for an allocation of
$1,200,000,000 among thirteen of the participating countries but made
ao direct provision for Bizone Germany. It is quite obvious to m
that the comparative need for a recovery budget is greater in Gewasy
than In any of these other countries, since each of them, with the
possible exception of the French Zone in Germany, has a higher standard
©f living, a higher level of industry and a higher feeding level than
Bizoiie Germany. let these tables, in effect, eliminated Biione Germany
from the European Becovery Program in spite of our Government^ flag
responsibility in that area and ir* spite of the fact that the rehabilitation of Germany is one of the keystones ©f the European recovery.
The Department of State and the Department of the Arsy are in
agreement that adequate funds ®ast be provided for Bisone Germany
during this period, the Bepartment of State suggesting $75*000,000
and the Department of tha Anay, $120,000,000. It appears to ne to be
vital from every consideration of the ikropean ftecovery Program that
lestern Germany be included for an appropriate amount. From the viewpoint of the Departffi@iit of the Army, which Is responsible for the
operations in Occupied Qermanyi this matter is of the greatest importance.
Since this subject will be discussed further before the Advisory
Steering Committee and possibly befor© the working staff of the
iational Advisory Council, on both of which you are represented,
I am
sure that you will want to know the Bepartmsnt of the Armyfs position
on this important subject.
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Federal Reserve Bank of St. Louis
Sincerely yours,
(Signed) KENN1TH C. ROYAMi
March 17, 1948
MEMORANDUM to Mr. Martin
Re5 Allocations under the E.R.P.
The substance of a suggestion I made to you this afternoon is
as follows.
The discussion tomorrow at the N.A.C. meeting would merely
resolve whether the N.A.C. as a body is consulted by the State Department, which is now acting as the temporary administrator in the matter
of the first allocations of funds under the E.R.P. If the issue is
resolved in favor of the N.A.C., a major problem would still remain
from our point of view. Is an agent under all the E.R.P. bills we
should be working together with the State Department right along
until the administrator has come into being and has organized the
staff. It is for this reason that irrespective of the decisions
at the N.A.C. which will merely effect our participation as N.A.C.
memberjf, the Board or yourself should make an effort to come to
an arrangement with the State Department whereby representatives
of this Bank sit with the appropriate State Department officials,
in particular, Paul Nitze, in the preliminary discussions relating
to the first allocations under E.R.P. and the steps to be taken in
consequence of such allocations.
I
Rifat Tirana '
cc: Mr. Arey
Mr. Sherwood
Mr. Sauer
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Federal Reserve Bank of St. Louis
http://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
•
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Federal Reserve Bank of St. Louis
A 'Hiss
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INI
•
I desire to acknowledge and to tftanfc you far y@@r letter of
April 13th eddreftaed to C&iitewBi Kartiiu le ccncrcr in your
gaetlon to c^ttiinse^ mill nere gpeeifie axT&ngmotit^ are
the fiaoe general iBtardcpmrteerital relationships *e have
«f f «ct la pm)1»1nAry work <m
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erial may b0 iMMMil to Mr, Sidney
of th« E«p8rt-Iaport Bank.
X nott? that ;rou are convinced that tb» work of
Adsirdstratioaft c^n, go f oreraafd Bxu&ctesfttily
f^lleet p^®@iblt partieipati^i cdT Ootrerxussoot agendttt whieb
G©n.cern®d with tti mnwal «sp«ct® of tho pr^r^a* I tdadi to
assure y^j that th* direcstcars, officers arid gtaff of the
I^j^rt
stand ron% to cooperate ia evary w^r which will
tribute to to st«jee«s of the EeoBonlc Cooperatloo
Oiar auMting with a** f «QrXer ©a Sat^rcta^^ April 1?^, p?oidded the
oppertmltj fcsr a a®»t ngtiaf Actorjr pr^i^jaarj di»eua®io« of
and aeans for Isqring the l^tsis for operating arraag«s»nt«
shoiald have good r^inltn«
^
http://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Knrbtrt 1* Oaatoa
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http://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
to d*t*rmlnatloa ty AAelnl»trfttor
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Federal Reserve Bank of St. Louis
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Federal Reserve Bank of St. Louis
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Federal Reserve Bank of St. Louis
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Federal Reserve Bank of St. Louis
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http://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
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http://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
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DEPARTMENT OF STATE
'•'9-i-ly > lt**»o
rtfor tot E
CONFIDENTIAL
W do*?- 3r. lartlnt
In acsordft3fte« with ife* proviftien* 0f Soetie© 115 of
Act ®f If4&, tfc* Stop.-rtfMftnt fcf Stftto p
i:***o« t© iidgirs -itgeuaataa® la tft* vmsy m#&r ftitwr* for m series
oo|-*rfbti«i witte <MOh of tl-,
la tii* Suy
draft of »
l
fe
y is
to indie* t* th« gwi^ral esat^nt ef the
tfe« l
of
may b* of iniorMit to it. In this eonnoepftrtlettl«r rofomnoo ie awd* t^ Artie 1«« II, ?IXX &nd X*
v© to b* t«xmiA*tod feo frigr ei»^lrj whlels rs
Soetloe 115 of tfco Aot t« not in fore* by Jfedy 3,
awny sf tho eovmirioji ©^ac*-n4<ici will n-*«d to l«y tho
-«s*d ngr«wm««t* b»f@f* thoir iofinltttnro^) It is e^uwj
tl»t ftof otlatieno b« MM^iotod wi^fe tte* gr*mto»t ^ocsifelo dlopatoto. In mdlor to parait &dli«r«RS* to %Ni tin* *efe«^al«, I
»ci
;re«i&to jnsar ft«n4iag m* say gonaanta vHitifc th*
Impart fi^Ak m&y b&v* b> ^«diroo4ayt Hay ' -
of
The S
http://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Ghtirawtt: ' l< of
ly-orVlR^rt iMtlt of
A
Attachment to Ieaorj»odu« Agreement dated
_
between Administrator for fconoaie Cooperation «nd Chairman of
the Board of Directors of Export-Import Batik of Warhizigtaa
def iniag agency relationship between Economic Cooperation
AdaJnJgtratiaiQ &aa gxport-Iaport Bank of We? hlngton
_
Dear *r. Martini
IB accordance with the rrorisione of the Economic Cooperation Act of
194ft, a determination hag been made to extend assistance on credit terar la
an amount of sot exceeding I
to . . . . . . . . .
to
floa&ee (general statenent of nature of project)*
I have allocated fund® for the pis-pose la the amount of t
to I&port-IiBport Baafc of tasnlagton tej th* l^suaoce of a i^roaisaory note to
the Secretary of Tree«2ry with appropriate iagtructione to the Treasury to
sake the proceed, thereof available to the Bam frow ti^te to tlae at Its
request*
Accordingly, 1 am requesting that Earport-Ittport Bank of Wanhiagtoa
establish a line of credit to Ittplemmt the aforesaid deterai nation) the
cradit to b« ei»tabli*hed and &d®lnist«red upon the following terssst
i* Beaeficiary* (i%me)
2« Amount* Kot ejcc*edlnf $:_
3* Purpose » to aftift _
r»
\
___ io financing the
acquisition eo^t of United f tates gtachiaery, equipment, «urplie5 aai attend&ot
ssrvicea. ueslgned to (general stat^aent of nature ^f troject) .
4. Period of Pgyaea^.. Aavanc«f> under the credit «ihell be re?
In (gpeclfy number f years?, etc).
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Federal Reserve Bank of St. Louis
_
- 25* Interest* Advances shall bear Interest at the rate of
per cent (
%) per annum payable
.
6. Arailability. The credit shall be available until
7. Other Teras and Conditions. Such other terms as Export-Import
Bank shall dee* appropriate in accordance with its customary procedures
with respect to credits established under the Fprelgn Assistance Act of 1948,
as referred to in the Meaorandum Agreement dated
between
the administrator for Economic Cooperation and the Chairman of the Board of
Directors of Export-Import Bank of Washington, defining the agency relationship
between the Economic Cooperation Administration and Export-Import Bank of
Washington.
Sincerely yours,
William McChesney martin, Jr.
C"*iriaan, Bosrd of Directors
&Eport-Import Bank of Washington
Washington, D. C,
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Federal Reserve Bank of St. Louis
EXPORT-IMPORT BANK OF WASHINGTON
WASHINGTON 25
OFFICE OF THE C H A I R M A N
CABLE ADDRESS
"EXIMBANK"
May 17, 1948
MEMORANDUM FOR MR, MARTIN:
Subject: The Role of Short-Term Processing Loans in ERP.
Introduction
The proposal that the cotton and tobacco requirements of the
participating countries should be handled through short-term
processing credits requires evaluation in light of the broad
purposes of E$P.
The principal economic implications of the proposal are two:
(a) From the point of view of every participating
country, a short-term, i.e., under four-year, credit is
the practical equivalent of a deferred cash payment out
of its own resources within the life of the program and
does not represent ERP aid as contemplated in the Paris
CEEC report. Any participating country would regard such
EGA assistance as no more than short-term financing through
normal commercial channels.
(b) From the point of view of EGA, whatever the volume
of short-term credits it extends may turn out to be, the
ERP assistance so furnished Europe represents a corresponding
reduction in the amount that would otherwise be available for
restoration of the capital structure and productive^capacity
of the recipient countries.
Discussion
I think it is very important to keep in mind that no short-term
credits were ever contemplated by the Executive Branch during the
preparation of ERP. The NAG 20 to 40 percent loan calculation was
based on the expressed assumption that all of the loans would be on
a long-term basis. The high figure of 40 percent was offered to
make allowances for the possibility of very long-term conditional loans,
i.e., 50 years repayment with interest waiver provisions, being extended. The NAG calculations of the amount of ERP that might be
carried on a loan basis were directly related to the over-all capacity
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Federal Reserve Bank of St. Louis
-2-
of each participating country to repay, not during the initial ERP
period, but over a considerable period after the objectives of ERP
had been achieved and balance of payments equilibrium restored.
Looking at the short-term processing credit from the standpoint of a participating country, the following must be kept in mind:
The Executive Branch calculations of the amount of ERP assistance
required are based on the estimated balance of payments deficit of
that country with the Western Hemisphere. The estimated deficit was
calculated on the assumption that no substantial additional dollar
debt burden would be imposed on the country during the life of ERP
(4-1/2 years). On the dollar receipts side, Sull allowance was made
in the Executive Branch calculations for the dollar exchange earnings
that would be forthcoming in the BRP period, including earnings from
raw materials supplied under ERP and processed. Accordingly, if the
country should now be required by EGA to pay back dollars earned from
processing of raw materials^wrfchin this period, its dollar exchange
earnings will be reduced by a corresponding amount. Any prudent
participating country will have to regard the processing credit as
tantamount to a deferred cash expenditure out of its own resources
and will have
to earmark
an equal amount out
of its gold and dollar
.
accept- skort-fz.r™ ,Cr<.djtf
"iMo</f. Syc/> Tcxripv e<*f>n girKinf
reserves. Any country prepared to te^an is giving prima facie
evidence that it is receiving an over-allocation of aid, or else that
it anticipates a prompt recovery in thjjlar balance of payments position
greatly more favorable than was anticipated in the Paris 194-7 and U.S.
Government calculations. (These observations, of course, hold only
on the assumption that the extension of short-terms will not result
in an proportionate increase in current earnings).
Conclusions
For the reasons outlined above, it seems to me that short-term
processing credits are fundamentally inconsistent with the purposes
of ERP. I believe that all of the EGA credits should be related to
the balance of payments approach provided for in the legislation. If
the Administrator feels that, despite the contrary judgment of the
Executive Branch up to the present, there are good prospects that
certain credits to a given participating country could be Vepaid within
the life of ERP, it is my judgment that the Administrator should reduce
the over-all allocations to the country in question by that amount in
preference to extension of short-term credits. I would argue to this
effect because I feel that the policy consequences of introducing shortterm processing credits could easily prove seriously detrimental to
the purposes of ERP. I think that the British problem illustrate this
best*
In the case of Britain, SRP only covers the deficit of the U.K.
with the Western Hemisphere. Unfortunately the total U.K. dollar drain
will be substantially in excess of the U.K. deficit with the Western
Hemisphere in this same period because the U.K. is obliged to carry the
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Federal Reserve Bank of St. Louis
-3-
dollar deficit of the sterling area. This latter may amount to as
much as $500 million during the first year of ERP. This oversight
cannot be remedied, at any rate, during the first year of EKP. In
such circumstances, the British as a matter of prudence will have
to regard any proposed short-term credit under ERP as the equivalent
of a deferred cash outlay from their own resources and earmark a
corresponding amount out of their reserves. My own opinion is that
the British Government would feel obliged to refuse any short-term
credit and either do without the raw materials or make the necessary
outlays directly out of their reserves* The British financial
community and general public are already greatly concerned by the
persistent rumors that certain quarters in the United States are out
to wreck the sterling area. No matter what the avowals of SCA might
be, the British financial community would, in my opinion, regard
the use of the short-term processing credit technique as a U. S.
Government subterfuge to reduce the over-all aid allocation to the
U.K. without admitting the fact. I feel certain in ray own mind that
the British Treasury would be unprepared to face the internal
repercussions involved and would feel obliged to see their reserves
run down instead. But there is every indication that the British
Government will not see their reserves go below the $2 billion mark
without taking drastic corrective steps. In my opinion, their only
"out" will be to refuse to allocate further dollars to the Middle
East portion of the sterling area, i.e., Pakistan, India, Iraq,
Iran and Egypt* U. S. political commitments in that area are already
such that, in my opinion, as soon as the British adopted this course
we would immediately be faced with the necessity of supplying the
dollars directly on a Greek-Turkish aid basis. If my analysis is
correct, EGA insistence on short-term processing credits to the U.K.
would be tantamount to hastening the crisis which (in my judgment)
this Government has every reason to defer until it can be dealt with
more sffioMofrifily.
The. British
case is the most extreme
but,
in my opinion, there
.
. . .
.
-, rfjwrfj
' Jrȣr of looA, Jfe siff&v, <e &v*i
is no single participating country in Europe thatn can afford at this
time to accept in good faith short-term processing credit^. For the
reasons I have pointed out above, they can afford to accept shortterm credits only if they receive an over-allocation of funds on a
grant basis this year at the expense of some other participating
country or are willing to gamble that they will receive an overallocation at the time the processing credits come due. I have no
doubt that several of the countries are prepared to accept processing
credits with tongue in cheek, but it seems to me very dangerous to
gear ERP to the lowest common denominator of European financial
morality at the outset.
I appreciate the considerations which cause certain people to
favor the concept of processing credits. Although I personally do
not agree with their reasoning, accepting their arguments as valid,
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Federal Reserve Bank of St. Louis
-4I would argue that the proposals would have to be modified at least
to the following extent to make the processing credit technique at
all consistent with the basic purposes of ERP: Specific provision
in the processing credit contract for refunding the credit at
maturity on to, for example a ten-year basis, in the event that the
recipient country demonstrates that, although the processing has
been carried out in accordance with the loan contract, and the dollar
earnings set aside in escrow, the over-all balance of payments position
of the country at maturity is such that the repayment would involve
an equal reduction in reserves, i.e,, that the EGA estimate of the
balance of payments improvement «# over and above the original ERP
calculations did not materialize. I suggest a refunding on to a
10-year basis on the grounds that, if the EGA feels the need for
distinction between raw material processing and other credits , this
is probably the shortest term of refunding credit that can be justified
on any balance of payments approach.
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Federal Reserve Bank of St. Louis
L. M. PUMPHREY
I
V
June 15, 1948
MEMORANDUM TO The Board of Directors
Re : Size of EGA Loans
In view of the difficulties being experienced by EGA,
especially Mr. Bissell's office, in handling loans on a piecemeal quarterly basis (see memorandum relating to France), Mr.
Bissell has apparently consented to loan negotiations clearing for a six month period, and he is prepared apparently to
fix the sums that are to be made available by EGA in the form
of loans during the second and third calendar quarters in a
form which is firm enough for the parties to negotiate.
Hifat Tirana
I
cc: Mr. Arey
Mr. Sauer
Mr. Sherwood
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Federal Reserve Bank of St. Louis
June 9, 1948
MEMORANDUM TO Mr. Martin
Re'
Tojg_^evel^_ .JnterrAgencx_ EGA.jComaittee
In a memorandum of June 4- from Mr. Bissell which has already been
circulated to the Board, mention was made in paragraph 10 about the
establishment of a Top Level Inter-Agency Committee.
I have learned that this Committee met for the first time today.
It is a revival of the State Department Steering Committee which was set
up last autumn for the purpose of getting various agencies to work on
ERP under the aegis of the State Department. It will be recalled that
the Steering Committee was regarded by the Treasury Department as a
mechanism designed to dispense with the HAC. It will also be recalled
that the Bank was excluded from this Committee until the very bitter
end when Mr. Sauer, by arrangement with the General Counsel of the State
Department, managed to get Bank observers to sit in on the Committee.
The Committee today met under the Chairmanship, apparently
temporary, of Mr. Bissell. Other representatives of EGA sitting at the
meeting were Tyler Wood, Lincoln Gordon, Geiger, and Richardson. Mr.
Taylor's office was not represented. The State Department was represented by Mr. Labouisse and Mr. McGhee, and the Treasury Department by
Southard and George Willis. The Comma rce and Agricultural Departments
were also represented.
Apparently most of the meeting was taken up by the establishment
of procedures for conducting the meetings of this Committee.
Apparently Lincoln Gordon raised some questions with respect to
intra-Suropean trade problems,
The Committee wiH meet generally once a week. There seems to
be no intention of having the Bank represented in the Committee, which
also may be gathered from Bissell1 s memorandum of June 4- whic^i has already been circulated.
If you think that the Bank representation in the Comnittee is necessary and desirable, and my personal opinion is that such representation
should be automatic from the terms of the ECA Act, I suggest that the problem
might be handled in one of two ways. In view of Mr. Taylor's absence from
the meeting it is perhaps advisable to raise the problem of the Bank representation through or with Tylor Vood. I shall be glad to do this on a
very informal and casual basis if you feel that such a casual approach is
more advisable than a telephone call from you to him, I would appreciate
it if you would advise me as to what course I should follow.
R. Tirana
cc: Messrs. Arey, Sauer, Sherwood
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Federal Reserve Bank of St. Louis
June 21, 1948
MEMORANDUM TO The Board of Directors
Re: EGA Loans
Mr. Bissell has finally come around to the view that loans should
not be made on a piecemeal basis, and that recipient countries should be
given better indications as to the total"amount of funds that may be made
available to them on a loan basis for a relatively long period so that
they can plan a little more intelligently. In the case of Norway, Mr.
Bissell has informed Mr. Taylor that he can negotiate with the Norwegians
for loan funds covering between two to three quarters. He has not stated
the amount of funds that would be allocated out of EGA on a loan basis to
Norway for this period. He cannot do so even if he desired because he
would have to await the recommendations of the NAG on the subject of the
division of funds between grants and loans.
It is understood, however, that beneficiary countries may be told
that they can request the establishment of a line of credit that would
cover their anticipated requirements to be financed by way of loans for
a period running between two and three quarters. It will be up to the
recipient country to state the total amount of credits that it requests,
the recipient country taking into account in doing so its desire and
ability to contract additional dollar debt. Each recipient country will
also be told that such line of credit as is established for this relatively long period will be utilized only against approved programs of requirements which go through the usual channels in EGA.
It is expected that the decision for Norway will be generalized to
cover other countries.
Rifat Tirana
cc: Mr. Arey
Mr. Sauer
Mr. Sherwood
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Federal Reserve Bank of St. Louis
July 6, 194-8
MEMORANDUM TO The Board of Directors
Re: Interbank and EGA
As I explained to the Board on Friday July 2, Mr. McCloy called
on Mr. Hoffman with respect to matters relating to SCA loans.
I understand this morning that the subjects discussed were the
following:
1. The negative pledge clause. Mr. McCloy made another bid for
the insertion of the negative pledge clause in all loan contracts of the
EGA and this Bank. No decision was apparently taken with respect to Mr.
McCloy's request.
2. Mr. McCloy raised the question of the Interbank being kept fully
informed on loan negotiations right from the start. Apparently, Mr. Taylor
made much the same suggestion that I had in my conversations with Mr. Demuth,
namely, that the fortnightly meetings between the two banks were the appropriate channel for an exchange of information and views on the subject
of EGA loans. Apparently Mr. McCloy wants something more.
3.
Interbank
is not in
lars that
Mr. McCloy also informed Mr. Hoffman and Mr. Taylor about the
project to issue dollar obligations in Holland and Belgium. EGA
favor of the project because it means tying up or diverting dolwould be otherwise available to ERP countries.
A. The President of the Interbank also dwalt briefly on the subject of interest rates, and maintained his thesis that rates charged by
the EGA should be more in line with market rates.
V
Rifat Tirana
Circulated to: Mr. Arey
Mr. Sherwood
Mr, Sauer
Mr. Lynch
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Federal Reserve Bank of St. Louis
July 12, 1948
MEMOR&HDUM TO The Board of Directors
Re: Press Release on EGA Guaranties
I checked with Mr. Taylor this afternoon about the issuance
of the Press Release without prior clearance with the Export-Import
Bank. As I suspected, Mr. Taylor had not been aware of the plans
for issuing it, and it had been his intention to clear such Press
Releases with this Bank, if not, to issue them generally as he
has agreed in the case of loans.
Apparently Mr. Sherlock Davis was the party who was anxious
to release the statement as soon as possible and had overlooked the
necessity of prior clearance. After I reminded him of the arrangements and of the advisability for the sake of good working relationships for such clearance, he stated that he felt guilty and would
make amends in some way in the future.
You will note page U refers to the Bank in two instances.
Rifat Tirana
cc: Messrs. Arey
Sherwood
Shen
Sauer
Saue:
Lynch
Attachment
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Federal Reserve Bank of St. Louis
\
ITo. ECA-88
ECONOMIC COOPERATION ADMINISTRATION
Office of the Administrator
Por Release in A.M. Papers
of Monday, July 12
WASEIITG-TGIT, July 11.
Westlake
Sterling'6400 - Ext. 26J5~9
Room 415, 800 Conn* Ave.
Regilations "by which American investors may
apply for guaranties covering the transfer into U»S« dollars of proceeds
from new investments in countries participating in the European Recovery
Program were announced today "by Paul G-. Hoffnanr Economic Cooperation Administrator,
The regulations will "be effective when published this week in the
Federal Register.
(Copies of the regulations and of a policy statement "by EGA on the
subject are attached)
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Federal Reserve Bank of St. Louis
- 30 -
ECONOMIC COOPERATION ADMINISTRATION
Office of the Administrator
GUARANTIES UNDER THE ECONOMIC COOPERATION ACT OF 194-8
Provisions, of the. Economic Cooperation
Act of 1948 with Respect to Gu
Guaranties
of American- Investments
A fundamental, purpose of, the Economic Cooperation Act of 194-8 is to
promote.recovery within the countries participating in the European Recovery Fro.gram, by facilitating, and .increasing.,to the maximum the use of the normal• private
channels of trade within those countries and between those countries and other
parts of the world. One of the methods of assistance which the Administrator for
Economic.Cooperation.is empowered to render, under the Act, and the one which may
perhaps prove most effective in promoting the use of. private .channels of trade, is
contained in Section lll(b)(3). It is1 there provided that, subject to rules and
Regulations which he may.prescribe, the Administrator may issue a limited form of
guaranty for new, American, dollar investments in participating countries, if the
projects represented by such investments are approved by the Administrator and the
participating countries, concerned, as furthering the purposes of the joint program
.of European Recovery. The .guaranties for which provision is made may,:if the
Administrator so determines, cover the transferability into United States dollars
of the proceeds of investments .up.to 100 per cent of the dollars.invested. For the
purposes of the guaranty, .it makes no-difference whether such proceeds -have been
received as income from the investment, as r.-epayment or return of -the investment,
in whole or in part, or as compensation for the...sale, or disposition-of al,l-or .any
part of the property representing such investment.
The Administrator is -not
empowered to issue guaranties against ordinary business or political risks, or
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Federal Reserve Bank of St. Louis
-2-
against fluctuations in the rates of foreign exchange. Moreover, when the
recipient of a guaranty receives and converts into United States dollars proceeds
from his investment, either in the form of income, or return of principal, the
guaranty is reduced by such amount,
If called upon by an investor to honor a guaranty as the result of the
inability of the investor to convert proceeds from his investment into dollars in
the regular course of business, the Administrator, through his agents, will provide
dollars in exchange for the foreign currency received by the investor at the then
rate of exchange recognized by the United States Government.
The foreign currency
which the Administrator thus receives then becomes the property of the United
;
States. It must be emphasized that the Act does not authorize any guarantee of
the transferability into dollars of any profits which may accrue to an investor
over and above the amount of dollars originally invested and specified in the
contract of guaranty.
To be eligible to receive a guaranty under the terms of the Act the
investor must be a citizen of the United States, or a corporation, partnership,
or other association created under the lav/ of the United States, or of any state
or territory and substantially beneficially owned by citizens of the United States.
The maximum period for which an investment may be guaranteed is^until April 3,
1962.
It must be borne in mind that although the guaranty provisions of the Act
are designed to offer substantial inducement to American capital to seek profitable
employment abroad, their primary purpose is to promote the joint program of
economic recovery within widespread geographical and industrial areas. The determination, therefore, as to whether a projected investment should receive a
guarantee will be made in each instance by the Administrator and the appropriate
participating countries, with reference to the degree to which such investment
will serve this primary purpo.se*
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Federal Reserve Bank of St. Louis
A fee not exceeding 1 per cent'"per annum of the amount of each guaranty
is authorized by law*
It is contemplated that a fee in this amount will be
charged each investor receiving a guaranty, unless in the case of any given
investment unusual circumstances exist rendering it desirable, in furtherance of
the purposes of the Act, to charge a smaller fee.
It is believed that the power to issue guaranties can be of great value
in aiding recovery within the participating countries. For this reason, it is
important to ascertain the extent and character of interest in this topic'among
/
potential United States investors in participating countries at the earliest
possible moment, and similarly to ascertain the attitudes of the participating
covntries towards guaranteed United States investments within their borders* To
this endj citizens of the United States, and corporations, partnerships, and other
associations created under the law of the United States, or of :.ny state or territory, and substantially beneficially owned by citizens of the United States
interested in obtaining guaranties under the Act, are urged to file applications,
cr to consult with the staff of the Economic Cooperation Administration as promptly
as possible with respect to projects in which investment is contemplated subject
to a guaranty^
Rules and regulations are being issued at this time to eftablish a uniform
procedure for making applications for guaranties.
Each project which is the sub-
ject of an application will require individual study. The contract between the
investor and the Administrator, giving effect to the guaranty, will provide such
safeguards as may be deemed necessary by the Administrator to carry out the purposes of the Act, and the rules, regulations, and policies thereunder,
All applications will be made to the Administrator at his offices in
Washington, D. C.
Potential investors in participating countries, and other interested
persons•, may direct inquiries with respect to the program for the extension of
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Federal Reserve Bank of St. Louis
guaranties to the attention of the Director, Guaranty Division, Economic
Cooperation Administration^ Washington, D, C,
Administration
To obtain the required approval of the Administrator and the participating country concerned as expeditiously as possible, it is desirable that an
applicant for a guaranty enter into negotiation with the appropriate participating
country as soon as practicable.
It is not necessary that such negotiations be
brought to a successful termination prior to filing an application with the
Administrator. The approval cf the participating country, however, must be
obtained before the Administrator may extend his approval*
In the administration of the program of guaranties, it has been agreed
between the Chairman of the Export-Import Bank of Washington and the Administrator
that extensive use will be made of the facilities of the Bank«
The actual issuance of guaranties, the establishment of policies with
respect,thereto, the decision as to the terms of contracts of guaranty, and
other matters involving the exercise of the discretionary powers vested in the
Administrator by law, will be the direct responsibility of the Economic Cooperation Administration* All consultation with respect to applications for guaranties
IP
vq.ll be conducted by the Economic Cooperation Administration, with appropriate
'•. y
coordination with the Export-Import Bank cf Washington,
Guaranties of Investments in Enterprises
Producing* or Distributing Informational Media
Section lll(b)(3) of the Ecbnomic Cooperation 'Act of 1943, as amended"by
the- Foreign Aid Appropriation Act,' 19#9 '(Public Law' No. 793, 80th'Congress), ''
provides for the issuance'of guaranties 'of inves-tments in enterprises producing; or
distributing informational media, provided that the amount cf "such guaranties in
the first year after the date of the enactment of the Act does .not exceecl : .
$10,000,0000 Such guaranties must, of course, receive the approval df the
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Federal Reserve Bank of St. Louis
-5Administratcr and the participating countries concerned. The Report of the
Conference Committee of the Senate and House, of Representatives, dealing with the
Economic Cooperation Act of 194-8, indicates a clear intention to pro\ride for
guaranteeing in the case of informational media an essentially different form'of
investment than is contemplated in the general provisions authorizing guaranties
of investments in industrial projects. The Report states:
"...The members of the committee of conference recognize that
the nature of the information media industry is such that in
many cases the investment to which the guaranty will apply
will have been made in the United States and the product of
the investment sold or exhibited abroad. In these cases the
guaranty might well apply to the convertibility of foreign
currencies earned by the sale or exhibition of the products
of the industry, to the extent of the dollar cost of production wholly attributable to those specific products."
Such applications for guaranties as may be received from producers and
distributors of informational media will, therefore, be considered by the
Administrator in the light of this clearly expressed Congressional intention. As
in the case of other applicants, such investments must be new, at least in the
sense of an expansion of an existing enterprise, a guaranty being available only
to the extent that it encourages new investment for the purpose of increasing
the dissemination of informational media. In view of current conditions in
Europe, it is believed to be particularly desirable at this tim^, in furtherance
of the purposes of the Act, to obtain the widest possible circulation in Europe
of American informational media conveying a true understanding of American
institutions and policy among the nations.
Rules and Regulations
There are issued herewith rules and regulations which have been prescribed
by the Administrator, establishing the methods to be employed in applying for
guaranties.
These rules are designed to render the process of securing a guaranty
as simple as possible under the provisions of the law, and to provide the necessary
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Federal Reserve Bank of St. Louis
-6rnechanism for the administration of the.program.
Each guaranty, will be evidenced by a contract which will set forth the
specific terms and conditions thereof.
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Federal Reserve Bank of St. Louis
-30-
EGA REG., 4
Title 22 - Foreign Relations
Chapter III - Economic
Cooperation Administration
Part 1114 - Guaranties Under
the Economic Cooperation Act
of 1948
Preamble, In furtherance of the purposes of the Economic Cooperation Act
of 1948, and in order to facilitate and maximize the use of private channels~of
trade5 pursuant to authority contained in Section lll(a) and lll(b) of such Act,
the following rules and regulations are prescribed as necessary and proper terms
and -conditions, consistent with the provisions of such Act, for the making of
guaranties of investments as provided for in Section 111 of such Act.
,1114.1 Information required in application for guaranties and place of
filing.
1114.2 Fees for Guaranties.
1114.3 Saving clause,
Authority; I § 1114.1 to 1114.3, inclusive, issued under, Sec. Ill,
Public Law 472, 80th Cong.
1114.1 ^Information required in application, for guaranties and place »f
filing. Applications for guaranties, pursuant to Section 111 of the Economic
Cooperation Act of 1948 > will be made in writing to the Administrator for Economic
Cooperation, Washington 25, P. C., containing the following information;
(a) Name and citizenship of applicant; if a corporation, partnership,
or-other-association, the jurisdiction under the laws of which it
was created and:under;which it exists, and evidence that it is
substantially beneficially owned by citizens of the United States.
(b) Address of-the applicant, and name, title, and addretes. of-person or
persons authorized to represent the applicant»
(c) : Name of participating country in which investment is proposed to be
made, and either evidence of approval by that country- of the investment as furthering the joint program for Europe an, recovery, or a *"'
statement of the channel through which negotiations are being or will
be conducted for the purpose.of obtaining such approval. (d) Total amount in United States dollars of the guaranty for which application is made.
(e) Description of the proposed investment; where development projects ,
are involved, the description should include engineering and economic
surveys, and pro forma balance sheets and income statements.
(f) Statement as to how the projected investment may be expected to affect
the foreign exchange position of the participating country, or
countrie s, concerned »
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Federal Reserve Bank of St. Louis
—2—
(g) If any part of the investment is to be in a form other than cash,
the basis of the evaluation in dollars of the facilities or services
proposed as the subject of the investment,
(h) A description of the facilities in which the applicant proposes to
invest, proposed location, projected method of operation, and total
amount of proposed investment in the project, both in United States
dollars and foreign currencies,
(i) Estimated time required in placing in operation the project for which
the investment is to be made.
(j) The facts with respect to any other proposed participants, financially or otherwise, in the project,
(k) Information, with respect to the market for the products or services
resulting from the project (this to include the domestic market in
the participating country, the market in the United States, and the
general world export market) and pertinent information with respect
to the economic soundness of the project*
(l) Brief statement of history and experience of the investor, commercial,
bank, and trade references,t and- comparative balance sheets and profit
and loss statements for the past three years, together with a statement as to the availability of funds for the proposed investment, and
the source thereof, .
.? (m) A description of all existing investments of the applicant in the
country in which the investment covered,by the present application
is contemplated,
(n) Such further information as the Administrator may require vd.th respect to any application to assist him in the exercise of the
authority vested in him by the Act,
1114.2 Fees for Guaranties. The recipient of a guaranty shall pay to the
Administrator or his duly appointed representative, 'annually in advance, a fee of
1 per cent per annum 'of the face amount of such guaranty, unless unusual circumstances are found by the Administrator ,to..exist with respect to any guaranteed
investment, rendering it desirable,,in furtherance of the purpose of the Act, to
charge a smaller fee,
1114.3 Saving Clause. The Administrator, may waive, withdraw, or amend at
any time or-from time to time any or all of the provisions of these regulations.
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Federal Reserve Bank of St. Louis
for the
of ^p^rt^lmport Bank of Waahlagton by tha Jb&aini&tra.tor
for Seoaoaia Cooperation IB Ooo&^tiofi fitfc th* M&king of
tfe» J&Kftalatr&tor far Seofeoaio Gooparatton
of tte Board of Mrsctors of S^ert-Iatport B®ak of
that tlia Adaiinistrfetor will utilise th* B*rrloes
of Sxltttaik: in eoim.«etit»i with th« mftkimf of tho gu«x«£itlMi
by Soctlom Hl(b)(3) of tb* Xeo&OBlo Goop«ratiozi Aet of 1948*
tfe* foUowiaf IMNMMiHHlMltoi «40UL for tho utilic*tioii of
th.o por$K>eot
{1} tho gu«ur»nti«« ua^«r th* Aot snuy bo iaauad for a |«3rla4 up to
(14) year* ft^s th® 4*t« of «®&ot^«t of ^e Mt|
t the Afitt for th» ete%yLt©r
®xiet«e^ of tho
(S) tho is^iWS^iMi of th* tgrs* of fuftjnmtgr frorfidod for in, th« Aot 1*
lliod to tho
©IT
of er®dit« iad«r both tho Fortlpi
^E^ th«* £Kpor^b^f»ort
Act of I945|
(3) ^s« dosir* of «X1 .oott$«x&*d to utllii® an «d«tlnf m^s&^f of tb*
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Federal Reserve Bank of St. Louis
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Federal Reserve Bank of St. Louis
July 1, 1948
MEMORANDUM TO The Board of Directors
Re: EGA and Interbank
At the suggestion of Mr. Tyler Wood,
Administrator, I had lunch with Mr. Demuth,
the International Bank. The purpose of the
national Bank up to date on various laatters
ties of EGA.
Special Assistant to the Deputy
Assistant to President McCloy of
luncheon was to bring the Interconnected with the lending activi-
I gave Mr. Demuth a fairly detailed account of the loan negotiations
now in progress, referring specifically to Iceland, Norway, Denmark, Italy and
the NEI. I also corrected certain misinformation regarding Iceland.
I went into some detail also with respect to the loan procedures as of
present in effect in EGA, and gave him the highlights of the Agency Relationship Agreement of May 21 between EGA and the Bank. I gave him as reasoned
explanation for the procedures now in effect, especially the setting up of
lines of credit prior to a determination of the commodities to be financed
under the credits and the thinking relating to the rate of interest and other
terms and conditions. In connection with the interest rate, I referred to the
Action of the NAG on the subject.
Mr. Demuth raised the following questions:
1. He requested a copy of the Agency Relationship between EGA and the
Bank, and a copy of the draft credit agreements with Iceland. I am sending
him a copy of the former document, and will forward to him the draft credit
agreement as soon as it is in shape. Mr. Demuth is particularly interested
in the negative pledge clause.
2. Mr. Demuth desired to know what the best way of keeping posted with
respect to EGA loan matters was. I told him that problem could best be resolved
by himself. I gave him my personal belief that as the Bank was acting as agent
of EGA in all loan matters, both under the Foreign Assistance ^.ct of 1948 and
the Agency Agreement of May 21, the Bank might be the proper channel for the
International Bank to be kept currently advised on various developments at
EGA on loans. I suggested that part of the fortnightly meetings between the
two banks might be devoted to a discussion of matters relating to EGA loans.
He agreed that this might be the proper channel and said that he would take
the matter up with Mr. McCloy.
3. Mr. Demuth was under the impression that SCA believed that the
International Bank would not and should not engage in European financing in
the foreseeable future. I explained to him that that impression was incorrect and, in fact, at the time of the negotiation of the Agency Agreement
between the Bank and SCA, quite a bit of tijae and thought had been devoted
to the problem of keeping the International Bank fully advised of projects
likely to be of interest to that Bank and give them the chance to pick up
whatever projects they desired to finance. I stated that I further recalled
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that it was Mr. Taylor's desire to prevent any competition between the three
institutions engaged in European financing and stressed to him the desire of
Mr. Taylor to prevent any of the participating countries from shopping around
with a view to getting the best terms. I stated that it was my belief that,
if in the opinion of EGA or the Bank, a project presented to EGA was likely
to be of interest to the International Bank, that either institution would take
the initiative of clearing with the International Bank prior to taking further
action on such a project or projects. I explained further to him that no such
projects had yet been presented to the EGA.
Rifat Tirana
cc: Mr. Arey
Mr. Sherwood
Mr. Sauer
Mr. Taylor - EGA
Mr. Tyler Wood
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Federal Reserve Bank of St. Louis
\
V
July 2, 1948
HEMORAJDUM TO The Board of Directors
Re: EGA Lending; and Financial Functions
I am attaching copies of three memoranda issued by Mr. Hoffman
defining the functions within EGA in the field of lending and financial problems.
The first memorandum spells out the functions of Mr. Taylor.
The Main provisions are as follows :
1. Mr. Taylor's title has been changed to that of Assistant
to the Administrator;
2. Mr. Taylor is to handle the financial aspects of loans
and guaranties;
3. Mr. Taylor is to be the alternate of the Administrator at
the Nft.0.
The second memorandum of loan authorization procedure does not
contain anything new, and is not a radical departure from the Memorandum
of Agreement between this Bank and EGA of May 21.
The subject of the third memorandum is a Finance Division set
up under Mr. Bissell. This division takes over certain functions in
the local currency domestic and international financial problems
which were being handled by Mr. Taylor. This division is to service
Mr. Taylor and provide the staff for the Staff Committees of the HAG.
I
Rifat Tirana
Circulated to:
Mr.
Mr.
Mr.
Mr.
Arey
Sherwood
Sauer
Lynch
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Federal Reserve Bank of St. Louis
UNITED STATES OF AMERICA
ECONOMIC COOPERATION ADMIMISTRATICN
i-MUAL OF OPERATIONS
_
No. 11Q.A
June....£<?,_ 194.8
SUBJECT: Organization: Establishment and Functions of the Position of
Assistant to the Administrator
I. Organization
There is hereby established the position of Assistant to the Administrator.
The Assistant to the Administrator will act in a staff capacity to the Administrator on broad financial policy decisions and will serve as his Alternate on
the National Advisory Council.
II. Functions of the Assistant to the Administrator
A. Advises the Administrator as to the creditworthiness of participating
countries and the proportion of the assistance granted to them that should be
in the form of loans, based on estimates of the abilities of these countries
to repay loans in dollars.
B. Determines the terms of loans, including maturities and rates of interest,
C. Advises the Administrator on general questions of loan policy, such as
the right of the participating nations to accept grants in aid while refusing
to accept assistance in the form of loans.
D. Completes the negotiations through the Export-Import Bank for loans on
projects which have been approved as part of the program, within the total
amount allocated for loans to each country, and in this connection deals with
the Washington representatives of the participating countries as required.
S. Develops policies and procedures with respect to EGA guarantees of
private investments in participating countries. He will examine applications
for guarantees from a financial point of view and will negotiate with applicants
all financial provisions of guarantees.
F. Exercises general responsibility for making and supervising detailed
arrangements with the Department of Commerce for the dissemination to the business community of information on EGA programs and authorizations.
G. Reviews and develops recommendations for policies and procedures for
procurement and transfer to participating countries of commodities porchased
by non-participating countries prior to March 1, 1948. where an export license
has been denied. (Section 204 of Appropriations Act.;
H. Maintains liaison with the International Bank, and serves as the alternate to the Administrator on the National Advisory Council.
I. Performs such other functions as the Administrator may from time to
time assign.
Issued by authority of the Administrator, effective June 29, 1948.
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Federal Reserve Bank of St. Louis
UNTIED STATES OF AMERICA
ECONOMIC COOPERATION ADMINISTRATION
MANUAL OF OPERATIONS
SUBJECT:
No. 910.1
June 29, 19A8
Loan Authorization Procedure
I. Purpose
This order is to establish the relationships among EGA organization units
and the sequence of steps to be followed in authorizing EGA loans.
II. Procedure
A. The country programs will be reviewed, and the total amounts of aid
to each country determined, by the program units responsible to the Assistant
Deputy Administrator.
B. The Division of Statistics and Reports will, as may be needed, assemble such estimates of the projected national accounts and future balance of
payments of the participating countries for use in determining their creditworthiness.
C. On the basis of the estimates prepared by the Division of Statistics
and Reports, the -Assistant to the Administrator will advise the Administrator
as to the creditworthiness of participating countries, and as to the proportion
of total aid (determined in (A) above) that should be in the form of loans.
D. The National Advisory Council and its staff will be consulted by EGA
as to the proportion of aid that should be in the form of loans. The Fiscal
Division of EGA will provide the regular representation of EGA on the staff
committee of the NAG, and will provide or arrange for EGA representation on
staff and working committees. On all questions concerning the creditworthiness of participating countries, and the proportion of aid to be extended to
them in the form of loans, the EGA representatives of these committees will
receive their instructions from the Assistant to the Administrator.
E. In consultation with the NAG, the Administrator will determine the
proportion of aid for each country that will be in the form of loans.
1
F. The Trade Policy and Program Coordination Division, in 'cooperation
with the appropriate program division, will identify the commodities or
projects for which loans will be granted, up to the total amount approved
for loans to each participating country.
G. The Assistant to the Administrator will determine the terms of loans,
including maturities and rates of interest, and will complete the negotiation
of the approved loans through the Export-Import BanJii
Issued by authority of the Administrator, effective June 29, 1948,
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Federal Reserve Bank of St. Louis
UNITED STATES OF AMERICA
ECONOMIC COOPERATION ADMINISTRATION
WASHINGTON 25, D. C.
Manual of Operations
No. 110.3
June 29f 194.3
SUBJECT: Organization; Establishment and Functions of the Finance Division
I. Organization
There is hereby established a Finance Division under the direction of the
Assistant Deputy Administrator. The Division will be headed by a Director.
II. Functions of the Finance Division
A. In conjunction with the Division of Trade Policy and Program Coordination, determines EGA policy on matters concerning the internal
and external finances of the participating countries, including their
international trade policy, international exchange policy, and domestic
fiscal and monetary policy.
B. Examines all proposals for the use of local currency deposits by
the participating countries, and keeps informed as to the size and status
of such deposits.
C. Provides the regular representation of the SCA on the staff committees
of the National -Advisory Council and provides or arranges for EGA representation on staff and working committees. On all questions concerning the
creditworthiness of participating countries, and the proportion of aid to
be extended to them in the form of loans, the EGA representatives on these
committees will receive their instructions from the Assistant to the
Administrator.
I
Issued by the Authority of the Administrator and is effective June 29, 194-3.
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Federal Reserve Bank of St. Louis
'
July 7, 1948
. . TUT
Subject: jjbcimbank Administration of 3CA Loans
on. Judging from the comments of Administrator Hoffman
at the July 6 1IA.C meeting and IJr. L. Gorrin Strong at the :ixinbank Board
meeting of July 7, -^CA and the Bank now see eye to eye as to what are the
essential elements of the .JCU loan program. The area of agreement includes :
(a) Loan program on an annual basis (with initial loan quotas
for the first nine months of IMP);
(b) Loans in the form of lines oi' credit
program geared into the ovcr-c.ll SHP
available funds r^ .' .
.uich are
proved by luGA as falling within the
(with the HRP loan
program by making
from time to time apQ ^ro-jram); and
(c) The rate of disbursements of loans and grants to be so
controlled that a loan-grant ratio of approximately 20
percent will be achieved by January .1, 1949. (On this
point, IJr. Hoffman indicated that lilG-'. would put in an
administrative cut-off date of October 1 and make loan
countries disburse up to 75 percent of their annual loan
quota by the end of the third quarter. Mr» Tirana advised
me today that j3CA would place this policy in effect by
requiring all loan countries fully to cornnit (through
letters of intent, etc.) their initial lines of credit
( jOO million in the case of the IK) by December 311 194S
and by withholding fourth quarter grants until tl^Ls had
been accomplished. This is a superior method of teontrolling the grant-loan rat^o to the one suggested in my memo
of July 2, inasmuch as it will get the loan-grant ratio
in line by January 1 rather than April 1, 1949.
Comments. If 3GA will follow through promptly on the above line of
policy, the essential policy interests of ^isimbank in its role of loan agent
will be met. The major issues that will thereafter arise fall into the administrative category. They include:
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Federal Reserve Bank of St. Louis
Technique of disbursement of the lines of credits. Here
the issue resolves itself into whether the disbursements
will be made in accordance with established Bximbank
practice or whether jiximbank will carry out disbursements
- 2-
in conformity with liCA practice on grant disbursements.
1 agree fully i.lth. Walter Sauer that the established Bank
practice should prevail here inasmuch as it meets the
essential tests of promptness and proper documentation.
The .j-CL-i. should forward to the Bank complete lists of approved programmed items and maximum amounts of disbursements against each iten and leave up to the Bank the
subsequent administration of the credit.
(b) Analysis of the impact of the JCA credits on the Bank. It
is my view that the IXXA. pro "ram, especially the loan phase,
should be followed carefully by the economic staff of the
Bank from the point of view of the impact of the program on
the Bank's outstanding credits in the IS3P area. I believe
this study should be made entirely independently of :^GA and
the NA.C machinery, and be made purely for internal purposes
of the Board. I believe that the Chairman of the Board
should be in a position to go before the Congressional Committees next year and discuss the loan program of 3IRP from
the viewpoint of its impact on 3&imbank. I believe that
considerable weight would be given, for example, to the
independent judgment of the lixirnbank Chairman that an additional billion of loans in 1949 would (or would not) jeopardize the prospects of repayment of the Sximbank reconstruction
credits.
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fat
Lowell ..I. Fumphrey
July 14, 1948
MEMORANDUM FOR MR. MARTIN
Subject: Some EGA Matters
Timing of the EGA Loans. In a discussion with Walter Sauer
yesterday, I expressed my concern over the fact that the EGA had not
already firmed up the basic elements of its loan contracts with the
participating countries. Bissell indicated to the press last week
that EGA would require the participating countries to draw down their
loan quotas in the third quarter of ERP. I personnally do not see how
they can be expected to do this unless workable lines of credit are
established by September 1 at the very latest. Walter agreed and expressed the opinion, with which I concur, that strong representations
on the subject should be made to Administrator Hoffman if the loan
terms are not finned up within the next two weeks.
Terms of BCA loans. Walter Sauer stated that a general pattern
of 25 year, 3 percent loans appeared tof be emerging from the current
discussions. Although recognizing ECA s full responsibility here, it is
my feeling that a pattern of 30-35 year loans would be more in the Bank's
interest. The amortization formula suggested by Ed Lynch in the Danish
case, namely, amortization beginning at the sixth year but at one-quarter
of the normal rate until the tenth year, has a great deal of appeal. The
longer the term and the more generous the amortization schedule on 3GA
loans, the less likely becomes the necessity for an early recasting of
the whole post-war foreign credit structure. It is ray view that the
principal concern of Eximbank in this field lies in the avoidance of a
wholesale recasting of U.S. post-war credits in the 1951-54 period. I
think it would be most unfortunate if this action were precipitated by
severe EGA loan amortization requirements added on top of the Eximbank
amortization payments.
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Federal Reserve Bank of St. Louis
Lowell M. Pumphrey
June 15, 194B
MEMORANDUM FOR MR. MARTIN
Subject: Some Current ERP Loan Problems
The following discussion stems from some comments about current
EGA thinking on the ERP loan problem made by Mr. Maffry at the NAG Staff
Committee meeting of June 10 (see attached memo). Judging from what he
said, the EGA should be coming to grips shortly with several basic loan
policy problems, especially the grant-loan ratio problem and the type of
credit approach (project or general purpose) to be used during the first
year of ERP.
Grant-loan ratio. The whole tenor of the Executive Branch consideration of the problem, the legislative history of the Act, and finally
the Economic Cooperation Act itself, in iny opinion, morally commit the
Administrator for Economic Cooperation to making every effort to extending
20 percent of the total assistance to Europe in the first year of ERP in
the form of loans and guaranties.
Inasmuch as Congress provided that $1 billion of aid could be extended on credit terms and financed as a public debt transaction, it seems
to me that the Administrator can reasonably make the presumption that
Congress felt that the participating countries as a whole are in a position
to carry at least that heavy a repayment load. Accordingly, the Administrator, as I see it, is not obliged to make an independent determination
of whether or not it is safe to extend a billion dollar total of aid on
payment terms in this first year. Rather, it is his problem, in consultation with the NAG, to evaluate the relative capacity of the participating
countries to repay loans and guaranties of that magnitude in order to
distribute the loan and guaranties burden in such a fashion as to maximize
the prospect of repayment to the U.S.
•
The EGA/NAG evaluation of the relative repayment capacities of the
participating countries will be reflected in the loan-grant ratios that
finally emerge from the EGA operations. The ratios submitted by the NAC
to the Administrator will represent the Council's index of the relative
capacity of each participating country to repay, on the assumption that
ERP will be a success and general equilibrium of the economies of the participating countries achieved by 1952. The Administrator's allocations
may deviate from the Council's recommendations for a number of policy and
administrative reasons. The principal policy reason relating to loans
that may be advanced by EGA is the statutory requirement (Sec. lll(c)(l))
that weight be given in determining the amount of aid extended on payment
terms to the character and purpose of assistance.
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Federal Reserve Bank of St. Louis
- 2It seems to me that the ability of a country to repay a loan has
to be the determining consideration in the loan policy of any prudent
lending agency, and that the character and purpose of assistance has a
policy significance only to the extent that it improves or adversely affects the repayment capacity. Project loans are superior to general purpose loans only to the extent that they improve the balance of payments
prospects of a country more than the latter. This may be the case,
especially in the instance of countries which tend to dissipate the proceeds of a general purpose loan on unnecessary consumption items. Also,
project loans are particularly appropriate where the capital requirements
of the country in question tend to fall into clear-cut areas of project
operations. Contrariwise, there are instances where general purpose
loans may be preferable, e.g., where the country in question (Britain?)
is tending to devote too high a percentage of its resources to capital
expansion and exports and too little to current consumption. General
purpose loans may be the only type feasible when the diversity of items
required is such that they cannot be fitted into a project pattern.
General purpose vs. project loans. Bearing in mind the conditions
which prevail in the participating countries today, it seems to me
probable that EGA will find general purpose loans more appropriate than
project loans during the first year of ERP.
The early experience of EGA has revealed the difficulties of
phasing the loans into the over-all ERP program. It seems clear now that
no loans (except the $2.3 million Icelandic credit) will have been made
during the first quarter of ERP. It has therefore become necessary for
EGA to tackle the loan problem on a six-months, rather than quarterly,
allocation basis. In order to get the loans moving at the outset, EGA
will have to agree to general purpose credits. Project credits are not
practicable at this stage where the basic purpose is to expedite the flow
of capital items and hasten European recovery.
The question before the EGA is whether it is feasible tand advisable
to try to shift onto a project loan pattern during the secondv six-months
of ERP. Whether or not the initial loan pattern should be tightened in
that period, in my opinion, will hinge largely on whether or not EGA believes that project credits can be set up and substantial disbursement of
funds made against them before the first year of ERP is up. I believe it
would be a serious policy mistake for EGA, after setting up general purpose
credits during the first half-year of ERP and having disbursed, e.g., $4-00
million quite promptly against them, to try to shift over onto a project
credit basis with negligible disbursements against such credits during the
second half-year of ERP. The Appropriations Committees will, very properly,
tend to look at loan disbursements, not commitments, when ERP is up for its
second-year's appropriations and I think that the Administrator must have
the objective of approximately 20 percent of loan disbursements (rather
than commitments) to grant disbursements during the first year. If he winds
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Federal Reserve Bank of St. Louis
- 3\ap with a half billion or more of loan commitments made during the second
half-year without any disbursements against them, he will lay himself open
to the attack that the loans are subterfuges designed to magnify the
amount of assistance extended during the first year. This policy need for
prompt disbursement of loan, as well as grant, funds during the first year
of ERF argues strongly for general purpose credits as against project credits. Because of the difficulties in setting up project credits and disbursing funds against them promptly, I do not see how EGA could afford to
shift over to a project loan approach during the second half-year. In
order to pave the way for a later more extensive use of project credits,
however, EGA should try to tighten up its second series of general purpose
credits so that as far as possible they cover capital goods rather than
raw materials requirements of the recipient countries.
Supervision of Loans. The need for careful phasing of loan commitments and disbursements so that they gear into the ERP program of grant
disbursements appears to me to commit the EGA to the general purpose credit
rather than the project credit approach and poses a difficult policy problem
for the Administrator. Project loans look like "sound" loans whereas general
purpose loans are inevitably going to be attacked by some Congressmen as
"phony" loans. The Administrator will have to have a convincing rationale
for the use of the general purpose loan approach and satisfy the Congress
that the expenditure of loan funds has been properly supervised even though
on a non-project basis. As for the defense of the general loan approach,
it seems to me that it has to be made substantially along the lines presented
in this memorandum. As for supervision, general purpose loans are obviously
not susceptible to the same type of detailed supervision as project loans.
The most that can be done is to ensure through appropriate disbursement techniques that they are utilized for the purposes agreed. The Administrator
must look, not to the precise utilization of the loan funds, but to the overall effect of ERP aid and the over-all recovery in a given country as an
ex post facto indication of whether or not the loan portion of the aid has
met the basic test of falling within the country's capacity to repay. If
there is a serious lag in recovery, the Administrator may be pbliged to advocate assistance during the second year of ERP being extended on an allgrant basis (or with a smaller loan component).
u
Lowell M. Pumphrey
Attachment:
Memorandum dated June 11, 194-8
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Federal Reserve Bank of St. Louis
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JUly 20, 1948
M FOR MR. MAHTIN
Subject: Present Status of SCA Loan Program
After reviewing the subject with Messrs. Sauer, Tirana, and
lynch in accordance with your request, I have the following comments
to offer on the present status of the EGA loan program.
In the first place, a sharp distinction has to be drawn between
the official EGA loan policy as outlined to the NAG by Administrator
Hoffman on July 6 and present status of the implementation of that
policy by the EGA staff.
As to the policy itself, EGA formally took a position on loan
policy that in all significant respects corresponds to the best judgments
of the Bank staff and yourself. I believe everybody in this Bank would
agree with Mr» Hoffman that the goal of EGA should be to set up workable
lines of credit in time to implement the avowed EGA policy of complete
disbursements or commitals in the 3rd BEP quarter.
It is the matter of implementation of the SCA declared policy that
arouses the greatest concern in the Bank staff. Both Mr. Tirana and Mr.
Sauer agree that, at the rate things are moving at EGA, it is most unlikely that all the lines of credit will have been established by your
tentative September 1 target date. Even more important, they fear that a
continuation of the present attitude of the 3CA Comptroller on documentation will result in largely unworkable credits and prevent anything resembling reasonable rapidity of disbursements.
In the light of this situation, it is my suggestion tl^at a meeting
be held in your office this week with Messrs. Sauer, Tirana, lynch and •
myself to review the whole subject.
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Federal Reserve Bank of St. Louis
Lowell M. Pumphrey
June 21, 1948
MEMORANDUM FOR MR. FJLRTIN
Subject: The EGA Loan Program:
Further Comments
Introduction. At the NAG Staff Committee meeting of June 17,
Mr. Maffry had several additional points of interest to make regarding
the current EGA approach to the loan problem. They were:
(a) the prevailing opinion in the EGA is that the recipient
governments must be given the choice whether or not to
accept loans on the grounds that otherwise the Administrator would be engaged in "forced loans"5
(b) the EGA feels obliged to undertake an independent determination of the "creditworthiness" of recipient countries;
(c) the EGA is not insisting on project loans but is quite prepared to accept the general purpose loan approach; and
(d) because of considerations such as the above, the loan phase
of ERP aid has become almost completely divorced from the
grant phase.
Examining these points one by one, it seems to me that EGA is running
a grave risk of adopting a basic approach to the loan phase of ERP that is
in fundamental conflict with that intended by the Executive Branch (and developed by the NAG), repeatedly expressed in the legislative history, and
(in my opinion) implicit in the wording of the European Cooperation Act.
(a) "Forced loans". As for the forced loans argument, $.t is my conviction that the Congress intended loans to be an integral parti of the first
year program — that grants, not loans, shall be the residual element of the
program and that $1 billion upward of loans and guaranties would be extended
in proportion to the relative capacities to repay of the recipient countries.
Adherence to the approach that decision whether or not to accept the loan
portion of ERP rests with the recipient government independently of whether
it accepts the grant portion will mean that, to the extent the aid extended
in the first year falls below the total aid authorized and appropriated, the
program will correspondingly tend to approximate a pure grant, i.e., relief
program,
(b) Independent determination of creditworthiness. Here again, the EGA
approach seems to me to run the risk of ending up with results counter to the
intent of the Act. An independent determination approach is likely to give
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Federal Reserve Bank of St. Louis
- 2the policy twist to the program that the $1 billion figure provided in the
Act for loans and guaranties is accepted as a ceiling rather than a floor.
If this happens, the practical consequence of ECA's attempting to reach independent appraisals of creditworthiness of the various recipient countries
will almost inevitably be to adopt criteria of assurance of repayment that
will seriously discourage the making of loans. Actually, the whole ERP
program was presented to, and accepted by, The Congress as a calculated risk
and the estimates of the various participating countries' capacity to repay
credits have to be approached in that light. The assumption has to be made
that ERP will be a success and that the Western European-British economies
wil3 be viable by 1952. On this premise, the issue before the EGA narrows
down to evaluating, in consultation with the NAG, the relative capacity of
the recipient countries to assume additional external debt. The task of the
EGA, as I see it, is to distribute loans and guaranties among the participating
countries within the framework of ERP in such a fashion as to maximize the
repayment prospects to the U.S., not to withhold loans in the absence of certainty of, or even reasonable assurance of, repayment.
(c) General purpose loan approach. The acceptance by EGA of the general
purpose loan approach is, in my opinion and for the reasons set forth in my
memorandum of June 15, a real step forward and an indispensable element in an
effective first year ERP loan program. But in the absence of a changed attitude towards points (a) and (b) above, it seems to me very unlikely that EGA
will gain much during the first half-year of ERP from being willing to consider
general purpose credits. As long as recipient countries are free not to accept
loans, they will obviously hold off from accepting aid on paymentterms until
they exhaust their grant aid.
(d) Practical divorcement of the loan and grant programs of EGA. The
tendency in this direction is the inevitable consequence of the initial ERP
approach to the loan problem and, in my view, if continued throughout the year,
will gravely jeopardize the prospects for continuing an effective ERP. By
separating the less palatable loan phase of the over-all program from, and
subordinating it to, the grant phase, the EGA is gambling that the grant aid
will not be sufficient and that before the year is up the participating countries will have to take up an appropriate portion of aid on payment terms.
This may turn out to be the case, but in the view of the notorious flexibility
of international balance of payments and the comparative slowness with which
loan commitments can be implemented and disbursements made against them, it
seems to me that it is not the course of prudence for EGA to make this assumption.
Conclusion; In view of the direction in which EGA appears to be heading,
I have come to the conclusion that the whole subject of the role of loans in
ERP should be thrashed out in the National Advisory Council at the earliest
opportunity. I believe, in particular, that the Council should go clearly on
record in opposition to any approach which makes loans, rather than grants, the
marginal element of the aid program.
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Federal Reserve Bank of St. Louis
&.(?
Lowell M. Pumphrey
July 23, 1948
MEMORANDUM TO Mr. Martin
Mr. Taylor
Re: Status of Loan Negotiations
Before leaving on vacation I thought I would take stock briefly
of that end of the loan negotiations with which I have been connected.
Staff Memoranda on Loan Applications. The situation as of this
date on the work of the Joint Staff Memoranda on loan applications is as
follows:
!• Iceland; Out of the way.
2. Norway: Everything is complete, and the loan authorization
has been held up by EGA Legal for the last 10 days awaiting the writing
of EGA determination.
3«
Italy;
Staff memorandum completed and circulated.
4« Denmark; Staff memorandum drafted by Mr. Lynch and ready
to be issued as soon as loan terms become definite.
5« ILJL.:
Staff memorandum drafted by Mr. Lawrence with my
concurrence. Awaiting final determination on terms for issuance.
6. France: A memorandum with certain blanks relating particularly to terms has been drafted by me and is ready as soon as terms
become firm.
7. Netherlands; MSI; Mr. Strong is drafting a memorandum on
both of these countries.
>•
8. Ireland; Draft memorandum being drawn up by Mr. Lawrence.
The above list completes the countries with which loan negotiations have been going on. No word has been heard from either the Swedes,
the Belgians or the Luxembourgers.
Terms and Conditions Discussed to Date.
1. Iceland; Line of credit $2.3 million; interest rate 3%;
payable immediately; period of grace 3 years; repayment of principal in
remaining 7 years; availability of credit June 30, 1949.
2. fforway; Line of credit $30 million; to be committed by
December 31, 194-B; interest rate 3%, period of grace 5 years; repayment
in following 20 years; availability of credit June 30, 1949.
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Federal Reserve Bank of St. Louis
3» Italy; Line of credit $50 million; to be committed by
December 31, 1948$ rate of interest 3% payable immediately; period of
grace 5 years; repayment in the next 25 years in graduated payments,
with light payments in first 5, and moderate payments in next 5 years;
availability December 31, 1949.
4. Denmark; Line of credit
December 31, 1948; rate of interest
grace 5 years; repayment over next
first 5 years and moderate payments
$25 million; to be committed by
3% payable immediately; period of
30 years, with light payments in the
in the next 5 years.
5« France; Line of credit $170 million; to be committed by
December 31, 1948; rate of interest 3% payable immediately; period of
grace 6 years; repayment in next 24 years in graduated installments,
making allowance for peaks and troughs in payments for existing obligations.
6. MS I; Line of credit $15 million; interest rate 3% payable
immediately; period of grace 5 years; repayment in remaining 10 years.
7. Netherlands; Line of credit $80 million; interest rate 3%
payable immediately; period of grace 5 years; repayment in next 20 years.
8. ILK.; Line of credit $300 million; interest rate 3% payable
immediately; period of grace up to 1956; repayable over a total period
of 50 years, with interest waiver as in 1945 loan and deferrment of
principal repayments in the event of interest waiver.
9- Ireland; Terms and conditions to be similar to the British
as soon as these have been determined.
A firm determination, or final acceptance of, terms discussed to
date with Italy, Denmark, France, N.E.I., and the Netherlands has not
been possible largely owing to concerted maneuvers on the part of the
borrowers whereby each is awaiting the results of the negotiations with
the British in the hope or expectation of getting identical terms.
What remains to be made firm is the following;
\
a) VJhether forgiveness of interest in the period up to July 1952
is applicable across the board to all countries, or merely to the British;
b) Whether a British type waiver is to be applicable to other
countries;
c) Whether the maturities discussed to date, except for minor
variations, are adhered to and the procrastination and delays on the
part of the borrowers are brought to an end.
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Federal Reserve Bank of St. Louis
During my absence, Mr. Lynch will take over at EGA; all interested parties in EGA and the Bank have been informed about these arrangements
The International Bank has similarly been informed that Mr. Lynch will
keep them advised from time to time. Mr. Lockhart will continue to be
available on NJS.T., China, and Turkey.
I am ready to return from Nantucket on 24 hours1 notice at any
time, if the Bank or EGA should desire.
The main problems that need to be resolved still continue to
be those relating to the lists of commodities eligible for financing,
and the documentation required by the Controller of EGA. I am ready
to return to fight that battle, but I expect it will be some time before these two connecting problems come up for real attention.
Rifat Tirana
cc: The
Mr.
Mr.
Mr.
Mr.
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Federal Reserve Bank of St. Louis
Board of Directors
Sherwood
Sauer
Lynch
Lockhart
ESTIMATED ADMINISTRATIVE EXPENSES 19^9 *
EXPORT - IMPORT BANK OF WASHINGTON
AND
ECONOMIC COOPERATION ADMINISTRATION
Salaries
Travel
Transportation of Things
Total
EIB & EGA
EIB - 19^9
EGA - 19^9
$714,911-
$58,859.
$773,770.
30,000.
2,000.
32,000.
500.
700.
1,200.
V
Communications
10,600.
500.
11,100.
Rents
89,700.
15,900.
105,600.
Printing and Binding
6,000.
500.
6,500.
Other Contractual Services
6,600.
10,000.
16,600.
Supplies
4,000.
1,000.
5,000.
7,500.
7,500.
$96,959.
$959,270.
Equipment
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Federal Reserve Bank of St. Louis
$862,311.
(7-30-48)
ESTIMATED AMUAL ADMINISTRATIVE EXPENSES FY 1949
Estimated FY 194-9
As of
As of
July 27, 1948
EIB
EGA
June 25 , 1948
EGA
EIB
Salaries and Wages:
$659,673
8,018
Add: Remspeck promotions
9,000
Accumulated leave payments
44,880
Salary increase of $330
One day's accrual
Allowances for cost of living, etc.
tc.
2,730
Temporary employment
Less: Reimbursement (FALCAO)
—
—
Lapses
(-) 20,674
Total Salaries and Wages
703,627
Other expenses:
Travel
Transportation of things
Communications:
Telephone
Telegraph
Postage:
Regular
Penalty Mail
Rents and utility services
Printing and binding
Other contractual services
Photography
Special and miscellaneous
Maintenance of auto
Repairs and alterations
Rental of IBM machines, EGA
Supplies
Health Unit.
Equipment - EGA
Refunds, awards and indemnities
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Federal Reserve Bank of St. Louis
69.013
914, 565
58,859
300 )
50)
300 )
50)
89,700
15,900
500
6,000
10,000
6,600
1,700 )
300 )
1,000 )
1,400 )
700 )
- )
2,800 )
1,500 )
7,200 )
- )
4,000
1,000
500 )
7,500
7,200
)
)
)
)
7,200 )
4,000
FY 1948
3,480.00
300 )
300 )
80,825
6,000
11,300
1,800 )
1,000 )
500 )
8,000 )
- )
4,200
500 )
15,400
Actual
expenses
$619,126.96
158,859
30,000
500
10,600
7,000 )
3,000 )
200
845, 552
42,413
$668,536
5,700
15,000
41,078
2,759
2,738
1,000
(-) 1,600
(-) 20,300
714,911
30,000
400
9,000
6,000 )
2,400 )
845,552
EIB
EGA
$42,413
(Est. in Nov.1947)
FY 1949
Budget
2,000
700
500
250 )
150 )
654,316
622,606.96
44,184
24,304.57
236.85
7,700
6,094.17
2,547.93
539.00
80,000
6,000
2,500
80,899.12
5,356.02
1,646.99
1,324.36
691.56
8,882.62
5,300
3,163.26
165.73
124.00
69,013
862, 311
96,959
959,270
—
862, 311
—
96,959.00
800,000
(7-30-48)
758,583.14
Country*
Applicant*
Ajoountj
Purposei
Austria
Bepublie of Austria
$35,900,000
A loan to assist in financing certain selected industrial
projects along tint following lisas submitted by the Austrian
GoveriBBentt
jfrflftfrtyr
Materialc
(in million* of u.a.|)
Mashlne and natal working
meetrloal
Textile, leathtr, Wood, Fap«r
Stwl
Chdadaal
P0w«r
Mi«0«llailM«UI
totals
Capital Goods
$ 6.9
2.4
.7
2.0
2.0
—
I 31*5
1.6
1.8
U.O
—
4.0
. L ....A.ftf
>g
115.0
|20.1
**«»****««
Ooumtry:
Borrower!
Applieanti
Aaountf
J*nrp®wit
Austria
Cradltmastalt-Bank^eraln
Sepu^lle of Austria
I4,500f000
f0 inmire aa adequate supply of n®od f^ the Austrian
paper Industry by financing the purdiese of ooal to be
procured in the II, S* and Europe to be oomsred by
exports of Austrian pulp, newsprint, aad hign grade
papers.
*****«**«*
^
V
Country*
Borrower:
A^lieanti
Amount t
Purposes
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Federal Reserve Bank of St. Louis
Austria
EepO^ia of Austria
lefmfelle «f Amatri*
$3,000,000
ShorUterm credit of 1$ Months to finance tbs imrehase of
0. S» ray ootton«
« « « « * £ * » « *
•
'
- 2 •
Country*
Borrower?
Belgium
Societe Anonyaie Beige 4'Exploitation
(Belgian GOTeriiJ»ent Airline)
Consolidated Tultee Aircraft Corporation
$1,100,000
A eredit to assist in financing a sale of 6 model 240 airliners
by Censoli<iated ?ultee Aircraft Corporation Of total selling
prioe of 11,950,000 SABE8A has already paid $487,500 as a down
payment leaving 41,462,500 to be financed. Suggested terms 5 years*
Applioantt
iMMfcf
Purpose:
§*««•«»*««
,
Cowntryt
Borrower!
Applieanti
Aao^mts
Purposei
France
Soelete Anonysa Air Franoe
(Frenoa Gorrertiaent Airline)
Society Anonyoe Air Franee
13,500,000
For purchase of replaeeneat farts by Air France for the
applicant's A^erioam planes. Suggested terms 2 years.
« « * * * « * * * «
Ooantryi
Borrower*
Applicant!
Amounts
Purpose?
S^mdes
Swedish Airlines
(Swedish GorenaBent Airline)
Douglas Aircraft 6^4, Ine,
I4»a00,000
To assist in financing the sale of 10 aircraft by Douglas
Aireraft Coa isy to the Swedish Airline®. Involves the
\uapaid balanee 10 air«?raft« the ai^iwit to be finaneed is
about U,200,000.
«#****«*»*
Coujstryt
Borroweri
Applieantt
Afflotmtt
Purposet
loeland
loelasdio Governiient
loelandio Govena^nt
|29300fOOO
\
A loan to finasee United States purchases of eqifipomit for
the &oTers23ent~0wned fisheries industry in loelaad. A
7-year term vas suggested.
* * * « * * « « * *
Ooaatryi
Borrower t
Applioanti
Afflonntt
Furpo«ei
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Federal Reserve Bank of St. Louis
Turkey
Turkish State Railways
fuloan Iron Works
$3,74B,500
to assist in fiaanelng the manufaotxire of 42 steam looostotlrss
%7 tfee Valoma Iron Work* £&? the T«rk^^ State Ealliw^s* A
term of 7 years quarterly payigestg 0uggeste4»
(Application for alloaatioa tinder existing aredit line.)
Informl Aapliontioag fro.m Countrlee.
in
Com try *
Austria
Borrower*
Applicants
Amematt
Purpose*
0**t«rreiohi8che KwistBeide-mil Z«ll«ollef*to*ik A* 6»
Oscar Eoixona & Co.f Ltd*
14,400,000
To finaaoe installation of & filasaeat rayon and cellophane
plant at Leasing, Austria, In the 0, S* Zone
Repayable in aqoal sexUmnual inatsllme&ts over a period
of five years beginning tisr^e y®ar^ from effective da,to of
contract, witfe intereet at the rate of 3|$l per ennu®* Total
credit desired is I5>500,000t @f wktefa fCohom's participeticai
(20%) aaoimts to f 1,100,000.
Terast
JUJtir
Country!
Borrowers
Applicants
Anountt
P«r|)asei
'4M)*J:
"***'
* "*
*"*"•
I—U
"'
*•"*•
*ILIJ
"**'
*•**
*M»
--ice
Cie. dee Fcrges de ChateJlon - Coinaantry et Heuvc^-feigoms
Araeo Int^mfitional
$2tOOO,000
MtonvlamtUtt of & staei sfe&ot adll
femsi
Fifteen years, repayment beginning fotsr yesrs from date
of credit
Country!
Borrower i
A^pXic«jati
Supplier*
Aeointj
Purpose*
Msr^&y
Hanafcrs Fslsriklcer
Ciirictiania Bank ag "Creditka^t.®
Beloit Iron ^orks
Terwti
Cotaitriesi
Borroweri
Applieantt
Aissmnts
Purposes
Term I
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Federal Reserve Bank of St. Louis
M&ifolc*
Tbree years
. ;-!:. ;ry far ?rodu0ti4Mi of ^ir aa.il pap@rt
.'.ad tJiiu tank
\
edeti, Norway sad Censmrk
Four Setmdiaairijya air linea
Douglas Airersft Co.
•, ,500,0
;.Ie of eleven &irpl&ne@ to the aboim SemMinavian air line®
Qn® y®ar fro® data of delivery, no rate of interest ap^Gified,
Total e^itrmct priee is $59*?GQtOQQ9 of whieh Xtaiglaa is prepe..red
to par'tieipet* to tba ©3ct@nt of 11,200,000, the balance to be
tafe«n ap "by the Export-Istport B^ftk ami eoa»«reial banks.
August 13,
MHHOiASimM fO HE. WAfiTE TAILOR*
Daring the pest two weeks we have >fi*en considerable thought to
the suggestion mde to iai» separately by Mr. Henderson and Mr. Kohler
that It night b« desirable to Have iCA handle disbursement of KG A
credits. Our •Kperlanc* with the Iceland oredit, with which you are
familinr, has convinced u« that v« aust work out sosss proce<lurs along
the gftfisrsl lln#ts of that suggested.
At the tise I discussed the matter with Mr. Kohlar, I thought it
aight be nee*ss&ry for ; C& to use appropriated funds in the first
infitar4cef with reSabttrsest«iit to 1GA by tia out of the proceeds of the
not*« of tJ*» Ad&aittistr&tar delivered to the Treasury, It aov appears
to me that a simpler and more satisfactory procedure 'mmy be followed*
IDA will determine %^i«n it is prepared to authoriae a dis^rsesient
to a borroviag eouotry, either by \my of reimbttrseasiit for prior «x»
p*ttdit«r@g lay th« borrower or by way of an advance for a working fund.
A direction ta us by the Administrator to disburse X dollars to the
borrower will enable us to draw down the money from the Treasury and
pay It ©irsr to the borrower against its promissory sote* All disburs«T8ents eould be ooafined to the borrower, as distinguished from
suppliers arid commercial banks, by the simfl^ expedient of using a
working fund established for the borrower through an advance to it.
the borrower would us© the working fund to aake payment to suppliers
and cosweroial banks &n orders and letters of credit. Any guaranties
of such ocNK<ments that EC A would be called upon to give would merely
be for protection of the suppliers or co»w*elal basiss aci as a practical
aatter would not require disbursements by IDA under the guaranties sine*
arrangements would be wade with the borrowing countries for them to meet
the payments isut of the working fund. This procedure, of course, is the
one we follow in all our credits ami I have explained its workings to
Mr. Kohler*
fn« following eimtsges in th© loan agreement would suffice to permit
us to adopt th« procedural
1.
Chang® Article I to read as follows*
*iixi®bank hereteFy establishes in favor of ^^im^M^^m a line of
credit of I.
..^.mr-™-^ to assist ^ .,..,_,_, i:
in financing the
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Federal Reserve Bank of St. Louis
acquisition coat of such cowsioditiea and services as shall from ti&e to
time be ay.-trored by the Administrator. Disbursements under th» credit
vill be made by Sxiabanfe fro-;i ti^« to time in such amounts as shall be
authorized lay the A&ainlstrator. It in understood and agreed that
. ._, .......... vill taka all reasonable steps to isake the proceeds
of the credit available for the use of its nationals through private
channels of trade to the extent that it shall be practicable and consistent
with the general witlfura end interests of
«*
2*
Delete Articles II I, I? and ? of the Agreement.
3, Make necessary ^laages in Termination provision (Artiele
to indicate ^odertekings with resiseot to letters of credit will be given
by the Administrator,
In suggest iaf the above procedure, us agate state that we do not
subscribe to the reason whi*fh pnMsptsd Jfr* Henderson and Mr. Kohler to
entertalr the ideap naiw^ly, that ander the oonoraic Oooperation Actf no
practical dlstitietlon stay be drawn between grants and credits other than
the fact that credits are evidenced by a» obligation to rspey the debt,
As you know, ovstr the past »evertl monthsf w« have «rgu@d repeatedly and,
at tiacs too vehea^itli' perhaps, with Mr. Bissell, Hr* Haadisrsos,
«r, Kohler and their subordinttes that a real distinction is drawn between
credits and grants an fer the &et for other purposes than the taking of an
obligation a»d that the distincticm say as*l should be drsiwr? in practiee
without departing from the basic principle to whiali all subscribe— that
the fiCA Fregram should be a unified, over-all program controlled and
by the
We have nev«r made and do not now propose to wake an ise*$e on jurisdictional grounds t© the approach being followed by iCA, We believe it
advisable, for the sake of fatting the job dona, to do no sjore than atte»pt
to persuade EGA that its approach is unsound, Ue failed in our effort, as
you know. The £CA «ppre«eh resulted in our being oonfrotited with a
situation in the Iceland case which eao?*ot, from the standpoint of either
the SCA or the flank, be permitted to rise in future credits.
V
As we see it, therefore, the logical and inevitable end ef the EGA
approecn is for K^A to authorise «ie SenJe to awke disbursewents in «ie
•saner suggested above*
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Federal Reserve Bank of St. Louis
Honorable HHiam Martin,
Chairman, Export-Import Bank,
73k - 15th Street, N* W.,
D* C«
Dear Mr. Martini
In order to simplify and facilitate arran^gwaents for furnishing
assistance under the Economic Cooperation Act, this Administration
proposes to adopt a consolidated procedure for drawing upon both grai
and loans* The proposed procedure, set forth below, will eliminate
the necessity for identifying any particular transactions with loans,
and thereby eliminate dual documentation by the Export-Import Bank ai
curb administrative expense*
1» The total allocation to a participating country will be
fixed for each quarter. Assume it is $100,000,000.
2. The loan-grant ratio will be fixed for each country in
accord with the statutory standards (Section lll(c)(l))»
Assume that, in the case of a particular country, this
Is Q0% grant and 2Q% loan* It would then be contemplated
that approximately 20% of the assistance authorized would
be used in order to finance imports of capital equipment
and of raw materials for use in connection with capital
development, 'Brasf although the
procedure outlined below
eliminates the present "tagging1* of each item authorized
as a loan item or a grant item, the substantive effect of
the program will be the same as that resulting from the
present procedure*
3* The participating country will enter into a loan agree*
rnent with th* Export-Import Bank by which it will agree
to a credit, on terms specified by the Administrator in
consultation with the National Advisory Council, for
$20,000,000,
k*
EGA win then allocate $20,000,000 (obtained by the execution of a note to the Treasury) to the credit of the
EKport-33^?ort Sink for a loan to the participating country*
5>* All iteas will be processed as though they were grant items,
EGA receiving in each transaction the documentation required
by Regulation No0 1« The money will be expended directly
by ECA out of appropriated funds as in the case of grants*
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Federal Reserve Bank of St. Louis
6* A0 EGA makes payment* (to the country, or to a bank or
a supplier), or at such other time or tines as the Administrator nay choose within or at the end of each
quarter, EGA will give a certificate to the Sxport-lKport
Bank setting forth such amounts of EGA advances as are
attributable to the loan, and will be entitled to reimbursement to that extent by the recipient country from
the proceeds of the loan* the iSxport-I&port Bank will
issue its cheek against the EGA certificates, payable to
the country, for delivery as instructed by the Adirdnistrator* (The check will be delivered to the country
representative in the EGA offices and iaaediately
endorsed over to £GA as reimbursement of the expenditures
already isade as described above )•
!• the participating country will deliver the necessary note
to the Bxport-Iiaport Bank at the beginning of each quarter0
The note will state that it is effective only for the
amount actually advanced. Since these credits will net
carry interest until 19$2, this adjustable type af note
will not give rise to difficulties*
8* Ihe only documentation the i&port-Japort Bank will receive
will be the certificates of EGA described In (6) above*
If you are prepared to acquiesce in the operating procedures
outlined above, they wHl be put into effect forthwith*
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Federal Reserve Bank of St. Louis
Sincerely yours,
(signed) Paul G. Hoffaan
Administrator
V
September 24, 1948
MEMORANDUM TO The Board of Directors
The attached three documents are the latest versions
of the Sconomic Cooperation Administration drafts on loans
to SRP countries.
Rifat Tirana
Circulated to: Messrs. Arey
Sherwood
Lynch
Mr. Richard Demuth - Int'l. Bank,
Attachments
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Federal Reserve Bank of St. Louis
Draft
9/23/48
LETTER OF NOTIFICATION
.-*•
First part of letter will set forth total allocation and segregation,
and also specify period covered. The following paragraphs should be included:
"In addition to the foregoing allotment, you are hereby notified that
expenditures made by
(Country)
__
during the second
and, third calendar quarters of 1948 for commodities or services within approved
programs for those quarters and for which it has not been reimbursed by the
Economic Cooperation Administration will be reimbursed to it upon a loan basis
in an amount not to exceed $
for the second and third
calendar quarters of 1948, upon the terms and conditions hereinafter set forth
with respect to loans for the fourth calendar quarter of 1948.
The foregoing allocation (hereinafter called the "line of credit") is made
upon the following terms and conditions-
(a) Before any procurement authorization shall be issued hereinunder
(country) will be required to execute to jibcport—Import Bank of
Washington a Loan Agreement and promissory note in the form and
content attached hereto as Exhibits A and B respectively. The
initial principal amount of such promissory note shall be for the
total of the maximum amounts specified above as available under
loans for the second, third and fourth calendar quarters of 1948.
As soon as practicable after the end of the fourth calendar
quarter, the principal amount of said note will be adjusted to
the amount of actual reimbursement for procurement with loan
funds during the second and third calendar quarters of 1948,
and to
% of the total allotment for all purposes
actually expended or committed for the fourth calendar quarter
of 1948.
(b) The line of credit will be available to (country) initially
from the Economic Cooperation Administration upon compliance
with the procedure set forth in EGA Regulation No. 1, as from
time to time amended, and upon the documentation prescribed therein, as in the case of grants.
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Federal Reserve Bank of St. Louis
r
2_
(c) (Country) -will be required to furnish the Administrator -with
such signatures, endorsements, or authorizations as arc
necessary or desirable in administering the disbursement of
this line of credit.
(d) This line of credit shall expire at the end of the second
calendar quarter of 1949 except as to -amounts theretofore
firmly committed. Amounts shall be deemed to be firmly
committed for the purpose hereof it (country) has entered
into a binding agreement for commodities cr services to be
supplied after the end of such quarter, or if country is
actively negotiating a contract for the acquisition of
commodities requiring the preparation of complex plans
and specifications which from their nature cannot be reduced to contract prior to the; expiration of the quarter.
In either case, in order to preserve its rights under the
line of credit, (country) shall certify the pjrtinent facts
to the Administrator (including in the latter case an estimate
of the ultimate contract price) prior to tht; end of such
quarter. Upon receipt of such certification, the Administrator
will take appropriate steps (a) to have the necessary funds
therefor set aside by the iixport-Import Bank of Washington;
(b) to provide for the disbursement thereof, and (c) to provide for the adjustment of the Promissory Note referred to
in paragraph (a) hereof in the event of abandonment of any
such contract or negotiations.
(f) The Administrator assumes no obligation or responsibility
for the issuance b^ any agency or department of the Government
of the United States of an;y priority, allocation, permit or
license which may be required under existing or future laws
of thd United States or any existing or future regulation
•*
of any agency or department thereof to manufacture, produce, purchase,
sell or export any item which may be financed hereunder.
please indicate your acceptance of the foregoing on the enclosed copy of
this letter."
http://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Administrator for Economic Cooperation
Draft
9/23/48
AGREEMENT
This Agreement made and entered into as of the
day of
1948 by and between the Government of
(hereinafter referred to as
M
") and Export-Import
Bank of V/ashingtcn (hereinafter referred to as "Eximbank"), an Agency of the
United States of America,
w I T N i i S S E T H *:
WHEREAS, the Administrator for Economic Cooperation (hereinafter referred
to as "Administrator") his advised Eximbank that in accordance with the provisions
of the Economic Cooperation Act of 1948 a determination has bjen made to -xtend
assistance to
on credit terms in the amount not
exceeding
Dollars
($>
) for financing the acquisition of such commodities and services
as are approved by the Administrator; and
WHEREAS, the Administrator has allocated funds to Eximbank for the purpose
and in the amount aforesaid by the issuance of a promissory note to the Secretary
of the Treasury of the United States, and has specified, after consultation "with
the National Advisory Council on International Monetary and Financial Problems,
the terms upon which Eximbank shall make and administer the credit;
NOTi.;, THEREFORE, It is agreed that:
1.
Eximbank hereby establishes in favor of
a line of credit of not exceeding
($>
Dollars
) tc assist
in financing the
acquisition of such commodities and services as shall be from time tu time approved
by the Administrator;
2.
Simultaneously with the execution of this agreement
has executed in favor of and delivered to Eximbank a promissory note in the principa.
amount of
Dollars ($
), or
so much thereof as may be advanced under the credit hereby established; a copy of
•which promissory note is attached hereto as Exhibit A;
3.
Eximbank will make disbursements for the account of
under the credit in such amounts and at such times as shall b^ specified by the
Administrator5
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Federal Reserve Bank of St. Louis
- 24. If at any time when an Instalment of interest or principal becomes, or
is about to become, due en the aforesaid promissory note, i_ximbank and (
w
) determine that because of adverse economic conditions it
vjould be in their common interests to postpone, or provide for the postponement
of, such instalment or to provide that such instalment of any part thereof shall be
made and received in local currency of
at a rate
of exchange to be agreed upon, or to modify the aforesaid promissory note in any
other respect, they may by mutual agreement in writing provide for any such postponement for payment in local currency, or other modification hereof. Any agreement for payment in local currency may specify the purposes for which such currency
may be used.
5. Prior to and as a condition precedent to the first disbursement under tru
credit, xiximbank shall be furnished:
(a) Evidence of authority of the person -who has executed this
agreement and the promissory note and otherwise acts as the
representative of
in connection
with the credit;
(b) An opinion of the Minister of Justice of
,
or other Legal Counsel, satisfactory to rCximbank demonstrating
to the satisfaction of jiximbank that
has taken all action necessary under its constitutional laws
to authorize the contracting of the credit and that the promissory
note given to evidence the credit constitutes the valid and
binding obligation of
accordance with its terms.
IN WITNiSSS v;HjlR__OF, etc.
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Federal Reserve Bank of St. Louis
-*-n
Draft
9/23/48
PROMISSORY NOTE
Washington, D. C.
, 1948
U. S. $
1.
FOR VALUE RECEIVED
;
hereby
promises to pay to Export-Import Bank of Washington, an Agency of the United
States of America, its successors or assigns, the principal sum of
Dollars (U. S. $
), or so much thereof as may
be advanced against this note, in instalments as herein set forth, and to pay
interest at the rate of two and one-half percent (2-|$) per annum on the unpaid
principal balance hereof from time to time outstanding from June 30, 1952; such
interest to be payable send-annually thereafter beginning on December 31, 1952.
2.
The principal of and interest on this promissory note are payable at
the office of Export-Import Bank of Washington, Washington, D. C., in lawful money
of the United States of America, unless the parties hereto mutually agree otherwise
3. The principal of this promissory note shall be paid in semi-annual instalments, beginning June 30, 1956, in the amounts and at the times set forth
below:
Date
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Federal Reserve Bank of St. Louis
Amount
Date
Amount
- 2If less than the face amount of this note shall be advanced hereunder, proportionate
adjustments will be made in the amounts of the respective instalments
**•*'
of principal, after final advance hereunder.
4.
(Country)
™ay prepay on any interest
date without penalty or premium all or any part of the principal of this promissory
note, any such prepayment to be applied to the above instalments of principal in
the inverse order of their maturity.
5o
Upon default in the prompt and full payment of any instalment of princip;
of or any interest on this promissory note the entire unpaid principal hereof and
interest thereon to the date of payment shall immediately become due and be payable
at the option and upon demand of the holder, hereof.
The non-exercise by the hold^i
hereof of such right, with respect to any particular default shall not constitute a
waiver of such right with.
respect to such default or any other default.
6. This note is issued pursuant to the provisions of that certain Loan
Agreement between the parties hereto dated
, 1948 and is
subject to all of the terms and conditions thereof.
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Federal Reserve Bank of St. Louis
(Country)
October 22, 1948
uRAiOTM TO The Board of Directors
He:
SGA Loan Agreement — Postponement Clause
In previous memoranda you have been informed about the negotiations with the UK regarding the Postponement Clause, Article IV,
of the draft Credit Agreement and the objections the British raised
to the use of the words "local currency". These objections were
alleged to have arisen from the special problems relating to blocked
sterling and the anxiety of the Chancellor of the Exchequer to avoid
in Parliament any complications on the subject. It was the assumption
of the American negotiators, however, that what the British were really
trying to get was a complete waiver of both interest and principal
and the ruling out of any possibility of payment in any form whatsoever at a time when Article IV came into effect.
In order to exclude this interpretation on the part of the
British at a subsequent date, the Administrator has written the
attached letter to the British Ambassador, making the position clear
and stating that the United States does not in any way waive the
possibility of payment in some form. The letter is an important
document from the point of view of this Bank1s administration of
the loan.
Attachment
cc: liessrs. Arey
Sherwood
Sauer
Lynch
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Federal Reserve Bank of St. Louis
October 16, 194-8
My dear Mr. Ambassador:
The proposed agreement between your Government and Export-Import Bank
of Washington covering assistance on a loan basis for the last three calendar
quarters of 194-8 under the Economic Cooperation Act of 194-8 contains a paragraph providing, under certain circumstances, for postponement of interest
or principal, or modification of the promissory note, by mutual agreement
of the parties. The current draft of this paragraph states that such
mutual agreement may provide for payments in local currency.
--<*L
You have assured me that this specific reference to the possibility
ojj payments in local currency presents certain problems to your Government.
Your Government has informed me that the following alternative text will
meet these problems and is acceptable. The change is also acceptable to me.
"If at any time or from time to time the parties hereto
determine that it would be in their common interests because of adverse economic conditions or for any other
reasons to postpone, or provide for the postponement of,
any instalments of interest or principal or to alter or
provide for the alteration of any provisions of the aforesaid
promissory note relating to payment of interest and principal,
or to modify the aforesaid promissory note in any other
respect, they may by mutual agreement in writing provide
for any such postponement or alteration or other modification."
I should point out, however, that this revised ps.ragrs.ph does not in
fact reduce the scope of the modifications that :.iay be agreed to by the
parties during the term of the promissory note. The new paragraph clearly
permits alteration, by mutual agreement, of the terns of the note in any
respect. This would cover the exploration of other means of payment, including payment in local currency, and no inference to the contrary should
be drawn from my acceptance of the alternative text quoted above.
Sincerely yours,
Paul G. Hoffman
Administrator
His Excellency
oir Oliver Jranks, IIC J3 *, G .B .S.
British Ambassador
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Federal Reserve Bank of St. Louis
September 15, 1948
Dear Mr. Hoffman:
Since our acknov/ledgment of September 2, 194-3 of your letter of
August 26, 194-8, the Board of Directors of the Bank has given thought
to your proposal "to adopt a consolidated procedure for drawing upon
both grants and loans" and thereby "eliminate the necessity for
identifying any particular transaction with loans"»
As has been made known to various menibers of the Econorrdc
Cooperation Administration, including Messrs. Bissell, Henderson and
Kohler and their subordinates, at the time of the drafting of our
Memorandum Agreement of May 21, 1948 and in discussions since that
time, v/e do net subscribe to the theory that the Economic Cooperation
Act of 194-8 dra.ws no distinction between grants and credits other than
the fact that obligations are taken to evidence credits. It has been
our opinion that the Congress intended, end that the Act provides,
that a real distinction is to be drawn between the two forms of
assistance and that the distinction Fay and should be drawn in practice
without departing from the basic principle to which all subscribe —
that the ERP program should be a unified, over-all program controlled
and directed by the Administrator*
However, we recognise that the Act vests in the Administrator
the right to deter nine the approach to be followed in the extension
of credits under the Act. Since v/e have never raised and do not now
intend to raise a jurlsdictional issue, we are prepared to follow the
proposed procedure to the extent we may do so within the reouirements
of the Act in so far as they ap;;ly to the Bank.
Section lll(c)(2) of the Act requires that the Bank,! as a
minimum, establish each credit, disburse the funds thereunder fco or
for the account of the borrowing country, receive its obligations in
evidence thereof, and receive payments on the indebtedness. Accordingly, we are prepared, upon authorization of the Administrator, to
establish a line of credit upon condition that disbursements will be
me.de by the Bank to or for the account of the borrowing country at
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Federal Reserve Bank of St. Louis
-2-
such times and in such amounts as shall be certified to the Bank by the
Ad irin i s tr at or,
We believe this type of agreement, to which only the Bank and the
borrowing country will be parties, will permit the EconordLc Cooperation
Administration to achieve the purposes which are expressed in your letter
of August 26, 194-B, It ?vill necessitate, however, that the Administrator
and the respective countries enter into independent arrangements with
respect to the mechanics of the combined grant and loan procedure rather
than providing for these matters in the credit agreements as has been
proposed by the Economic Cooperation Administration.
It is understood, of course, that our Memorandum Agreement of
May 21, 194$ is modified by this exchange of letters.
Sincerely yours,
Wnu McC. Martin, Jr,
Chairman
The Honorable
Paul G. Hoffman, Adirinistrator
Economic Cooperation Administration
Washington, D. C.
\
WCS:nm
http://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
September 3, 1948
MEMORANDUM TO The Board of Directors
Re: Proposed EGA Loan Procedures
The Administrator addressed a letter to the Chairman
on August 26, 194-8, copy of which is attached.
After discussions with Mr. Gaston, at which there
were present Messrs. Sherwood, Sauer, Holbrook and myself, a
brief reply was sent to Mr. Hoffman, a copy of which is attached.
PETRifat Tirana
Enclosures
Circulated to: Messrs. Sherwood
Sauer
Holbrook
Lynch
http://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
\
2,
Is Mr* Martin** ebasnoa, I aa aekiiowladgiiig your
let tar of August 26, 19iB r*iati»f to opftretlng proe^dui^
which thft Keonoaie Cooj^ration Admittistr»tioa proposes to
pit into «ff«at vith respect to loan* ta^br th» Economic
Goop«r*tios Aet,
Urn «jr« striJMMl fey Mr* Btndsrsoii, jonr 0»D»r«tl
Counsel, that the l4NP^ Bifiaios of 1.0,4. is prsparisg
a irmft of a eoatraet embodying tfeft proe«^ir«« propo»«I
in your letter. % should like to ha-ws the oj^ortmoity of
cossidieriag tb* proe«4ur»s aa they art spell«d out im th«
draft eontr«.et aai will gi^t you our eoaeltijiioas followa atu^y of th» eo«trt.et.
Herbert 1. Qacton
Acting Chairman
Hoaorabl©
Paul a.
iootiomie Cooparatios Ateiztlatnttlon
http://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
B.C.
\
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Federal Reserve Bank of St. Louis
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Federal Reserve Bank of St. Louis
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http://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
^
V
F»tu (** Hoffoaa* MmlJaittrator
•eoncMsic Co.,
. i.o*i Admiai»trmtli»i
fs,fi|-iirjgtoii ^6> p. C*
Ilr. Martin
December 6, 194$
:ORu;o)Un TO THE BOARD
Sub j ect: EHP Loans for Fiscal
A meeting was held on December 3 by the Financial Policy
Committee, a subcommittee of the Correlation Committee on ERP.
The latter committee, organized by the EGA, includes, in addition
to that organization, representatives of the Treasury, State,
Commerce, and Agriculture Departments. The Bank, although not a
member of it, is represented on the Financial Policy Committee.
Mr. Arey distributed a paper prepared by the staff of the
Bank suggesting that EGA request Congress for sufficient funds to
carry out its program for fiscal 1950 entirely by r/ay of grants.
The paper further proposed that to the extent that good loans could
be found in Europe, they be made by the Export-Import Bank, with a
possible saving of part of the EGA appropriation. Mr. Smithies,
representing EGA, stated that the latter organization was very
strongly of the opinion that its initial approach to Congress must
be for funds part of which should be available for loans. The
Administrator, however, "ould ask for discretionary power to make
loans, rather than for the system obtaining this year. *ir. Southard
observed that this Approach would be likely to lead to the same sort
of legislation as that regulating this year's operations. He thought
it the better part of wisdom to ueek authority from Congress to disburse all of BCA's appropriation in the form of grants.
Mr. Smithies insisted that his proposal be subject to a vote
"by the Financial Policy Committee. The result of the poll*was L to 2
against his proposal. Onl^y the State Department sided witn the EGA.
Mr. Arey then suggested that the Committee advise that H*r.
Hoffman seek from Congress authority to disburse his entire appropriation in the form of grants, with the explicit condition that the
Export-Import Bank might, if it saw fit, make loans to participating
countries. He made it clear that it was not the Bankfs desire that
two programs be established. Rather, the Bank felt very strongly—as
it has from the beginning of the European aid discussions—that the
program must be under the control of the Administrator. He believed,
however, that the program could be more effectively accomplished by
his proposal. Hr. Southard reminded Sir. Smithies that Mr. Martin's
position has consistently been that the European Recovery Program
must be under a single administration. He pointed out further that
without Kr. Martin1s insistence on this point a dual administration
of the program might have been put into effect ty Congress this year.
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Federal Reserve Bank of St. Louis
- 2^r. Blau, of Commerce, said that he would, go along with this proposal
provided that it did not involve any increase in Export-Import Bank's
lending authority specifically for Europe. (He ttated that in his
judgment the 1500 million increase in lending authority for Latin
America was as much as the Export-Import Bank should ask of Congress.)
Hr. Areyfs proposal was put to a vote, the result of which was a 3-3
tie, EGA, State, and Commerce voting against it. Both before and
after the vote, Mr. Arey pointed out that the question of an extension
of the Export-Import Bank's lending authority was before the NAG and
that it was not the province of the Financial Policy Committee to rule
on it.
The Committee then voted on the proposal that the Administrator
be advised to request Congress for authority to disburse all of its
appropriation in the form of grants, .?ith "the understanding that the
ort-Import Bank would engage in extending loans to the participating
countries. This vote carried. 5 to 1, only the EGA opposing.
A suggestion had been made by Mr. Dembits, of the Federal
Reserve Board, that the EGA request authority to make contingent loans.
This was ruled, out without a vote after a short discussion.
The Secretariat was instructed to prepare a brief report to
the Correlation Committee stating the Financial Policy CommitteeTs
position on the EGA loan-grant approach to Congress. This paper will
be available for review by the Export-Import Bank before it gees to
the Correlation Committee.
\
Edward £. LncH
Copies to Members of the Board
^r. Arey
Mr. Sauer
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Federal Reserve Bank of St. Louis
December 15, 194-8
MEMORANDUM TO The Board of Directors
Re: Joint Congressional Committee on EGA
Late in November the staff of the Joint Committee on
Foreign Economic Cooperation, known as the Watchdog Committee11 ,
and set up under P.L. 4-72, submitted a confidential report for
the use of the Joint Committee of Congress. There are mainly
three points of particular interest to the Bank in this report
of 95 pages:
(1) In answer to the Committee's question "what services
and facilities of any United States department, agency, etc.,
have been used by the Administrator?1' the EGA made the following
significant statement regarding this Bank: "Loans and guaranties
made by EGA are turned over to the Export- Import Bank to administer,
inasmuch as they extend beyond the present life of EGA." (page 37)
(2) In answer to two separate questions on the number
and type of projects being considered or put into effect by EGA,
the Committee was informed by EGA that no projects proper have
been approved by EGA. It was stated further that considerable study
is being given to this question by EGA, both in Washington and in
Paris, (pages 19-20 and 35)
(3) The most significant statement in the report from
the point of view of the Bank is a question relating to loans and
the answer of the Watchdog Committee itself on it. The question
and the answer of the Watchdog Committee is textually as follows:
"What were the underlying factors determining the nature of the
payments described in (i) above ?tf "The Administrator has made no
statement as to these underlying factors. An examination of the
proceedings of the National Advisory Council and of the £oan agreements apparently indicates that emphasis is placed on lending the
full amount of money authorized by the act, even though repayment
may be uncertain, rather than treating the $1,000,000,000 authorized
for loans as a sum available to be used to the extent that borrowers
can be found who qualify." (page 4-0)
Rifat Tirana
cc: Messrs. Arey
Sherwood
Sauer
Lynch
http://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
A GLOBAL AID PROGRAM
Introduction - Any new foreign aid program ahould, in my opinion, b* a
global rather than a nmrrowly European program. It aeeaf to me that it would
b« a serious sintake for this Government, once it diec&rtla the present piecemeal approach, to follow it with a morrow * continent*!* approach with an
overtly political bias r&ther than & global approach with a predominantly
economic rationale. The great vfctue of the original 0.S. foreign lending
policy approach waa that it w&* a global economic concept. I think that any
new prop-am should stem from the point of view that the deficiency of the
original approach w&fi, not that it was basically non-political, but that untoward political events destroyed it* effectiveaeaa in coping with the postwar
economic rehabilitation problem.
I have the feeling tfeat the 0.6* finance portion of an adequate global
aid program would involve amounts somewhere between the $1 billion annual
figure yon apoke of and the 15 billion annu&I figure being mentioned in the
KNNNN
A repreaentatlve la*eaJtdown for the three year period 1947*49 follow*!
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Federal Reserve Bank of St. Louis
Europe
9*K*
France
Italy
Attatria, Germany
Greece
turkey
Other
- |^. billion upward
- $a billion
- $1 billion
- $500 million
- $250 million
- $500 million
- §250 millioa
- 1^50 milUce
Asia
China
Korea
Japan
- 11 billies upward
- $500 million
- $2$Q million
- f£50 million
Latin America
- tSQO million
\
~ aJEsjSt Fia&pcia£of FrQgray - The 0,8. financing of * global aid program
of the kbove magnitude would, I believe, fall into three parts 1. tfetied graiits-in-fiid or lines of credit.
2* Tied short~term or long-tent credits.
3« Administered greats~in-ald and loans*
It definitive solution of the British and French balance of payment8
problem is the key to any global aid program* If the British and French
problem cannot be net, there is no real hope of solving the continental
European problem (at least in a manner desired by tids country). If, OB the
other hand, this government should reject & global (or even a aore nurro*
continental Ruropee&) approach, there would appear to be little advantage in
going ahead with en attempt to deal with the IE and French situation* in
iaolatian. A sound global aid program t inns fore, as I see it, would have as
its central feature the extension by this country of sufficient aid to cover
the (reasonable) residual balance of payments deficits of the United Kingdom
•ae Fraisee during the 1947*-49 period. Such t id would be aost appropriately
extended in the form of an untied line-of-credit ©r grant*ia-aid handled
v
through the Treasury.
The regaining European problem, &s I see it, can be broken down into
three eategori«**t First, the requirements of the "good risk* «reae of
festerii Europe (Belgium, ietlierlfends, Denmark and Norway) | second, the re*
habilitation requirements of the ^middle risk* «rcas of Europe (Austria,
Germany end Itnly) exclusive of the 08SR »atelliti**$ thirdly, th« rehabilitation requirements of poor risk, politically upset strategic areas (Greece)*
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Federal Reserve Bank of St. Louis
- 3Developments since VJ-D»y have destroywci the original nope that the
International Bank, once it got into operation* would be able to take c&re
of nil the reconstruction requirements of Europe* As a practical natter* It
seests to ae ti*t the International Bank can be uaed, for the time being at
leaat, only to aeet the reconstruction problems of the good risk arena of
Western lurope. Any attempt under present world conditions to use tt& International Bank to cover the needs of the "middle risk* and *poor risk* *refc«
of Europe would be likely to result in f«t*lly undermining the Bank's
borrowing e*pe.elty« Chi the other h«mdy should G*S. investor* beeome satis*
fled that tb» British and French problems will be definitely solved through
direct U.S. aid, the Interiiitionei Bank should be able to aarket sufficient
debentures to tak@ care of the regaining reeoag true t ion credit needs of the
good risk areas of Western £urope« This, of course, would leave it up to
this country to decide to what extant the rehabilitation requirements of the
middle risk and poor risk areas would be met.
As for the "aiddle risk* category I believe that tb* reimbilitation
requirements of Austria, G&rnany, and Italy should be accepted &s a direct
I
0.S. fisaaclal reepotisibiiity* Although both Britain and France "have a
stake in Austria and Germany, neither country ie in a position to cover
their shiire of tlie rehabilitation (i.e., ea-tegory B) requlreiaente of Austria
and Genaany without borrowing from abroad for th« purpose* Itoder these
circumstances I believe it would be more straightforward for the Salted
States to assume the full reeponeibility ©f financing the category B require«ents of both areas directly rather than to furnish dollars in the first
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Federal Reserve Bank of St. Louis
instance to Britain and France, part of which they are obliged to use to
carry their agreed portion of sueh financial assistance to Austria and
Geraany* Similarly, although the British have a stake in It&ly equal to our
wm, they are in no position to at SUM any additional financial burden with
respect thereto* Under these elrcuiist&aceB, it seems to me that the United
States Simula provide the exchange needed to carry out th« Italian rehabilitation task*
Any U.S* financial 6suistance to Austria, Germany and Italy should, in
my opinion, be sade on e tied loaa basis, preferably through the ExportImport B&ak» This would serve two purposes? First, it would insure that the
funds were used for productive rehabilitation purposes and not diverted to
relief channels* Secondly, the protpeci of repayment of loftns to these three
areas is sufficient good to warrant using a loau technique most likely to
facilitate the repayment* Ii. the case of Italy and Austria, because of their
liheofced area status, I believe it would be advisable to extpnd assistance on
^
f
.
Jt «
j • -•
itHtfHt
a long-term basis. In the etise of Germany, however, 0.S, category B
financi&g should be furnished, on a short-term basis and constitaite a first
charge on Geroaa exports &$ long as it is quadripartite policy \tojdltiaet»^
collect in hard currency for category A supplies.
fhis leaves the problem of pollticaHy-Btrategic poor ri^k ereas, of
»hich Graaea end Turkey are the European ©xeiaples. Here some type of
technique as a means of ensuring proper use of 0,S. funds
etaantial* The pattern of adsinlgtretion of this type of eid (under
Stat« Pepartaetit end r«ar l^pertiieiit control) will presumably be set in
Oraaee &ncl Turkey, fhe area of 0»S« interest in Asia falls l&rgely into
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Federal Reserve Bank of St. Louis
_ 5eategory* If a globe! aid program is adopted, it seems to ©e that any
atsiatenee to Chine and Korea ah mild be extended only on this administered
aid ba«lt • In order to minimi^* the overtly political assets of the global
aid progrea aad thereby enhance the prospect of the United States being repaid for tfce loan portion of the program, this ph^se of the 0«S« global aid
program shoiald b« differentiated &.« completely ae possible from the remainder
of the program •
As for post-war derelopaent&l ae distinct from re-con* traction needs,
if a glob&l aid prop-isai 1§ adopted by the U.S. and it appears likely to
succeed in it* purpoee, the Intercationel &aak would be placed in an
exceptionally good poeitloa to meet all deTelopmental needs in Latin JMserica
ftmd elsewhert. If, however, the International Bank should be unwilling to
enter the t8tin American field ftxteiudvely pending demonstration of succees
of such a 0*0. global aid program, this GoTermseRt should be prepared to
continue in this field during the Interim and render an ap£T6priate amount
of sssisttiBce to I»etin Aasriea throtigh tfae Ixport*-Imj>ort Sank.
Hole ..of .the Ddmbaak - In raeapitulatioa, if a global aid
should be adopted, tiue fxiebank wotild appear to be tfce epproprla'te sfency
of the u%S« ^o^«rrt«*mt to handle several pha.v«» of t^* prograaf (a)
financing th© e&tegory B rteuire»«ntii of Geraany aad Atsetris on either a
•hort-bara or XoKg*»t*rm basis, (b) flna&oing tb<? rehabilitation requirea^nta
of Italy fend- other "middle risk* area* on a lon.g*term busis, (c) financing
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Federal Reserve Bank of St. Louis
e^elopaentfcl credit requirements (to the extent tiaat the
Banlc is iffi^illing to do to),
This article is protected by copyright and has been removed.
Article Title:
Number 1538
Journal Title:
American Letter
Date:
February 21, 1948
Publisher:
Whaley-Eaton Service
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Federal Reserve Bank of St. Louis
This article is protected by copyright and has been removed.
Article Title:
The Market Break is Serious
Journal Title:
The Kiplinger Washington Letter
Date:
February 14, 1948
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Federal Reserve Bank of St. Louis
This article is protected by copyright and has been removed.
Article Title:
This Letter is About the Marshall Plan
Journal Title:
The Kiplinger Washington Letter, Special Issue
Date:
February 14, 1948
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Federal Reserve Bank of St. Louis
Union Calendar No. 738
S. 2202
[Report No. 1585]
IN THE HOUSE OF BEPKESENTATIVES
MARCH 15,1948
Referred to the Committee on Foreign Affairs
MARCH 20,1948
Reported with amendments, committed to the Committee of the Whole House
on the State of the Union, and ordered to be printed
[Strike out all after the enacting clause and insert the part printed in italic]
AN ACT
To promote the general welfare, national interest, arid foreign
policy of the United States through necessary economic and
financial assistance to foreign countries which undertake to
cooperate with each other in the establishment and maintenance of economic conditions essential to a peaceful and
prosperous world.
1
Be it enacted by the Senate and House of Representa-
2 tives of the United States of America in Congress assembled,
3 That this Aet may be cited as "The Economic Cooperation
4 Aetef 1918".
5
6
FINDINGS AJ?B DECLARATION OP POLICY
8sO7 £r -(ft)- Recognizing fee intimate economic aftd other
7 relationships between the United States an4 the nations el
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Federal Reserve Bank of St. Louis
2
1 Europe, a»d recognizing that disruption following in- the wake
2 el war is set contained fey national frontiers, the Congress
3 finds that the existing situation i» Europe endangers the
4 establishment ef a lasting peace, the general welfare and
5 national interest ef the United States, a»d the attainment of
6 the objectives ef the United Nations. ¥he restoration e*
7 maintenance m European countries of principles el individual
8 liberty, free institutions, aed genuine independence rests
9 largely upon tbe establishment of sound economic conditions,
10 stable international eeonomic relationships, a»d the achieve
11 mcnt by the countries ef Europe ef a healthy economy indc
12 pendent of extraordinary outside assistance. 5^ accom
13 plishmcnt ef these objectives eaUs fe^ a; pto ef European
1^ rccovciyr, open te all sueh nations which cooperate m saeh
plan,1 Dascd upon a? strong proQiiction cuorcy tnc expansion
1" ef foreign trade, Ihe creation aftd maintenance ef internal
1 • financiaJ: stability,' aftd the development ef economic coopcra
18 tiefij including all possible steps te establish astd manitain
1^ equitable rates ef exchange aa4 te bring about the progressive
20 elimination ef trade barriers. Mindful ef the advantages
21 which the United States has enjoyed through the existence
22 ef a large domestic market- with se internal trade barricrsr
O
7
23 ajftd believing that similar advantages eaa accurc te the
2^ countries ef Europe, tt is the hope ef the people ef the United
2^ States that these countries through a jeist organization will
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Federal Reserve Bank of St. Louis
3
1 esei4 sustained common efierts which will speedily ochicvo
2 that eeonomic eeeperation ffi Europe which is essential fe
3 lasting peace and prosperity- Accordingly, it is declared te
4
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5 strengthen principles el individual liberty, free institutions,
6 and genuine independence m Europe through assistance to
7 these countries ef Europe which participate in- a joint recovery
8 program based itpen- self help and mutual cooperation: Pro
^ vidcd, That no assistance to the participating countries herein
10 contemplated shall seriously impair the economic stability
11 el the United States. It is further declared te be the policy
12 el the United States that continuity el assistance provided
13 by the United States should, at all timesj be dependent ttpen14 continuity el cooperation among countries participating in1^ the program.
16
riiErosES OF ^e*
l'
-fb)- It is the purpose el this Aet te effectuate the policy
iy
set lorth in- subsection -(*f ^ &^ section by furnishing
-*-" material and financial assistance te the participating coun
^ tries ift Stteh a manner as te aid them, through their ewnindividual and concerted eifetsj te become independent el
99
-,.
.
.
.
~ extraordinary eu-tside economic assistance within the period
f\ry
~' J el operations under this Aetj by—
24-
25
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Federal Reserve Bank of St. Louis
-fi)- promoting industrial and agricultural produc
• ffi the partteipatmg eeuntrics;
eefi
4
1
-{£)- ferthering the resteratien er maintenance el
2
the seundncss el European currencies, budgets,- and
3
finances;
an4
4
-|g-)- facilitating an4 stimulating the gre^h el inter-
5
national trade el participating countries with ene an-
6
etbe? an4 witb etke^ eountyies by appfopriate ffieastH^s
7
including rcduetion el te^iefs which m&f hampe? stteh
I I
4-T<f^ /^ ^\
tl MIAU •
9
10
PAETICITATING CQTJyTEIES
8E6r Br As ftse4 ifi this Ae% the tem -partieipfttiftg
11 eettfit^y^ means—
12
-(ft}- any eeuritry, tegotlior with dependent ftfeas
1^
imdef its ftdministfQtion, wh4eh signo4 the i^^pert el the
1^
Committee el European- Economic Cooperation at ftet^
I5
en September 32j 1947; an4
1^
-(h)- any other country -(including any el the genes
l^
el occupation el Germany, any areas midcr interim
18
tienai administration er- control, an4 the Erec ¥emtery
1:1
el Trieste er- either- el its genes)- whehy er partly hi
orv
zu
_„.
21
istratie&j
.
_
Europe, tegcthcr with dependent areas under its adrnm-
22
provided stteh country adheres tey an4 ler se leng as h
23
remains an adherent t% a jeint program ler European
24
recovery designed te accomplish the purposes el this Aek
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Federal Reserve Bank of St. Louis
5
1
ESTABLISHMENT OP ECONOMIC COOPERATION
2
ADMINISTRATION
3
Seer 4r -faf There is hereby established, with its
4 cipal office in- the District el Columbia, as agency el the
5 Government which shall he known as the Economie Co op era
6 tien- Administration, hereinafter referred to as the Adminis
7 tration. ¥he Administration- shall he headed by an
(
8 Administrator for Eeen-en4e Cooperatieny hereinafter referred
^ to as the Administrator^ who shaH he appointed hy the
10 President, by and with the ad^iee and- consent ef the Senate,
11 and who shall receive compensation at the rate el $20,000
1^ per- ann-tHftr ¥he Administrator shall he responsible to the
13 President and shall have a status in the executive branch
14
el the Government comparable te that el the head el an
eseeftti¥e department. Except as otherwise presided in- this
i fi
17
''
Aety the administration el the provisions el this Aet is
hereby vested in the Administrator an4 his functions shall
he performed under the control el the President.
¥here shall he h* the Administration a Deputy
90
21
Administrator lor- Economic Cooperation who shall he
pointed by the President, by and with the advice and een-
22 sent el the Senate, a«4 shall receive compensation at the
23
"' rate ol $17,500 per- annum. The Deputy Administrator- lor
24 Economic Cooperation shall perform stteh functions as the
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Federal Reserve Bank of St. Louis
6
1 Administrator shall designate, afl4 shall be Acting Adminis2 trator ies Economic Cooperation during the absence es 4is3
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4 at the office el Administra-tesr
5
-(of ^^e President is authorized^ pending the appoint-
6 mont aed qualification el t^he fisst Administrates es Deputy
7 Administrator les Economie Coopcratiea appointed here
jaftcr tbe date el enactment el this Aetj fes tbe performance
el tbe functiees el tlie Administrator under tfeis Ae^ through
suefe departments, agencies, es establishments el the United
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13 President nominates a» Administrates es Deputy AdminisJ-^t
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•^f
shatt be extended be}Tond sueh thirty day pesied but e«ly
^ ' ttfttii a» Administrator es Deputy Administrator qualifies a»d
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-(4)" ^ n j department, agcnc}^ es eBte-blishme»t el the
^ GrovornmoBt (including, whenever used m this Aety aey
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performing functteas under this Ae£ is authorized te cmployj
- "J les dtbfy within the eentincntal limits el the United States,
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-^ ?stteh personnel as may be iieeessasy te cany e«fe tfeel
25
-
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¥tsietrs am purposes el this Ae4^ and teds available pursuant
http://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
7
1 to section 44 of this Aet sha41 be available for personal
2 services m the District of Columbia aed elsewhere withottt
3 regard to section 44 -fa^}- of the Federal Employees ^Pay Aet
4 of 1946 -(40 8 tat. 219)7 Of such personnel employed 'by
5 the Administration, not to exceed sixty may be compensated
6 without regard £e the provisions of the Classification Aet
I I
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8 compensated a4 a fate ift excess of $10,000 pe? annum,
9 bet sot in- excess of $15,000 per annum.
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10 consultants Of organizations thereof? as attthorizcd by section
11
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12 raay ^e employed by the Administration, and individuals so
13
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employed may be compensated at rates ftol ift excess of
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ether expenses while so employed.
*
-(e)- ¥he head of asy department,- agency? o? establish
mcnt of the Govcrmerit performing functions under this
21
^-^
99
oo
Aet^ ffiay? from time to ttfflej promulgate sueh rules aftd rcgui
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tions under this Aet? aed he triay delegate authority ^o
perform asy of such functions to his subordinates, acting
under his direction a»d under mles a»d rcgulatlions
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Federal Reserve Bank of St. Louis
by iiitiTT
8
1
GENERAL FUNCTIONS OF ADMINISTRATOR
2
SBOT Ih- -{af ¥fee Administrator^ under the control of
3 the President, shall in addition- to aH other- functions nested
4^*-
iyv l"i T T-VI r\TT j- rVlCj __A /"j"K
ITT 111111 U V tlllb j-i-Ut
5
-fi)- review a«4 appraise the requirements of pa¥-
6
ticipating countries for assistance under the terms of
-f24- formulate programs of Ignited States assistance
\
/
J.
O
<
under this Aety including approval of specific ofojeets
which have been submitted to him by the participating
countries;
-^- provide fe? the efficient execution of any such
programs as may he placed m operation ; a-n4
-(4f terminate provision of assistance e? take other
remedial action as provided m section 4-7- of this Aetr
-(h)- fe order to strengthen a»d make more eSeetive the
conduct of the foreign relations of the United States—
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Federal Reserve Bank of St. Louis
-ftf the Administrator and the Secretary of State
shall keep each other folly an4 currently informed o»
i natters, including prospective action^ arising within the
scope of their respective duties whieh a-pe pertinent to
4~ l"> f\
IJIU
r\n 4- j s\ n r%j: 4- IT r\ f\4- KI f\-*9 •
I I I I Lll -3 T7T 1/1HJ Lfl/llv-J. ;
-^- whenever the Secretary of State believes
any action, proposed actionT or failure to aet on the
of the Administrator is inconsistent w-ith the foreign
*
9
1
policy objectives el tfee United States, fee shall consult
2
witfe tfee Administrator a»d? il differences el view are
3
net adjusted fey consultation, tfee matter shall fee referred
4
to tfee President- ler- feai decision.
5
-fe)- ¥fee Administrator a»d tfee department, agency,
6 OF officer » tfee executive branch el tfee Government cxor7 cising tfee authority granted te tfee President fey section
8 £ el tfee Aet el July 3? i&40 -{£4 8*ak ^4^ as amended?
9 shall keep each other fttHy and currently informed eft matters?
10 including prospective action, ar4siftg within tfee scope el tfeeir
n
T<^VOY\/~i/^-J-T-T-r/^
1 Uo [JUl_? tl V l_-
12 other.
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Whcaevef tfee Administrator believes tfeat a»y
13 action, proposed action, e? laifetr^ te act e» tfee part el
14 s«efe department? agency, er officer is inconsistent witfe tfee
15 ^purposes a»d provisions el tfeis Aet? fee sfeali consult witfe
16 suefe department, agency, e? officer and? il differences el
17 view ar-e net adjusted fey consultation? tfee matter shall fee
18 referred te tfee President le? feat decision.
19
20
KATIONAJb ADVISORY COUNCIL
g^Or <4r 8ectie« 4 -(a)- el tfee Eretton Woods Agreement
21 Aet •&& 8ta^ M^? M^)- is hereby amended te read as
22 lellews23
-"SEC. 4-7 -(a)- fe e^der te eeerdiftate tfee policies and
24 operations el tfee representatives el tfee United States eft tfee
25 Fund and tfee Bank an4 el all agencies el tfee Government
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Federal Reserve Bank of St. Louis
10
1 which make e? participate is making foreign loans e? which
2 engage m foreign financial exchange e? monetary transac
3 tieasy there is hereby established the National Advisory Cetm4 eil eft International Monetary aed Financial Problems
5
(hereinafter referred te as the 'Council'), consisting el the
6 Secretary el Trcasur}^ as Chairman, the Secretary el State,
7 the Secretary el Commerce, the Chairman el the Board el
° Governors el the Federal Reserve System, the Chairman el
10 ingtony and during sues period as the Economic Cooperation
11 Administration shall continue te exist, the Administrator fe*
12 Economic Cooperation."
13
"
rUDLIC ADVISORY DOABD
SfiOr £7 -(a)- There is hereby created a Publie Advisory
1^ Board? hereinafter relereed te as the Board, which shall
1R
10
17
J- •
1Q
10
iy
20
advise and eensult with the Administrator with respect te
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Board shall consist el the Administrator^ whe shall be Chair
man, aft4 ftet te exceed twelve additional members te be
appointed by the President^ by an4 with the advice aft4 ee»-
22
^^ seftt el the Senate, aed whe shall be selected from among
citizens el the United States el teead and varied experience
24
^
m matters affcctiftg the puMe iftterestj other than- officers and
25 employees el the United States -(iaeluding aey agency
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Federal Reserve Bank of St. Louis
•
11
1 instrumentality el tfee United States) wboy as such-,- regularly
2 receive compensation ler- current services. 5^ Board sfeatt
3
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4 el tfee Administrator er- wlieft toee er- ffiere members el tfee
5 Beard request tfee Administrator te eaH a meeting. 5^
6 more ^fean- a majority el twe el tfee members sfeaH fee ap/1
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8 feers el tfee Board, other tfeae tfee Administrator, sfeatt
9 receive, ewfe el fe»ds raade available ler tfee purposes el
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12 tfee purpose el attendance at meetings el tfee Board, e*
1^ at conferences feeld upon tfee eall el tfee Administrator?
" af^4 ift necessary travel, and while se engaged, they may
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UNITED STATES SrECIAL EEPBESENTATIVE ABEOAD
O_IL(JT i5.' _L iici c biiaLi T^e a LJ mrcG. o tarco opociai
scntativc m Europe wfee sfeaH -fa)- fee appointed fey tfee Prcsident, fey an4 witfe tfee advice a&4 consent el tfee Senate, -ffe)fee entitled £e receive tfee same compensation aad aHowanccs
as a chiel el mission, ekss ij within tfee meaning el tfee
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Federal Reserve Bank of St. Louis
12
1 ,e| August i£j ±94£ -{$9 Stak 90^ a«4 -{ef hft¥e the
2 ef ambassador e?ctraordinary an4 plenipotentiary. He shall
3 be the representative ef the Administrator? aed shftll also
4 be the ehief representative ef the United States Government
5 to any organization of participating countries which may be
6 established by sueh countries to further a joint program for
7 European reeevcry? and shall discharge m Europe such addi8 tiorra-1 responsibilities as may be assigned to him with the
9 approval of the President ht furtherattee of the purposes of
10 this Aetr He etay also be designated as the United States
11 representative OK the Econogae Commission for Europe.
1^ He shall receive his instructions from the Administrator an4
13 stteh instructiofts shall be prepared aftd transmitted to hrm
1^ in- accordance with procedures agreed to between the AdJ-t)
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1^ appropriate coordinatioTi as presided by subsection -(bf of
IT section § of this Aetr He shail eoordinate the activities
"1! Q
of the Chiefs of Special Missions provided for m section 0
of this Aetr Be shatt keep the Admimstratorj the Sccrctaiy
^
of State-, the chiefs of the United Stfttes drpromatic missions,
^1 arrd the chiefs of the special missions provided for m section
** 0 of this Aet cuiTcntly informed concerning his activities
OQ
He shall consult with the ehiefs of all stieh missions, who
^
shall giv-e him sueh eoop eratioTi as he ffiay reo^rire for the
25
performance of his duties ttrrder this
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Federal Reserve Bank of St. Louis
13
1
SPECIAL EGA MISSIONS ABROAD
2
SBOr Or -(a)- There shall he established in- eaeh partici
3 pating country, except as pre¥i4ed m subsection -(4)- el this
4 section, a special mission fer eeenemie eeoporation under
5 the direction el a chief whe shall be responsible ler assuring
6 the performance within such country el operations under
7 this Aetr The chief shall be appointed by the Adminis
8 tratorj shall receive his instructions Irem the Administrator,
9 and shall report te the Administrator e« the performance
10 el the duties assigned te hiffir The ehiel el the special misO
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11 sien- shall take rank immediately alter the chief el the United
12 States diplomat4e missies in- stteh eeuntry?
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1* el the United States 4*plenTatie mission feUy an4 cuiTcntly
1^ informed eft matters, including prospective action, arising
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special mission feUy an4 currently informed en matters
1^ relative te the eenduct el the duties el the chief el the special
*® mission. The chief el the United States diplomatic mission
7~ witi be responsible ler assuring that ^e operations el the
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special mission are eonsistcnt -with the foreign policy objcc^"^1^^"
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Federal Reserve Bank of St. Louis
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1 e» the pa#t el the special mission is inconsistent with such
^ lorcign poncy o DJ cc lives, nc sno.ii so advise tnc cmci or inc
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bUCCiai lilloSlOn and
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4 ift Europe. H differences el view a#e »et adjusted by een5 sultation, ^ie matter sfea41 fee referred te tfee Secretary el
6 State aed the Administrator fa decision.
i c ) .Lnc i5ccrctar\r et otatc snan provide sucn onice
*
8 spacc? facilities^ and other administrative services ler- the
9 United States Special Representative m Europe aed his staff,
10 &Hd ler- the special mission m eaeh participating country, as
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12
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15 period el occupation, the President shatt make appropriate
1" administrative arrangements te the conduct el operations
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rEESQNNEL OUTSIDE UXITED STATES
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SEO. 4Or -(ft)- J^er- the purpose el performing ftmetiess
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Federal Reserve Bank of St. Louis
States the Admmistrator may—
-(4^- employ persons whe shall receive compenoa
tieft at any el the rates provided le? the Foreign Service
15
1
Reserve and staff fey the Foreign Service Aet el 1916
^
I t)U oto/c. t/yy ) , LOgci/nor ^virn ano\vanccs ano. Dcncnts
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established thereunder ; and
4
-{£}- recommend the appointment of assignment of
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persons, and the Secretary el State may appoint e?
6
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Ecscrvc ef Staff te tfee duration el operations under
8
tkis Aetj aed tfee Secretary el State may thereafter
9
assign, transfer, e? promote Stteh- persons upon the
10
recommendation- el the Administrator. Persons se
11
appointed te the Foreign Service Staff shall be entitled
1^
te the benefits el section £28 el the Foreign Service
13
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^
-fb)- ¥er the purpose el performing functions under this
A pf A£ _LiQ/tfi
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•^-^ Aet outside the continental limits el the United States, the
•*•" Secretary el State may, at the request el the Administrator,
•*• ' appoint, lef the duration el operations under this Aetj alien
•
-^ clerks aed employees in aGcordancc with applicable
19
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-fe)- Civilian personnel whe are citizens e? residents
el the United States employed or appointed pursuant te this
section te perform functions under this Aet shall fee invcsti
f)O
"° gated fey the Federal Bureau el Investigation which shall
make a report thereof te the appointing authority as seen- as
possible : Provided, however, That they may temporarily
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Federal Reserve Bank of St. Louis
16
1 assume their- posts an4 perform their functions after
2 liminary investigation and clearance by the Administrator ef
3
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6
XATUBE A?*B METnOD Og ASSISTANCE
7
SEC. tt: -fft)- ¥he Administeatef may, from time te
8 time,- furnish assistance te any participating country ky pre9 viding fe? the porformanco ef any ef the functions set forth
10 ia paragraphs -(if through -f£}- ef this subscctioft when he
11 deems it te be m furtherance ef the purposes ef this Act,
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such additional terms a«4 eonditions consistent with the p?e-
14 visions ef this Aet as he may determine te be necessary an4
1* proper.
-ft)- Procurement from any se«i:eej including Gov
1^
M
crnment stocks, ef a*^ commodity whieh he determines
l^
te be required fe? the furthcranee ef the purposes ef this
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aey commodityj matcAlj article, supply- e? goods
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necessary fe^ the purposes ef this Aetr
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in-g any commoditiesj er performing any ether services
94-
with respect te a participating country which fete deter
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Federal Reserve Bank of St. Louis
•
. . .
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17
1
mines te fee required for- accomplishing the purposes of
2
f]-|iq A pf
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3
¥he Administrator shall, in providing te the
4
curcmcnt of commodities under authority of this
5
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6
as is practicable, that at least &Q per- centum ef the
1
gross tonnage of commodities, procured within the
^
u nitcci otatcs out 01 luncis maQC avauaDic uncicr tnis
9
Aet aed transported abroad eft ocean vessels, is so
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transported on u nitcci otatcs nag vessels to tnc extent
11
Stteh vessels are available at market rates.
12
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-(£)- Procurement of and furnishing technical infor
13
mation an4 assistance.
14
-{4f Transfer of aey commodity ef service, which
1^
transfer shall fee signified fey delivery of the custody
16
aa4 right of possession and »se ef saeh commodity, of
17
otherwise making available any such commodity, OF fey
18
rendering a service te a participating country e? te
-'
any agency OF organization representing a participating
20
country.
21
-fef the allocation of commodities or- services to
22
specific projects designed to ear^y eat the purposes of
*^
this Aetj which have been submitted to the Adminis
S. 2202
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Federal Reserve Bank of St. Louis
2
18
1
trator by participating countries a«4 have been approved
§
2
l~iTT
3
-fb}- ¥he Administrator may provide ler the perform
U V
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4 eaee el a»y el the functions described m subsection -(a)- el
5 this section—
6
7
-fH" ky establishing accounts against which, under
regulations prescribed by the Administrator—
8
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connection with supply programs approved by the
10
Administrator
11
when issued, shati constitute obligations el appli
12
cable appropriations) ; aa4
13
(and such letters el eemmitmcnt,
-{ii)- withdrawals may be made by partici
14
paring countries, e? agencies er- organizations ±tep-
1^
resenting participating countries, upon presentation-
16
el contracts-,- invoices, er other doGumcntatten spcci
1^
fied
by the Administrator.
1^
Buch accounts may be established e±± the books el the
19
Administration, er any other department^ agency, er
20
establishment el the Government specified by the Admin
21
istrator, ery en- terms ai±4 conditions approved by the
22
Secretary el the Treasury, is banking institutions ift
2^
the United 8tatesr Expenditures el fluids which have
24
been made available through accounts se established shall
25
be accounted ler en- standard documentatteft required
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Federal Reserve Bank of St. Louis
19
1
fer- expenditures el Government feftds-r Provided, That
2
such expenditures ler- commodities e? services
3
etttaidc the continental limits el the United States under
4
authority el this section *ftay he accounted le? exclu
5
sively- eft such certification as the Administrator may
6
prescribe te assure expenditure ift furtherance el the
7
purposes el this Aetj aed sueh certification shall he
8
binding eft the accounting officers el the Government
9
-{£}- by utilizing the services a»d facilities el afty
10
department? agency, e? establishment el the Government
:
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head el such department, agency, er- establishment, erj is
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the President's discretion, by acting ift coopcratteft with
tne u niicci ^\ axions er \vitn otner international organ •
1
'
izations e? with agencies el the participating eeuntrics,
"^
a»4 funds allocated pursuant te this section te a«y depart
"
meaty agency, e? establishment el the Government shati
he established ift separate appropriation accounts eft the
111
books el the Treasury.
-{£)- by makingT under rules ae4 regulations te he
prescribed by the Administrator, guaranties te afty
person el investments ift connection with project
oq
24
25
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Federal Reserve Bank of St. Louis
proved by the Administrator aft4 the participating coun
concerned as furthering the purposes el this
whieh guaranties shall terminate ftet later thaft fourteen
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Federal Reserve Bank of St. Louis
20
yoars from tfee date ol enactment of tfeis Act: Provided,
That
-(if tfee guaranty to any perse** sfeaH net exeeed tfee amount of dollars invested HI tfee project
fey sttefe person witfe tfee approval of tfee Adminis
trator and sfeaH fee limited to tfee transfer i
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pcnsation fe tfee sale o? disposition of aH o? any
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guaranties sfeali »ot exceed § per centum of
funds appropriated fe tfee purposes of tfeis
any liabilities accuring under s«efe guaranties
snail DC Qciray c Q ^vn/nm tno jjmiiTS ot lunds so appro**
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corporation, partncrshipj of other association created
under tfee law of tfee United States e? of aw
State
•/
Of Territory a»4 substantially fecncficially owned fey
citizens of tfee United States.-(4)- -(if By making- under rules aa4 regulations
21
1 scribed by the Administrator, guaranties te any
2 government in the Western Hemisphere with respect te
3
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4 ffleditics an4 services te be transferred, with the approval
5 of the Administrator, te €b participating country : Provided,
6 That guaranties te governments in- the Western Hemisphere
7 shall net exceed TO per centum el the credits se extended
8 by any such government : And provided further, That the'"
9 Administrator determines that the ftse el this method el
10 guaranteeing credits, as opposed te this method el direct
11 procurement and delivery te participating countries, wiH
12 fret substantially prejudice the extension e* validity el
13 credits e? loans by other governments, by the International
14 Bank lor- Ecconstruction as4 Development-,- e? by private
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16 touro might be? prudently made without soeh guaranty,
17 considering the capacity el the several participating coun
18 tries te repay, fe determining whether te provide fe ^te
19 procurement el commodities a»4 services outside the conti
ncnt/ai limits e± tnc u nitco. ij tares, tnc x\.Q.mmistyrator snail
21 take inte account whether the government el the country
22 ift which commodities er services are available !e* transfer
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24 %&& conditions as the Administrator considers equitable
25 prudent m connection with stteh transfers, fe connection
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Federal Reserve Bank of St. Louis
22
1 with stieh guarantiesj the Administrator^ en- terms an4 eon9
j-i -i -f T /~vy* n
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5 ef such agreement.
6
-(ii)- As «se4 in this paragraph^ the term
7 means a citizen ef any Western Hemisphere eeuntry, er any
8 corporation, partnership, er other association created under
9 the law ef any sueh country er- un4er- any political suhdivi
10 sien- thereofj an4 stthstantially owned by eitraens ef Western
11 Hemisphere countries.
-(ef -(4-)- :Phe Administrater- may provide assistance fer-
12
13 any participating country, in the form an4 under the pre14 eedures authorized m subsections -fa)~ an4 (b) , respectively,
I D ef this section, through grants er- upon payment in cash, er
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W may 6n4 appropriate, including payment by the transfer- te
1° the United States (under sueh terms an4 in sueh quantities
-*•" as fttay be agreed te between the Administrator an4 tbe
20
participating country) ef materials which ar-e required by
^4 the United States as a result ef deficiencies er- potential
2 2 !
~~
£ • • • •
dcncicncics
m its ew-n resources? In determining w-hether
oq
~ ' s«eb assistance shall be through grants er upon terms ef
24
"
25
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Federal Reserve Bank of St. Louis
payment, an4 in- determining the terms ef payment, fee
sbatt aet in consul tatien with tbe National Advisory Council
23
1 e*t International Monetary a*4 Financial Problems, an4 the
2 determination whether er- net ft participating country should
3 be required to make payment for- ftfiy assistance furnished
4 to sttch country «t furtherance ef the purposes ef this Aety
5 and the terms ef sueh payment, if required, shall depend
6 upon the character a«4 purpose ef the assistance a-ad upon
7 the eapacitv ef sueh eeuntry te make stteh payments without
c/
8 jeopardizing the accomplishment ef the purposes ef this Act.
it is determined that assistanee should he
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tnc o^v cimini s tra t o r stiaii allocate luncis IOF tnc purpose te
^ the Ejcport Import Bank ef Washington, which shallj »et^ withstanding the provisions ef the Export Import Bank Aet
^ ef 1945 -(^ S^tk §^)-7 as amended, make a«4 administer
the credit as directed^ and: e« terms specified, hy the xVdmin
1R
' ' istrator m consultation with the National Advisory Council
17
,
18
en International Monetary- ftwd Financial Problems.
Administrator shall make advances t% er- reimburse,
Export Impert Bank ef Washington fe? necessary admin
20
"
21
tstmtivc expenses m eonncction with sueh ercdits.
¥he
Bai^k shall deposit hite the Treasury ef the United States,
22
~~ as miscellaneous rceciptSy aifteuftts received hy the Bank m
23
repayment ef pr-ineipal a«4 interest e» aey such credits.
24 OretUts made by the Export Import Bank ef Washington
25
with funds se allocated te it by the Administrator shall
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Federal Reserve Bank of St. Louis
24
1 fee considered m determining whether the Bank has eatstand2
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5
PEOTECTION OP DOMESTIC ECONOMY
6
SEC. -t^r -fa)- ^Ffee Administratop shall provide !e?
7 procurement is the United States el commodities under
?S
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9 rtcsourccs el Ihe United States a«4 the impact el such
10 procurement upon the domestic economy, an4 -(3)- avoid
11 impairing :the fulfillment el vital n'ccds el the people el
12 the United States.
13
J-^t
-(h)- ^e procurement el petroleum an4 petroleum
y\>*y^yJny^j-ci
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1^ ticablc, fee made from petroleum sources outside the
*" States ; a»dy m furnishing commodities under the provisions
* ' el this Aety the Administrator shatt tafee Mly iste account
18
the present an4 anticipated world shortage el petroleum a&d
1
its products ase! ;fee consequent undcsirability el expansion
20
i» petroleum consuming equipment where the ttse el alter
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25
-fe)- fe order te assure the eeaservatien: el domestic
supplies aed the retention m the Un4te4 States el byproduct
feeds necessary te the maintenance el the agricultural
economy el the United States, the amounts el wheat
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Federal Reserve Bank of St. Louis
25
1 wheat flour produced m the Ignited States te fee transferred:
2 fey grant te the participating countries shall fee so determined
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-(4)- 5%e term "surplus agricultural commodity" as used
9 m this section is defined as any agricultural commodity, e?
10 product thereof, produced m the feited States which is
H
determined fey the Secretary el Agriculture te fee » excess
l^ el domestic rcquircmcntsT fe providing ler the procurement
13 el aey sueh surplus agricultural: eommodity ler transfer fey
14
i^
1R
17
grant te any participating country in- aecordanco with the
requirements el sueh country, the Administrates shallj insofar
as practicable a»d w^hcrc i» furthcranee el the purposes el
this Aetj gi¥e effect te the following:
18
The Administratof shall authorise the procurement
el any such surplus agricultural commodity enly within the
90
United States: Provided, That this restriction shall net fee
21 applicable -fi)- te any agricultural commodity, er produet
22
w
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24
25
thereof, located in- ese participating country, aed intended:
ler transfer £e another participating eeuntry, il the Adminis
trator,- m consultation with the Secretary el Agriculture,
determines that sueh procurement a»d transfer is m further
http://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
26
1
nt-\ /~ir\
iMlUU
f\f
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2 burdensome surplus m ^fee United States e* seriousl}' preju
3 diee me position el domestic producers el sttefe surplus agri-4 cultural eommodities, e^ -(iif ilj a»d ^e t;lie estesl tfeftfe any
5 s«eli surplus agricultural commodity is «et available ift the
6 United States ift sufficient quantities £e supply tfee require
7 mcnts el llie participating countries under this Aek
8
-££)- In providing ler tfee procurement el any such s«^
9 plus agricultural conimodit}^ the Administrator shall, isse1P te as practicable and applicable, Oft4 alter- giving due eenH
sidcration ^e the excess el any stteh commodity ev-er domestic
12 requirements, an4 te the historic reliance el United States
13 producers el any saeh surplus agricultural commodity upon
markets m the participating countries, provide le? the precurcmont el each class er- typo el aey such surplus agricul
i f\
17
'
tural commodity m the approximate proportion that the
Secretary el Agriculture determines sueh classes e? types
hea* te the teta4 amount el excess el s«eh surplus agricul
teal commodity e^er- domestic requirements.
20
21
-fe)- Whenever the 8eeretary el Agriculture determines
that any quantity el any surplus agricultural commodity,
22
~~ heretofore e* hereafter acquired by Commodity Credit Cer23
poration m the administration el its price support programs,
is available te ttse m furnishing assistance te foreign coun-
25
http://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
tries, he shall se advise aH departments, agencies, a»4 estah-
27
1 lishmcnts el the Government administering laws providing
2 ler- the furnishing el assistance or- relief to foreign countries
3 -fmcluding occupied or- liberated countries or- areas ef such
4 countries). Thereafter the department,- agency, or- establish
5 mcnt administering any such law shall, te the maximum
6^ extent _Lpracticable,7 consistent with the Br-oyisiofts
aftd m
J_
7 furtherance ef the purposes of such lawj and where for transfer
8 by grant ami H* accordance with the requirements ef such
9 foreign eettsfcpf? procure or- provide fer- the procurement el
10 sueh quantity el sueh surplus agricultural commodity. 5^
11 sales price paid as rcimburscmcB-t te Commodity Credit
12 Corporation ler- aay sueh sufplus agricultural commodity sha-H
13 he m such amount as Commodity Credit Corporation deter
1± mines witt IttHy reimburse it fef the eest te it el sueh surplus
^5 agricultural commodity at the time and place s«eh surplus
IQ agricultural commodity is delivered by i£j bttt ift »e event
-^ *-i
1 'T
Q l l O 4^1 4-11 /v o O-. I f\ r< i^.T*i C*f\ rk./^ 1^ T ^(*r> V^T* J: t^XO f^ 4-1 ^ f\ rl j^t-fk f \a4--t r\ **-\r\ c\ T< \7 r\4- *r\T*j^^^/^
ollttll TTTt? ocLlUb JJl 113" ttt7 lll^HUl L-llciil TTrvt UUllltTBlll" I J l t l l l V U t l/l 1LU
^g at sueh time a»d place el delivery as determined by the Sccre19 tary el Agriculture, ae4 &te Secretary el Agi'iculturc may
20 Mf ^^ & exceed §0 pe? centum el such sales price as
21 authorized by subsection -fef el this section.
22
"f£f Subject te the provisions ef this section, bttt net-
23 withstanding any ether- provision el law^ in- order te es24. courage utilization el surplus agricultural commodities p«r25 suaftt te this er- a^y- other Aet providing ler- assistance or
http://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
28
1 relief te foreign countries, tfee Secretary el Agriculture, m
2 carrying etrt tfee purposes el clause -(^H section- BQj Public
3 Law £207 Seventy fourth GengFessy as amended, may make
4 payments, including payments te any government agency
5 procuring e*= selling Sttefe surplus agricultural commodities,
6 in as amount set te exceed §0 fez centum el the sales price
I
I J^or-t-1 ft
T-F*^/*\
f\ I /~v-n rf-*» o Kt-i -»^v
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8 ports) , as determined fey tfee Secretary el Agriculture, el
9 suefe surplus agricultural commodities. 5%e rescission: el tke
^^ remainder el section £2 funds fey
•^ tfee Aet el *Wy
•/ ^Or
' 1947
"
(Public taw %%&-; Eightieth Congress) , is hereby canceled
12 ttn4 Sttefe funds a#e hereby ma^e available fe tfee purposes
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~t Q /I Q
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^
"fe)~ ^° export sfeaH fee authorized pursuant te authority
15
conferred fey seetien £ el tfee Aet el Ju4y 3r W40 -f§4 Stfttr
•*•" 71<L) , including a«y amendment thereto, el aey commodity
*™ from tfee United States te aey country wholly e? partly
-*-° is Europe which is set a participating county, il tfee See19
rotary el Commerce determines tfea-t tfee supply el swefe
commodity is insufficient -(e* would fee insufficient il s^efe
export were permitted) te fulfill tfee requirements el partici-
99
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mmistrator : Provided, however, That such expert may fee
24
~^ authorized il tfee Secretary el Commerce determines that
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Federal Reserve Bank of St. Louis
29
1 such export is otherwise in the national interest ef the
2 United States.
3
-{hf fe providing fef the performance ef any ef the
4 functions described in subsection- -(ft)- of section 44? the
5 Administrator shall, to the maximum extent consistent with
6 the accomplishment ef the purposes of this Aety utilize
7 private channels ef trade?
8
9
BEIMDFESEMEyT TO GOYEEffMENT AGENCIES
SEOr i£? -{af The Administrates shall make reimburse
10 mcnt ef payment, e»t ef funds available for the purposes ef
11 this Aety fe* aw commodity, service, er facility procured
12 under section ii ef this Aet from any department, agency,
13 ef establishment ef the Government. Such reimbursement
14 ef payment shall he made te the owning ef disposal agency,
15 as the ease may hej at replacement ees% efj if required by
j.o ia^v, at actual cost, of ac any otncr price, autnorizcci Dy la^v
17 as4 agreed te between the Administrator a**4 soeh agency.
18 The amount ef aey reimbursement or- payment te ae owning
19 agency for- commodities, services^ er- facilities se procured
20 shall he credited te current applica!4e appropriations, funds,
21 ef accounts from which there may he procured replacements
22 ef similar commodities ef s«eh services ef facilities: Pro
23 vidcdj That sueh commodities? services, ef facilities may he
24 procured from ae owning agency eely with the consent ef
http://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
30
I
Qiif iv euti\-..i.J.l.'
f\ <vr > T>f > \'Vr .* .i-L
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2 priations, funds, e? tteeettftts are se^ reimbursable except fe^
3 reason el this subsection, a*4 w-hewk the owning agcnc}" deter
4 mines tha-t replacement el any commodity procured under
5 authority el :this section is ne^ necessary? aey feeds received
6 ift pa}Tmcnt therefor shatt be eevcred iftte ^ Treasury as
7 miscellaneous receipts.
^
-(k)- 5^ Administrator, whenever m his judgment the
mtci csts ei tnc u miCQ. orfttes \vm ocst iye served tncre uy7
1^ may dispese el aey commodity procured e«t el funds made
^ available fer- ;fehe purposes el this Ae% m he« el transferring
12 sueh commodit}T te ft participating country, -fH" ^y transfer
*" el sueh commodity? «peft rembftrsement, te aey
^ agency, er- establishment el the Government ler- ttse er- di
^r pesal by Stteh department, agency, er- establishment as
i&
authorized by law? er- -(§•)- without regard te provisions el
' law relating te the disposal el Government owned p^epertyj
1 ft
when necessary te prevent spoilage er- wastage el stteh eemmodity er- te conserve the usefulness thereof. Funds realized
from saeh disposal er- transfer shall revert te the respective
appropriation: er- appropriations ettt el which feeds were
expended ler- the procurement el stteh commodity.
oq
AUTnOEIZATIOy OF
24
r i4r -(fbf Notwithstanding the provisions el a«y
other law? the E«eeBStr-uetieii Finance Gerp oration is a«-
http://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
31
1 thorized a»4 directed, until such time as aft appropriation
2 shall he made pursuant to subsection -(ef el this section,
3 to make advances net to exceed m the aggregate $1,000,
4 000,000 to carry e«t the provisions ef this Aet^ in5 such manner, a£ such time a«4 hi such amounts as the Prcsi
6 4e»t shall determine, an4 no interest shall he charged e» a47 vanccs made by the Treasury to the Reconstruction Finance
8 Corporation te this purpose. The Reconstruction Finance
9 Corporation shall he repaid without interest from appro
10 priations authorized under this Aet for advances made by
11 it hcrcundcr.
12
-(h)- &ueh pftft as the Resident may determine ef the
13 unobligated a«4 unexpended balances el appropriations e*
1^ other funds available fe the puiposcs el the Foreign A44
1^ Aet el 1947 shall he available te the purpose el carrying
16 ettt the purposes el this Aetr
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1° with respect to those participating countries which adhere
™ ^e the purposes el this Aetj aftd remain eligible te receive
^
assistance hcrcundcr, there are hereby authorized to he appro
1 pfiatcd to the President, from time to time through June
oo
~~ -1952, eut el aey money in- the Treasury ftet otherwise
oo
24-
propriatcd, such sums as may he necessary to carry ettt the
provisions an4 accomplish the purposes el this Act : Provided,
however, That fe? cariying eat the provisions a»4 accom
http://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
32
1
T>n"nTnfif
nr > THI
A f^j- 4-/->-»«
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2 following the date el enactment el this Ae% there
3 hereby authorized te fee se appropriated ftet te exceed
4 $5,300,000,000.
5
-(4)- Funds eiftde available !e* ^he purposes el this Aet
6 shall fee available te incurring and defraying ell necessary
7 expenses incident te carrying ettt the provisions el this
8 Aetj including administrative expenses ftftd expenses
te
9 compensation, allowances a&d travel el personnel, including
10 Foreign Service personnel whose services a*e utilized
11 primarily le? the purposes el this Act,- ftftdy without regard
l^ te the provisions el any other lawj le? printing aa4 binding,
13 aed te expenditures outside the continental limits el the
l^ United States te the procurement el supplies asd services
1«* a»d te other administrative purposes (other than- compcnsa
16 tieft el personnel) without regard te sueh laws an4 rcgula
1'
tions governing the obligation aed expenditure el govcHi
18 mcnt funds, as the Administrator shall specify m the interest
19 el the accomplishment el the purposes el this Aet?
20
-(ef ^Fhe unexpended portions el any deposits wrhich
21 may have been made fey any participating country pursuant
2^ te section % el the jeint resolution providing te relief as23 sistancc te the people el countries devastated fey war (Public
24 i^w g4^ Eightieth Congress) an4 section § -(fef el the
25
http://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Foreign Aid Aet el iM£ (Publie taw gSOy Eightieth €e»-
33
I
nfl-i* /~k o ci \
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4 terms a»4 ee»4i^e^i as are provided ift section 4§ -(fe)5 -(g)_ el tkis Aetr
6
-(I)- fo erder- te reserve seiBe par4 el tfee surplus el
7 ^fee feea4 year 4048 ler- paymeirts thereafter- te fee made
8 under this Aetj there is herefey created ee the books el
y
-<-V> /%
nn-»^-»T £vt; ^ n <-> I I m 'ff>-fl vSJ"fl j'Og fl -f 1^1-1 o^- -f -in -n H -<-^v V> /^ l7--n /^-v-rT-i^t
H1U '-LI 'i^/~ir»
HJclBU.1
v^ fr TTTX? U lliLlyU. KJ III L L/o ct La LIBL ltllli.1 Tt7 Ttt/ IxllU \V 11
ie Coopcra^eB: Trust Fundv
•W- withstanding any ether pre-vision el lawj aft amount el
y etrt el StrrBs apprepriatcd pursuan-t te the
•w aftthorizatieri eerrtaxfted Tft this Aet shalij when appropriated,
W fee transferred immediately te ^e trust fund, aird sfeftrl there
l^ upon fee eerrsider-ed as expended during the fiscal yea* 1948,
16 ler- the purpose el reporting govciiimcntal expenditures.
1^ The Secretary el -the Treasury shail fee the sete trustee el the
1° trust luird and is authorized aird directed te pay eut el the
"f r<
o d
lt? trp
"f-.r^ /^
A
ri yyil-n T c<4-T-*o 4~/^T*
o l~i f\ ±\
/-J-n I TT
L'li't/ xjLLLlillllln tl cittTr wllMil U.U.1 V
-w»/^/~^Tiim _
1'UU LllOl
T The first experrditttfes made eut el tiie appropriations
m
4~*~*
/-v llBUtil
-H n/->r» I -r-rf\c\-t*
O ooil
t^ f«Mil
1 1 t->^\
TTT
L11U
V UM1 "1J.O/l
t/ l_t/
UU
^^ made with terds requisitioned fey the Administrator- eut el
^*^
•<-!-> f\
j--i<i-io4- -h Tt-i rl iTn Til JrJjLr* TTTKI rl -iri r\-*r h r» n n 4- /-> rl
o j- TTT K T /->Tt -J-T T-J--! f\ cm /->!-»
Lllv? Tl
LISL lliliU: ttlltTT til" 1L111U. TCT UJLilllUMlUU., Wv
Vv illull LlillU oU.1311
lunci snaii cease t/e cxisi.
S. 2202 - 3
http://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
_L ne pi o » isions ei tnis suDsection
34
1 ishaH net fee construed as affecting the application ef
2 provision ef law which would otherwise govern the
3 tien- ef fends se appropriated ef the auditing er- submission
4 ef accounts ef transactions with respect te sueh funds.
5
6
BILATEBAL &&& ^IIJLTILATEBAfc UNDERTAKINGS
&EO7 i&r -(a)- ¥he Secretary ef StateT afte? eensuita-
7 tien- with the Adffiinistratofj is au-ther-feed te conclude, with
8 individual participating countries e? any number ef sueh ee«s9 tries er- with an organizatien ¥epresenting any such countries,
10 agreements in fu-r-thefanee ef the purposes ef this Aek
11
-|h)- ¥he provisien ef assistance ttnder- this Aet results
12 from the multilateral pledges ef the participating ee«»:tr4es
13 te use all their eSer-ts te aeeefflplish a joint recover}^ program
14 based upon self help and mutual eeoperation as embodied
15 is the report ef the Committee ef European- Economic Ge16 operation signed at Paris en- September- ££7 1947, and is
17 contingent upon continuous effort ef the participating
18 countries te accomplish a joint recovery program through
19 multilateral
undertakings and -fee establishment ef a
20 eentinuing organization for- this purposcv
Jn addition te
21 continued mutual cooperation- ef the participating eeuntrics
22 is stteh a progranij eaeh such eeuntry shall conclude an
23 agreement wkh the :toited States in erder- for- sueh eeuntry
24 te fee eligible te receive assistance under- this Aetr Sueh
25 agreement shall preside fer- the adherence ef such country
http://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
35
1 te the purposes el this Aet and shall, where applicable, make
2 appropriate provision, among others, for—
3
-j-ty promoting industrial an4 agricultural pro due
4
tien- in- e^der- to enable the participating eountry te be-
5
come independent of extraordinary outside economic
6
assistaneej a»d sfttedtting fe the approval el the Ad-
7
ministrator, upon
his request
an4 whenever he deems
-L
J.
8
it ift lurthcrance el the purposes el this Act, specific
9
projects proposed fey stteh eeuntry te he undertaken ift
10
substantial part wMi assistance furnished under this Act,
^^
which projects, whcncvof practicable, shall include proj
12
eets te fficreascd: productieft el eea4y steel, transportation
13
facilities, ftftd Iee4^
7
14
-&\.
\ / taking
o financial aad monetary
*/ measures ftcccs-
15
sa*y te stabilize its currency, establish e? maintain ft
16
valid fate el exchange, te balance its governmental
1^
budget as sees as practicablcT and generally te restore e?
1°
maintain conHdcncc in its monetary system;
^
-f^)" eeeperatiftg with ether- participating countries
*®
ift facilitating an4 stimulating as iftcrcasing interchange
21
el goods and services among the participating countries
and with other countries a»d cooperating te reduce
^
barriers te trade among themselves and with other
24
countries •-
9^
http://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
-{4)- making efficient an4 practical usey within the
36
framework el a jeifi-fc program fer- European recovery,
el the resources el stteh partieipatiftg country,
aey commodities, laeilit-iesy er- services furnished
-^-i^n a
\ s*41/lllB J.A.L5L,
-TTT KI T n \~*
ctf\
C1ff~lO I I 1 T~l J~* 111 /"I r\
"f~/^ -d-1~» /~t yry 4-/^Ti -f- fyt'
VVULLUlT tt
U.BI'
B-ilMli iilUililUJ. Tt7
tnttty tyarut/lTt! Ui
caoic. lajiinsr measui es te locate anci coiiLroi, iii iui tiier
el Stteh progranij assets, and earnings therefrom,
T
-\r\ I r\T\ rv» j-rx -^- t^r\ j^a T ^~ l rrjCLT^_r< /^vx Oil /^I^V /"*- 011 Tl-j" T^T T -fV-yVfl- TT -M-1 /Tzi
JUlUllg"
"bvt 'bllU Ultl/iUira tTT toLL<JU. UU till 11 V cLIlU. \\ I1I1311
a^e situated within the United States,- its Territories aad
9
possessions;
10
-(&)- facilitating ;fee transfer te the United States hy
11
safej esehangc, har4er7 er- otherwise ler- stock piling par-
I 2l
-v\r\c\r\n
4-/-k>»
on ft\-i
-K\/-\T»T s\r\
f\+
4-i T-V> /->
r> ci
-r-inn^cT
UUOvJo, 1U1 ailUJJ. JJLIIIUU. \T± 1/liilU tti5 lllttV
l\ /->
r» m-v»/^/^/-l
-<-/-v
o-|-> rl
UU Mgl DLIU. TT7 Llilll
13
upon reasonable terms a»d ffl reasonable quantities, el
^
materials which are required hy the United States as a
1*>
result el deficiencies er- potential deficiencies m its ewn-
^ ij
resources, and which may he available ie such participat
•yj
iftg country after due regard fer- reasenable requirements
1°
fer- domestic use aed eemmcrcial export
el such eountry;
.
^
-{€)- placing in a special account a deposit m ^te
^^
currency el sueh eouiitr}:, ie commensurate amounts as4
4J
under sueh terms a»d eesditiens as may fee agreed te
between su-eh eettiitr^
•/ and the Ge^crnmcnt el the United
oo
~°
http://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
States, when- any eemmodity er- serviee is made avail
f> n lf> i".MT*r>n
(Tn till
nm^
TT;f>oT>n UIttriui
•" i-i tnnvi.n.nia
r< /TH 'tlllo
-j-hTn -LJLUt,
A r>4- tt-iiu.
nn n
d'Mj.c?
fii-i v/LigXA
\ iiiUciiis
lat?tt TT»I
LiilllUl'
is Bet furnished te the participating eeaetry ee terms
37
1
el payment
2
unexpended portions el any deposits which may have
3
been ma4e fey sweh eewfttry pttm-tant to section £ el the
4
joint resolution providing fe? reliel assistance te the
5
people el eenntrics devastated fey wa* (Public Law
6
Eightieth Congress)- and seetieB- e -ffe}- °
7
Aid Aet el i94? (Public -Law £&9y Eightieth: Congress) ,
C5
^
C? n fl II
9
agreed te between swfe ee««^ and the Administrates
10
in eensultation with the £fetieftal Advisory Council ew
11
International Monetary a»d Financial Problems, a»d:
12
under agreement that any unencumbered balance rcmain-
13
J£g ^ g^gjj account en Ju«e ^Or 1952, will fee disposed
14
el within sueh eetintry le* such ptffpeses as may, subject
15
te approval fey Aet e^ Jemt resolution el the Congress^ fee
16
agreed te feetwee« stteh eountyy a«4 the Government el
17
the United Statesj
Vv/">
l-i r\ I /-I
Such special account, together with the
/~y>»
T-I n rv /-I
^-yyt ITT
i3ilU.i± UU llL/Itl trr tlSUtt UIll ^
X£iH
i" 'J-Liili.
"r^ ^ T»»T-V f\ r< f\ cy
ft o
yy>f|TT
lUr ft III "11 ULll UUBUS tttS lllcl^
K /•>
TTv?
18
-^)- publishing m stteh eountry a«4 transmitting te
19
the United Statos, net less frequently tha» every eai-
20
cndar qwarte? alter- the date el the agreement, Ml
21
statements el operations tffi4er- the agreement, including
22
a
23
received eftder- this Act; an4
report el the use el fon4sj commodities a»d services
24
-(^)- furnishing promptly,, open- request el
25
United States, aey relevant information which would fee
http://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
the
38
el assistance te the United States m determining the
-yi o j-n T*rv
o y\ r-J
llMtlll" Iillll
on/~vrt /"k
f~\T.
r\^Tk C\V f\ t 1 <~vy* ^
Q J^rj
"f T~* j^
oUUJJC TTT T7 UL'l MHUIlt5 Ml 111 TTit7
"1-i.Cfrv
UWU
/"IT
o rNQT-Ci'f-
VTT MtSolWt
ancc provided under this Act.
-fefy- Notwithstanding
tfee
provisions
el
subsection
el ^is soctionj the Administrate^ during tfee three
^ months alter- the date el enactment el this Ae^
^ perform with respect te aw participating eeuntry a»y el
& functions authorized under this Aet which fee e*ay determine
^ tie fee essential m fartherancc el tfee purposes el tfeis Aetj
^ il s«efe country -fif
has signified its adherence te
-*•-*• jtfee purposes el this Aet a»d ite intention te conclude aft
•^ agreement pursuant te subsection -{fef el tfeis section^
•A-*?
I O\
I ZJ I
l-> y-t
JJ.U
-h T-v H n
llllLlo
^-IT f> ^-
1/llUit
cm /^V<
oU.UI1
/^r\l-| y»-^T»TT
^v^ii-LlLl \
TCI
To
^/-VT-\TI-\|TT-I->-> /-«»
1./U1±1U1 y ilL£'
TrTT<-l->
V» 1HJ.
14 applicable provisions el subsection -{fef el tfeis section:
^ Provided, Tfeaty notwithstanding the provisions el this seb•*•" section, tfee Administrates may, through June 30j 1948y
1
'
provide ler tfee transfer el leedj mcdieai supplies, fibers,-
i ft
feely petroleum aed petrelettffl- products, fertilizer^ pesticides,
and. seed te any country of 'Xjui ope "Wfiien panticipated m
nr\
the Committee el European Economic Cooperation aed
91
which undertook pledges te tfee ether participants therein,
22
"^
oo
24
when tfee Administrator determines tfeat tfee transfer el a»y
suefe supplies te asy suefe country is essential i» order te
make it possible te carry e«t tfee purposes el tfeis Aet fey
http://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
39
1 alleviating conditions el hunger and eekl a«4 fey preventing
2 serious economic retrogression.
3
-(4)- ^Phe Administrate? sha41 encourage the joint e*-
4 ganization el the participating countries referred te in
5 subsection -fbV
of this section te ensure that eaeh lBar\ /
6 ticipating country makes sufficient use el the resources el
7 such country-,- including any eommoditiesy facilities, e? sen7
8 iees furnished under this Aetj fey observing an4 reviewing
9 such use through an effective follow up system approved
10 fey the jeint organization.
11
-fs}- ft is the understanding el the Congress that, m
12 accordance with agreements new in- effect, prisoners el wa?
13 remaining in participating countries sha41 il they se freely
14 clcet fee repatriated pr4e^ te January iy 1919.
15
16
WESTERN ILEMISrnEBE COUNTRIES
SEOr i^r ?&& President shall take appropriate steps te
1^ encourage aH eeft»tr4es in the Western Hemisphere te make
18 available te participating countries such assistance as they
19 ffiay fee afele te famish.
20
21
OTHER DUTIES OP ¥HE- ABMINISTRATOR
SEC. i^r -(a)- ^Fhe Administeatefj in furtherance el the
22 purposes el section W -fbf 4^7ft**^^ QgrGcmcnt with ft par23 ticipating country^ may promote, fey means el funds made
24 available fer- the purposes el this Aetj an- increase ha the
http://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
40
1 ^reduction is sseh saftieipatisg eewstry el materials whieh
2 are required by the United States as a result el deficiencies
3 e? potential deficiencies is the r-esesrees withis the Usited
4 States.
5
-fb^ ¥he Administrate^ is eeeseraties with the Sccre-
6 tia^y el Commerce, shall laeilitate asd encourage, through
7
-r^-truTgv^-^\ f \ -r\ /~\ -yi-i-Lr^Li n 4--*+r\ -rrr^L 4"t+f\ T~I O>"\ f\~Pi^_ -tfv*"> f\. y\4~ l"t^\-v» o r**/^T-> /^-tjT\.n
J: la /^.
UJ.1 V cMU ctllU. U Li L/H\J tl ct V v^X^ UJL «A/J.J.O p V/JL i/y ctlivl TTCTITTT" tii^vJ'Il'L/l'L'oT Lllvy
8 promotion asd development el travel by citizens el the
s\
•
•
•
" United States te asd withis participattsg countncs.
10
-{e}- Is er4er te tether- the efficient sse el United
11 States voluntary contributions let* fehel is participating
12 countries receiving assistance ssder- this Aet is the form el
13 grants, funds saade available fe fee sur-seses el this Aet
14 ;siay be used, is fee discrcties el fee Administrator, asd
1^ under rules asd regulations pr-eser4bed by hisiy te say eeeas
1^ freight charges from a Usited States per4 te ft designated
l^ foreign se^t el entry -(4-)- el supplies desated tej e¥ psrJ-O
T
t~i l^ ri o r\ e\ J^TT
I I a ^i T 4- r\ f\ W 4- c\ •f /^ a -i-T/^lnt-i-^-ri T^I TI f\-r* -r\T/\4-i 4- T»/^ 11/^4- n SYf\-r\ st-t f\n
l'ilil<MJ<_l
f y, U
ill tUU. kJtillUn V UlUIltlli \ ±Tt?±lUiTrrrc xUlUJi HJJ Lilv'lUt?
C
19 licensed te operations is Europe^ e? -{2}- el relie! -packages
20 eenforming te sueh specified skey weight, asd eestest% as
21 fee Administrator s^ay sr-esmbe originatii^g is the Usited
22 States asd consigned te as individual r-esidisg is ft par23 ticipating country receiving assistance under this Aet is the
24 form el grants.
JT\ P^
http://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Administrator smy make as agreement wife seeh
41
1 country fef the use el ft portioft el the deposit el local e»r2
^*/-\ ir\ n T r
TUllv>'\
~r\ I f\ r t f \ f \
i y->
UlM't'L'U TIT
o
tt
fi.yy^^.i <rt I
&UL/1M1
o f*f\{\\~\ TYJ1 TV1 1 V-Ql 1 O Tl j*
M-CUUlilru I'lll ollMllt
j:j^v
T7t7
T"iO VQ fJClV* T^l"*
UM1 My ntUJl
/^x
T7
3 el subsection -fb)- el seetieft 44 el tfeis Aetj te tfee purpose
4 el defraying the teansportatioB eest el sttefe supplies a»d
O
iT«r\li /~v4-
1 U11U1
-i-vr» p J T - i n rpf^n
UMtrSSTtii 13 o
x
<n?
TT»rXT>1
II Ulll
1 J-Xii
t±Tt>
Xi.f-il*i
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i
£ll
tTT
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L Jill \
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6 tfee designated shipping point el eonsignccv
^
TEEMINATIQX OP ASSISTA^eB
^
^EOr J-8v 5fee AdiBffiistffttei^ ift determining the
9 *md ineasui^e el ftssistft»ee pr-e^ided twder- this Aet te
IP participating eeuntiyj sha41 take iftte account the exteftt te
11 whieh such eettftt^y is eeftwlyittff with its undertakings em«/
-L
«/
O
C5
1? feedied ift its pledges te ether- participating countries a«d
1^ ift its agreement concluded with the •United States undo?
1| section 4-§7 ¥he Administrator shah terminate the provision
r)
-if;
" '
el assistance under this Aet te aw participating counter
whenevcF he detemwftes tha4 -(4-f sweh eeu^tf ^ is Bet adheri»g te its agreement concluded wider- seetieft 4% ef is divertiftg Ir-efft the purposes el this Aet assistance provided
hereunder, a«d that ift the etfcumstances remedial action-
(jr\
ether- thftft tcrmitiatioft wih* ftet ifter-e effeetivcly promote
O-j
the purposes el this Aet er- -(^)- because el ehaeged eeftoo
.
.
.
~~ ditieftSj assistance is »e leftger- consistent with the sational
2Q
"" interest el the United
24
EXEMPTION FftOM eOyTRACT •&&& ACCOUNTING LAWS
25
http://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
8EOr ^ Wheft ^ie Prcsideat determines it te be ift"
42
1 furtherance of the purposes of this Aety the functions author
2 i«e4 under this Aet may be performed without regard to
3 sueh provisions of law regulating the making, performance,
4 amendment, e? modification of eontr-acts ftft4 the cxpcndi
5 tee of Government funds as the President may specify.
6
EXEMPTION FBOM CERTAIN FEDERAL LAWS RELATING TO
7
EMPLOYMENT
8
SEO. SOr Sendee of a» individual as a member of the
Public Advisory Board (other thaft the Administrator)
10 created by section % -(a^ as ft member of a» advisory
11 committee appointed pursuant to section 3- -fb)^ fts an- expert
12 OF eonsultant under section 4 -fd^ e* as a» expert? eofi1^
sultant, OF technician under section £4 -(d)^ shall ftot be
14 considered fts service OF employment bringing s«eh iftdiIt)
WT-I rl-n rt I
I V ILLULcU
-TTTI -<-Vi T T^»
V* i. l/lllll
•<- 1-» /->
LllU
yvv»<^VTTT t-i-i r\-n C( f\f
rtf\s-*4--i f\-r\n
"1 /^O
IJ 1 \J V lt31UJ-l»3 \7T ol-'l^tlwllo -L v/t/
/-\-M "1 "1 Q /%4- •<- k> <-i
V7T _L JL c/ \7I H1U
i^ nnunai \_> o cie i u .' C^T i^j., title Xo, sees. j.yo ano. ^L\JO ) , 01
17 section iW of the Revised Statutes -^5-: B? Gry title fy seev
18 S9^)-7 0¥ of section i9 -(e)- of the Contract Settlement Aet
19 of 1911, 0¥ of ft»y other Federal law imposing restrictions?
20 requirements, or penalties m relation to the employment of
21 persons, the performance of services, e? the payment or
22 receipt of compensation i» eonncction with any claim, p^o23 cccding, e? matter invok4ag the United States.
24
25
http://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
UNITED NATIONS
Sfie? £3-r -(fir)- 5^ President is authorized to request
43
1 the cooperation el er- the use el the sendees aed facilities
& ei tno LJ mtcd IN a>tionSj its organs and specialized agcn
3
/^l/~>q f\T» /-\-<-t-> f\tn -t TI •f r>T»ri f| ^-i on r> I /-\-i*rfr>-rii ryr» j-i r\-*-\ ct i-rv <-*f»-y-r»-f ri-n /-»» f\ii 4- 4-V\ f\
UlL/CTj tTT UL11L/1 ±11 tlJ-LllclfciUllill UJ y U;lllZillLlUlli5j TIT 13M1IV HAsi ULIL H1U
4 purposes el this Act, and may make payments, hy advance
5 mcnts er- reimbursements, ler- such purpose, e»t el feftds
6 made aavilabic le? the purposes el this Ae% as may he ncccs
7 sary thcrcfo^ te the extent that special compensation is
8 ftsually required le? saeh seroees aed facilities.
9
-(h)- ^ke President shall cause ^ fee transmitted -te the
10 Secretary General el the United ^fetiess copies el reports
11 te Congress e» the operations conducted under this Act.12
-(e)- Afty agreements eeftefeded between the United
13 States ftftd participating eettftfepiesr er groups el sueh coun
X
JL
O
'
O
i
1^ tries, ift implcmcntatioft el the purposes el this Act, shall fee
15 registered with the United Nations il stteh registration is
16 required hy the Charter el the United £Mons.
17
TERMINATION OP PEOGBAM
18
Cl-ntn
OO
kJ-l^U.' —
~.
ln\
^cl^
A ffoy
xVl
LUi" JEiiiifi
CTttltt? .QA
«JV/j
1 Q£>O
nr M1LU1
nffnv TllvJ
f>.r> /In-fr
nf
X
tJtJ—. j tTr
U.U.ILJ tTt
^ the passage el a; concurrent resefetieft fey the twe Se«ses el
f\f\
^u Congress fecfore sueh datey whieh declares that the
21 conferred eft £he Administr-a4er- hy er- pursuant te subsection
t^iLil
t c\\
I Ml
/^T" cj/^/^f"| f\ir\
J,.^L £\T J^TVI C*
A /"*j" r> T*/^ yj/% I /~v-v> /v/tf* 1^/^/3^^^ ct & f* T^-CT -K/^x1 4- i-t ^\
trr WUUtlUll JL -L trr tlllh -/-iUL n.1 U 11U lUliy Ul lUJdJoWMl y
1UJ. "trlt?
^^ accomplishment el the purposes el this Ae% whichever shall
~
rirsti occur, none ei t/nc lunctions autnonzcd under sucn pro •
visions mav DC exercised, ex.cept tnau durmfir cne
http://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
44
1 months Mlewing sueh dale commodities a«4 service
2 respect -te which the Administrator hady prior te such date?
3 authorised procurement lery shipment t% er- delivery m ft pa*4 ticipating eouritryy may fee tr-aasf erred te s«eh country, an4
5 fernds appropriated under au4her4ty el this Aet may fee efeliVJ
O
T
TT
.0*0 4-f\r\
iTJ 11 yi-T^ f>* r^n n v\
/^ rl T/^V J~.r1i /"*- 3^X .QjQ/^jCJ.-Q ^ '*"
gcMCtl
LlLll-lil^
oLICil 4--*-rrf\
I \V UlITJ.O
V iJ TYl^lTlTrl
lllUil III T>OTM
JJ Ul 1U
LI TA7tr llliJ llU"Ur5oHl y s\~*r
LA._
^ pcnscs el procurement shipmcatr delivery, a»d other activi
8 ties essential ^ sttefe transtej aad shali remain a^ailafele
9 during sueh- period te the Beeessar^1 expenses el Hquida4iBg
10 operations andcr this Act.
( o ) xVi suciT time as "trie Jrrcuictenb snai.t nnci appro**
l^ priate alter s^ieh date and prie? te £he espiratiea el
-L<5
iixi^xLsz/i
TVI A T> ^" H .c* Tr> 1 1 •ATTT'' T^ "* O"JQI^ /-I f> 4-/~> 4-h /-> •v->/-vi-rT,rvT?oi
rlni"i f>n
TTVrvTrvT/ lllvJJ.1 l-J-Jo 1 U11U \ V iJ-lci o livJJLl LicltU, 1/JlHj I J U W «JT OT xlLlllUB,
1^ authority el the Administrator tracer- :this Aet may fee
•S transferred te sneh f4he¥ departmeBts. agencies, e* estafe1" tishmen-ts el ^the Oevernmcnt as tl^te -President shall specify,
1 ' an4 the relevantfttftdsyrecords, awd per-sennel el the Admin
1° istration may fee :tr-ansferrcd te the dcpartmcn-tSj agencies^
™ er estabJ4shmcnts ^te which the related femetions are
^
transfcrredr
21
BEPOBTS *O CO^GBESS
<
O Q
iP h rv
^~1 f\-r>\-p-n/-y-r-y-t
-<-Tyvi ^>
-f/~>
+-i w\ f\
l \\fi4- y-> f\j~
y.
£0
• J_livJ
u_TJT»/M~n
1 CSlU-iJlll'
11
Ulil mlll't/
Tt/
1/llllUj
UULt lltrt;
** Ir-cqucntly tha» ewee every calendar quarter through June
^•*
»JV/j
^
tiops under- this Aet have feeea completed, shati transmit
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Federal Reserve Bank of St. Louis
Q/^\
1
O>^O
J_ ij tj — . ,
n T"> /~l
tl 11 U.
/^T->^-i/-t
UilULI
^\-TT/-tT«TT
U V Ul y
TT/~tf>T«
y UM1
j" H r'T'O f> T j lOT*
H1UJ. UMI LAJJ.
] 111 ^1 I
x^ii I/A j.
f> J- 1
CDJ-J.
ft Ti PI* ft
\j M v/x cv
i
45
1 te the Congress a repert el epcrations tinder this Aetr
2 Ecports provided for ttnder this section- shftll fee transmitted
*j te tile occi etai y OT me oena xe 01 me \_yiciiit of [no -LIOUSO ex
4 jRepyeseatfttivos, as the ease may feey il the Senate er the
5 House el Rcprcscntativcr^ as tfee ease may feey is net ift
6 session.
JOINT 6QNGRESSIO]STAL OOMMITTEE
7
O
>>T^/^
(OJ^v^.
O /I
-j
i.
r»1 \
I/ cl
1
' P l-i /-v-i»/^
T n l-» /^-n/t K-r^ /->C!J~n IA 1 1 c-ili /->/1 L I
_L liUl U to
llUi Vy'U y t?octl olioliL'tt to
T /'v T Y^ ^-
«^/~>-n
I Ulll I CtJll
^ grcssional committee te fee known as tfee Joint Committee
10 en Foreign Economic Ceepcration- -Hereinafter referred te
11 as tfee eemmittcc) -, axrd te fee composed el seven Menafeers
1^ el tfee Senate te fee appointed fey the President el tfee Senate^
I O
?4 appointed fey tfee Speaker el tfee Hettsev fe each instance?
15 net more than- lewr members sfeaH fee members el the same
1" political partyr A vacancy m ^e membership el the com
-L •
TV^ -i 4- -j- /\ /%
1I11LLUU
cilui I I
tolliill
i"k/^
T i l l /"Vfi_
iy"L
Ut? llll.L?vl TTT
4~ in /\
tlllJ
no ~LV^ r^
T>^L O liyi^l?
oMlllU JllilJllJv'l
o ci
tto
j~l^ i^
IIHJ
^~VT»I rv*i vxAi._L
UlliiJ.lltll
1° sclcctiefiT ^^he President el the Senate and the Speaker el
1Q
iy
the House,- acting jetRtlyy shall appeint a ejiairman and a
^
-v4ee ehak-man Ireift ameng the members el the committee.
•^
Ii K
U yi
9 9
•
I i: o
n n 1 1 trt?
no i'-i£i
TI /~*f i r>Ti trr
r^r Tort/
^~ '"» ^> /^
/~tT-v-> T-»-^ i ^4- /->/-> "ttt
-<-/^ ^^-t
r> Ir /-> tt
<•»
art;
biictll
TiTitr TTI
ILllIULlort
UUIi-illl-LmJU
illMJi."
T
C
I
T
"^ eontmaetts study el the programs el -fetted States economic
OQ
assistance te foreign eeustriesy and te review the progress
achieved in the execution- and administratien- el such pregraffiSv
http://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Upon request, the committee shall aid the several
46
1
standing committees of the Congress having legislative juris
2 diction over any pa^t of the programs of United States
3 economic assistance to foreign eetmtrios; a*r4 it shall make a
4•*•
-ii*f\-ms\-n4- 4-f\
1 U IJU1 V T7t7
4-IT f\
tllv?
SK/^TI n^n
kJUllclHJ
mn A
U.11U
+ !T f\
HJ.U
l-l rui nr\
JLJ-VylAol^
r\T
V7T
r? r^TtVfdPTI'f fl J'lTTr>r3
-HJVy tJi V^OVyJLLUU.-1/.L V l^O,
TTT>T>1
J.O. Vyj-LJ.
5 tHrie to time, concerning the results of its studies, together
^ with such recommendations as it raay deem desirable. ¥he
7 Administrator, at the request of the committee, shall consult
'
O
;-T-TTT ^" l^
-j- IT ^^
' v V 1 I'll
L11L/
^Trf^TTT -TVi 1 "^ "f f\ f\
4~t» S\1TV*
4-f YY1 f^
^" ^V
"|-T -ViT f\
TTTl4- iT
f*/^ QT^ f^ f^4~
4~ f\
JT "1 O
LJ^Jllll±14-ttUl^
J.JL Ulll
i/iijLi\^
TT7
LlllH^/
yv AUJ.J.
JL ^'U pv^v^u
T\7
.u~io
^ activities under this Act.
10
-(e)- 5^ eommittcc, o? any duly authorized subcom
11 mitte thereof, is authorized to hoM stteh hearings, to sit aso!
at sueh times ftftd places, to require by subpcna or- other
the attendance of stteh witnesses aed the production of
-JL^t
m-l /->!-<
V> rt/~v If o
TVr» -r-> /-tt»o
r»r H
H/A/^n-r-vr <->TT 4-Cj
4-r\
c\ f\ -r^n, i V>T Q f- f>T*
OTI «rV»
y>r» 4-IT n
53LHJ11 UUU1VB, JpllULJJL H, itllU. U.UUU.111U11 Lo, t/tr ULlllllllloLCT HU.L511 ULltllB,
1^ to take Sfteh testimony, to procure stieh printing asd binding,
-1-VJ
o t^ r\
O.'JLiLl
1'
eost of stenographic services to report such hearings ishall
iS
-*-*-1
i^f\
TvT
~m f\ IT r\
TTTtCjJLv^
rm n i^
oULL/JLX
f\-*r*ir\f\-r-\ r\ 14-n T*r\f<
U-A-Uv/JLlvlltLLJ. L/o
oo
cTTT
T -fTT
rl /^/^•W^CN
LLUUJLllo
i i
*
c ^ k K r> r\-i-\ 4-rt
i
1
1
1
T> Ol
^^> U3, Q^rpfvgri
ft+ * / hi
-r\f\-V'
n1TT> Hi»<-> rl
'11U V UtJ i±T U-A-UlvBo X7T ZTfcf L5U111/B JJUl 11U.11LU. ULl
f\ /~I.TT3-CiQ-g\J-^\
tl-vt V l*3ciU-M_/«
i
VV Ul LIB.
-rrff\t' H n
• I * j-^ /\
JL11U
rm
' I ' tr/r
T% •»»/->
JLJJLU JJ1U
o
1" visions of sections iQ2 to i94j inclusive, of the Revised
*-v/x
O |~i f\ 11
fXT^\V\ ITT
tSIlclll ttjj Jjiy
3-TX
itt
/^O Q/^
ULLHL/
/XT
trt
c*-Y"t-rr
Mil y
4-n 1 I T T -r*^v
f\4^
IMllLLl U trr
.Q_T^.TT
Mil y
TTTT J
\V1I
to comply with any subpcna or to testify when summoned
under authority of this subsection.
^
-(4)- ¥he committee is authorized to appoint aedj with •
24-
^ oat regard to the Classification Aet of 1923, as amended, fe
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Federal Reserve Bank of St. Louis
the compcnsatioa of such experts, eonsultants, technicians,
47
1 an4 organizations thereof, aadj clorical an4 stenographic
2 assistants as it deems necessary and advisable.
3
-fef There are hereby authorized to be appropriated
4. such sums as may be necessary to carry out the provisions ol
5 this scction-y to be disbursed by the Secretary ol the Senate
6 Oft vouchers signed by the chairman.
7
8
SEPARABILITY CLAUSE
SEOT 2£r H any provision ol this Act or the applica
9 tion- ol such provision to a*iy eh-'cunistanees or persons shall
10 be held invalid, the validity ol the remainder ol the Aet
11 and the applicability ol sueh provision- to other circumstances
12 or persons shall sot be affected thereby.
13 That this Act may be cited as the "Foreign Assistance Act
14 of 1948".
15
16
TITLE I
SEC. 101. This title may be cited as the "Economic
17 Cooperation Act of 1948".
18
19
FINDINGS AND DECLARATION OF POLICY
SEC. 102. (a) Eecognizing the intimate economic and
20 other relationships betiveen the United States and the nations
21 of Europe, and recognizing that disruption following in the
22 wake of war is not contained by national frontiers, the Con23 gress finds that the existing situation in Europe endangers the
24 establishment of a lasting peace, the general welfare
and
25 national interest of the United States, and the attainment of
http://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
48
1
the objectives of the United Nations. The restoration or
2 maintenance in European countries of principles of individual
3 liberty, free institutions, and genuine independence rests
4 largely upon the establishment of sound economic and
5 political
conditions,
stable international
economic and
6 political relationships, and the achievement by the countries
1 of Europe of a healthy economy independent of extraor8 dinary
outside assistance. The accomplishment of these
9 objectives calls for a plan of European recovery, open
10 to all such nations which cooperate in such plan, based
11 upon a strong production effort,
12 eign trade, the creation and
the expansion of formaintenance of internal
13 financial stability, and the development of economic coopera14 tion, including all possible steps to establish and maintain
15 equitable rates of exchange and to bring about the progressive
16 elimination of trade barriers. Mindful of the advantages
17 which the United States has enjoyed through the existence
18 of a large domestic market with no internal trade barriers,
19 and believing that similar advantages can accrue to the
20 countries of Europe, it is declared to be the policy of the
21 people of the United States to encourage these countries
22 through a joint organization to exert sustained common efforts
23 as set forth in the report of the Committee of European
24 Economic Cooperation signed at Paris on September 22,
25 1947, which will speedily achieve that economic cooperation
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Federal Reserve Bank of St. Louis
49
1
in Europe which is essential for lasting peace and pros-
2 perity. It is further declared to be the policy of the people
3 of the United States to sustain and strengthen principles
4 of individual liberty, free institutions, and genuine inde5 pendence in Europe through assistance to those countries
6 of Europe which participate in a joint recovery program
^
based upon self-help
and mutual cooperation: Provided,
8 That no assistance to the participating countries herein
9 contemplated shall seriously impair the economic stability
10 of the United States. It is further declared to be the policy
^
of the United States that continuity of assistance provided
*" by the United States should, at all times, be dependent upon
*™
continuity of cooperation among countries participating in
14
the program.
s
1±0*
PURPOSES OF TITLE
~\ a
1
(b) It is the purpose of this title to effectuate
7
.
the
.
policy set forth in subsection (a) of this section by furnishing
-j Q
material and financial assistance to the participating coun1Q
20
~
21
"
22
tries in such a manner as to aid them, through their own
individual and concerted efforts,
to become independent of
extraordinary outside economic assistance within the period
of operations under this title, by—
90
(1) promoting industrial and agricultural produc-
94-
tion in the participating countries;
S. 2202
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Federal Reserve Bank of St. Louis
4
50
1
(2) furthering the restoration or maintenance of
2
3
the soundness of European currencies, budgets, and
finances;
and
4
(3) facilitating and stimulating the growth of inter-
5
national trade of participating countries with one an-
6
other and with other countries by appropriate measures
7
including reduction of barriers which may hamper such
8
trade.
9
PARTICIPATING
COUNTRIES
SEC. 103. (a) As used in this title, the term l'partici-
10
11 paling country" means—
12
(1) any country, together with dependent areas
13
under its administration, which signed the report of the
14
Committee of European Economic Cooperation at Paris
15
on September 22, 1947; and
16
.
(2) any other country (including any of the zones
1^
of occupation of Germany, any areas under inter-
18
national administration or control, and the Free Territory
19
0^
20
Europe, together with dependent areas under its admin-
21
istration;
Trieste or either of its zones) wholly or partly in
22 provided such country adheres to, and for so long as it
23 remains an adherent to, a joint program for European re** covery designed to accomplish the purposes of this title.
2*
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Federal Reserve Bank of St. Louis
(b) Until such time as the Free Territory of Trieste
51
1 or either of its zones becomes eligible for assistance under
2 this title as a participating country, assistance to the Free
3 Territory of Trieste, or either of its zones, is hereby author4 ized under the Foreign Aid Act of 1947 until June 30,
5 1949, and the said Foreign Aid Act of 1947 is hereby
6 amended accordingly, and not to exceed $20,000,000 out
7
of funds authorized to be advanced by the Reconstruction
8 Finance Corporation under subsection (a) of section 114
9 of this title may be utilized for the purposes of this subsection:
10 Provided, That section 11 (b) of the Foreign Aid Act
11 of 1947 shall not apply in respect of the Free Territory of
12 Trieste or either of its zones: And provided further, That
13 the provisions of section 11,5 (b) (6) of this title shall apply
14 to local currency deposited pursuant to section 5 (b) of that
15
Act.
3a
ESTABLISHMENT
^
OF ECONOMIC
COOPERATION
ADMINISTRATION
•to
SEC. 104. (a) There is hereby established, with its principal office in the District of Columbia, an agency of the
20
^ Government which shall be known as the Economic Coop21
" eration Administration, hereinafter referred to as the Admin22
23
istration. The Administration shall be headed by an Administrator for Economic Cooperation, hereinafter referred
24 to as the Administrator, who shall be appointed by the
25
President, by and with the advice and consent of the Senate,
http://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
52
1 and who shall receive compensation at the rate of $20,000
2 per annum. The Administrator shall be responsible to the
3 President and shall have a status in the executive branch
4
of the Government comparable to that of the head of an
5 executive department.
6
Except as otherwise provided in this
title, the administration
of the provisions of this title is
1 hereby vested in the Administrator and his functions shall be
8 performed under the control of the President.
9
(b) There shall be in the Administration a Deputy
10 Administrator for Economic Cooperation who shall be ap11 pointed by the President, by and with the advice and con12 sent of the Senate, and shall receive compensation at the
13 rate of $17,500 per annum. The Deputy Administrator for
14 Economic Cooperation shall perform such functions as the
15 Administrator shall designate, and shall be Acting Adminis16 trator for Economic Cooperation during the absence or dis17 ability of the Administrator or in the event of a vacancy
18 in the office of Administrator.
19
(c) The President is authorized, pending the appoint-
20 ment and qualification of the first Administrator or Deputy
21 Administrator for Economic Cooperation appointed here22 under, to provide, for a period of not to exceed thirty days
23 after the date of enactment of this Act, for the performance
** of the functions of the Administrator under this title through
2<* such departments, agencies, or establishments of the United
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Federal Reserve Bank of St. Louis
53
1
States Government as he may direct.
In the event the
2 President nominates an Administrator or Deputy Admin3 istrator prior to the expiration of such thirty-day period, the
4
authority conferred, upon the President by this subsection
5 shall be extended beyond such thirty-day period but only
6 until an Administrator
7
or Deputy Administrator
qualifies
and takes office.
8
(d) (1) The Administrator, with the approval of the
9
President, is hereby authorized and empowered to create a
10 corporation with such powers as the Administrator may deem
11
necessary or appropriate for the accomplishment of the
12
purposes of this title.
13
(2) If a corporation is created under this section—
14
(i) it shall have the power to sue and be sued, to
15
acquire, hold, and dispose of property, to use its revenues,
1"
to determine the character of and necessity for its obli-
1^
(jations and expenditures and the manner in which they
1"
shall be incurred, allowed and paid, and to exercise such
1 t
other powers as may be necessary or appropriate to
20
carry out the purposes of the corporation;
"
7*
(ii) its powers shall be set out in a charter which
22
shall be valid only when certified copies thereof are filed
^
ivith the Secretary of the Senate and the Clerk of the
24
House of Representatives and published in the Federal
http://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
54
1
Register, and all amendments to such charter shall be
2
valid only when similarly filed and published;
3
(Hi) it shall not have succession beyond June 30,
4
1952, except for purposes of liquidation, unless its life
5
is extended beyond such date pursuant to Act of
6
Congress; and
7
(iv) it shall be subject to the Government Corpora-
8
tion Control Act to the same extent as wholly owned
9
Government corporations listed in section 101 of such
10
Act.
11
(3) All capital stock of the corporation shall be of one
12 class, be issued for cash only, and be subscribed for by the
l^ Administrator. Payment for such capital stock shall be made
14 from funds available for the purposes of this title.
1«*
(e) Any
1" the
department,
Government
agency,
(including,
or
whenever
establishment of
used
in
this
1'
title, any corporation which is an instrumentality
of the
1°
United States) performing functions under this title is au-
1^ thorized to employ, for duty within the continental limits of
^
the United States, such personnel as may be necessary to
^1 carry out the provisions and purposes of this title, and funds
*"
available pursuant to section 114 of this title shall be avail-
oo
"^ able for personal services in the District of Columbia and
"
25
http://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
elsewhere ivithout regard to section 14 (a) of the Federal
Employees Pay Act of 1946
(60 Stat. 219).
Of such
55
1
personnel employed by the Administration, not to exceed sixty
2 may be compensated without regard to the provisions of the
3
Classification Act of 1923, as amended, of whom not more
4
than ten may be compensated at a rate in excess of $10,000
5 per annum, but not in excess of $15,000 per annum. Experts
6 and consultants or organizations thereof, as authorized by
7. section 15 of the Act of August 2, 1946 (U. 8. C., title 5,
8 sec. 55a), may be employed by the Administration, and indi9 viduals so employed may be compensated at rates not in excess
10 of $50 per diem and while away from their homes or regular
11 places of business, they may be paid actual travel expenses
l^
and not to exceed $10 per diem in lieu of subsistence and
13 other expenses while so employed.
14
(fj
fhe Administrator may, from time to time, promul-
1^ gate such rules and regulations as may be necessary and
16 pr0per to carry out his functions under this title, and he may
"
delegate authority to perform any of such functions to his
1°
subordinates, acting under his direction and under rules and
1^ regulations promulgated by him.
'
20
GENERAL FUNCTIONS
OF
ADMINISTRATOR
'SEC. 105. (a) The Administrator, under the control of
the President, shall in addition to all other functions vested
o^i
in him by this title—
'
("t) review and appraise the requirements of par-
http://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
56
1
ticipating countries for assistance under the terms of this
2
title;
3
(2) formulate programs of United States assistance
4
under this title, including approval of specific projects
5
ivhich have been submitted to him by the participating
6
countries;
7
8
(3) provide for the efficient
execution of any such
programs as may be placed in operation; and
9
(4) terminate provision of assistance or take other
10
remedial action as provided in section 118 of this title.
11
(b) In order to strengthen and make more effective the
1^ conduct of the foreign relations of the United States—
13
(1) the Administrator and the Secretary of State
1^
shall keep each other fully and currently informed on
ID
matters, including prospective action, arising within the
1"
scope of their respective duties which are pertinent to
*'
the duties of the other;
(2) whenever the Secretary of State believes that
y
any action, proposed action, or failure to act on the part
*®
of the Administrator is inconsistent with the foreign-
*•*•
policy objectives of the United States, he shall consult
oo
**
with the Administrator and, if differences
**
not adjusted by consultation, the matter shall be referred
**
to the President for final decision;
OK
**
http://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
of view are
(3) whenever the Administrator believes that any
57
*"
1
action, proposed action, or failure to act on the part
2
of the Secretary of State is inconsistent with the pur-
3
poses and provisions of this title, he shall consult with
4
the Secretary of State and, if differences
5
not adjusted by consultation, the matter shall be referred
6
to the President for final decision.
7
(c) The Administrator and the department, agency,
8
or officer in the executive branch of the Government exer-
of view are
9 cising the authority granted to the President by section
10 6 of the Act of July 2, 1940 (54 Stat. 714), as amended,
11 shall keep each other fully and currently informed on matters,
12 including prospective action, arising within the scope of their
13 respective duties which are pertinent to the duties of the
1* other. Whenever the Administrator believes that any action,
15 proposed action, or failure to act on the part of such depart1" ment, agency, or officer is inconsistent with the purposes and
17 provisions of this title, he shall consult with such 'depart1° m,ent, agency, or officer and, if differences
of view are not
1" adjusted by consultation, the matter shall be referred to the
20 President for final decision.
21
22
NATIONAL
ADVISORY
COUNCIL
SEC. 106. Section 4 (a) of the Bretton Woods Agree-
23 ments Act (59 Stat. 512, 513) is hereby amended to read
24 as follows:
25
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Federal Reserve Bank of St. Louis
"SEC. 4. (a) In order to coordinate the policies and
58
1 operations of the representatives of the United States on the
2 Fund and the Bank and of all agencies of the Government
3 which make or participate in making foreign loans or which
4 engage in foreign financial, exchange or monetary trans5 actions, there is hereby established the National Advisory
6 Council on International Monetary and Financial Problems
7 (hereinafter referred to as the 'Council'), consisting of the
8 Secretary of the Treasury, as Chairman, the Secretary of
9 State, the Secretary of Commerce, the Chairman of the
10 Board of Governors of the Federal Reserve System, the
11 Chairman of the Board of Directors of the Export-Import
12 Bank of Washington, and during such period as the Economic
13 Cooperation Administration shall continue to exist, the Ad14 ministrator for Economic Cooperation."
l^
PUBLIC ADVISORY BOARD
1^
-trr
SEC. 107. (a) There is hereby created a Public Ad.*
•" visory Board, hereinafter referred to as the Board, which
18 shall advise and consult with the Administrator with respect
19 to general or basic policy matters arising in connection with
20 the Administrator's discharge of his responsibilities.
The
21 Board shall consist of the Administrator, who shall be Chair^
man, and not to exceed twelve additional members to be
2^ appointed by the President, by and with the advice and con24 sent of the Senate, and who shall be selected from among
2<* citizens of the United States of broad and varied experience
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Federal Reserve Bank of St. Louis
59
.
1 in business, labor, agriculture, the professions, and in
2
matters affecting
the public interest, other than officers
and
3 employees of the United States (including any agency or
4 instrumentality of the United States) who, as such, regularly
5 receive compensation for current services. The Board shall
6 meet at least once a month and at other times upon the call
1 of the Administrator or when three or more members of the
8 Board request the Administrator to call a meeting.
Not
9 more than a majority of two of the members shall be ap~
10 pointed to the Board from the same political party.
11
Mem-
bers of the Board, other than the Administrator, shall
9
•"• receive, out of funds made available for the purposes of
1^ this title, a per diem allowance of $50 for each day spent
away from their homes or regular places of business, for
the purpose of attendance at meetings of the Board, or at
conferences held upon the call of the Administrator, and in
necessary travel, and while so engaged, they may be paid
i ft
actual travel expenses and not to exceed $10 per diem in
lieu of subsistence and other expenses.
(b) The Administrator may appoint such other advisory
committees as he may determine to be necessary or desirable
OO
"^ to effectuate the purposes of this title.
00
UNITED STATES SPECIAL REPRESENTATIVE
oj.
*~
ABROAD
SEC. 108. There shall be a United States Special Representative in Europe who shall (a) be appointed by the Presi-
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Federal Reserve Bank of St. Louis
60
1
dent, by and with the advice and consent of the Senate, (b)
2 be entitled to receive the same compensation and allowances
3 as a chief of mission, class 1, within the meaning of the Act
4 of August 13, 1946 (60 Stat. 999), and (c) have the rank
5 of ambassador extraordinary and plenipotentiary.
He shall
6 be the representative of the Administrator, and shall also
7 be the chief representative of the United States Government
8 to any organization of participating countries which may be
9 established by such countries to further a joint program for
10 European recovery, and shall discharge in Europe such addi11 tional responsibilities as may be assigned to him with the
12 approval of the President in furtherance of the purposes of
l^ this title. He may also be designated as the United, States
14 representative on the Economic Commission for Europe.
He shall receive his instructions from the Administrator and
1 fi
such instructions shall be prepared and transmitted to him
1 7 .
in accordance with procedures agreed to between the Ad-
1Q
ministrator and the Secretary of State in order to assure
appropriate coordination as provided by subsection (b) of
20
section 105 of this title. He shall coordinate the activities
21
"'
of the chiefs of special, missions provided for in section 109
22
^
of this title. He shall keep the Administrator, the Secre-
23
tary of State, the chiefs of the United States diplomatic
24
missions, the chairmen of the Senate Foreign Relations Committee, the House Foreign Affairs
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Federal Reserve Bank of St. Louis
Committee, the Senate
61
1 Appropriations Committee, and the House Appropriations
2 Committee, and the chiefs of the special missions provided
3 for in section 109 of this title currently informed concerning
4 his activities. He shall consult with the chiefs of all such
5 missions, who shall give him such cooperation as he may
6 require for the performance of his duties under this title.
1
8
SPECIAL EGA MISSIONS ABROAD
SEC. 109. (a) There shall be established for each
^
9 participating country, except as provided in subsection (d)
10 of this section, a special mission for economic cooperation
11 under the direction of a chief who shall be responsible for
12 assuring the performance within such country of operations
13 under this title. The chief shall be appointed by the Admin14 istrator, shall receive his instructions from the Administrator,
15 and shall report to the Administrator on the performance of
f
16 the duties assigned to him. The chief of the special mission
l^ shall take rank immediately after the chief of the United
18 States diplomatic mission in such country.
19
(b) The chief of the special mission shall keep the chief
20 of the United States diplomatic mission fully and currently
21 informed on matters, including prospective action, arising
22 within the scope of the operations of the special mission and
23 the chief of the diplomatic mission shall keep the chief of the
2^ special mission fully and currently informed on matters
25 relative to the conduct of the duties of the chief of the special
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Federal Reserve Bank of St. Louis
62
1 mission. The chief of the United States diplomatic mission
2 will be responsible for assuring that the operations of the
3 special mission are consistent with the foreign-policy objec4 lives of the United States in such country and to that end
5 whenever the chief of the United States diplomatic mission
6 believes that any action, proposed action, or failure to act
7 on the part of the special mission is inconsistent with such
8 foreign-policy objectives, he shall so advise the chief of the
9 special mission and the United States Special Representative
10 in Europe.
If differences
of view are not adjusted
by
11 consultation, the matter shall be referred to the Secretary of
1^ State and the Administrator for decision.
13
(c) The Secretary of State shall provide such
office
" space, facilities, and other administrative services for the
1^
United States Special Representative in Europe and his staff,
* • and for the special mission in each participating country, as
17
±l
may be agreed between the Secretary of State and the
1" Administrator.
(d) With respect to any of the zones of occupation of
^
Germany and of the Free Territory of Trieste, during the
~* period of occupation, the President shall make appropriate
~~
oo
administrative arrangements for the conduct of operations
under this title, in order to enable the Administrator to carry
out his responsibility to assure the accomplishment of the
*** purposes of this title.
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63
1
PERSONNEL OUTSIDE UNITED
STATES
2
SEC. 110. (a) For the purpose of performing functions
3
under this title outside the continental limits of the United
4 States, the Administrator may—
»
<
5
(1) employ persons who shall receive compensa-
6
tion at any of the rates provided for the Foreign Service
7
Eeserve and Staff
8
(60 Stat. 999), together with allowances and benefits
9
established thereunder; and
by the Foreign Service Act of 1946
10
(2) recommend the appointment or assignment of
11
persons, and the Secretary of State may appoint or
12
assign such persons, to any class in the Foreign Service
13
Reserve or Staff
14
this title, and the Secretary of State may assign, transfer,
15
or
for the duration of operations under
promote such persons upon the recommendation of the
16
^
1^
Administrator. Persons so appointed to the Foreign
18
528 of the Foreign Service Act of 1946.
19
*®
Service Staff
fi}
shall be entitled to the benefits of section
por ihe purpose of performing functions under this
title outside the continental limits of the United States, the
21 Secretary of State may, at the request of the Administrator,
*
appoint, for the duration of operations under this title, alien
** clerks and employees in accordance with applicable provisions
24
of the Foreign Service Act of 1946 (60 Stat. 999).
***
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Federal Reserve Bank of St. Louis
(c) No citizen or resident of the United States may be
64
1
employed, or if already employed, may be assigned to duties
2 by the Secretary of State or the Administrator under this
3 title until such individual has been investigated as to loyalty
4 and security by the Federal Bureau of Investigation and a
5 report thereon has been made to the Secretary of State and
6 the Administrator: Provided, however, That any present
'l
employee of the Government, pending the report as to such
8 employee by the Federal Bureau of Investigation, may be
9 temporarily assigned to duties under this title for the period
10 of six months from the date of its enactment. This subsection
11 shall not apply in the case of any officer
appointed by the
12 President by and with the advice and consent of the Senate.
l^
NATURE AND METHOD OF ASSISTANCE
"
SEC. 111. (a) The Administrator may, from time to
1
time, furnish assistance to any participating country by providing for the performance of any of the functions set forth
in paragraphs (1) through (6) of this subsection when he
deems it to be in furtherance of the purposes of this title,
and upon the terms and conditions set forth in this title
and such additional terms and conditions consistent with the
provisions of this title as he may determine to be necessary
and proper.
(1) Procurement from any source, including Gov-
C\A
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Federal Reserve Bank of St. Louis
ernment stocks on the same basis as procurement by
Government agencies under Public Law 375 (Seventy-
65
1
ninth Congress) for their own use, of any commodity
2
which he determines to be required for the furtherance
3
of the purposes of this title. As used in this title, the
4
term "commodity" means any commodity, material, arti-
5
cle, merchant vessel authorized to be chartered under
6
paragraph (4) of this subsection, supply, or goods neces-
t
sary for the purposes of this title.
8
(2) Processing, storing, transporting, and repairing
^
any commodities, or performing any other services with
1"
respect to a participating country which he determines
^
to be required for accomplishing the purposes of this
12
title.
-^
procurement of commodities under authority of this title,
**
take such steps as may be necessary to assure, so far as is
*•*
practicable, that a substantial portion of the gross tonnage
•lu
of commodities, procured within United States out of
•*•*
funds made available under this title and transported
W*
abroad on dry-cargo ocean vessels, is so transported on
The Administrator shall, in providing for the
United States flag vessels to the extent such vessels are
*V
available at market rates.
**
oo
(3) Procurement of and furnishing technical information and assistance.
OQ
(4) With the approval of the President, placing in
operating condition, and, for periods not extending beS. 2202
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Federal Reserve Bank of St. Louis
5
66
1
yond December 31, 1952, chartering to participating
2
countries, not more than two hundred dry-cargo mer-
3
chant vessels owned by the United States and not in
4
operation at the time of charter. If a vessel of the United
5
States is so chartered, its documents as a vessel of the
6
United States shall be surrendered and it shall, during
7
the charter period, be considered as a foreign vessel for
8
the purposes of the navigation and vessel inspection
9
laws of the United States. Each charter under this
10
paragraph shall be terminable whenever (i) the Presi-
11
dent determines that such termination is necessary in the
12
interest of national security or (ii) the Administrator,
13
pursuant to section 118, terminates the provision of
14
assistance to the country to which the vessel is chartered.
15
Any vessel chartered under this paragraph shall engage
16
primarily in the transportation of commodities supplied
1^
under this title to the participating countries, and shall
18
not otherwise compete with vessels of the United States
19
on ship routes served by them unless the charterer certifies
20
such service to be necessary to maintain adequate service
21
on such routes.
22
(5) Transfer of any commodity or service, which
23
transfer shall be signified
24=
and right of possession and use of such commodity, or
25
otherwise making available any such commodity, or by
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Federal Reserve Bank of St. Louis
by delivery of the custody
67
1
rendering a service to a participating country or to any
2
agency or organization representing a participating
3
country.
4
(6) The allocation of commodities or services to
5
specific projects designed to carry out the purposes of
6
this title, which have been submitted to the Admin-
7
istrator by participating
8
approved by him.
9
(b) In order to facilitate and maximize the use of
countries and have been
10 private channels of trade, subject to adequate safeguards
11 to assure that all expenditures in connection ivith such pro12 curement are ivithin approved programs in accordance with
l^
terms and conditions established by the Administrator, he
l^ may provide for the performance of any of the functions
1^ described in subsection (a) of this section—
1"
1*
i10R
-
(1) by establishing accounts against which, under
regulations prescribed by the Administrator—
(i) letters of commitment may be issued in
connection with supply programs approved by the
Administrator (and such letters of commitment,
when issued, shall constitute obligations of applicable appropriations) ;
rtO
2 4
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Federal Reserve Bank of St. Louis
(ii) withdrawals may be made by participating
•
.
.
.
countries, or agencies or organizations representing
participating countries, upon presentation of con-
68
1
tracts, invoices, or other documentation specified by
2
the Administrator under arrangements prescribed by
3
the Administrator to assure the use of such with-
4
drawals for purposes approved by the Administrator.
5
Such accounts may be established on the books of the
6
Administration, or any other department, agency, or
7
establishment of the Government specified by the Admin-
8
istrator, or, on terms and conditions approved by the
'-•
Secretary of the Treasury, in banking institutions in
10
the United States. Expenditures of funds which have
11
been made available through accounts so established shall
12
be accounted for on standard documentation required
13
for expenditures of Government funds: Provided, That
14
such expenditures for commodities or services procured
15
outside the continental limits of the United States under
1"
authority of this section may be accounted for exclu-
1^
sively on such certification as the Administrator
1°
prescribe to assure expenditure in furtherance of the
1(J
purposes of this title, and such certification shall be
20
binding on the accounting officers
21 ,
may
of the Government.
(2) by utilizing the services and facilities of any
^
department, agency, or establishment of the Government
"*
as the President shall direct, or with the consent of the
•*;;
head of such department, agency, or establishment, or, in
*TO3
the President's discretion by acting in cooperation with
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Federal Reserve Bank of St. Louis
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Federal Reserve Bank of St. Louis
69
the United Nations or with other international organizations or with agencies of the participating countries,
and funds allocated pursuant to this section to any department, agency, or establishment of the Government shall
be established in separate appropriation accounts on the
books of the Treasury.
(3) by making, under rules and regulations to be
prescribed by the Administrator, guaranties to any
person of investments in connection with projects approved by the Administrator and the participating country concerned as furthering the purposes of this title
(including guaranties of investments in enterprises producing or distributing informational media: Provided,
That the amount of such guaranties in the first year
after the date of the enactment of this Act does not
exceed $15.000,000), which guaranties shall terminate
not later than fourteen years from the date of enactment
of this Act: Provided, That—
(i) the guaranty to any person shall not exceed the amount of dollars invested in the project
by such person with the approval of the Administrator and shall be limited to the transfer into
United States dollars of other currencies, or credits
in such currencies, received by such person as income from the approved investment^ as repayment
70
1
or return thereof, in ichole or in part, or as com-
2
pensation for the sale or disposition of all or any
3
part thereof: Provided, That, when any payment is
4
made to any person under authority of this para-
5
graph, such currencies, or credits in such currencies,
6
shall become the property of the United States Gov-
7
ernment;
8
(ii) the Administrator may charge a fee in an
9
amount determined by him not exceeding 1 per
10
centum per annum of the amount of each guaranty,
11
and all fees collected hereunder shall be available for
12
expenditure in discharge of liabilities under guar-
13
anties made under this paragraph until such time
14
as all such liabilities have been discharged or have
15
expired, or until all such fees have been expended
1°
in accordance with the provisions of this paragraph.
1*
(in) as used in this paragraph, the term "per-
1
son" means a citizen of the United States or any
^
corporation, partnership, or other association created
^
under the law of the United States or of any State
21
or Territory and substantially beneficially owned
22
by citizens of the United States.
OQ
24
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Federal Reserve Bank of St. Louis
The total amount of the guaranties made under this
paragraph (3) shall not exceed $500,000,000, and as
such guaranties are made the authority to realize funds
71
1
from the sale of notes for the purpose of allocating funds
2
to the Export-Import Bank of Washington under para-
3
graph (2)
4
accordingly reduced. Any payments made to discharge
5
liabilities under guaranties issued under paragraph
6
of this subsection shall be paid out of fees collected under
1
subparagraph (ii) of paragraph (3) of this subsection
8
as long as such fees are available, and thereafter shall
9
be paid out of funds realized from the sale of notes issued
of subsection (c) of this section shall be
(2)
(3)
10
under authority of paragraph
of subsection (c)
11
of this section, which funds shall be obligated for this
12
purpose at the time each such guaranty is made.
13
(c) (1.) The Administrator may provide assistance for
14 any participating country, in the form and under the pro15 cedures authorized in subsections (a) and (b), respectively,
16 of this section, through grants or upon payment in cash, or
17 on credit terms, or on such other terms of payment as he
18
may
find appropriate, including payment by the transfer to
19 the United States (under such terms and in such quantities
20 as may be agreed to between the Administrator and the
21 participating country) of materials which are required by
22 the United States as a result of deficiencies or potential
2^ deficiencies in its own resources. In determining whether
2^ such assistance shall be through grants or upon terms of
2^ payment, and in determining the terms of payment, he shall
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Federal Reserve Bank of St. Louis
72
1
act in consultation with the National Advisory Council on
2 International Monetary and Financial Problems, and the
3 determination whether or not a participating country should
4 be required to make payment for any assistance furnished
5
to such country in furtherance of the purposes of this title,
6
and the terms of such payment, if required, shall depend
1 upon the character and purpose of the assistance and upon
8 whether there is reasonable assurance of repayment consid9
ering the capacity of such country to make such payments
10 without jeopardizing the accomplishment of the purposes
11 of this title.
12
(2) When it is determined that assistance should be
13
extended under the provisions of this title on credit terms,
14 the Administrator shall allocate funds for the purpose to
1^
the Export-Import
Bank of Washington, which shall, not-
16 withstanding the provisions of the Export-Import
Bank Act
1^
of 19d5 (59 Stat. 526), as amended, make and administer
1°
the credit on terms specified
by the Administrator
in
19 consultation with the National Advisory Council on Inter20 national Monetary and Financial Problems. For the purpose
21 of carrying out the provisions of this paragraph
2^
during
the period of one year following the date of enactment
23 of this Act, and for the purpose of carrying out the pro^
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Federal Reserve Bank of St. Louis
visions of paragraph (3) of subsection (b) of this section
the Administrator is authorized to issue notes from time to
73
1
time for purchase by the Secretary of the Treasury in an
2 amount not exceeding in the aggregate $1,000,000,000.
3 Such notes shall bear such rate of interest as may be deter4 mined by the Administrator with the approval of the Secre5
tary of the Treasury.
The Secretary of the Treasury is
6 hereby authorized and directed to purchase any notes issued
1 hereunder, and for such purpose the Secretary of the Treas8 ury is authorized to use as a public-debt transaction the pro9 ceeds of any securities hereafter issued under the Second
10 Liberty Bond Act, as amended, and the purposes for which
11 securities may be issued under that Act are hereby extended to
12 include such purpose. Payment under this paragraph of the
13 purchase price of such notes shall be treated as public-debt
14 transactions of the United States. In allocating funds to
15 the Export-Import
Bank of Washington under this para-
16 graph, the Administrator shall first utilize such funds realized
^
17 from the sale of notes authorized by this paragraph as he
*
18 determines to be available for this purpose, and when such
19 funds are exhausted, or after the end of one year from
20 the date of enactment of this Act, whichever is earlier, he
21 shall utilize any funds appropriated under this title.
The
22 Administrator
shall make advances to, or reimburse, the
23 Export-Import
Bank of Washington for necessary admin-
2^ istrative expenses in connection with such credits.
Credits
25 made by the Export-Import Bank of Washington with funds
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Federal Reserve Bank of St. Louis
74
1
so allocated to it by the Administrator shall not be considered
2 in determining whether the bank has outstanding at any one
3 time loans and guaranties to the extent of the limitation im4 posed by section 7 of the Export-Import Bank Act of 1945
5
(59 Stat. 529), as amended.
Amounts received in repay-
6 ment of principal and interest on any credits made under
7 this paragraph shall be deposited into miscellaneous receipts
8 of the Treasury: Provided, That, to the extent required
'
9 for such purpose, amounts received in repayment of principal
•w
and interest on any credits made out of funds realized from
-*--*•
the sale of notes authorized under this paragraph shall be
-^
deposited into the Treasury for the purpose of the retirement
•*** of such notes.
14
*
PROTECTION
OF DOMESTIC
ECONOMY
SEC. 112. (a) The Administrator shall provide for the
"1R
17
18
procurement in the United States of commodities under this
.
7
(
title in such a way as to (1) minimize the drain upon the
resources of the United States and the impact of such pro-
19 curement upon the domestic economy, and (2) avoid im20 pairing the fulfillment of vital needs of the people of the United
91
^
22
23
States.
(b) The
procurement
of
petroleum
and
petroleum
products under this title shall, to the maximum extent
24 practicable, be made from petroleum sources outside the
25
United States; and, in furnishing commodities under the
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Federal Reserve Bank of St. Louis
75
1 provisions of this title, the Administrator shall take fully
2 into account the present and anticipated world shortage of
3 petroleum and its products and the consequent undesir ability
4 of expansion in petroleum-consuming equipment where the
5 use of alternate fuels or other sources of power is practicable.
6
(c) In order to assure the conservation of domestic
1 grain supplies and the retention in the United States of by8 product feeds necessary to the maintenance of the agricultural
9
economy of the United States, the amounts of wheat and
10 wheat flour produced in the United States to be transferred
11 by grant to the participating countries shall be so determined
12 that the total quantity of United States wheat used to produce
13 the wheat flour procured in the United States for transfer
14 by grant to such countries under this title shall not be less
1° than 25 per centum of the aggregate of the unprocessed
16 wheat and wheat in the form of flour procured in the United
17 States for transfer by grant to such countries under this title.
18
(d) The term "surplus agricultural commodity" as used
19 in this section is defined as any agricultural commodity, or
20 product thereof, produced in the United States which is
21 determined by the Secretary of Agriculture to be in excess
22 of domestic requirements. In providing for the procurement
23 of any such surplus agricultural commodity for transfer by
94-
f^
• •
grant to any participating
country in accordance with the
25
requirements of such country, the Administrator shall, insofar
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Federal Reserve Bank of St. Louis
76
1
as practicable and where in furtherance of the purposes of
2 this title, give effect to the following:
3
(1) The Administrator shall authorize the procurement
4 of any such surplus agricultural commodity only within the
5
United States: Provided, That this restriction shall not be
6 applicable (i) to any agricultural commodity, or product
7 thereof, located in one participating country, and intended
8 for transfer to another participating country, if the Adminis9 trator, in consultation with the Secretary of Agriculture,
10 determines that such procurement and transfer is in further•**•
ance of the purposes of this title, and would not create a
*r
burdensome surplus in the United States or seriously preju-
*? dice the position of domestic producers of such surplus ngricultural commodities, or (ii) if, and to the extent that any
such surplus agricultural commodity is not available in the
"I R
171
United States in sufficient
quantities to supply the require-
ments of the participating countries under this title,
-j Q
(2) In providing for the procurement of any such surplus agricultural commodity, the Administrator shall, inso20
" far as practicable and applicable, and after giving due con21 sideration to the excess of any such commodity over domestic
22
requirements, and to the historic reliance of United States
23
producers of any such surplus agricultural commodity upon
24
markets in the participating countries, provide for the pro25
curement of each class or type of any such surplus agricul
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Federal Reserve Bank of St. Louis
77
1
tural commodity in the approximate proportion that the
2 Secretary of Agriculture determines such classes or types
3 bear to the total amount of excess of such surplus agricul4 tural commodity over domestic requirements.
5
(e) Whenever the Secretary of Agriculture determines
6 that any quantity of any surplus agricultural commodity,
7 heretofore or hereafter acquired by Commodity Credit Cor8 poration in the administration of its price-support programs,
9 is available for use in furnishing assistance to foreign coun10 tries, he shall so advise all departments, agencies, and estab11 lishments of the Government administering laws providing
12 for the furnishing of assistance or relief to foreign countries
13
(including occupied or liberated countries or areas of such
14 countries). Thereafter the department, agency, or establish15 ment administering any such law shall, to the maximum
Jvj
extent practicable, consistent with the provisions and in
1^ furtherance of the purposes of such law, and ivhere for trans1° fer by grant and in accordance with the requirements of such
1^ foreign country, procure or provide for the procurement of
^
such quantity of such surplus agricultural commodity. The
rf
sales price paid as reimbursement to Commodity Credit
^
Corporation for any such surplus agricultural commodity shall
**
be in such amount as Commodity Credit Corporation determines will fully reimburse it for the cost to it of such surplus
agricultural commodity at the time and place such surplus
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Federal Reserve Bank of St. Louis
78
1
agricultural commodity is delivered by it, but in no event
2 shall the sales price be higher than the domestic market price
3
at such time and place of delivery as determined by the
4 Secretary of Agriculture, and the Secretary of Agriculture
5 may pay not to exceed 50 per centum of such sales price as
6
7
authorized by subsection (f) of this section.
(f) Subject to the provisions of this section, but not-
8 withstanding any other provision of law, in order to encour9 age utilization of surplus agricultural commodities pursuant
10 to this or any other Act providing for assistance or relief to
4~
foreign countries, the Secretary of Agriculture, in carrying
12 out the purposes of clause (1), section 32, Public Law 320,
13 Seventy-fourth
Congress, as amended, may make payments,
1^ including payments to any Government agency procuring
15 or selling such surplus agricultural commodities, in an amount
16 not to exceed 50 per centum of the sales price (basis free
17 along ship or free on board vessel, United States ports), as
18 determined by the Secretary of Agriculture, of such surplus
19 agricultural commodities.
The rescission of the remainder
20 of section 32 funds by the Act of July 30, 1947 (Public
21 Law 266, Eightieth Congress), is hereby canceled and such
^
funds are hereby made available for the purposes of section
^
32 for thefiscalyear ending June 30,1948.
^
(g) No export shall be authorized pursuant to authority
25 conferred by section 6 of the Act of July 2, 1940 (54 Stat.
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79
1 714), including any amendment thereto, of any commodity
2 from the United States to any country wholly or partly
3 in Europe which is not a participating country, if the Sec4 retary of Commerce determines that the supply of such
5 commodity is insufficient
(or would be insufficient
if such
6 export were permitted) to fulfill the requirements of partici7 pating countries under this title as determined by the Ad8 ministrator: Provided, however, That such export may be
9
authorized if the Secretary of Commerce determines that
10 such export is otherwise in the national interest of the United
11 States.
12
(h) In providing for the performance of any of the
1^ functions described in subsection (a) of section 111, the
1^ Administrator shall, to the maximum extent consistent with
15 the accomplishment of the purposes of this title, utilize private
1" channels of trade.
^
REIMBURSEMENT
lb
TO GOVERNMENT
AGENCIES
SEC. 113. (a) The Administrator shall make reimburse-
-*•" ment or payment, out of funds available for the purposes of
this title, for any commodity, service, or facility procured
under section 111 of this title from any department, agency,
or establishment of the Government.
no
Such reimbursement
or payment shall be made to the owning or disposal agency,
f\A
as the case may be, at replacement cost, or, if required
oc
by law, at actual cost, or at any other price authorized
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1
by law and agreed to between the Administrator and
2 such agency. The amount of any reimbursement or payment
3 to an owning agency for commodities, services, or facilities
4 so procured shall be credited to current applicable appropria5 tions, funds, or accounts from which there may be procured
6 replacements of similar commodities or such services or
1 facilities: Provided, That such commodities, services, or
" facilities may be procured from an owning agency only with
9 the consent of such agency: And provided further,
That
™ where such appropriations, funds, or accounts are not reim•*-*
bur sable except by reason of this subsection, and when the
f$
owning agency determines that replacement of any com-
W
modity procured under authority of this section is not neces-
•^ sary, any funds received in payment therefor shall be covered
•*•** into the Treasury as miscellaneous receipts.
"1 K.
j'j
^j jr^e Administrator, whenever in his judgment the
interests of the United States will best be served thereby,
-t o
may dispose of any commodity procured out of funds made
available for the purposes of this title, in lieu of trans-
90
ferring such commodity to a participating country, (1) by
21
22
23
24
25
transfer of such commodity, upon reimbursement, to any department, agency, or establishment of the Government for use
or disposal by such department, agency, or establishment as
authorized by law, or (2) without regard to provisions of
law relating to the disposal of Government-owned property,
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81
1
when necessary to prevent spoilage or wastage of such com-
2 modity or to conserve the usefulness thereof.
Funds realized
3 from such disposal or transfer shall revert to the respective
4 appropriation or appropriations out of which funds were
5 expended for the procurement of such commodity.
§
T
AUTHORIZATION
OF APPROPRIATIONS
SEC. 114. (a) Notwithstanding
the provisions of any
° other law, the Reconstruction Finance Corporation is au9 thorized and directed, until such time as an appropriation
-*$ shall be made pursuant to subsection (c) of this section,
^
to make advances not to exceed in the aggregate $1,000,000,000 to carry out the provisions of this title, in such
1o
manner, at such time, and in such amounts as the President
^ shall determine, and, no interest shall be charged on advances
made bij the Treasunj to the Reconstruction Finance Corif
17
is
1
poration for this purpose.
The Reconstruction
Finance
Corporation shall be repaid without interest from appropriations authorized under this title for advances made
by it hereunder.
90
91L
99
9°
(b) Such part as the President may determine of the
unobligated and unexpended balances of appropriations or
other funds available for the purposes of the Foreign Aid
Act of 1947 shall be available for the purpose of carrying
out the purposes of this title.
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6
82
1
(c) In order to carry out the provisions of this title
2 with respect to those participating countries which adhere
3 to the purposes of this title, and remain eligible to receive
4 assistance hereunder, such funds shall be available as are
5 hereafter authorized and appropriated to the President from
6 tune to time through June 30, 1952, to carry out the provi7 sions and accomplish the purposes of this title: Provided, how8 ever, That for carrying out the provisions and accomplishing
9 the purposes of this title for the period of one year following
10 the date of enactment of this Act, there are hereby authorized
11 to be so appropriated not to exceed $4,300,000,000.
Nothing
12 in this title is intended nor shall it be construed as an express
13 or implied commitment to provide any specific assistance,
14 ivhether of funds, commodities, or services, to any country
15 or countries. The authorization in this title is limited to the
16 period of twelve months in order that subsequent Congresses
17 may pass on any subsequent authorizations.
18
(d) Funds made available for the purposes of this
19 title shall be available for incurring and defraying all neces20 sary expenses incident to carrying out the provisions of this
21 title, including administrative
expenses and expenses for
22 compensation, allowances and travel of personnel, including
23 Foreign Service personnel whose services are utilized pri24 marily for the purposes of this title, and, without regard
25 to the provisions of any other law, for printing and binding,
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83
1
and for expenditures outside the continental limits of the
2
United States for the procurement of supplies and services
3 and for other administrative purposes (other than compensa4 tion of personnel) without regard to such laws and regula5 tions governing the obligation and expenditure of govern6 ment funds, as the Administrator shall specify in the interest
7 of the accomplishment of the purposes of this title.
8
(e) The unexpended portions of any deposits which may
9 have been made by any participating country pursuant to
10 section 6 of the joint resolution providing for relief assistance
11 to the people of countries devastated by war (Public Law 84,
12 Eightieth Congress) and section 5 (b) of the Foreign Aid
13 Act of 1947 (Public Law 389, Eightieth Congress) may be
14 merged with the deposits to be made by such participating
15 country in accordance with section 115 (b) (6) of this title,
16 and shall be held or used under the same terms and conditions
** as are provided in section 115 (b) (6) of this title.
1°
(f) In order to reserve some part of the surplus of
i
19 the fiscal year 1948 for payments thereafter to be made
*® under this title, there is hereby created on the books of
^1 the Treasury of the United States a trust fund to be known
^
as the Foreign Economic Cooperation Trust Fund. Not-
oo
^ withstanding any other provision of law, an amount of
*
$3,000,000,000, out of sums appropriated pursuant to the
authorization contained in this title shall, irhen appropri-
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84
1 cited, be transferred immediately to the trust fund, and shall
2 thereupon be considered as expended during the fiscal year
3 1948, for the purpose of reporting governmental expenditures.
4 The Secretary of the Treasury shall be the sole trustee of the
5 trust fund and is authorized and directed to pay out of the
6 fund such amounts as the Administrator shall duly requisi7 tion. The first expenditures made out of the appropriations
8 authorized under this title in the fiscal year 1949 shall be
9 made with funds requisitioned by the Administrator out of
10 the trust fund until the fund is exhausted, at which time such
11 fund shall cease to exist. The provisions of this subsection
12 shall not be construed as affecting
the application of any
13 provisions of law which would otherwise govern the obliga14 tion of funds so appropriated or the auditing or submission
15 of accounts of transactions with respect to such funds.
1^
17
BILATERAL
AND MULTILATERAL
UNDERTAKINGS
SEC. 11<5. (a) The Secretary of State, offer consulta-
18 tion with the Administrator, is authorized to conclude, with
19 individual participating countries or any number of such coun20 tries or with an organization representing any such countries,
21 agreements in furtherance of the purposes of this title.
22 The Secretary of State, before an Administrator or Deputy
23 Administrator shall have qualified and taken office, is author24 ized to negotiate and conclude such temporary agreements in
25 implementation of subsection (b) of this section as he may
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85
1 deem necessary in furtherance of the purposes of this title.
2 Provided, That when an Administrator or Deputy Adminis3 trator shall have qualified and taken office, the Secretary of
4 State shall conclude the basic agreements required, by subsec5 lion (b) of this section only after consultation with the Ad6 ministrator or Deputy Administrator, as the case may be.
7
(b) The provision of assistance under this title results
8 from the multilateral pledges of the participating countries
9
to use all their efforts
to accomplish a joint recovery program
10 based upon self-help
and mutual cooperation as embodied
11 in the report of the Committee of European Economic Co12 operation signed at Paris on September 22, 1947, and is
13 contingent upon continuous effort
of
the
participating
14 countries to accomplish a joint recovery program through
1^ multilateral undertakings and the establishment of a con1" tinning organization for this purpose.
W
Tn addition to con-
tinned mutual cooperation of the participating countries
1° in such a program, each such country shall conclude an
1^ agreement with the United States in order for such country
A*
to be eligible to receive assistance under this title.
fn
agreement shall provide for the adherence of such country
^
to the purposes of this title and shall, ivhere applicable, make
"
appropriate provision, among others, for—
TT
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Such
(1) promoting industrial and agricultural production in order to enable the participating country to
86
1
become independent of extraordinary outside economic
2
assistance; and submitting for the approval of the Ad-
3
ministrator, upon his request and whenever he deems
4
it in furtherance of the purposes of this title, specific
5
projects proposed by such country to be undertaken in
6
substantial part with assistance furnished under this title,
7
which projects, whenever practicable, shall include proj-
8
ects for increased production of coal, steel, transportation
9
facilities, and food;
10
(2) taking financial and monetary measures neces-
11
sary to stabilize its currency, establish or maintain a
12
valid rate of exchange, to balance its governmental
13
budget as soon as practicable, and generally to restore or
14
maintain confidence in its monetary system;
15
(3) cooperating with other participating countries in
16
facilitating and stimulating an increasing interchange of
17
goods and services among the participating countries and
18
with other countries and cooperating to reduce barriers
19
to trade among themselves and with other countries;
20
(4) making efficient
and practical use, within the
21
framework of a joint program for European recovery,
22
of the resources of such participating country, including
23
any commodities, facilities, or services furnished under
24
this title, which use shall include, to the extent practi-
25
cable, taking measures to locate and control, in further-
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87
'
1
ance of such program, assets, and earnings therefrom,
2
which belong to the citizens of such country and ivhich
3
are situated within the United States, its Territories and
4
possessions;
5
(5) facilitating the transfer to the United States by
6
sale, exchange, barter, or other imse for stock-piling pur-
7
poses, for such period of time as may be agreed to and
8
upon reasonable terms and in reasonable quantities, of
9
materials which are required by the United States as a
10
result of deficiencies or potential deficiencies in its own
11
resources, and which may be available in such participat-
12
ing country after due regard for reasonable requirements
13
for domestic use and commercial export of such country;
14
(6) placing in a special account a deposit in the
15
currency of such country, in commensurate amounts and-
16
under such terms and conditions as may be agreed to
17
between such country
18
United States, when any commodity or service is made
19
available through any means authorized under this
20
title, and is furnished to the participating country on
21
a grant basis. Such special account, together with the
22
unexpended portions of any deposits which may have
23
been made by such country pursuant to section 6 of the
24
joint resolution providing for relief
25
people of countries devastated by irar (Public Law 84,
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Federal Reserve Bank of St. Louis
and
the Government
of the
assistance to the
88
1
Eightieth Congress) and section 5 (b) of the Foreign
2
Aid Act of 1947 (Public Law 389, Eightieth Congress),
3
shall be held or used within such country for such pur-
4
poses as may be agreed to between such country and the
5
Administrator in consultation with the National Adwsory
6
Council on International Monetary and Financial Prob-
7
lems, and the Public Advisory Board provided for in
8
section 107 (a) for purposes of internal monetary and
9
financial
stabilization, for the stimulation of productive
10
activity and the exploration for and development of new
11
sources of wealth, or for such other expenditures as may
12
be consistent with the, purposes of this title, including
13
local currency administrative expenditures of the United
14
States incident to operations under this title, and under
15
agreement that any unencumbered balance remaining in
16
such account on June 30, 1952, shall be disposed of
fS
within such country for such purposes as may, subject to
18
approval by Act or joint resolution of the Congress,
19
be agreed to between such country and the Government
20
of the United States;
21
(7) publishing in such country and transmitting to
3?
the United States, not less frequently than every calendar
oo
Zo
^
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Federal Reserve Bank of St. Louis
quarter after the date of the agreement, full statements
of operations under the agreement, including a report
89
1
of the use of funds, commodities, and services received
2
under this title;
3
4
Sfate^
5
assistance to the United, States in determining the nature
6
and scope of operations and the use of assistance provided
n
»
(8) furnishing promptly, upon request of the United
7
any relevant information irhic-h would be of
under this title;
8
(9) recognizing the principle of equity in respect to
9
the drain upon the natural resources of the United States
10
and of the recipient countries, and (a) providing for a
11
future schedule of availabilities to ihe United, States for
12
future purchase and delivery/ of a fair share of strategic
13
materials at world market prices so as to protect the
14
access of United States industry to an equitable share
15
of such materials either in percentages of production or
16
in absolute quantities from the territories and posses-
•* '
xionx of the participating countries, and (b) agreeing
•
1
to negotiate suitable protection for the right of access for
'''
United States enterprise in the development of such
materials on terms of treatment equivalent to those
^
afforded
to the nationals of the country concerned, and
(c) providing an agreed schedule of increased production
oo
94-
"*
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Federal Reserve Bank of St. Louis
of such materials where practicable in the Territories
or possessions of such participating countries and for
90
1
delivery of an agreed percentage of such increased pro-
2
duction in repayment on a long-term basis of (/rants or
3
loans made by the Administrator to such countries.
4
(10) submitting for the decision of the International
5
Court of Justice or of any arbitral tribunal mutually
6
agreed upon any case espoused by the United States
1
Government involving compensation of a national of the
8
United States for governmental measures affecting
9
property rights, including contracts with or concessions
his
10
from such country.
11
(c) Notwithstanding the provisions of subsection (b)
12 of this section, the Administrator, during the three months
13 after the date of enactment of this Act, may perform with
14 respect to any participating country any of the functions
15 authorized under this title which he may determine to be
16
essential in furtherance of the purposes of this title, if
17
(1) such country has signified its adherence to the purposes
18 of this title and its intention to conclude an agreement
19 pursuant to subsection (b) of this section, and (2) he finds
20 that such country is complying with the applicable provisions
21 of subsection (b) of this section: Provided, That, notivith22 standing the provisions of this subsection, the Administrator
23 may, through June 30,1948, provide for the transfer of food,
24 medical supplies, fibers, fuel, petroleum and petroleum prod25
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Federal Reserve Bank of St. Louis
vci$< fertilizer, pesticides, and seed, to any country of Europe
91
1
which participated in the Committee of European Economic
2
Cooperation and which undertook pledges to the other par-
3
ticipants therein, when the Administrator determines that
4
the transfer of any such supplies to any such country is essen-
5
tiat in order to make it possible to carry out the purposes
6
of this title by alleviating conditions of hunger and cold
7
and by preventing serious economic retrogression.
8
9
(d) The Administrator shall encourage the joint organization of the participating
10 subsection (b)
11
countries referred
to in
of this section to insure that each par-
ticipating country makes efficient
use of the resources of
12 s-uch country, including any commodities, facilities, or serv13 ices furnished under this title, by observing and reviewing
14 such use through an effective follow-up system approved by
15 the joint organization.
16
(e) The Administrator shall encourage arrangements
17 among the participating countries looking toward the largest
18 practicable utilization of manpower available in any of the
19 participating countries in furtherance of the accomplishment
20
of the purposes of this title. Such utilization of manpower
21 shall include integration into the various recover// programs
22
of the participating countries of a fair share of displaced per-
23 sons who are the responsibility of the International Refugee
24
Organization, under reasonable terms to be established in
25 cooperation with that organization, in ninnbcr and
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Federal Reserve Bank of St. Louis
92
1 conditions negotiated by the Administrator with the respec2 tive participating countries. The Administrator will request
3 the Secretary of State to seek to obtain the agreement of those
4 countries concerned that xiich capital etfuipmvnt
as is
5 scheduled for removal as reparations from the three western
G zones of Germany be retained in Germany if such retention
7 will most effectively
serve the purposes of the European
8 recovery program.
(f) It is the understanding of the Confess that, in
10 accordance with agreements now in effect, prisoners of war
I* remaining in participating countries shall, if they so freely
12 elect, be repatriated prior to January 1, 1949.
13
WESTERN
HEMISPHERE
COUNTRIES
SEC. 116. The President shall take appropriate steps to
encourage all countries in the Western Hemisphere to make
1 (\
17
'
18
available to participating countries such assistance as they
77?ay be able to furnish.
OTHER
DUTIES
OF THE
ADMINISTRATOR
SEC. 117. (a) The Administrator, in furtherance of the
20
21
purposes of section 11-5 (b) (5), and in agreement with a
purposes of section 11-5 (b) (5), and in agreement with a
22 participating country, shall, whenever practicable, promote,
23 by means of funds made available for the purposes of this
24 title, an increase in the production in such participating
25
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Federal Reserve Bank of St. Louis
country of materials which are required by the United States
93
1 o,s a result of deficiencies or potential deficiencies in the re2 sources within the United States.
3
(b) The Administrator, in cooperation with the Secre-
4 tary of Commerce, shall facilitate and encourage, through
5 private and public travel, transport, and other agencies, the
6 promotion and development of travel by citizens of the United
1 States to and within participating countries.
8
(c) In order to further the efficient use of United States
^ voluntary contributions for relief in participating countries
10 receiving assistance under this title in the form of grants or
-*•-*• any of the zones of occupation of Germany for which assist-^ ance is provided under this title and the Free
*rf
Territory
of Trieste or either of its zones, funds made available for
•\? the purposes of this title may be used, in the discretion of
*
the Administrator, and under rules and regulations pre-
•7? scribed by him, to pay port charges in the United States
TI and ocean freight charges from a United States port to
-« Q
a designated foreign port of entry (1) of supplies donated
1Q
to, or purchased by, United States voluntary
relief
nonprofit
agencies registered with and recommended by the
Advisory Committee on Voluntary Foreign Aid for opera99
~" tions in Europe, or (2) of relief packages conforming to
9*-i
9.4
95
such specified size, weight, and contents, as the Administrator may prescribe originating in the United States and
consigned to an individual residing in a participating country
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94
1 receiving assistance under this title in the form of grants
2 or any of the zones of occupation of Germany for which
3 assistance is provided under this title and the Free Territory
4 of Trieste or either of its zones. The Administrator may
5 make an agreement with such country for the use of a portion
6 of the deposit of local currency placed in a special account
7 pursuant to paragraph (6) of subsection (b) of section 115
8 of this title, for the purpose of defraying the transportation
9 cost of such supplies and relief packages from the port of
10 entry of such country to the designated shipping point of
11 consignee.
12
(d) The Administrator is directed to refuse delivery to
13 participating countries of commodities or products which go
into the production of commodities or products for delivery
1& to any country which has announced its intention to attempt
"1 R
"17
to prevent the success of the European recovery program,
which commodities or products would be refused
export
licenses to those countries by the United States.
1Q
±J
TERMINATION
OF ASSISTANCE
SEC. 118. The Administrator, in determining the form
and measure of assistance provided under this title to any
oo
""'" participating country, shall take into account the extent to
00
""'
94-
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Federal Reserve Bank of St. Louis
which such country is complying with its undertakings embodied in its pledges to other participating countries and
in its agreement concluded with the United States under
95
1 section llo. The Administrator
shall terminate the pro-
2 vision of assistance under this title to any
participating
3 country whenever he determines that (1) such country is not
4 adhering to its agreement concluded under section 115, or is
5 diverting from the purposes of this title assistance provided
6 hereunder, and that in the circumstances remedial action
1 other than termination will not more effectively
8
promote
the purposes of this title or (2) because of changed con-
9 ditions, assistance is no longer consistent with the national
10 interest of the United States. Termination of assistance to
11 any country wider this section shall include the termination
12 of deliveries of all supplies scheduled under the aid program
13 for such country and not yet delivered.
14
15
EXEMPTION
FROM
CONTRACT
AND
ACCOUNTING
LAWS
SEC. 119. When the President determines it to be in
16 furtherance of the purposes of this title, the functions author17 ized under this title may be performed without reyard to
18 such provisions of law regulating the making, performance,
•
19 amendment, or modification of contracts and the expendi20 ture of Government funds as the President may
21
EXEMPTION
FROM CERTAIN FEDERAL LAWS RELATING TO
22
23
specify.
EMPLOYMENT
SEC. 120. Service of an individual as a member of the
24 Public Advisory
Board (other than the Administrator)
25 created by section 107 (a), as a member of an advisory
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Federal Reserve Bank of St. Louis
96
/
1 committee appointed pursuant to section 107 (b), as an ex2 pert or consultant under section 104 (e), shall not be con3 sidered as service or employment bringing such individual
4 within the provisions of section 109 or 113 of the Criminal
5 Code (U. S. C., title 18, sees. 198 and 203), of section
6 ±90- of the Revised Statutes (U. S. C., title 5, sec. 99),
7 or of section 19 (e) of the Contract Settlement Act of 1944,
8 or of any other Federal law imposing restrictions, require9 ments, or penalties in relation to the employment of persons,
10 the performance of services, or the payment or receipt of
11 compensation in connection with any claim, proceeding, or
1^ matter involving the United States.
I3
UNITED
NATIONS
SEC. 121. (a) The President is authorized to request
I5 the cooperation of or the use of the services and facilities
~\ f\
of the United Nations, its organs and specialized agencies, or other international organizations, in carrying out the
purposes of this title, and may make payments, by advancements or reimbursements, for such purpose, out of funds
made available for the purposes of this title, as may be neces-
91
sary therefor, to the extent that special compensation is usually
nn
required for such services and facilities.
OO
24
Nothing in this
title shall be construed to authorize the Administrator to
delegate to or otherwise confer upon any international or
foreign organization or agency any of his authority to decide
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97
1
the method of furnishing assistance under this title to any
2 participating country or the amount thereof.
3
(b) The President shall cause to be transmitted to the
4 Secretary General of the United Nations copies of reports
5 to Congress on the operations conducted wider this title.
6
(c) Any agreements concluded between the United States
!Z and participating countries, or groups of such countries, in
8 implementation of the purposes of this title, shall be registered
9 with the United Nations if such registration is required by
10 the Charter of the United Nations.
H
TERMINATION
12
OF PROGRAM
SEC. 12.2. (a) After June 30, 1952, or after the date
13 of the passage of a concurrent resolution by ike two Houses
" of Congress before such date, which declares that the powers
-^ conferred on the Administrator by or pursuant to subsection
1" (a) of section 111 of this title are no longer necessary
-*•'
for the accomplishment of the purposes of this title, which-
-*•" ever shall first occur, none of the functions
authorized
•^ under such provisions may be exercised; except that during
~* the twelve months following such date commodities and services
4* with respect to which the Administrator had, prior to such
*? date, authorized procurement for, shipment to, or delivery
OQ
.
.
.
in a participating country, may be transferred to such
country, and funds appropriated under authority of this
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7
98
1 title may be obligated during such twelve-month period for
2 the necessary expenses of procurement, shipment, delivery",
3 and other activities essential to such transfer, and shall remain
4 available during such period for the necessary expenses of
5 liquidating operations under this title.
6
(b) At such time as the President shall find appro-
7 priate after such date, and prior to the expiration of the
8 twelve months following such date, the powers, duties, and
9 authority of the Administrator under this title may be trans10 f erred to such other departments, agencies, or establishments
11 of the Government as the President shall specify, and the
•Mr relevant funds, records, and personnel of the Administration
13 may be transferred to the departments, agencies, or establish1* ments to which the related functions are transferred.
15
REPORTS TO CONGRESS
Ik
SEC. 123. The President from time to time, but not less
1'
frequently than once every calendar quarter through June
1° 30, 1952, and once every year thereafter until all opera1
tions under this title have been completed, shall transmit
to the Congress a report of operations under this title,
including the text of bilateral and multilateral agreements
99
"*" entered into in carrying out the provisions of this title.
*)O
"° Reports provided for under this section shall be transmitted
to the Secretary of the Senate or the Clerk of the House of
9^
Representatives, as the case may be, if the Senate or the
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Federal Reserve Bank of St. Louis
99
1 House of Representatives, as the case may be, is not in
2 session.
3
SEPARABILITY
4
CLAUSE
SEC. 124. If any provision of this Act or the applica-
5 tion of such provision to any circumstances or persons shall
6 be held invalid, the validity of the remainder of the Act
7
and the applicability of such provision to other circumstances
8
or
persons shall not be affected
9
thereby.
TITLE II
10
SEC. 201. This title may be cited as the "International
11 Children's Emergency Fund Assistance Act of 1948".
12
SEC. 202. It is the purpose of this title to provide for
13 the special care and feeding of children by authorizing addi14 tional moneys for the International Children's Emergency
15 Fund of the United Nations.
16
SEC. 203. The President is hereby authorized and di-
1'
rected any time after the date of the enactment of this Act
18 and before July 1, 1949, to make contributions (a) from
19 sums appropriated to carry out the purposes of this title and
(b) from funds made available pursuant to the proviso in
21 the first paragraph of the first section of the joint resolution
22
of May 31, 1947 (Public Law 84, Eightieth
^
as amended, to the International Children's Emergency Fund
24
of the United Nations for the special care and feeding of
2
children.
^
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Federal Reserve Bank of St. Louis
Congress),
100
1
SEC. 204. No contribution shall be made pursuant to
2 this title or such joint resolution of May 31, 1947, which
3 would cause the sum of (a) the aggregate amount contrib4 uted pursuant to this title and (b) the aggregate amount
5 contributed by the United States pursuant to such joint
6 resolution of May 31, 1947, to exceed ivhichever of the
7 following sums is the lesser:
B
(1) 50 per centum of the total resources contrib-
^
uted after Hay 31, 1947, by all governments for pro-
10
grams carried out under the supervision of such fund;
11
or
12
13
(2) $100,000,000.
SEC. 205. No contribution shall be made pursuant to
£* this title or such joint resolution of May 31, 1947, unless,
l^ at the time of such contribution, governments other than
1" the United States Government have provided for use in
1 - the world program for the special care and feeding of
1° children under the supervision of the fund at least 20
1^ per centum of the total resources contributed by govern20 ments for such use after May 31, 1947.
*®.
SEC. 206. Funds made available pursuant to such joint
resolution of May 31, 1947, shall remain available through
23
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Federal Reserve Bank of St. Louis
June 30,1949.
SEC. 207. There is hereby authorized to be appropriated
101
1
to carry out the purposes of this title for the fiscal year end-
2 ing June 30, 1949, the sum of $60,000,000.
3
TITLE
4
5
III
SEC. 301. This title may be cited as the "Greek-TurkishChinese Assistance Act of 1948".
6
SEC. 302. Paragraph (2) of section 1 of the Act en-
7 titled "An Act to provide assistance to Greece and Turkey"
8 (61 Stat. 103), is hereby amended to read as follows:
9
"(2) by detailing to the United States Missions
IP
to Greece or Turkey or China under this Act, or to the
11
governments of those countries in implementation of the
l^
purposes of this Act, any persons in the employ of the
13
Government of the United States; and while so detailed,
1^
any such persons shall be considered, for the purpose of
15
preserving his rights and privileges as such, as an officer
16
or employee of the Government of the United States
•**?
and of the department or agency from which detailed.
18
Traveling expenses of such personnel to and from the
place of detail shall be paid by the Government of the
United States. Such personnel, and personnel detailed
<-'l
pursuant to paragraph (3) of this section, may receive
"-1
such station allowances or additional allowances as the
23
President may prescribe; and payments of such allow-
"*
ances heretofore made are hereby validated.
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Federal Reserve Bank of St. Louis
No citizen
102
1
or resident of the United States may be employed, or if
2
already employed, may be assigned to duties by the
3
Secretary of State under this Act until such individual
4
has been investigated as to loyalty and security by the
5
Federal Bureau of Investigation and a report thereon
6
has been made to the Secretary of State: Provided, how-
7
ever, That, any present employee of the Government,
8
pending the report as to such employee by the Federal
9
Bureau of Investigation, may be temporarily assigned
10
to duties under this Act for the period of six months from
41
the date of the enactment of the
12
Assistance Act of 1948.
1''
not apply in the case of any officer appointed by the
^
President by and with the advice and consent of the
ir>
Senate;".
!l>
SEC. 303. Paragraph (3) of section 1 of the Act en-
Greek-Turkish-Chinese
The preceding sentence shall
17
1
' titled "An Act to provide assistance to Greece and Turkey"
(61 Stat. 103), is hereby amended to read as follows:
"(3) by detailing to the United States Missions to
Greece or Turkey or China under this Act, or to the
governments of those countries in implementation of the
i)i)
~~
410
purposes of this Act, a limited number of members of the
military services of the United States to assist those
countries, in an advisory capacity only; and the pro-
25
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Federal Reserve Bank of St. Louis
visions of the Act of May 19, 1926 (M Stat. 565), as
103
1
amended, applicable to personnel detailed pursuant to
2
such Act, as amended, shall, except as otherwise pro-
3
vided herein, be applicable to personnel detailed pursuant
4
to this paragraph;".
5
SEC. 304. (a) Subsection (a) of section 4 of the Act
6 entitled "An
Act to provide assistance to Greece and
7 Turkey" (61 Stat. 103), is hereby amended by adding at
8 the end thereof the following: "The Reconstruction Finance
9 Corporation is authorized and directed to make additional
10 advances, not to exceed in the aggregate $50,000,000 to
11 carry out the provisions of this Act in such manner and in
12 such amounts as the President shall determine. No interest
13 shall be charged on advances made by the Treasury to the
14 Reconstruction Finance Corporation for this purpose."
15
(b) Subsection (b) of section 4 of the Act entitled "An
1" Act to provide assistance to Greece and Turkey" (61 Stat.
11
103), is hereby amended by deleting "$400,000,000" and
1^ inserting in lieu thereof "$675,000,000" and by inserting
•
after the word "repaid" the following: "without interest".
""
(c) There is hereby authorized to be appropriated to the
President not to exceed $150,000,000 to carry out the provi-
22
f)O
" '"*
sions of the Act of May 22, 1947 (Public Law 75, Eightieth
Congress), as amended, in relation to China.
94.
0
SEC. 305. The Act entitled "An Act to provide assistance to Greece and Turkey" (61 Stat. 103), including the
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Federal Reserve Bank of St. Louis
104
1 title thereof, is amended by inserting before the word "Greece7,
2 wherever appearing therein, the following: "China": Pro3 vided, however, That this section shall apply neither to the
4 preamble of such Act nor to the amendments to such Act made
5 by sections 302 and 303 of this title.
6
TITLE IV
?
SEC. 401. This title may be cited as the "China Aid
8 Act of 1948".
9
;
SEC. 402. Recognizing the intimate economic and other
10 relation ships between the United States and China, and
11 recognizing that disruption following in the wake of war is
12 not contained by national frontiers, the Congress finds that
!«* the existing situation in China endangers the establishment
** of a lasting peace, the general welfare and national interest
1°
of the United States, and the attainment of the objectives
)S of the United Nations. It is the sense of the Congress that
A
1'
the further evolution in China of principles of individual
1° liberty, free institutions, and genuine independence rests
1^ largely upon the continuing development of a strong and
81 democratic national government as the basis for the establishment of sound economic and political conditions and for
99
~~
9Q
94.
stable international
economic and political relationships.
Mindful of the advantages which the United States has enjoyed through the existence of a large domestic market with
25
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Federal Reserve Bank of St. Louis
no internal trade barriers, and believing that similar ad-
105
1 vantages can accrue to China, it is declared to be the policy
2 of the people of the United States to encourage the Republic
3 of China and its people to exert sustained common
efforts
4 ivhich will speedily achieve the internal peace and economic
5 stability in China which are essential for lasting peace and
6 prosperity in the world. It is further declared to be the
.7 policy of the people of the United States to encourage the
8 Republic of China in its efforts
to maintain the genuine
9 independence and the administrative integrity of China, and
10 to sustain and strengthen principles of individual liberty and
11 free institutions in China through a program of assistance
1^
based on self-help
and cooperation: Provided,
That no
13
assistance to China herein contemplated shall seriously im-
14 pair the economic stability of the United States.
It is
15 further declared to be the policy of the United States that
16 assistance provided by the United States under this title
**
should at all times be dependent upon cooperation by the
W Republic of China and its people in furthering the program:
\J
Provided further, That assistance furnished under this title
*®
shall not be construed as an express or implied assumption
** by the United States of any responsibility for policies, acts,
& or undertakings of the Republic of China or for conditions
( lQ
which may prevail in China .
ft A
25
•
.
SEC. 403. In addition to the amount authorized by
section 11 (a) of the Foreign Aid Act of 1947
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Federal Reserve Bank of St. Louis
(Public
106
1 Law 389, Eightieth Congress), appropriations in the
2 amount of $420,000,000 are hereby authorized for assistance
3 to China under such Act until June 30, 1949, and such
4 Act is hereby amended accordingly: Provided, That—
5
(a) paragraphs (1), (2), and (3) of section 4,
6
section 10, and section 11 (b) of the Foreign Aid Act
1
of 1947 shall not apply with respect to China;
8
(b) the agreement provided for by section 5 of
9
the Foreign Aid Act of 1947 (1) shall, to ike extent
10
practicable, make appropriate provision for the matters
11
covered by paragraphs
12
(8), (9), and (10) of subsection (b) of section 115 of
13
title I; and (2) may contain such other undertakings
14
by China as are necessary to improve commercial rela-
15
tions between China and the United States, consistent
16
with the purposes of this title: Provided, That the pro-
1T
vision for the disposal of any unencumbered balance of
1°
local currency deposits provided for in section 5 (b)
19
of the Foreign Aid Act of 1947 shall not be effective
20
with respect to China until September 30, 1949;
(1), (2), (4), (5),
(7),
21
(c) the authority to procure or provide for the
**
procurement of commodities for China shall include
23
authority to procure or provide for the procurement of
**
such other commodities and services in addition to those
.
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Federal Reserve Bank of St. Louis
'
specified in section 3 (a) of the Foreign Aid Act of
«
107
1
1947 and for the furnishing of technical assistance as
2
the President deems necessary for the accomplishment
3
of the purposes of this title;
4
(d) without regard to the provisions of section 5
5
of the Foreign Aid Act of 1947, assistance under such
6
Act may be provided for China during the three months
7
following the date of enactment of this Act when the
8
President determines it to be essential in furtherance
9
of the purposes of this title;
10
(e) the provisions of sections 104, 105, 107, 110,
11
111 (c) (1), 112, 113, 117, 119, and 121 of the Eco-
12
nomic Cooperation Act of 1948 shall be applicable to
13
the furnishing of assistance for China under the For-
14
eign Aid Act of 1947 in the same manner and to the
15
same extent as such provisions are applicable to the fur-
1^
nishing of assistance to participating countries under the
1'
Economic Cooperation Act of 1948;
^b
(f)
when it is determined that assistance should
1^
be extended under the provisions of this title on credit
20
terms, the Administrator for Economic Cooperation shall
21
allocate funds for the purpose to the Export-Import Bank
-
of Washington, which shall, notwithstanding the provi-
23
sions of the Export-Import Bank Act of 1945 (59 Stat.
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Federal Reserve Bank of St. Louis
526), as amended, make and administer the credit on
terms specified
by the Administrator in consultation
108
1
with the National
Advisory
Council
on Interna-
2
tional Monetary and Financial Problems.
3
ministrator shall make advances to, or reimburse, the
4
Export-Import
5
ministrative expenses in connection with such credits.
6
The bank shall deposit into the Treasury of the United
7
States, as miscellaneous receipts, amounts received by
8
the bank in repayment of principal and interest on any
9
such credits. Credits made by the Export-Import Bank
10
of Washington with funds so allocated to it by the
11
Administrator shall not be considered in determining
12
whether the bank has outstanding at any one time loans
13
and guaranties to the extent of the limitation imposed by
1*
section 7 of the Export-Import
!<•*
Stat. 529), as amended;
The Ad-
Bank of Washington for necessary ad-
Bank Act of 1945 (59
16
(g) notwithstanding the appropriation made by the
**
Third Supplemental Appropriation Act, 1948, for foreign aid, the provisions of section 11 (d) of the Foreign
Aid Act of 1947 shall be applicable for carrying out the
provisions of this Act;
(li) not less than 5 per centum nor more than 10
•
9Q
per centum of the funds made available for the purposes
of this title shall be used to carry out the purposes of
section 404.
^
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Federal Reserve Bank of St. Louis
.
SEC. 404. The Secretary of State, after consultation with
^
109
1
the Administrator, is hereby authorized to conclude an agree-
2 ment with China establishing a Joint Commission on Rural
3 Reconstruction in China, to be composed of two citizens of
4 the United States appointed by the President of the United
5 States and three citizens of China appointed by the President
® of China. Such Commission shall, subject to the direction
1 and control of the Administrator, formulate and carry out a
8 program for reconstruction in rural areas of China, which
ft
9 shall include such research and training activities as may be
10
necessary or appropriate for such reconstruction: Provided,
11 That assistance furnished under this section shall not be
1^
construed as an express or implied assumption by the United
13 States of any responsibility for making any further contribu** tions to carry out the purposes of this section.
•"
SEC. 405. There shall be established in China a special
1" mission under the direction of a chief who shall be responsible
(
$
i
F
' for assuring the performance within China of operations
1" under this title, and who shall take rank immediately
after
1Q
** the chief of the United States diplomatic mission in China.
The chief shall be appointed by the Administrator, shall
91
receive his instructions from the Administrator, and shall
oo
~^ report to the Administrator on the performance of the duties
oo
^° assigned to him. He shall keep the chief of the United
94.
States diplomatic mission in China fully and currently informed on matters, including prospective action, arising
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Federal Reserve Bank of St. Louis
110
1
within the scope of the operations of the special mission;
2 and the chief of the diplomatic mission in China shall keep
3
the chief
of the special mission fully
and
currently
4 informed on matters relative to the conduct of the duties of
5
the chief of the special mission.
The chief of the special
6 mission shall also keep the Administrator, the Secretary of
7 State, the chairmen of the Senate Foreign Relations Com8 mittee, the House Foreign Affairs
Committee, the Senate
9 Appropriations Committee, and the House Appropriations
10 Committee currently
11
informed concerning his activities.
The chief of the United States diplomatic mission will be
12 responsible for assuring that the operations of the special
13 mission are consistent with the foreign policy objectives
14 of the Uinted States in China and to that end whenever the
15 chief of the United States diplomatic mission believes that
16 any action, proposed action, or failure to act on the part
17 of the special mission is inconsistent with such foreign policy
18 objectives, he shall so advise the chief of the special mission.
19 // differences
of view are not adjusted by consultation, the
20 matter shall be referred to the Secretary of State and the
21 Administrator for decision.
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Federal Reserve Bank of St. Louis
Amend the title so as to read: "An Act to promote
world peace and the general welfare, national interest, and
foreign policy of the United States through economic, financial, and other measures necessary to the maintenance of
1
111
conditions abroad in which free institutions may survive and
consistent with the maintenance of the strength and stability
of the United States."
Passed the Senate March 13 (legislative day, February
2), 1948.
Attest:
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Federal Reserve Bank of St. Louis
GAEL A. LOEFFLER,
Secretary.
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Federal Reserve Bank of St. Louis
Union Calendar No. 738
SOTH CONGRESS
2D SESSION
O
O O f\ O
JJ. ZZUZ
[Report No. 1585]
AN ACT
To promote the general welfare, national interest, and foreign policy of the United States
through necessary economic and financial
assistance to foreign countries which undertake to cooperate with each other in the
establishment and maintenance of economic
conditions essential to a peaceful and prosperous world.
MARCH 15,1948
Referred to the Committee on Foreign Affairs
MAECH 20,1948
Reported with amendments, committed to the Committee of the Whole House on the State of the
Union, and ordered to be printed
[PUBLIC LAW 472—SOTH CONGRESS]
[CHAPTER 169—2o SESSION]
[S. 2202]
AN ACT
To promote world peace and the general welfare, national interest, and foreign
policy of the United States through economic, financial, and other measures
necessary to the maintenance of conditions abroad in which free institutions
may survive and consistent with the maintenance of the strength and stability
of the United States.
Be it enacted by the /Senate and House of Representatives of the
United States of America in Congress assembled, That this Act may be
cited as the "Foreign Assistance Act of 1948".
TITLE I
SEC. 101. This title may be cited as the "Economic Cooperation Act
of 1948".
FINDINGS AND DECLARATION OF POLICY
SEO. 102. (a) Recognizing the intimate economic and other relationships between the United States and the nations of Europe, and
recognizing that disruption following in the wake of war is not contained by national frontiers, the Congress finds that the existing
situation in Europe endangers the establishment of a lasting peace,
the general welfare and national interest of the United States, and
the attainment of the objectives of the United Nations. The restoration or maintenance in European countries of principles of individual
liberty, free institutions, and genuine independence rests largely upon
the establishment of sound economic conditions, stable international
economic relationships, and the achievement by the countries of Europe
of a healthy economy independent of extraordinary outside assistance.
The accomplishment of these objectives calls for a plan of P^uropean
recovery, open to all such nations which cooperate in such plan, based
upon a strong production effort, the expansion of foreign trade, the
creation and maintenance of internal financial stability, and the development of economic cooperation, including all possible steps to establish
and maintain equitable rates of exchange and to bring about the progressive elimination of trade barriers. Mindful of the advantages
which the United States has enjoyed through the existence of a large
domestic market with no internal trade barriers, and believing that
similar advantages can accrue to the countries of Europe, it is declared
to be the policy of the people of the United States to encourage these
countries through a joint organization to exert sustained common
efforts as set forth in the report of the Committee of European Economic Cooperation signed at Paris on September 22, 1947, which will
speedily achieve that economic cooperation in Europe which is essential for lasting peace and prosperity. It is further declared to be
the policy of the people of the United States to sustain and strengthen
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Federal Reserve Bank of St. Louis
IPUB LAW472.]
£
principles of individual liberty, free institutions, and genuine independence in Europe through assistance to those countries of Europe
which participate in a joint recovery program based upon self-help
and mutual cooperation: Provided, That no assistance to the participating countries herein contemplated shall seriously impair the economic stability of the United States. It is further declared to be the
policy of the United States that continuity of assistance provided by
the United States should, at all times, be dependent upon continuity of
cooperation among countries participating in the program.
PURPOSES OF TTTLE
(b) It is the purpose of this title to effectuate the policy set forth in
subsection (a) of this section by furnishing material and financial
assistance to the participating countries in such a manner as to aid
them, through their own individual and concerted efforts, to become
independent of extraordinary outside economic assistance within the
period of operations under this title, by—
(1) promoting industrial and agricultural production in the
participating countries;
(2) furthering the restoration or maintenance of the soundness
of European currencies, budgets, and finances; and
(3) facilitating and stimulating the growth of international
trade of participating countries with one another and with other
countries by appropriate measures including reduction of barriers
which may hamper such trade.
PARTICIPATING COUNTRIES
SEC. 103. (a) As used in this title, the term "participating country"
means—
(1) any country, together with dependent areas under its
administration, which signed the report of the Committee of
European Economic Cooperation at Paris on September 22, 1947;
and
(2) any other country (including any of the zones of occupation of Germany, any areas under international administration or
control, and the Free Territory of Trieste or either of its zones)
W7holly or partly in Europe, together with dependent areas under
its administration;
provided such country adheres to, and for so long as it remains an
adherent to, a joint program for European recovery designed to
accomplish the purposes of this title.
(b) Until such time as the Free Territory of Trieste or either of
its zones becomes eligible for assistance under this title as a participating country, assistance to the Free Territory of Trieste, or either
of its zones, is hereby authorized under the Foreign Aid Act of 1947
until June 30^ 1949, and the said Foreign Aid Act of 1947 is hereby
amended accordingly, and not to exceed $20,000,000 out of funds
authorized to be advanced by the Reconstruction Finance Corporation
under subsection (a) of section 114 of this title, or under subsection
(d) of section 11 of the Foreign Aid Act of 1947 notwithstanding
any appropriation heretofore made under such Act, may be utilized
for the purposes of this subsection: Provided, That section 11 (b)
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Federal Reserve Bank of St. Louis
<3
[Pus. LAW 472.]
of the Foreign Aid Act of 1947 shall not apply in respect of the Free
Territory of Trieste or either of its zones: And provided further, That
the provisions of section 115 (b) (6) of this title shall apply to local
currency deposited pursuant to section 5 (b) of that Act.
ESTABLISHMENT OF ECONOMIC COOPERATION ADMINISTRATION
SEC. 104. (a) There is hereby established, with its principal office
in the District of Columbia, an agency of the Government which shall
be known as the Economic Cooperation Administration, hereinafter
referred to as the Administration. The Administration shall be
headed by an Administrator for Economic Cooperation, hereinafter
referred to as the Administrator, who shall be appointed by the President, by and with the advice and consent of the Senate, and who shall
receive compensation at the rate of $20,000 per annum. The Administrator shall be responsible to the President and shall have a status
in the executive branch of the Government comparable to that of the
head of an executive department. Except as otherwise provided in
this title, the administration of the provisions of this title is hereby
vested in the Administrator and his functions shall be performed
under the control of the President.
(b) There shall be in the Administration a Deputy Administrator
for Economic Cooperation who shall be appointed by the President,
by and with the advice and consent of the Senate, and shall receive
compensation at the rate of $17,500 per annum. The Deputy Administrator for Economic Cooperation shall perform such functions as
the Administrator shall designate, and shall be Acting Administrator for Economic Cooperation during the absence or disability of
the Administrator or in the event of a vacancy in the office of
Administrator.
(c) The President is authorized, pending the appointment and
qualification of the first Administrator or Deputy Administrator for
Economic Cooperation appointed hereunder, to provide, for a period
of not to exceed thirty days after the date of enactment of this Act,
for the performance of the functions of the Administrator under this
title through such departments, agencies, or establishments of the
United States Government as he may direct. In the event the President nominates an Administrator or Deputy Administrator prior to
the expiration of such thirty-day period, the authority conferred upon
the President by this subsection shall be extended beyond such thirtyday period but only until an Administrator or Deputy Administrator
qualifies and takes office.
(d) (1) The Administrator, with the approval of the President,
is hereby authorized and empowered to create a corporation with such
powers as the Administrator may deem necessary or appropriate for
the accomplishment of the purposes of this title.
(2) If a corporation is created under this section—
(i) it shall have the power to sue and be sued, to acquire, hold,
and dispose of property, to use its revenues, to determine the
character of any necessity for its obligations and expenditures
and the manner in which they shall be incurred, allowed and paid,
and to exercise such other powers as may be necessary or appropriate to carry out the purposes of the corporation;
(ii) its powers shall be set out in a charter which shall be valid
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Federal Reserve Bank of St. Louis
[PUB. LAW 472.]
•
only when certified copies thereof are filed with the Secretary
of the Senate and the Clerk of the House of Representatives and
published in the Federal Register, and all amendments to such
charter shall be valid only when similarly filed and published;
(iii) it shall not have succession beyond June 30, 1952, except
for purposes of liquidation, unless its life is extended beyond such
date pursuant to Act of Congress; and
(iv) it shall be subject to the Government Corporation Control Act to the same extent as wholly owned Government corporations listed in section 101 of such Act.
(3) All capital stock of the corporation shall be of one class, be
issued for cash only, and be subscribed for by the Administrator.
Payment for such capital stock shall be made from funds available
for the purposes of this title.
(e) Any department, agency, or establishment of the Government
(including, whenever used in this title, any corporation which is an
instrumentality of the United States) performing functions under
this title is authorized to employ, for duty within the continental limits
of the United States, such personnel as may be necessary to carry
out the provisions and purposes of this title, and funds available
pursuant to section 114 of this title shall be available for personal
services in the District of Columbia and elsewhere without regard to
section 14 (a) of the Federal Employees Pay Act of 1946 (60 Stat.
219). Of such personnel employed by the Administration, not to
exceed one hundred may be compensated without regard to the provisions of the Classification Act of 1923, as amended, of whom not more
than twenty-five may be compensated at a rate in excess of $10,000
per annum, but not in excess of $15,000 per annum. Experts and consultants or organizations thereof, as authorized by section 15 of the
Act of August 2, 1946 (U. S. C., title 5, sec. 55a), may be employed
by the Administration, and individuals so employed may rbe compensated at rates not in excess of $50 per diem and while aw ay from
their homes or regular places of business, they may be paid actual
travel expenses and not to exceed $10 per diem in lieu of subsistence
and other expenses while so employed.
(f) The Administrator may, from time to time, promulgate such
rules and regulations as may be necessary and proper to carry out his
functions under this title, and he may delegate authority to perform
any of such functions to his subordinates, acting under his direction
and under rules and regulations promulgated by him.
GENERAL FUNCTIONS OF ADMINISTRATOR
SEC. 105. (a) The Administrator, under the control of the President,
shall in addition to all other functions vested in him by this title—
(1) review and appraise the requirements of participating countries for assistance under the terms of this title;
(2) formulate programs of United States assistance under this
title, including approval of specific projects which have been
submitted to him by the participating countries;
(3) provide for the efficient execution of any such programs as
may be placed in operation; and
(4) terminate provision of assistance or take other remedial
action as provided in section 118 of this title.
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Federal Reserve Bank of St. Louis
O
{PUB. LAW 472.]
(b) In order to strengthen and make more effective the conduct of
the foreign relations of the United States—
(1) the Administrator and the Secretary of State shall keep
each other fully and currently informed on matters, including
prospective action, arising within the scope of their respective
duties which are pertinent to the duties of the other;
(2) whenever the Secretary of State believes that any action,
proposed action, or failure to act on the part of the Administrator
is inconsistent with the foreign-policy objectives of the United
States, he shall consult with the Administrator and, if differences
of view are not adjusted by consultation, the matter shall be
referred to the President for final decision;
(3) whenever the Administrator believes that any action, proposed action, or failure to act on the part of the Secretary of State
in performing functions under this title is inconsistent with the
purposes and provisions of this title, he shall consult with the
Secretary of State and, if differences of view are not adjusted by
consultation, the matter shall be referred to the President for final
decision.
(c) The Administrator and the department, agency, or officer in the
executive branch of the Government exercising the authority granted
to the President by section 6 of the Act of July 2, 1940 (54 Stat. 714),
as amended, shall keep each other fully and currently informed on
matters, including prospective action, arising within the scope of their
respective duties which are pertinent to the duties of the other. Whenever the Administrator believes that any action, proposed action, or
failure to act on the part of such department, agency, or officer in performing functions under this title is inconsistent with the purposes
and provisions of this title, he shall consult with such department,
agency, or officer and, if differences of view are not adjusted by consultation, the matter shall be referred to the President for final decision.
NATIONAL ADVISORY COUNCIL
SEC. 106. Section 4 (a) of the Bretton Woods Agreements Act
(59 Stat. 512, 513) is hereby amended to read as follows:
"SEC. 4. (a) In order to coordinate the policies and operations of
the representatives of the United States on the Fund and the Bank
and of all agencies of the Government which make or participate in
making foreign loans or which engage in foreign financial, exchange
or monetary transactions, there is hereby established the National
Advisory Council on International Monetary and Financial Problems
(hereinafter referred to as the 'Council'), consisting of the Secretary
of the Treasury, as Chairman, the Secretary of State, the Secretary
of Commerce, the Chairman of the Board of Governors of the Federal
Reserve System, the Chairman of the Board of Directors of the
Export-Import Bank of Washington, and during such period as the
Economic Cooperation Administration shall continue to exist, the
Administrator for Economic Cooperation."
•
PUBLIC ADVISORY BOARD
SEC. 107. (a) There is hereby created a Public Advisory Board,
hereinafter referred to as the Board, which shall advise and consult
with the Administrator with respect to general or basic policy matters
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arising in connection with the Administrator's discharge of his
responsibilities. The Board shall consist of the Administrator, who
shall be Chairman, and not to exceed twelve additional members to
be appointed by the President, by and with the advice and consent of
the Senate, and who shall be selected from among citizens of the
United States of broad and varied experience in matters affecting
the public interest, other than officers and employees of the United
States (including any agency or instrumentality of the United States)
who, as such, regularly receive compensation for current services.
The Board shall meet at least once a month and at other times upon
the call of the Administrator or when three or more members of the
Board request the Administrator to call a meeting. Not more than
a majority of two of the members shall be appointed to the Board
from the same political party. Members of the Board, other than
the Administrator, shall receive, out of funds made available for the
purposes of this title, a per diem allowance of $50 for each day spent
away from their homes or regular places of business, for the purpose
of attendance at meetings of the Board, or at conferences held upon
the call of the Administrator, and in necessary travel, and while so
engaged, they may be paid actual travel expenses and not to exceed
$10 per diem in lieu of subsistence and other expenses.
(b) The Administrator may appoint such other advisory committees as he may determine to be necessary or desirable to effectuate
the purposes of this title.
UNITED STATES SPECIAL. REPRESENTATIVE ABROAD
SEC. 108. There shall be a United States Special Representative in
Europe who shall (a) be appointed by the President, by and with the
advice and consent of the Senate, (b) be entitled to receive the same
compensation and allowances as a chief of mission, class 1, within the
meaning of the Act of August 13, 1946 (60 Stat. 999), and (c) have
the rank of ambassador extraordinary and plenipotentiary. He shall
be the representative of the Administrator, and shall also be the chief
representative of the United States Government to any organization
of participating countries which may be established by such countries
to further a joint program for European recovery, and shall discharge
in Europe such additional responsibilities as may be assigned to him
with the approval of the President in furtherance of the purposes of
this title. He may also be designated as the United States representative on the Economic Commission for Europe. He shall receive his
instructions from the Administrator and such instructions shall be
prepared and transmitted to him in accordance with procedures agreed
to between the Administrator and the Secretary of State in order to
assure appropriate coordination as provided by subsection (b) of section 105 of this title. He shall coordinate the activities of the chiefs
of special missions provided for in section 109 of this title. He shall
keep the Administrator, the Secretary of State, the chiefs of the
United States diplomatic missions, and the chiefs of the special missions provided for in section 109 of this title currently informed concerning his activities. He shall consult with the chiefs of all such
missions, who shall give him such cooperation as he may require for
the performance of his duties under this title.
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SPECIAL, EGA MISSIONS ABROAD
SEC. 109. (a) There shall be established for each participating
country, except as provided in subsection (d) of this section, a special
mission for economic cooperation under the direction of a chief who
shall be responsible for assuring the performance within such country
of operations under this title. The chief shall be appointed by the
Administrator, shall receive his instructions from the Administrator,
and shall report to the Administrator on the performance of the duties
assigned to him. The chief of the special mission shall take rank
immediately after the chief of the United States diplomatic mission
in such country.
(b) The chief of the special mission shall keep the chief of the
United States diplomatic mission fully and currently informed on
matters, including prospective action, arising within the scope of the
operations of the special mission and the chief of the diplomatic mission
shall keep the chief of the special mission fully and currently informed
on matters relative to the conduct of the duties of the chief of the
special mission. The chief of the United States diplomatic mission
will be responsible for assuring that the operations of the special
mission are consistent with the foreign-policy objectives of the United
States in such country and to that end whenever the chief of the United
States diplomatic mission believes that any action, proposed action, or
failure to act on the part of the special mission is inconsistent with such
foreign-policy objectives, he shall so advise the chief of the special mission and the United States Special Representative in Europe. If
differences of view are not adjusted by consultation, the matter shall
be referred to the Secretary of State and the Administrator for decision.
(c) The Secretary of State shall provide such office space, facilities,
and other administrative services for the United States Special Representative in Europe and his staff, and for the special mission in each
articipating country, as may be agreed between the Secretary of
tate and the Administrator.
(d) With respect to any of the zones of occupation of Germany
and of the Free Territory of Trieste, during the period of occupation,
the President shall make appropriate administrative arrangements for
the conduct of operations under this title, in order to enable the
Administrator to carry out his responsibility to assure the accomplishment of the purposes of this title.
P
PERSONNEL. OUTSIDE UNITED STATES
SEC. 110. (a) For the purpose of performing functions under this
title outside the continental limits of the United States the Administrator may—
(1) employ persons who shall receive compensation at any of
the rates provided for the Foreign Service Reserve and Staff by
the Foreign Service Act of 1946 (GO Stat. 999), together with
allowances and benefits established thereunder; and
(2) recommend the appointment or assignment of persons, and
the Secretary of State may appoint or assign such persons, to
any class in the Foreign Service Reserve or Staff for the duration
of operations under this title, and the Secretary of State may
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assign, transfer, or promote such persons upon the recommendation of the Administrator. Persons so appointed to the Foreign
Service Staff shall be entitled to the benefits of section 528 of the
Foreign Service Act of 1046.
(b) For the purpose of performing functions under this title outside the continental limits of the United States, the Secretary of State
may, at the request of the Administrator, appoint, for the duration of
operations under this title, alien clerks and employees in accordance
with applicable provisions of the Foreign iService Act of 1946
(60Stat. 999).
(c) No citizen or resident of the United States may be employed,
or if already employed, may be assigned to duties by the Secretary
of State or the Administrator under this title for a period to exceed
three months unless such individual has been investigated as to loyalty
and security by the Federal Bureau of Investigation and a report
thereon has been made to the Secretary of State and the Administrator,
and until the Secretary of State or the Administrator has certified
in writing (and filed copies thereof with the Senate Committee on
Foreign Relations and the House Committee on Foreign Affairs)
that, after full consideration of such report, he believes such individual
is loyal to the United States, its Constitution, and form of government,
and is not now and has never been a member of any organization advocating contrary views. This subsection shall not apply in the case of
any officer appointed by the President by and with the advice and
consent of the Senate.
NATURE AND METHOD OF ASSISTANCE
SEC. 111. (a) The Administrator may, from time to time, furnish
assistance to any participating country by providing for the performance of any of the functions set forth in paragraphs (1) through (5)
of this subsection when he deems it to be in furtherance of the purposes of this title, and upon the terms and conditions set forth in this
title and such additional terms and conditions consistent with the provisions of this title as he may determine to be necessary and proper.
(1) Procurement from any source, including Government stocks
on the same basis as procurement by Government agencies under
Public Law 375 (Seventy-ninth Congress) for their own use, of
any commodity which he determines to be required for the furtherance of the purposes of this title. As used in this title, the term
"commodity" means any commodity, material, article, supply, or
goods necessary for the purposes of this title.
(2) Processing, storing, transporting, and repairing any commodities, or performing any other services with respect to a participating country which he determines to be required for
accompl ishing the purposes of this title. The Administrator shall,
in providing for the procurement of commodities under authority
of this title, take such steps as may be necessary to assure, so far
as is practicable, that at least 50 per centum of the gross tonnage
of commodities, procured wTithin the United States out of funds
made available under this title and transported abroad on ocean
vessels, is so transported on United States flag vessels to the extent
such vessels are available at market rates.
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(3) Procurement of and furnishing technical information and
assistance.
(4) Transfer of any commodity or service, which transfer shall
be signified by delivery of the custody arid right of possession and
use of such commodity, or otherwise making available any such
commodity, or by rendering a service to a participating country
or to any agency or organization representing a participating
country.
(5) The allocation of commodities or services to specific projects designed to carry out the purposes of this title, which have
been submitted to the Administrator by participating countries
and have been approved by him.
(b) In order to facilitate and maximize the use of private channels
of trade, subject to adequate safeguards to assure that all expenditures in connection with such procurement are within approved programs in accordance with terms and conditions established by the
Administrator, he may provide for the performance of any of the
functions described in subsection (a) of this section—
(1) by establishing accounts against which, under regulations
prescribed by the Administrator—
( i ) letters of commitment may be issued in connection
with supply programs approved by the Administrator (and
such letters of commitment, when issued, shall constitute
obligations of the United States and monies due or to become
due thereunder shall be assignable under the Assignment of
Claims Act of 1940 and shall constitute obligations of applicable appropriations) ; and
(ii) withdrawals may be made by participating countries.
or agencies or organizations representing participating countries or by other persons or organizations, upon presentation
of contracts, invoices, or other documentation specified by the
Administrator under arrangements prescribed by the Administrator to assure the use of such withdrawals for purposes
approved by the Administrator.
Such accounts may be established on the books of the Administration, or any other department, agency, or establishment
of the Government specified by the Administrator, or, on terms
and conditions approved by the Secretary of the Treasury, in
banking institutions in the United States. Expenditures of funds
which have been made available through accounts so established
shall be accounted for on standard documentation required for
expenditures of Government funds: Provided, That such expenditures for commodities or services procured outside the continental
limits of the United States under authority of this section may be
accounted for exclusively on such certification as the Administrator may prescribe in regulations promulgated by him with the
approval of the Comptroller General of the United States to
assure expenditure in furtherance of the purposes of this title.
(2) by Utilizing the services and facilities of any department,
agency, or establishment of the Government as the President shall
direct, or with the consent of the head of such department, agency,
or establishment, or, in the President's discretion, by acting in
cooperation with the United Nations or with other international
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organizations or with agencies of the participating countries,
and funds allocated pursuant to this section to any department,
agency, or establishment of the Government shall be established
in separate appropriation accounts on the books of the Treasury.
(8) by making, under rules and regulations to be prescribed by
the Administrator, guaranties to any person of investments in
connection with projects approved Dy the Administrator and
the participating country concerned as furthering the purposes
of this title (including guaranties of investments in enterprises
producing or distributing informational media: Provided, That
the amount of such guaranties in the first year after the date of
the enactment of this Act does not exceed $15,000,000), which
guaranties shall terminate not later than fourteen years from the
date of enactment of this Act: Provided, That—
(i) the guaranty to any person shall not exceed the amount
of dollars invested in the project by such person with the
approval of- the Administrator and shall be limited to the
transfer into United States dollars of other currencies, or
credits in such currencies, received by such person as income
from the approved investment, as repayment or return
thereof, in whole or in part, or as compensation for the sale
or disposition of all or any part thereof: Provided, That,
when any payment is made to any person under authority
of this paragraph, such currencies, or credits in such
currencies, shall become the property of the United States
Government;
(ii) the Administrator may charge a fee in an amount
determined by him not exceeding 1 per centum per annum
of the amount of each guaranty, and all fees collected hereunder shall be available for expenditure in discharge of liabilities under guaranties made under this paragraph until
such time as all such liabilities have been discharged or have
expired, or until all such fees have been expended in accordance with the provisions of this paragraph; and
(iii) as used in this paragraph, the term "person" means
a citizen of the United States or any corporation, partnership,
or other association created under the law of the United States
or of any State or Territory and substantially beneficially
owned by citizens of the United States.
The total amount of the guaranties made under this paragraph
(3) shall not exceed $300,000,000, and as such guaranties are made
the authority to realize funds from the sale of notes for the
purpose of allocating funds to the Export-Import Bank of Washington under paragraph (2) of subsection (c) of this section
shall be accordingly reduced. Any payments made to discharge
liabilities under guaranties issued under paragraph (3) of this
subsection shall be paid out of fees collected under subparagraph
(ii) of paragraph (3) of this subsection as long as such fees are
available, and thereafter shall be paid out of funds realized from
the sale of notes which shall be issued under authority of paragraph (2) of subsection (c) of this section when necessary to
discharge liabilities under any such guaranty.
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(c) (1) The Administrator may provide assistance for any participating country, in the form and under the procedures authorized in
subsections (a) and (b), respectively? of this section, through grants
or upon payment in cash, or on credit terms, or on such other terms
of payment as he may find appropriate, including payment by the
transfer to the United States (under such terms and in such quantities
as may be agreed to between the Administrator and the participating
country) of materials which are required by the United States as a
result of deficiencies or potential deficiencies in its own resources. In
determining whether such assistance shall be through grants or upon
terms of payment, and in determining the terms of payment, he shall
act in consultation with the National Advisory Council on International Monetary and Financial Problems, and the determination
whether or not a participating country should be required to make
payment for any assistance furnished to such country in furtherance
of the purposes of this title, and the terms of such payment, if required,
shall depend upon the character and purpose of the assistance and
upon whether there is reasonable assurance of repayment considering
the capacity of such country to make such payments without jeopardizing the accomplishment of the purposes of this title.
(2) When it is determined that assistance should be extended under
the provisions of this title on credit terms, the Administrator shall
allocate funds for the purpose to the Export-Import Bank of Washington, which shall, notwithstanding the provisions of the ExportImport Bank Act of 1945 (59 Stat. 526), as amended, make and administer the credit on terms specified by the Administrator in consultation
with the National Advisory Council on International Monetary and
Financial Problems. The Administrator is authorized to issue notes
from time to time for purchase by the Secretary of the Treasury in an
amount not exceeding in the aggregate $1,000,000,000 (i) for the purpose of allocating funds to the Export-Import Bank of Washington
under this paragraph during the period of one year following the date
of enactment of this Act and (ii) for the purpose of carrying out the
provisions of paragraph (3) of subsection (b) of this section until all
liabilities arising under guaranties made pursuant to such paragraph
(3) have expired or have been discharged. Such notes shall be redeemable at the option of the Administrator before maturity in such manner
as may be stipulated in such notes and shall have such maturity as
may be determined by the Administrator with the approval of the
Secretary of the Treasury. Each such note shall bear interest at a
rate determined by the Secretary of the Treasury, taking into consideration the current average rate on outstanding marketable obligations
of the United States as of the last day of the month preceding the
issuance of the note. Payment under this paragraph of the purchase
price of such notes and repayments thereof by the Administrator shall
be treated as public-debt transactions of the United States. In allocating funds to the Export-Import Bank of Washington under this
paragraph, the Administrator shall first utilize such funds realized
from the sale of notes authorized by this paragraph as he determines
to be available for this purpose, and when such funds are exhausted,
or after the end of one year from the date of enactment of this Act,
whichever is earlier, he shall utilize any funds appropriated under
this title. The Administrator shall make advances to, or reimburse,
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the Export-Import Bank of Washington for necessary administrative
expenses in connection with such credits. Credits made by the ExportImport Bank of Washington with funds so allocated to it by the
Administrator shall not be considered in determining whether the
Bank has outstanding at any one time loans and guaranties to the
extent of the limitation imposed by section 7 of the Export-Import
Bank Act of 1945 (59 Stat. 529), as amended. Amounts received in
repayment of principal and interest on any credits made under this
paragraph shall be deposited into miscellaneous receipts of the Treasury : Provided, That, to the extent required for such purpose, amounts
received in repayment of principal and interest on any credits made
out of funds realized from the sale of notes authorized under this
paragraph shall be deposited into the Treasury for the purpose of the
retirement of such notes.
PROTECTION OF DOMESTIC ECONOMY
SEC. 112. (a) The Administrator shall provide for the procurement in the United States of commodities under this title in such a
way as to (1) minimize the drain upon the resources of the United
States and the impact of such procurement upon the domestic economy,
and (2) avoid impairing the fulfillment of vital needs of the people
of the United States.
(b) The procurement of petroleum and petroleum products under
this title shall, to the maximum extent practicable, be made from
petroleum sources outside the United States; and, in furnishing commodities under the provisions of this title, the Administrator shall
take fully into account the present and anticipated world shortage
of petroleum and its products and the consequent undesirability of
expansion in petroleum-consuming equipment where the use of alternate fuels or other sources of power is practicable.
(c) In order to assure the conservation of domestic grain supplies
and the retention in the United States of byproduct feeds necessary
to the maintenance of the agricultural economy of the United States,
the amounts of wheat and wheat flour produced in the United States
to be transferred by grant to the participating countries shall be so
determined that the total quantity of United States wheat used to
produce the wheat flour procured in the United States for transfer
by grant to such countries under this title shall not be less than 25
per centum of the aggregate of the unprocessed wheat and wheat in
the form of flour procured in the United States for transfer by grant
to such countries under this title.
(d) The term "surplus agricultural commodity" as used in this
section is defined as any agricultural commodity, or product thereof,
produced in the United States which is determined by the Secretary
of Agriculture to be in excess of domestic requirements. In providing
for the procurement of any such surplus agricultural commodity for
transfer by grant to any participating country in accordance with the
requirements of such country, the Administrator shall, insofar as practicable and where in furtherance of the purposes of this title, give effect
to the following:
(1) The Administrator shall authorize the procurement of any such
surplus agricultural commodity only within the United States: Provided^ That this restriction shall not be applicable (i) to any agri-
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cultural commodity, or product thereof, located in one participating
country, and intended for transfer to another participating country,
if the Administrator, in consultation with the Secretary of Agriculture, determines that such procurement and transfer is in furtherance
of the purposes of this title, and would not create a burdensome surplus
in the United States or seriously prejudice the position of domestic
producers of such surplus agricultural commodities, or (ii) if, and
to the extent that any such surplus agricultural commodity is not
available in the United States in sufficient quantities to supply the
requirements of the participating countries under this title.
(2) In providing for the procurement of any such surplus agricultural commodity, the Administrator shall, insofar as practicable
and applicable, and after giving due consideration to the excess of
any such commodity over domestic requirements, and to the historic
reliance of United States producers of any such surplus agricultural
commodity upon markets in the participating countries, provide for
the procurement of each class or type of any such surplus agricultural
commodity in the approximate proportion that the Secretary of Agriculture determines such classes or types bear to the total amount
of excess of such surplus agricultural commodity over domestic
requirements.
(e) Whenever the Secretary of Agriculture determines that any
quantity of any surplus agricultural commodity, heretofore or hereafter acquired by Commodity Credit Corporation in the administration of its price-cupport programs, is available for use in furnishing
assistance to foreign countries, he shall so advise all departments,
agencies, and establishments of the Government administering laws
providing for the furnishing of assistance or relief to foreign countries
(including occupied or liberated countries or areas of such countries).
Thereafter the department, agency, or establishment administering
any such law shall, to the maximum extent practicable, consistent
with the provisions and in furtherance of the purposes of such law,
and where for transfer by grant and in accordance with the requirements of such foreign country, procure or provide for the procurement of such quantity of such surplus agricultural commodity. The
sales price paid as reimbursement to Commodity Credit Corporation
for any such surplus agricultural commodity shall be in such amount
as Commodity Credit Corporation determines will fully reimburse
it for the cost to it of such surplus agricultural commodity at the
time and place such surplus agricultural commodity is delivered by
it, but in no event shall the sales price be higher than the domestic
market price at such time and place of delivery as determined by the
Secretary of Agriculture, and the Secretary of Agriculture may pay
not to exceed 50 per centum of such sales price as authorized by subsection (f) of this section.
(f) Subject to the provisions of this section, but notwithstanding
any other provision of law, in order to encourage utilization of surplus
agricultural commodities pursuant to this or any other Act providing
for assistance or relief to foreign countries, the Secretary of Agriculture, in carrying out the purposes of clause (1), section 32, Public
Law 320, Seventy-fourth Congress, as amended, may make payments,
including payments to any government agency procuring or selling
such surplus agricultural commodities, in an amount not to exceed 50
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per centum of the sales price (basis free along ship or free on board
vessel, United States ports), as determined by the Secretary of
Agriculture, of such surplus agricultural commodities. The rescission
of the remainder of section 32 funds by the Act of July 30,1947 (Public
Law 266, Eightieth Congress), is hereby canceled and such funds
are hereby made available for the purposes of section 32- for the fiscal
year ending June 30,1948.
(g) No export shall be authorized pursuant to authority conferred
by section 6 of the Act of July 2, 1940 (54 Stat, 714), including any
amendment thereto, of any commodity from the United States to any
country wholly or partly in Europe which is not a participating
country, if the department, agency, or officer in the executive branch
of the Government exercising the authority granted to the President
by section 6 of the Act of July 2, 1940, as amended, determines that
the supply of such commodity is insufficient (or would be insufficient
if such export were permitted) to fulfill the requirements of participating countries under this title as determined by the Administrator:
Provided, however, That such export may be authorized if such
department, agency, or officer determines that such export is otherwise
in the national interest of the United States.
(h) In providing for the performance of any of the functions
described in subsection (a) of section 111, the Administrator shall,
to the maximum extent consistent with the accomplishment of the
purposes of this title, utilize private channels of trade.
REIMBUKESMENT TO GOVERNMENT AGENCIES
SEC. 113. (a) The Administrator shall make reimbursement or
payment, out of funds available for the purposes of this title, for any
commodity, service, or facility procured under section 111 of this title
from any department, agency, or establishment of the Government.
Such reimbursement or payment shall be made to the owning or
disposal agency, as the case may be, at replacement cost, or, if required
by law, at actual cost, or at any other price authorized by law and
agreed to between the Administrator and such agency. The amount
of any reimbursement or payment to an owning agency for commodities, services, or facilities so procured shall be credited to current
applicable appropriations, funds, or accounts from which there may
be procured replacements of similar commodities or such services or
facilities: Provided, That such commodities, services, or facilities may
be procured from an owning agency only with the consent of such
agency: And provided further, That where such appropriations, funds,
or accounts are not reimbursable except by reason of this subsection,
and when the owning agency determines that replacement of any
commodity procured under authority of this section is not necessary,
any funds received in payment therefor shall be covered into the
Treasury as miscellaneous receipts.
(b) The Administrator, whenever in his judgment the interests
of the United States will best be served thereby, may dispose of any
commodity procured out of funds made available for the purposes of
this title, in lieu of transferring such commodity to a participating
country, (1) by transfer of such commodity, upon reimbursement,
to any department, agency, or establishment of the Government for
use or disposal by such department, agency, or establishment as
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authorized by law, or (2) without regard to provisions of law relating
to the disposal of Government-owned property, when necessary to
prevent spoilage or wastage of such commodity or to conserve the
usefulness thereof. Funds realized from such disposal or transfer
shall revert to the respective appropriation or appropriations out of
which funds were expended for the procurement of such commodity.
AUTHORIZATION OF APPROPRIATIONS
SEC. 114. (a) Notwithstanding the provisions of any other law, the
Reconstruction Finance Corporation is authorized and directed, until
such time as an appropriation shall be made pursuant to subsection
(c) of this section, to make advances not to exceed in the aggregate
$1,000,000,000 to carry out the provisions of this title, in such manner,
at such time, and in such amounts as the President shall determine,
and no interest shall be charged on advances made by the Treasury to
the Reconstruct!or. Finance Corporation for this purpose. The Reconstruction Finance Corporation shall be repaid without interest for
advances made by it hereunder, from funds made available for the
purposes of this title.
(b) Such part as the President may determine of the unobligated
and unexpended balances of appropriations or other funds available
for the purposes of the Foreign Aid Act of 1947 shall be available for
the purpose of carrying out the purposes of this title.
(c) In order to carry out the provisions of this title with respect
to those participating countries which adhere to the purposes of this
title, and remain eligible to receive assistance hereunder, such funds
shall be available as are hereafter authorized and appropriated to
the President from time to time through June 30, 1952, to carry out
the provisions and accomplish the purposes of this title: Provided,,
however, That for carrying out the provisions and accomplishing the
purposes of this title for the period of one year following the date
of enactment of this Act, there are hereby authorized to be so appropriated not to exceed $4,300,000,000. Nothing in this title is intended
nor shall it be construed as an express or implied commitment to
provide any specific assistance, whether of funds, commodities, or
services, to any country or countries. The authorization in this title
is limited to the period of twelve months in order that subsequent
Congresses may pass on any subsequent authorizations.
(d) Funds made available for the purposes of this title shall be
available for incurring and defraying all necessary expenses incident
to carrying out the provisions of this title, including administrative
expenses and expenses for compensation, allowances and travel of
personnel, including Foreign Service personnel whose services are
utilized primarily for the purposes of this title, and, without regard
to the provisions of any other law, for printing and binding, and for
expenditures outside the continental limits of the United States for
the procurement of supplies and services and for other administrative
purposes (other than compensation of personnel) without regard to
such laws and regulations governing the obligation and expenditure
of government funds, as the Administrator shall specify in the interest
of the accomplishment of the purposes of this title.
(e) The unencumbered portions of any deposits which may have
been made by any participating country pursuant to section 6 of the
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joint resolution providing for relief assistance to the people of countries
devastated by war (Public Law 84, Eightieth Congress) and section 5
(b) of the Foreign Aid Act of 1947 (Public Law 389, Eightieth Congress) may be merged with the deposits to be made by such participating country in accordance with section 115 (b) (6) of this title,
and shall be held or used under the same terms and conditions as are
provided in section 115 (b) (6) of this title.
(f) In order to reserve some part of the surplus of the fiscal year
1948 for payments thereafter to be made under this title, there is
hereby created on the books of the Treasury of the United States a
trust fund to be known as the Foreign Economic Cooperation Trust
Fund. Notwithstanding any other provision of law, an amount of
$3,000,000,000, out of sums appropriated pursuant to the authorization
contained in this title shall, when appropriated, be transferred immediately to the trust fund, and shall thereupon be considered as
expended during the fiscal year 1948, for the purpose of reporting
governmental expenditures. The Secretary of the Treasury shall be
the sole trustee of the trust fund and is authorized and directed to pay
out of the fund such amounts as the Administrator shall duly requisition. The first expenditures made out of the appropriations authorized
under this title in the fiscal year 1949 shall be made with funds requisitioned by the Administrator out of the trust fund until the fund is
exhausted, at which time such fund shall cease to exist. The provisions
of this subsection shall not be construed as affecting the application
of any provision of law which would otherwise govern the obligation
of funds so appropriated or the auditing or submission of accounts of
transactions with respect to such funds.
BILATERAL AND MULTILATERAL UNDERTAKINGS
SEC. 115. (a) The Secretary of State, after consultation with the
Administrator, is authorized to conclude, with individual participating countries or any number of such countries or with an organization
representing any such countries, agreements in furtherance of the
purposes of this title. The Secretary of State, before an Administrator or :Deputy Administrator shall have qualified and taken office, is
author zed to negotiate and conclude such temporary agreements in
implementation of subsection (b) of this section as he may deem
necessary in furtherance of the purposes of this title: Provided, That
when an Administrator or Deputy Administrator shall have qualified
and taken office, the Secretary of State shall conclude the basic agreements required by subsection (b) of this section only after consultation with the Administrator or Deputy Administrator, as the case
may be.
(b) The provision of assistance under this title results from the
multilateral pledges of the participating countries to use all their
efforts to accomplish a joint recovery program based upon self-help
and mutual cooperation as embodied in the report of the Committee
of European Economic Cooperation signed at Paris on September 22,
1947, and is contingent upon continuous effort of the participating
countries to accomplish a joint recovery program through multilateral
undertakings and the establishment of a continuing organization for
this purpose. In addition to continued mutual cooperation of the
participating countries in such a program, each such country shall
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conclude an agreement with the United States in order for such country to be eligible to receive assistance under this title. Such agreement shall provide for the adherence of such country to the purposes
of this title and shall, where applicable, make appropriate provision,
among others, for—
(1) promoting industrial and agricultural production in order
to enable the participating country to become independent of
extraordinary outside economic assistance; and submitting for
the approval of the Administrator, upon his request and whenever
he deems it in furtherance of the purposes of this title, specific
projects proposed by such country to be undertaken in substantial
part with assistance furnished under this title, which projects,
whenever practicable, shall include projects for increased production of coal, steel, transportation facilities, and food;
(2) taking financial and monetary measures necessary to stabilize its currency, establish or maintain a valid rate of exchange,
to balance its governmental budget as soon as practicable, and
generally to restore or maintain confidence in its monetary system;
(3) cooperating with other participating countries in facilitating and stimulating an increasing interchange of goods and
services among the participating countries and with other countries and cooperating to reduce barriers to trade among themselves
and with other countries;
(4) making efficient and practical use, within the framework
of a joint program for European recovery, of the resources of
such participating country, including any commodities, facilities,
or services furnished under this title, which use shall include, to
the extent practicable, taking measures to locate and identify and
put into appropriate use, in furtherance of such program, assets,
and earnings therefrom, which belong to the citizens of such
country and which are situated within the United States, its
Territories and possessions;
(5) facilitating the transfer to the United States by sale,
exchange, barter, or otherwise for stock-piling or other purposes,
for such period of time as may be agreed to and upon reasonable
terms and in reasonable quantities, of materials which are
required by the United States as a result of deficiencies or potential deficiencies in its own resources, and which may be available
in such participating country after due regard for reasonable
requirements for domestic use and commercial export of such
country;
(6) placing in a special account a deposit in the currency of
such country, in commensurate amounts and under such terms
and conditions as may be agreed to between such country and
the Government of the United States, when any commodity or
service is made available through any means authorized under
this title, and is furnished to the participating country on a grant
basis. Such special account, together with the unencumbered
portions of any deposits which may have been made by such
country pursuant to section 6 of the joint resolution providing
for relief assistance to the people of countries devastated by war
(Public Law 84, Eightieth Congress) and section 5 (b) of the
Foreign Aid Act of 1947 (Public Law 389, Eightieth Congress),
shall be held or used within such country for such purposes as
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may be agreed to between such country and the Administrator in
consultation with the National Advisory Council on International
Monetary and Financial Problems, and the Public Advisory
Board provided for in section 107 (a) for purposes of internal
monetary and financial stabilization, for the stimulation of productive activity and the exploration for and development of new
sources of wealth, or for such other expenditures as may be consistent with the purposes of this title, including local currency
administrative expenditures of the United States incident to
operations under this title, and under agreement that any unencumbered balance remaining in such account on June 30, 1952,
shall be disposed of within such country for such purposes as may,
subject to approval by Act or joint resolution of the Congress,
be agreed to between such country and the Government of the
United States;
(7) publishing in such country and transmitting to the United
States, not less frequently than every calendar quarter after the
date of the agreement, full statements of operations under the
agreement, including a report of the use of funds, commodities,
and services received under this title;
(8) furnishing promptly, upon request of the United States,
any relevant information which would be of assistance to the
United States in determining the nature and scope of operations
and the use of assistance provided under this title;
(9) recognizing the principle of equity in respect to the drain
upon the natural resources of the United States and of the recipient
countries, by agreeing to negotiate (a) a future schedule of minimum availabilities to the United States for future purchase and
delivery of a fair share of materials which are required by the
United States as a result of deficiencies or potential deficiencies in
its own resources at world market prices so as to protect the access
of United States industry to an equitable share of such materials
either in percentages of production or in absolute quantities from
the participating countries, and (b) suitable protection for the
right of access for any person as defined in paragraph (iii) of
subparagraph (3) of section 111 (b) in the development of such
materials on terms of treatment equivalent to those afforded to
the nationals of the country concerned, and (c) an agreed schedule
of increased production of such materials where practicable in
such participating countries and for delivery of an agreed percentage of such increased production to be transferred to the United
States on a long-term basis in consideration of assistance furnished
by the Administrator to such countries under this title; and
(10) submitting for the decision of the International Court of
Justice or of any arbitral tribunal mutually agreed upon any
case espoused by the United States Government involving compensation of a national of the United States for governmental
measures affecting his property rights, including contracts with
or concessions from such country.
(c) Notwithstanding the provisions of subsection (b) of this
section, the Administrator, during the three months after the date
of enactment of this Act, may perform with respect to any participating country any of the functions authorized under this title which
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he may determine to be essential in furtherance of the purposes of
this title, if (1) such country has signified its adherence to the purposes of this title and its intention to conclude an agreement
pursuant to subsection (b) of this section, and (2) he finds that
such country is complying with the applicable provisions of subsection (b) of this section: Provided, That, notwithstanding the
provisions of this subsection, the Administrator may, through June
30, 1948, provide for the transfer of food, medical supplies, fibers,
fuel, petroleum and petroleum products, fertilizer, pesticides, and
seed to any country of Europe which participated in the Committee
of European Economic Cooperation and which undertook pledges
to the other participants therein, when the Administrator determines
that the transfer of any such supplies to any such country is essential
in order to make it possible to carry out the purposes of this title
by alleviating conditions of hunger and cold and by preventing
serious economic retrogression.
(d) The Administrator shall encourage the joint organization of
the participating countries referred to in subsection (b) of this section
to ensure that each participating country makes efficient use of the
resources of such country, including any commodities, facilities, or
services furnished under tnis title, by observing and reviewing such
use through an effective follow-up system approved by the joint
organization.
(e) The Administrator shall encourage arrangements among the
participating countries in conjunction with the International Refugee
Organization looking towara the largest practicable utilization of
manpower available in any of the participating countries in furtherance of the accomplishment of the purposes of this title.
(f) The Administrator will request the Secretary of State to obtain
the agreement of those countries concerned that such capital equipment
as is scheduled for removal as reparations from the three western zones
of Germany be retained in Germany if such retention will most effectively serve the purposes of the European recovery program.
(g) It is the understanding of the Congress that, in accordance
with agreements now in effect, prisoners of war remaining in participating countries shall, if they so freely elect, be repatriated prior to
January 1,1949.
WESTERN HEMISPHERE COUNTRIES
SEC. 116. The President shall take appropriate steps to encourage
all countries in the Western Hemisphere to make available to participating countries such assistance as they may be able to furnish.
OTHER DUTIES OF THE
ADMINISTRATOR
SEC. 117. (a) The Administrator, in furtherance of the purposes
of section 115 (b) (5), and in agreement with a participating country,
shall, whenever practicable, promote, by means of funds made available for the purposes of this title, an increase in the production in
such participating country of materials which are required by the
United States as a result of deficiencies or potential deficiencies in
the resources within the United States.
(b) The Administrator, in cooperation with the Secretary of Commerce, shall facilitate and encourage, through private and public
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travel, transport, and other agencies, the promotion and development
of travel by citizens of the United States to and within participating
countries.
(c) In order to further the efficient use of United States voluntary
contributions for relief in participating countries receiving assistance
under this title in the form of grants or any of the zones of occupation
of Germany for which assistance is provided under this title and the
Free Territory of Trieste or either of its zones, funds made available
for the purposes of this title shall be used insofar as practicable by the
Administrator, under rules and regulations prescribed by him, to pay
ocean freight charges from a United States port to a designated foreign
port of entry (1) of supplies donated to, or purchased by, United
States voluntary nonprofit relief agencies registered with and recommended by the Advisory Committee on Voluntary Foreign Aid for
operations in Europe, or (2) of relief packages conforming to such
specified size, weight, and contents, as the Administrator may prescribe
originating in the United States and consigned to an individual residing in a participating country receiving assistance under this title in
the form of grants or any of the zones of occupation of Germany for
which assistance is provided under this title and the Free Territory
of Trieste or either of its zones. Where practicable the Administrator
is directed to make an agreement with such country for the use of a
portion of the deposit of local currency placed in a special account
pursuant to paragraph 6 of subsection (b) of section 115 of this title,
for the purpose of defraying the transportation cost of such supplies
and relief packages from the port of entry of such country to the designated shipping point of consignee. The Secretary of State, after consultation with the Administrator, shall make agreements where practicable with the participating countries for the free entry of such
supplies and relief packages.
(d) The Administrator is directed to refuse delivery insofar as
practicable to participating countries of commodities which go into
the production of any commodity for delivery to any nonparticipating
European country which commodity would be refused export licenses
to those countries by the United States in the interest of national security. Whenever the Administrator believes that the issuance of a
license for the export of any commodity to any country wholly or
partly in Europe which is not a participating country is inconsistent
with the purposes and provisions of this title, he shall so advise the
department, agency, or officer in the executive branch of the Government exercising the authority with respect to such commodity granted
to the President by section 6 of the Act of July 2, 1940 (54 Stat. 714),
as amended, and, if differences of view are not adjusted by consultation, the matter shall be referred to the President for final decision.
TERMINATION OF ASSISTANCE
SEC. 118. The Administrator, in determining the form and measure
of assistance provided under this title to any participating country,
shall take into account the extent to which such country is complying
with its undertakings embodied in its pledges to other participating
countries and in its agreement concluded with the United States under
section 115. The Administrator shall terminate the provision of
assistance under this title to any participating country whenever he
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determines that (1) such country is not adhering to its agreement concluded under section 115, or is diverting from the purposes of this
title assistance provided hereunder, and that in the circumstances
remedial action other than termination will not more effectively promote the purposes of this title or (2) because of changed conditions,
assistance is no longer consistent with the national interest of the
United States. Termination of assistance to any country under this
section shall include the termination of deliveries of all supplies scheduled under the aid program for such country and not yet delivered.
EXEMPTION FROM CONTRACT AND ACCOUNTING LAWS
SEC. 119. When the President determines it to be in furtherance
of the purposes of this title, the functions authorized under this title
may be performed without regard to such provisions of law regulating
the making, performance, amendment, or modification of contracts
and the expenditure of Government funds as the President may
specify.
EXEMPTION FROM CERTAIN FEDERAL LAWS RELATING TO EMPLOYMENT
SEC. 120. Service of an individual as a member of the Public
Advisory Board (other than the Administrator) created by section
107 (a), as a member of an advisory committee appointed pursuant
to section 107 (b), as an expert or consultant under section 104 (e),
or as an expert, consultant, or technician under section 124 (d), shall
not be considered as service or employment bringing such individual
within the provisions of section 109 or 113 of the Criminal Code
(U. S. C., title 18, sees. 198 and 203), of section 190 of the Revised
Statutes (U. S. C., title 5, sec. 99), or of section 19 (e) of the Contract
Settlement Act of 1944, or of any other Federal law imposing restrictions, requirements, or penalties in relation to the employment of
persons, the performance of services, or the payment or receipt of
compensation in connection with any claim, proceeding, or matter
involving the United States.
UNITED NATIONS
SEC. 121. (a) The President is authorized to request the cooperation of or the use of the services and facilities of the United Nations,
its organs and specialized agencies, or other international organizations, in carrying out the purposes of this title, and may make payments,
by advancements or reimbursements, for such purposes, out of funds
made available for the purposes of this title, as may be necessary
therefor, to the extent that special compensation is usually required
for such services and facilities. Nothing in this title shall be construed to authorize the Administrator to delegate to or otherwise
confer upon any international or foreign organization or agency any
of his authority to decide the method of furnishing assistance under
this title to any participating country or the amount thereof.
(b) The President shall cause to be transmitted to the Secretary
General of the United Nations copies of reports to Congress on the
operations conducted under this title.
(c) Any agreements concluded between the United States and
participating countries, or groups of such countries, in implementa-
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tion of the purposes of this title, shall be registered with the United
Nations if such registration is required by the Charter of the United
Nations.
TERMINATION OF PROGRAM
SEC. 122. (a) After June 30, 1952, or after the date of the passage
of a concurrent resolution by the two Houses of Congress before such
date, which declares that the powers conferred on the Administrator
by or pursuant to subsection (a) of section 111 of this title are no
longer necessary for the accomplishment of the purposes of this title,
whichever shall first occur, none of the functions authorized under
such provisions may be exercised; except that during the twelve
months following such date commodities and services writh respect to
which the Administrator had, prior to such date, authorized procurement for, shipment to, or delivery in a participating country, may be
transferred to such country, and funds appropriated under authority
of this title may be obligated during such twelve-month period for
the necessary expenses of procurement, shipment, delivery, and other
activities essential to such transfer, and shall remain available during
such period for the necessary expenses of liquidating operations under
this title.
(b) At such time as the President shall find appropriate after such
date, and prior to the expiration of the twelve months following such
date, the powers, duties, and authority of the Administrator under
this title may be transferred to such other departments, agencies, or
establishments of the Government as the President shall specify, and
the relevant funds, records, and personnel of the Administration may
be transferred to the departments, agencies, or establishments to which
the related functions are transferred.
REPORTS TO CONGRESS
SEC. 123. The President from time to time, but not less frequently
than once every calendar quarter through June 30, 1952, and once
every year thereafter until all operations under this title have been
completed, shall transmit to the Congress a report of operations under
this title, including the text of bilateral and multilateral agreements
entered into in carrying out the provisions of this title. Reports
provided for under this section shall be transmitted to the Secretary
of the Senate or the Clerk of the House of Representatives, as the case
may be, if the Senate or the House of Representatives, as the case may
be, is not in session.
JOINT CONGRESSIONAL COMMITTEE
SEC. 124. (a) There is hereby established a joint congressional committee to be known as the Joint Committee on Foreign Economic
Cooperation (hereinafter referred to as the committee), to be composed of ten members as follows:
(1) Three members who are members of the Committee on
Foreign Relations of the Senate, two from the majority and one
from the minority party, to be appointed by the chairman of the
committee; two members who are members of the Committee on
Appropriations of the Senate, one from the majority and one
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from the minority party, to be appointed by the chairman of the
committee; and
(2) Three members who are members of the Committee on
Foreign Affairs of the House, two from the majority and one from
the minority party, to be appointed by the chairman of the committee ; and two members who are members of the Committee on
Appropriations of the House, one from the majority and one
from the minority party, to be appointed by the chairman of the
committee.
A vacancy in the membership of the committee shall be filled in the
same manner as the original selection. The committee shall elect a
chairman from among its members.
(b) It shall be the function of the committee to make a continuous
study of the programs of United States economic assistance to foreign
countries, and to review the progress achieved in the execution and
administration of such programs. Upon request, the committee shall
aid the several standing committees of the Congress having legislative jurisdiction over any part of the programs of United States
economic assistance to foreign countries; and it shall make a report
to the Senate and the House of Representatives, from time to time,
concerning the results of its studies, together with such recommendations as it may deem desirable. The Administrator, at the request
of the committee, shall consult with the committee from time to time
with respect to his activities under this Act.
(c) The committee, or any duly authorized subcommittee thereof,
is authorized to hold such hearings, to sit and act at such times and
places, to require by subpena or otherwise the attendance of such
witnesses and the production of such books, papers, and documents,
to administer such oaths, to take such testimony, to procure such
printing and binding, and to make such expenditures as it deems
advisable. The cost of stenographic services to report such hearings
shall not be in excess of 25 cents per hundred words. The provisions
of sections 102 to 104, inclusive, of the Revised Statutes shall apply
in case of any failure of any witness to comply with any subpena or
to testify when summoned under authority of this subsection.
(d) The committee is authorized to appoint and, without regard
to the Classification Act of 1923, as amended, fix the compensation of
such experts, consultants, technicians, and organizations thereof, and
clerical and stenographic assistants as it deems necessary and advisable.
(e) There are hereby authorized to be appropriated such sums as
may be necessary to carry out the provisions of this section, to be
disbursed by the Secretary of the Senate on vouchers signed by the
chairman.
SEPARABILITY CLAUSE
SEC. 125. If any provision of this Act or the application of such
provision to any circumstances or persons shall be neld invalid, the
validity of the remainder of the Act and the applicability of such
provision to other circumstances or persons shall not be affected
thereby.
TITLE II
SEC. 201. This title may be cited as the "International Children's
Emergency Fund Assistance Act of 1948".
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SEC. 202. It is the purpose of this title to provide for the special
care and feeding of children by authorizing additional moneys for
the International Children's Emergency Fund of the United Nations.
SEC. 203. The President is hereby authorized and directed any time
after the date of the enactment of this Act and before July 1, 1949,
to make contributions (a) from sums appropriated to carry out the
purposes of this title and (b) from sums appropriated to carry out
the general purposes of the proviso in the first paragraph of the first
section of the joint resolution of May 31, 1947 (Public Law 84,
Eightieth Congress), as amended, to the International Children's
Emergency Fund of the United Nations for the special care and feeding
of children.
SEC. 204. No contribution shall be made pursuant to this title or
such joint resolution of May 31, 194T, which would cause the sum of
(a) the aggregate amount contributed pursuant to this title and (b)
the aggregate amount contributed by the United States pursuant to
such joint resolution of May 31, 1947, to exceed whichever of the
following sums is the lesser:
(1) 72 per centum of the total resources contributed after May
31, 1947, by all governments, including the United States, for
programs carried out under the supervision of such Fund: Provided, That in computing the amount of resources contributed
there shall not be included contributions by any government for
the benefit of persons located within the territory of such contributing government; or
(2) $100,000,000.
SEC. 205. Funds appropriated for the purposes of such joint resolution of May 31, 1947, shall remain available through June 30, 1949.
SEC. 206. There is hereby authorized to be appropriated to carry
out the purposes of this title for the fiscal year ending June 30, 1949,
the sum of $60,000,000.
TITLE III
SEC. 301. This title may be cited as the "Greek-Turkish Assistance
Act of 1948".
SEC. 302. In addition to the amounts authorized to be appropriated
under subsection (b) of section 4 of the Act of May 22, 1947 (61 Stat.
103), there are hereby authorized to be appropriated not to exceed
$275,000,000 to carry out the provisions of such Act, as amended.
SEC. 303. (a) Subsection (a) of section 4 of such Act of May 22,
1947, is hereby amended by adding at the end thereof the following:
"The Reconstruction Finance Corporation is authorized and directed
to make additional advances, not to exceed in the aggregate $50,000,000,
to carry out the provisions of this Act, as amended, in such manner
and in such amounts as the President shall determine. No interest
shall be charged on advances made by the Treasury to the Reconstruction Finance Corporation for this purpose."
(b) Subsection (b) of section 4 of the said Act is hereby amended
by inserting after the word "repaid" the following: "without interest".
SEC. 304. Subsections (2) and (3) of section 1 of such Act of May
22,1947, are hereby amended to permit detailing of persons referred to
in such subsections to the United States Missions to Greece and Turkey
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as well as to the governments of those countries. Section 302 of the Act
of January 27, 1948 (Public Law 402, Eightieth Congress), and section 110 (c) of the Economic Cooperation Act of 1948 (relating to
investigations of personnel by the Federal Bureau of Investigation)
shall be applicable to any person so detailed pursuant to such subsection (2) of such Act of 1947: Provided, That any military or civilian
personnel detailed under section 1 of such Act of 1947 may receive such
station allowances or additional allowances as the President may prescribe (and payments of such allowances heretofore made are hereby
validated).
TITLE IV
SEC. 401. This title may be cited as the "China Aid Act of 1948".
SEC. 402. Recognizing the intimate economic and other relationships between the United States and China, and recognizing that
disruption following in the wake of war is not contained by national
frontiers, the Congress finds that the existing situation in China
endangers the establishment of a lasting peace, the general welfare
and national interest of the United States, and the attainment of the
objectives of the United Nations. It is the sense of the Congress
that the further evolution in China of principles of individual liberty,
free institutions, and genuine independence rests largely upon the
continuing development of a strong and democratic national government as the basis for the establishment of sound economic conditions
and for stable international economic relationships. Mindful of the
advantages which the United States has enjoyed through the existence
of a large domestic market with no internal trade barriers, and believing that similar advantages can accrue to China, it is declared to be
the policy of the people of the United States to encourage the Republic
of China and its people to exert sustained common efforts which will
speedily achieve the internal peace and economic stability in China
which are essential for lasting peace and prosperity in the world.
It is further declared to be the policy of the people of the United
States to encourage the Republic of China in its efforts to maintain
the genuine independence and the administrative integrity of China,
and to sustain and strengthen principles of individual liberty and free
institutions in China through a program of assistance based on selfhelp and cooperation: Provided, That no assistance to China herein
contemplated shall seriously impair the economic stability of the
United States. It is further declared to be the policy of the United
States that assistance provided by the United States under this title
should at all times be dependent upon cooperation by the Republic
of China and its people in furthering the program : Provided further,
That assistance furnished under this title shall not be construed
as an express or implied assumption by the United States of any
responsibility for policies, acts, or undertakings of the Republic of
China or for conditions which may prevail in China at any time.
SEC. 403. Aid provided under this title shall be provided under the
applicable provisions of the Economic Cooperation Act of 1948 which
are consistent with the purposes of this title. It is not the purpose of
this title that China, in order to receive aid hereunder, shall adhere to
a joint program for European recovery.
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SEC. 404. (a) In order to carry out the purposes of this title, there
is hereby authorized to be appropriated to the President for aid to
China a sum not to exceed $338,000,000 to remain available for obligation for the period of one year following the date of enactment of this
Act.
(b) There is also hereby authorized to be appropriated to the President a sum not to exceed $125,000,000 for additional aid to China
through grants, on such terms as the President may determine and
without regard to the provisions of the Economic Cooperation Act of
1948, to remain available for obligation for the period of one year following the date of enactment of this Act.
SEC. 405. An agreement shall be entered into between China and
the United States containing those undertakings by China which the
Secretary of State, after consultation with the Administrator for Economic Cooperation, may deem necessary to carry out the purposes of
this title and to improve commercial relations with China.
SEC. 406. Notwithstanding the provisions of any other law, the
Reconstruction Finance Corporation is authorized and directed, until
such time as an appropriation is made pursuant to section 404, to
make advances, not to exceed in the aggregate $50,000,000, to carry
out the provisions of this title in such manner and in such amounts
as the President shall determine. From appropriations authorized
under section 404, there shall be repaid without interest to the Reconstruction Finance Corporation the advances made by it under the
authority contained herein. No interest shall be charged on advances
made by the Treasury to the Reconstruction Finance Corporation in
implementation of this section.
SEC. 407. (a) The Secretary of State, after consultation with the
Administrator, is hereby authorized to conclude an agreement with
China establishing a Joint Commission on Rural Reconstruction in
China, to be composed of two citizens of the United States appointed
by the President of the United States and three citizens of China
appointed by the President of China. Such Commission shall, subject to the direction and control of the Administrator, formulate and
carry out a program for reconstruction in rural areas of China, which
shall include such research and training activities as may be necessary
or appropriate for such reconstruction: Provided, That assistance
furnished under this section shall not be construed as an express or
implied assumption by the United States of any responsibility for
making any further contributions to carry out the purposes of this
section.
(b) Insofar as practicable, an amount equal to not more than 10
per centum of the funds made available under subsection (a) of section 404 shall be used to carry out the purposes of subsection (a) of
this section. Such amount may be in United States dollars, proceeds
in Chinese currency from the sale of commodities made available to
China with funds authorized under subsection (a) of section 404, or
both.
Approved April 3, 1948.
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80TH CONGRESS ) HOUSE OF REPRESENTATIVES (
REPORT
2d Session j"
( No. 1655
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FOREIGN ASSISTANCE ACT OF 1948
APRIL 1, 1948.—Ordered to be printed
Mr. EATON, from the committee of conference, submitted the following
CONFERENCE REPORT
[To accompany S. 2202]
The committee of conference on the disagreeing votes of the two
Houses on the amendment of the Senate to the amendments of the
House to the bill (S. 2202) to promote the general welfare, national
interest, and foreign policy of the United States through necessary
economic and financial assistance to foreign countries which undertake
to cooperate with each other in the establishment and maintenance
of economic conditions essential to a peaceful and prosperous world,
having met, after full and free conference, have agreed to recommend,
and do recommend to their respective Houses as follows:
That the House recede from its disagreement to the amendment of
the Senate to the amendment of the House and agree to the same with
an amendment as follows:
In lieu of the matter inserted by the Senate amendment and the
House amendment, insert the following: That this Act may be cited
as the "Foreign Assistance Act of 1948".
TITLE I
SEC. 101. This title may be cited as the "Economic Cooperation Act
of 1948".
FINDINGS
AND DECLARATION OF POLICY
SEC. 102. (a) Recognizing the intimate economic and other relationships
between the United States and the nations of Europe, and recognizing^ that
disruption following in the wake of war is not contained by national
•frontiers, the Congress finds that the existing situation in Europe endangers the establishment of a lasting peace, the general welfare and
national interest of the United States, and the attainment of the objectives
of the United Nations. The restoration or maintenance in European
countries of principles of individual liberty, free institutions, and genuine
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FOREIGN ASSISTANCE ACT OF 1 9 4 8
independence rests largely upon the establishment of sound economic
• conditions, stable international economic relationships, and the achievement by the countries of Europe of a healthy economy independent of
extraordinary outside assistance. The accomplishment of these objectives
calls for a plan of European recovery, open to all such nations which cooperate in such plan, based upon a strong production effort, the expansion
of foreign trade, the creation and maintenance of internal financial
stability, and the development of economic cooperation, including all
possible steps to establish and maintain equitable rates^ of exchange and
to bring about the progressive elimination of trade barriers. Mindful of
the advantages which the United States has enjoyed through the existence
of a large domestic market with no internal trade barriers, and believing
that similar advantages can accrue to the countries of Europe, it is declared
to be the policy of the people of the United States to encourage these countries through a joint organization to exert sustained common efforts as
set forth in the report of the Committee of European Economic Cooperation
signed at Paris on September 22, 1947, which will speedily achieve that
economic cooperation in Europe which is essential for lasting peace and
prosperity. It is further declared to be the policy of the people of the
United States to sustain and strengthen principles of individual liberty,
free institutions, and genuine independence in Europe through assistance
to those countries of Europe which participate in a joint recovery program
based upon self-help and mutual cooperation: Provided, That no assistance
to the participating countries herein contemplated shall seriously impair
the economic stability of the United States. It is further declared to be the
policy of the United States that continuity of assistance provided by the
United States should, at all times, be dependent upon continuity of
cooperation among countries participating in the program.
PURPOSES OF TITLE
(6) It is the purpose of this title to effectuate the policy set forth in
subsection (a) of this section by furnishing material and financial assistance to the participating countries in such a manner as to aid them,
through their own individual and concerted efforts, to become independent
of extraordinary outside economic assistance within the period of
operations under this title, by—
(1) promoting industrial and agricultural production in the
participating countries;
(2} furthering the restoration or maintenance of the soundness of
European currencies, budgets, and finances; and
(3) facilitating and stimulating the growth of international trade
of participating countries with one another and with other countries
by appropriate measures including reduction of barriers which may
hamper such trade.
PARTICIPATING
COUNTRIES
SEC. 103. (a) As used in this title, the term "participating country"
means—
(1} any country, together with dependent areas under its administration, which signed the report of the Committee of European
Economic Cooperation at Paris on September 22, 1947; and
(2} any other country (including any of the zones of occupation
of Germany, any areas under international administration or control,
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and the Free Territory of Trieste or either of its zones) wholly or
partly in Europe, together with dependent areas under its administration;
provided such country adheres to, and for so long as it remains an adherent
to, a joint program for European recovery designed to accomplish the
purposes of this title.
(6) Until such time as the Free Territory of Trieste or either of its zones
becomes eligible for assistance under this title as a participating country,
assistance to the Free Territory of Trieste, or either of its zones, is hereby
authorized under the Foreign Aid Act of 1947 until June 30, 1949, and
the said Foreign Aid Act of 1947 is hereby amended accordingly, and not
to exceed $20,000,000 out of'funds authorized to be advanced by the Eeconstruction Finance Corporation under subsection (a) of section 114 of this
title, or under subsection (d) of section 11 of the Foreign Aid Act of 1947
notwithstanding any appropriation heretofore made under such Act, may
be utilized for the purposes of this subsection: Provided, That section 11
(6) of the Foreign Aid Act of 1947 shall not apply in respect of the Free
Territory of Trieste or either of its zones: And provided further, That the
provisions of section 115 (6) (6) of this title shall apply to local currency
deposited pursuant to section 5 (6) of that Act.
ESTABLISHMENT
OF ECONOMIC COOPERATION
ADMINISTRATION
SEC. 104. (a) There is hereby established, with its principal office in
the District of Columbia, an agency of the Government which shall be
known as the Economic Cooperation Administration, hereinafter referred
to as the Administration. The Administration shall be headed by an
Administrator for Economic, Cooperation, hereinafter referred to as the
Administrator, who shall be appointed by the President, by arid with the
advice and consent of the Senate, and who shall receive compensation at
the rate of $20,000 per annum. The Administrator shall be responsible
to the President and shall have a status in the executive branch of the
Government comparable to that of the head of an executive department.
Except as otherwise provided in this title, the administration of the provisions of this title is hereby vested in the Administrator and his functions
shall be performed under the control of the President.
(6) There shall be in the Administration a Deputy Administrator for
Economic Cooperation who shall be appointed by the President, by and
with the advice and consent of the Senate, and shall receive compensation
at the rate of $17,500 per annum. The Deputy Administrator for Economic Cooperation shall perform such functions as the Administrator
shall designate, and shall be Acting Administrator for Economic Cooperation during the absence or disability of the Administrator or in the event
of a vacancy in the office of Administrator.
(c) The President is authorized, pending the appointment and qualification of the first Administrator or Deputy Administrator for Economic
Cooperation appointed hereunder, to provide, for a period of not to exceed
thirty days after the date of enactment of this Act, for the performance of
the functions of the Administrator under this title through such departments, agencies, or establishments of the United States Government as he
may direct. In the event the President nominates an Administrator or
Deputy Administrator prior to the expiration of such thirty-day period
the authority conferred upon the President by this subsection shall b(
extended beyond such thirty-day period but only until an Administratoor Deputy Administrator qualifies and takes office.
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FOREIGN ASSISTANCE ACT OF 1948
(d) (1} The Administrator, with the approval of the President, is
hereby authorized and empowered to create a corporation with such powers
as the Administrator may deem necessary or appropriate for the accomplishment of the purposes of this title.
(2} If a corporation is created under this section—
(i) it shall have the power to sue and be sued, to acquire, hold,
and dispose of property, to use its revenues, to determine the character of any necessity for its obligations and expenditures and the
manner in which they shall be incurred, allowed and paid, and to
exercise such other powers as may be necessary or appropriate to
carry out the purposes of the corporation;
(ii) its powers shall be set out in a charter which shall be valid only
when certified copies thereof are filed with the Secretary of the Senate
and the Clerk of the House of Representatives and published in the
Federal Register, and all amendments to such charter shall be valid
only when similarly filed and published;
(Hi) it shall not have succession beyond June 30, 1952, except for
purposes of liquidation, unless its life is extended beyond such date
pursuant to Act of Congress; and
(iv) it shall be subject to the Government Corporation Control Act
to the same extent as wholly owned Government corporations listed
in section 101 of such Act.
(5) All capital stock of the corporation shall be of one class, be
issued for cash only, and be subscribed for by the Administrator. Payment for such capital stock shall be made from funds available for the
purposes of this title.
(e) Any department, agency, or establishment of the Government
(including, whenever used in this title, any corporation which is an instrumentality of the United States') performing functions under this
title is authorized to employ, for duty within the continental limits of the
United States, such personnel as may be necessary to carry out the provisions and purposes of this title, and funds available pursuant to section
114 of this title shall be available for personal services in the District of
Columbia and elsewhere without regard to section 14 (a) of the Federal
Employees Pay Act of 1946 (60 Stat. 219). Of such personnel employed
by the Administration, not to exceed one hundred may be compensated
without regard to the provisions of the Classification Act of 1923, as
amended, of whom not more than twenty-five may be compensated at a
rate in excess of $10,000 per annum, but not in excess of $15,000 per
annum. Experts and consultants or organizations thereof, as authorized
by section 15 of the Act of August 2, 1946 (U. S. C., title 5, sec. 55a),
may be employed by the Administration, and individuals so employed
may be compensated at rates not in excess of $50 per diem and while
away from their homes or regular places of business, they may be paid
actual travel expenses and not to exceed $10 per diem in lieu of subsistence and other expenses while so employed.
(/) The Administrator may, from time to time, promulgate such rules
and regulations as may be necessary and proper to carry out his functions
under this title, and he may delegate authority to perform any of such
functions to his subordinates, acting under his direction and under rules
and regulations promulgated by him.
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FOREIGN ASSISTANCE ACT OF 1948
GENERAL FUNCTIONS
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OF ADMINISTRATOR
SEC. 105. (a) The Administrator, under the control of the President,
shall in addition to all other functions vested in him by this title—
(1} review and appraise the requirements of participating
countries for assistance under the terms of this title;
(2} formulate programs of United States assistance under this
title, including approval of specific projects which have been submitted to him by the participating countries;
(3} provide for the efficient execution of any such programs as
may be placed in operation; and
(4) terminate provision of assistance or take other remedial
action as provided in section 118 of this title.
(6) In order to strengthen and make more effective the conduct of the
foreign relations of the United States—
(1) the Administrator and the Secretary of State shall keep each
other fully and currently informed on matters, including prospective
action, arising within the scope of their respective duties which are
pertinent to the duties of the other;
(2} whenever the Secretary of State believes that any action, proposed action, or failure to act on the part of the Administrator is
inconsistent with the foreign-policy objectives of the United States,
he shall consult with the Administrator and, if differences of view
are not adjusted by consultation, the matter shall be referred to the
President for final decision;
(8) whenever the Administrator believes that any action, proposed
action, or failure to act on the part of the Secretary of State in performing functions under this title is inconsistent with the purposes
and provisions of this title, he shall consult with the Secretary of
State and, if differences of view are not adjusted by consultation,
the matter shall be referred to the President for final decision.
(c) The Administrator and the department, agency, or officer in the
executive branch of the Government exercising the authority granted to
the President by section 6 of the Act of July 2, 1940 (54 Stat. 714}, as
amended, shall keep each other fully and currently informed on matters,
including prospective action, arising within the scope of their respective
duties which are pertinent to the duties of the other. Whenever the
Administrator believes that any action, proposed action, or failure to
act on the part of such department, agency, or officer in performing
functions under this title is inconsistent with the purposes and provisions
of this title, he shall consult with such department, agency, or officer and,
if differences of view are not adjusted by consultation, the matter shall be
referred to the President for final decision.
NATIONAL
a
ADVISORY
COUNCIL
SEC. 106. Section 4 ( ) of the Bretton Woods Agreements Act (59
Stat. 512, 513} is hereby amended to read as follows:
"Sec 4- (o>) In order to coordinate the policies and operations of the
representatives of the United States on the Fund and the Bank and of
all agencies of the Government which make or participate in making
foreign loans or which engage in foreign financial, exchange or monetary
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transactions, there is hereby established the National Advisory Council on
International Monetary and Financial Problems (hereinafter referred to
as the 'Council'"), consisting of the Secretary of the Treasury, as Chairman,
the Secretary of State, the Secretary of Commerce, the Chairman of the
Board of Governors of the Federal Reserve System, the Chairman of the
Board of Directors of the Export-Import Bank of Washington, and during
such period as the Economic Cooperation Administration shall continue
to exist, the Administrator for Economic Cooperation."
PUBLIC ADVISORY
BOARD
SEC. 107. (a) There is hereby created a Public Advisory Board, hereinafter referred to as the Board, which shall advise and consult with the
Administrator with respect to general or basic policy matters arising in
connection with the Administrator's discharge of his responsibilities.
The Board shall consist of the Administrator, who shall be Chairman,
and not to exceed twelve additional members to be appointed by the President, by and with the advice and consent of the Senate, and who shall be
selected from among citizens of the United States of broad and varied
experience in matters affecting the public interest, other than officers and
employees of the United States (including any agency or instrumentality
of the United States') who, as such, regularly receive compensation for
current services. The Board shall meet at least once a month and at
other times upon the call of the Administrator or when three or more
members of the Board request the Administrator to call a meeting. Not
more than a majority of two of the members shall be appointed to the
Board from the same political party. Members of the Board, other than
the Administrator, shall receive, out of funds made available for the purposes of this title, a per diem allowance of $50 for each day spent away
from their homes or regular places of business, for the purpose of attendance at meetings of the Board, or at conferences held upon the call of the
Administrator, and in necessary travel, and while so engaged, they may
be paid actual travel expenses and not to exceed-$10 per diem in lieu of
subsistence and other expenses.
(6) The Administrator may appoint such other advisory committees
as he may determine to be necessary or desirable to effectuate the purposes
of this title.
UNITED
STATES
SPECIAL
REPRESENTATIVE
ABROAD
SEC. 108. There shall be a United States Special Representative in
Europe who shall (a) be appointed by the President, by and with the advice
and consent of the Senate, (6) be entitled to receive the same compensation
and allowances as a chief of mission, class 1, within the meaning of the
Act of August 18,1946 (60 Stat. 999], and (c) have the rank of ambassador
extraordinary and plenipotentiary. He shall be the representative of the
Administrator, and shall also be the chief representative of the United
States Government to any organisation of participating countries which
may be established by such countries to further a joint program for
European recovery, and shall discharge in Europe such additional responsibilities as may be assigned to him with the approval of the President in
furtherance of the purposes of this title. He may also be designated as
the United States representative on the Economic Commission for Europe.
He shall receive his instructions from the Administrator and such instructions shall be prepared and transmitted to him in accordance with proce-
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dures agreed to between the Administrator and the Secretary of State in
order to assure appropriate coordination as provided by subsection (b) oj
section 105 of this title. He shall coordinate the activities of the chiefs of
special missions provided for in section 109 of this title. He shall keep
the Administrator, the Secretary of State, the chiefs of the United States
diplomatic missions, and the chiefs of the special missions provided for
in section 109 of this title currently informed concerning his activities.
He shall consult with the chiefs of all such missions, who shall give him
such cooperation as he may require for the performance of his duties
under this title.
SPECIAL EGA MISSIONS
ABROAD
Sue. 109. (a) There shall be established for each participating country, except as provided in subsection (d) of this section, a special mission
for economic cooperation under the direction of a chief who shall be
responsible for assuring the performance within such country of operations
under this title. The chief shall be appointed by the Administrator, shall
receive his instructions from the Administrator, and_ shall report to the
Administrator on the performance of the duties assigned to him. The
chief q/ the special mission shall take rank immediately after the chief of
the United States diplomatic mission in such country.
(6) The chief of the special mission shall keep the chief of the United
States diplomatic mission fully and currently informed on matters,
including prospective action, arising within the scope of the operations of
the special mission and the chief of the diplomatic mission shall keep the
chief of the special mission fully and currently informed on matters
relative to the conduct of the duties of the chief of the special mission.
The chief of the United States diplomatic mission will be responsible for
assuring that the operations of the special mission are consistent with the
foreign-policy objectives of the United States in such country and to that
end whenever the chief of the United States diplomatic mission believes
fiat any action, proposed action, or failure to act on the part of the special
mission is inconsistent with such foreign-policy objectives, he shall so
advise the chief of the special mission and the United States Special
Representative in Europe. If differences of view are not adjusted by
consultation, the matter shall be referred to the Secretary of State and the
Administrator for decision.
(c) The Secretary of State shall provide such office space, facilities, and
other administrative services for the United States Special Representative
in Europe and his staff, and for the special mission in each participating
country, as may be agreed between the Secretary of State and the Administrator.
(d) With respect to any of the zones of occupation of Germany and of
the Free Territory of Trieste, during the period of occupation, the President shall make appropriate administrative arrangements for the conduct
of operations under this title, in order to enable the Administrator to carry
out his responsibility to assure the accomplishment of the purposes of this
tith.
PERSONNEL
OUTSIDE
UNITED
STATES
SEC. 110. (a) For the purpose of .performing functions under this title
outside the continental limits of the United States the Administrator
may'—
(j?) employ persons who shall receive compensation at any of the
rates provided for the Foreign Service Reserve and Staff by the For-
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FOREIGN ASSISTANCE ACT OF 1948
eign Service Act of 1946 (60 Stat. 999), together with allowances
and benefits established thereunder; and
(2) recommend the appointment or assignment of persons, and
the Secretary of State may appoint or assign such persons, to any
class in the Foreign Service Reserve or Staff for the duration oj
operations under this title, and the Secretary of State may assign,
transfer', or promote such persons upon the recommendation of the
Administrator. Persons so appointed to the Foreign Service Staff
shall be entitled to the benefits of section 528 of the Foreign Service
Act of 1946.
(6) For the purpose of performing functions under this title outside
the continental limits of the Lnited States, the Secretary of State may, at
the request of the Administrator, appoint, for the duration of operations
under this title, alien clerks and employees in accordance with applicable
provisions of^ the Foreign Service Act of 1946 (60 Stat. 999).
(c) No citizen or resident of the United States may be employed, or if
already employed, may be assigned to duties by the Secretary of State or
the Administrator under this title for a period to exceed three months unless
such individual has been investigated as to loyalty and security by the
Federal Bureau of Investigation and a report thereon has been made to
the Secretary of State and the Administrator, and until the Secretary of
State or the Administrator has certified in writing (and filed copies
thereof with the Senate Committee on Foreign Relations and the House
Committee on Foreign Affairs) that, after full consideration of such
report, he believes such individual is loyal to the United States, its Constitution, and form of government, and is not now and has never been a
member of any organization advocating contrary views. This subsection
shall not apply in the case of any officer appointed by the President by
and with the advice and consent oj the Senate.
NATURE
AND METHOD OF
ASSISTANCE
SEC. 111. (a) The Administrator may, from time to time, furnish
assistance to any participating country by providing for the performance
of any of the functions set forth in paragraphs (1) through (5) of this
subsection when he deems it to be in furtherance of the purposes of this
title, and upon the terms and conditions set forth in this title and such
additional terms and conditions consistent with the provisions of this title
as he may determine to be necessary and proper.
(1) Procurement from any source, including Government stocks
on the same basis as procurement by Government agencies under
Public Law 875 (Seventy-ninth Congress) for their own use, of any
commodity which he determines to be required for the furtherance of
the purposes of this title. As used in this title, the term "commodity"
means any commodity, material, article, supply, or goods necessary
for the purposes of this title.
(2) Processing, storing, transporting, and repairing any commodities, or performing any other services with respect to a participating country which he determines to be required for accomplishing
the purposes of this title. The Administrator shall, in providing
for the procurement of commodities under authority of this title, take
such steps as may be necessary to assure, so far as is practicable,
that at least 50 per centum oj the gross tonnage of commodities,
procured within the United States out of funds made available under
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this title and transported abroad on ocean vessels, is so transported
on United States flag vessels to the extent such vessels are available
at market rates.
(5) Procurement of and furnishing technical information and
assistance.
(4) Transfer oj any commodity or service, which transfer shall be
signified by delivery of the custody and right of possession and use
of such commodity, or otherwise making available any such commodity, or by rendering a service to a participating country or to any
agency or organization representing a participating country.
(5) The allocation oj commodities or services to specific projects
designed to carry out the purposes oj this title, which have been
submitted to the Administrator by participating countries and have
been approved by himi
(6) In order to facilitate and maximize the use oj private channels oj
trade, subject to adequate safeguards to assure that all expenditures in
connection with such procurement are within approved programs in
accordance with terms and conditions established by the Administrator,
he may provide for the performance oj any oi the junctions described in
subsection (a) of this section—
(1) by establishing accounts against which, under regulations
prescribed by the Administrator—
(i) letters of commitment may be issued in connection with
supply programs approved by the Administrator (and such
letters of commitment, when issued, shall constitute obligations
of the United States and monies due or to become due thereunder
shall be assignable under the Assignment oj Claims Act oj
1940 and shall constitute obligations oj applicable appropriations}; and
(ii) withdrawals may be made by participating countries,
or agencies or organizations representing participating countries or by other persons or organizations, upon presentation oj
contracts, invoices, or other documentation specified by the
Administrator under arrangements prescribed by the Administrator to assure the use of such withdrawals for purposes
approved by the Administrator.
Such accounts may be established on the books of the Administration,
or any other department, agency, or establishment of the Government
specified by the Administrator, or, on terms and conditions approved
by the Secretary of the Treasury, in banking institutions in the
United States. Expenditures of funds which have been made
available through accounts so established shall be accounted for on
standard documentation required for expenditures of Government
funds: Provided, That such expenditures for commodities or services
procured outside the continental limits of the United States under
authority^ oj this section may be accounted for exclusively on such
certification as the Administrator may prescribe in regulations
promulgated by him with the approval of the Comptroller General of
the United States to assure expenditure in furtherance of the purposes
of this title.
(2} by utilizing the services and facilities of any department,
agency, or establishment of the Government as the President shall
direct, or with the consent of the head of such department, agency, or
establishment, or, in the President's discretion, by acting in cooperaH. Kept. 1655, 80-2
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FOREIGN ASSISTANCE ACT OF 1948
tion with the United Nations or with other international organizations or with agencies of the participating countries, and funds
allocated pursuant to this section to any department, agency, or
establishment of the Government shall be established in separate
appropriation accounts on the books of the Treasury.
(3) by making, under rules and regulations to be prescribed by the
Administrator, guaranties to any person of investments in connection
with projects approved by the Administrator and the participating
country concerned as furthering the purposes of this title (including
guaranties of investments in enterprises producing or distributing
informational media: Provided, That the amount of such guaranties
in the first year after the date of the enactment of this Act does not
exceed $15,000,000), which guaranties shall terminate not later than
fourteen years from the date of enactment of this Act: Provided,
That—
(i) the guaranty to any person shall not exceed the amount of
dollars invested in the project by such person with the approval
of the Administrator and shall be limited to the transfer into
United States dollars of other currencies, or credits in such
currencies, received by such person as income from the approved
investment, as repayment or return thereof, in whole or in part,
or as compensation for the sale or disposition of all or any part
thereof: Provided, That, when any payment is made to any
person under authority of this paragraph, such currencies, or
credits in such currencies, shall become the property of the
United States Government;
(ii) the Administrator may charge a fee in an amount determined by him not exceeding 1 per centum per annum of the
amount of each guaranty, and all fees collected hereunder shall
be available for expenditure in discharge of liabilities under
guaranties made under this paragraph until such time as all
such liabilities have been discharged or have expired, or until
all such fees have been expended in accordance with the provisions of this paragraph; and
(Hi) as used in this paragraph, the term lfperson" means a
citizen of the United States or any corporation, partnership, or
other association created under the law of the United States or
of any State or Territory and substantially beneficially owned
by citizens of the United States.
The total amount of the guaranties made under this paragraph (3)
shall not exceed $300,000,000, and as such guaranties are made the
authority to realize funds from the sale of notes for the purpose of
allocating funds to the Export-Import Bank of Washington under
paragraph (2) of subsection (c) of this section shall be accordingly
reduced. Any payments made to discharge liabilities under guaranties Issued under paragraph (3) of this subsection shall be paid
out of fees collected under subparagraph (ii) of paragraph (3) of
this subsection as long as such fees are available, and thereafter shall
be paid out of funds realized from the sale of notes which shall be
issued under authority of paragraph (2) of subsection (c) of this
section when necessary to discharge liabilities under any such
guaranty.
(c) (1) The Administrator may provide assistance for any participating country, in the form and under the procedures authorized in
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subsections (a] and (b}, respectively, of this section, through grants or
upon payment in cash, or on credit terms, or on such other terms of
payment as he may find appropriate, including payment by the transfer
to the United States (under such terms and in such quantities as may be
agreed to between the Administrator and the participating .country) of
materials which are required by the United States as a result of deficiencies
or potential deficiencies in its own resources. In determining whether
such assistance shall be through grants or upon terms of payment, and in
determining the terms of payment, he shall act in consultation with the
National Advisory Council on International Monetary and Financial
Problems, and the determination whether or not a participating country
should be required to make payment for any assistance furnished to such
country in furtherance of the purposes of this title, and the terms of such
payment, if required, shall depend upon the character and purpose of the
assistance and upon whether there is reasonable assurance of repayment
considering the capacity of such country to make such payments without
jeopardizing the accomplishment of the purposes of this title.
(2) When it is determined that assistance should be extended under
the provisions of this title on credit terms, the Administrator shall allocate
funds for the purpose to the Export-Import Bank of Washington, which
shall, notwithstanding the provisions of the Export-Import Bank Act of
1945 (59 Stat. 526], as amended, make and administer the credit on
terms specified by the Administrator in consultation with the National
Advisory Council on International Monetary and Financial Problems.
The Administrator is authorized to issue notes from time to time for
purchase by the Secretary of the Treasury in an amount not exceeding in
the aggregate $1,000,000,000 (i) for the purpose of allocating funds to the
Export-Import Bank of Washington under this paragraph during the
period of one year following the date of enactment of this Act and (ii) for
the purpose of carrying out the provisions of paragraph (3) of subsection
(6) of this section until all liabilities arising under guaranties made
pursuant to such paragraph (3) have expired or have been discharged.
Such notes shall be redeemable at the option of the Administrator before
maturity in such manner as may be stipulated in such notes and shall
have such maturity as may be determined by the Administrator with the
approval of the Secretary of the Treasury. Each such note shall bear
interest at a rate determined by the Secretary of the Treasury, taking into
consideration the current average rate on outstanding marketable obligations of the United States as of the last day of the month preceding the
issuance oi ike note. Payment under this paragraph of the purchase
price of such notes and repayments thereof by the 'Administrator shall be
treated as public-debt transactions of the United States. In allocating
funds to the Export-Import Bank of Washington under this paragraph,
the Administrator shall first utilize such funds realized from the sale of
notes authorized by this paragraph as he determines to be available for
this purpose, and when such funds are exhausted, or after the end of one
year from the date of enactment of this Act, whichever is earlier, he shall
utilize any funds appropriated'under this title. The Administrator shall
make advances to, or reimburse, the Export-Import Bank of Washington
for necessary administrative expenses in connection with such credits.
Credits made by the Export-Import Bank of Washington with funds so
allocated to it by the Administrator shall not be considered in determining
whether the Bank has outstanding at any one time loans and guaranties
to the extent of the limitation imposed by section 7 of the Export-Import
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Bank Act of 1945 (59 Stat. 529\ as amended. Amounts received in
repayment of principal and interest on any credits made under this
paragraph shall be deposited into miscellaneous receipts oj the Treasury:
Provided, That, to the extent required jor such purpose, amounts received
in repayment of principal and interest on any credits made out of funds
realized from the sale of notes authorized under this paragraph shall be
deposited into the Treasury for the purpose of the retirement of such notes.
PROTECTION
OF DOMESTIC
ECONOMY
SEC. 112. (a) The Administrator shall provide for the procurement
in the United States of commodities under this title in such a way as to
(1) minimize the drain upon the resources of the United States and the
impact of such procurement upon the domestic economy, and (2) avoid
impairing the fulfillment of vital needs of the people of the United States.
(b) The procurement of petroleum and petroleum products under this
title shall, to the maximum extent practicable, be made from petroleum
sources outside the United States; and, in furnishing commodities under
the provisions of this title, the Administrator shall take fully into account
the present and anticipated world shortage of petroleum and its products
and the consequent undesirability of expansion in petroleum-consuming
equipment where the use of alternate fuels or other sources of power is
practicable.
(c) In order to assure the conservation of domestic grain supplies and
the retention in the United States of byproduct feeds necessary to the
maintenance of the agricultural economy of the United States, the amounts
of wheat and wheat flour produced in the United States to be transferred
by grant to the participating countries shall be so determined that the
total guantity of United States wheat used to produce the wheat flour
procured in the United States for transfer by grant to such countries
under this title shall not be less than 25 per centum of the aggregate of the
unprocessed wheat and wheat in the form of flour procured in the United
States for transfer by grant to such countries under this title.
(d} The term "surplus agricultural commodity" as used in this section
is defined as any agricultural commodity, or product thereof, produced in
the United States which is determined by the Secretary of Agriculture to
be in excess of domestic requirements. In providing for the procurement
of any such surplus agricultural commodity for transfer by grant to any
participating country in accordance with the requirements of such
country, the Administrator shall, insofar as practicable and where in
furtherance of the purposes of this title, give effect to the following:
(1) The Administrator shall authorize the procurement of any such
surplus agricultural commodity only within the United States: Provided,
Thai this restriction shall not be applicable (i) to any agricultural commodity, or product thereof, located in one participating country, and
intended for iransfer to another participating country, if the Administrator, in consultation with the Secretary of Agriculture, determines that
such procurement and transfer is in furtherance of the purposes of this
title, and would not create a burdensome surplus in the United States or
seriously prejudice the position of domestic producers of such surplus
agricultural commodities, or (n) if, and to the extent that any such
surplus agricultural commodity is not available in the United States in
sufficient quantities to supply the requirements of the participating
countries under this title.
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(2} In providing -for the procurement of any such surplus agricultural
commodity, the Administrator shall, insofar as practicable and applicable,
and after giving due consideration to the excess of any such commodity
over domestic requirements, and to the historic reliance of United States
producers of any such surplus agricultural commodity upon markets in
the participating countries, provide for the procurement of each class or
type of any such surplus agricultural commodity in the approximate
proportion that the Secretary of Agriculture determines such classes or
types bear to the total amount of excess of such surplus agricultural
commodity over domestic requirements.
(e) Whenever the Secretary of Agriculture determines that any quantity
of any surplus agricultural commodity, heretofore or hereafter acquired by
Commodity Credit Corporation in the administration of its price-support
programs, is available for use in furnishing assistance to foreign countries,
he shall so advise all departments, agencies, and establishments of the
Government administering laws providing for the furnishing of assistance
or relief to foreign countries (including occupied or liberated countries
or areas of such countries'). Thereafter the department, agency, or establishment administering any such law shall, to the maximum extent
practicable, consistent with the provisions and in furtherance of the
purposes of such law, and where for transfer by grant and in accordance
with the requirements of such foreign country, procure or provide for the
procurement of such quantity of such surplus agricultural commodity.
The sales price paid as reimbursement to Commodity Credit Corporation
for any such surplus agricultural commodity shall be in such amount as
Commodity Credit Corporation determines will fully reimburse it for
the cost to it of such surplus agricultural commodity at the time and place
such surplus agricultural commodity is delivered by it, but in no event
shall the sales price be higher than the domestic market price at such time
and place of delivery as determined by the Secretary of Agriculture, and
the Secretary of Agriculture may pay not to exceed 50 per centum of such
sales price as authorized by subsection (/) of this section.
(/) Subject to the provisions of this section, but notwithstanding any
other pro ision of law, in order to encourage utilization of suplus agricultural commodities pursuant to this or any other Act providing for assistance or relief to foreign countries, the Secretary of Agriculture, in carrying
out the purposes of clause (1), section 32, Public Law 320, Seventy-fourth
Congress, as amended, may make payments, including payments to any
go eminent agency procuring or selling such surplus agricultural commodities, in an amount not to exceed 50 percentum of the sales price
(basis free along ship or free on board vessel, United States ports}, as
determined by the Secretary of Agriculture, of such surplus agricultural
commodities. The rescission of the remainder of section 32 funds by the
Act of July 30, 1947 (Public Law 266, Eightieth Congress], is hereby
canceled and such funds are hereby made available for the purposes of
section 32 for the fiscal year ending June 30, 1948.
(g) No export shall be authorized pursuant to authority conferred by
section 6 of the Act of July 2, 1940 (54 Stat. 714}, including any amendment thereto, of any commodity from the United States to any country
wholly or partly in Europe which is not a participating country, if the
department, agency, or officer in the executive branch of the Government
exercising the authority granted to the President by such section 6 of the
Act of July 2, 1940, as amended, determines that the supply of such commodity is insufficient (or would be insufficient if such export were permitted)
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to fulfill the requirements of participating countries under this title as
determined by the Administrator: Provided, however, That such export
may be authorized if such department, agency, or officer determines that
such export is otherwise in the national interest of the United States.
(h) In providing for the performance of any of the functions described
in subsection (a) of section 111, the Administrator shall, to the maximum
extent consistent with the accomplishment of the purposes of this title,
utilize private channels of trade.
REIMBURSEMENT
TO GOVERNMENT
AGENCIES
SEC. 113. (a) The Administrator shall make reimbursement or payment, out of funds available for the purposes of this title, for any commodity, service, or facility procured under section 111 of this title from
any department, agency, or establishment of the Government. Such
reimbursement or payment shall be made to the owning or disposal agency,
as the case may be, at replacement cost, or, if required by law, at actual
cost, or at any other price authorized by law and agreed to between the
Administrator and' such agency. The amount of any reimbursement or
payment to an owning agency for commodities, services, or facilities so
procured shall be credited to current applicable appropriations, funds,
or accounts from which there may be procured replacements of similar
commodities or such services or facilities: Provided, That such commodities, services, or facilities may be procured from an owning agency
only with the consent of such agency: And provided further, That where
such appropriations, funds, or accounts are not reimbursable except by
reason of this subsection, and when the owning agency determines that
replacement of any commodity procured under authority of this section
is not necessary, any funds received in payment therefor shall be covered
into the Treasury as miscellaneous receipts.
(6) The Administrator, whenever in his judgment the interests of the
United States will best be served thereby, may dispose of any commodity
procured out of funds made available for the purposes of this title, in lieu
of transferring such commodity to a participating country, (1) by transfer
of such commodity, upon reimbursement, to any department, agency, or
establishment of the Government for use or disposal by such department,
agency, or establishment as authorized by law, or (2} without regard to
provisions of law relating to the disposal of Government-owned property,
when necessary to prevent spoilage or wastage of such commodity or to
conserve the usefulness thereof. Funds realized from such disposal or
transfer shall revert to the respective appropriation or appropriations
out of which funds were expended for the procurement of such commodity.
AUTHORIZATION
OF APPROPRIATIONS
SEC. 114- (a) Notwithstanding the provisions of any other law, the
Reconstruction Finance Corporation is authorized and directed, until
such time as an appropriation shall be made pursuant to subsection (c)
of this section, to make advances not to exceed in the aggregate $1,000,000,000 to carry out the provisions of this title, in such manner, at such
time, and in such amounts as the 'President shall determine, and no
interest shall be charged on advances made by the Treasury to the Reconstruction Finance Corporation for this purpose. The Reconstruction
Finance Corporation shall be repaid without interest for advances made
by it hereunder, from funds made available for the purposes of this title.
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(6) Such part as the President may determine of the unobligated and
unexpended balances of appropriations or other funds available for the
purposes of the Foreign Aid Act of 1947 shall be available for the purpose
of carrying out the purposes of this title.
(c) In order to carry out the provisions of this title with respect to those
participating countries which adhere to the purposes of this title, and remain eligible to receive assistance hereunder, such funds shall be available
as are hereafter authorized and appropriated to the President from time
to time through June 30, 1952, to carry out the provisions and accomplish
the purposes of this title: Provided, however, That for carrying out the provisions and accomplishing the purposes of this title for the period of one
year following the date of enactment of this Act, there are hereby authorized
to be so appropriated not to exceed $4,300,000,000. Nothing in this title
is intended nor shall it be construed as an express or implied commitment
to provide any specific assistance, whether of funds, commodities, or
services, to any country or countries. The authorization in this title is
limited to the period of twelve months in order that subsequent Congresses
may pass on any subsequent authorizations.
(d} Funds made available for the purposes of this title shall be available
for incurring^ and defraying all necessary expenses incident to carrying
out the provisions of this title, including administrative expenses and
expenses for compensation, allowances and travel of personnel, including
Foreign Service personnel whose services are utilized primarily for the
purposes of this title, and, without regard to the provisions of any other
law, for printing and binding, and for expenditures outside the continental
limits of the United States for the procurement of supplies and services
and for other administrative purposes (other than compensation of personnel] without regard to such laws and regulations governing the obligation
and expenditure of government funds, as the Administrator shall specify in
the interest of the accomplishment of the purposes of this title.
(e) The unencumbered portions of any deposits which may have been
made by any participating country pursuant to section 6 of the joint
resolution providing for relief assistance to the people of countries
devastated, by war (Public Law 84, Eightieth Congress] and section 5 (6)
of the Foreign Aid Act of 1947 (Public Law 389, Eightieth Congress)
may be merged with the deposits to be made by such participating country
in accordance with section 115 (b) (6} of this title, and shall be held or
used under the same terms and conditions as are provided in section 115
(6) (6) of this title.
(/) In order to reserve some part of the surplus of the fiscal year 1948
for payments thereafter to be made under this title, there is hereby created
on the books of the Treasury of the United States a trust fund to be known
as the Foreign Economic Cooperation Trust Fund. Notwithstanding
any other provision of law, an amount of $8,000,000,000, out of sums
appropriated pursuant to the authorization contained in this title shall,
when appropriated, be transferred immediately to the trust fund, and shall
thereupon be considered as expended during the fiscal year 1948, for the
purpose of reporting governmental expenditures. Ihe Secretary of the
treasury shall be the sole trustee of the trust fund and is authorized and
directed to pay out of the fund such amounts as the Administrator shall
duly requisition. The first expenditures made out of the appropriations
authorized under this title in the fiscal year 1949 shall be made with funds
requisitioned by the Administrator out of the trust fund until the fund
is exhausted, at which time such fund shall cease to exist. The provi-
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FOREIGN ASSISTANCE ACT OF
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sions of this subsection shall not be construed as affecting the application
of any provision of law which would otherwise govern the obligation oi
funds so appropriated or the auditing or submission oj accounts oj
transactions with respect to such funds.
BILATERAL
AND MULTILATERAL
UNDERTAKINGS
SEC. 115. (a) The Secretary of State, after consultation with the Administrator, is authorized to conclude, with individual participating countries
or any number of such countries or with an organization representing
any such countries, agreements in furtherance of the purposes of this title.
The Secretary of State, before an Administrator or Deputy Administrator
shall have qualified and taken office, is authorized to negotiate and conclude such temporary agreements in implementation of subsection (6) of
this section as he may deem necessary in furtherance of the purposes of
this title: Provided, That when an Administrator or Deputy Administrator shall have qualified and taken office, the Secretary of State shall
conclude the basic agreements required by subsection (6) of this section
only after consultation with the Administrator or Deputy Administrator,
as the case may be.
(6) The provision of assistance under this title results from the multilateral pledges of the participating countries to use all their efforts to
accomplish a joint recovery program based upon self-help and mutual
cooperation as embodied in the report of the Committee of European
Economic Cooperation signed at Paris on September 22, 1947, and is
contingent upon continuous effort of the participating countries^ to
accomplish a joint recovery program through multilateral undertakings
and the establishment of a continuing organization for this purpose.
In addition to continued mutual cooperation of the participating countries
in such a program, each such country shall conclude an agreement with the
United States in order for such country to be eligible to receive assistance
under this title. Such agreement shall provide for the adherence of such
country to the purposes of this title and shall, where applicable, make
appropriate provision, among others, for—
(1) promoting industrial and agricultural production in order to
enable the participating country to become independent of extraordinary outside economic assistance; and submitting for the approval
oi the Administrator, upon his request and whenever he deems it in
furtherance of the purposes of this title, specific projects proposed by
such country to be undertaken in substantial part with assistance
furnished under this title, which projects, whenever practicable, shall
include projects for increased production of coal, steel, transportation facilities, and food;
(2} taking financial and monetary measures necessary to stabilize
its currency, establish or maintain a valid rate of exchange, to
balance its governmental budget as soon as practicable, and generally
to restore or maintain confidence in its monetary system;
(3) cooperating with other participating countries in facilitating
and stimulating an increasing interchange of goods and services
among the participating countries and with other countries and
cooperating to reduce barriers to trade among themselves and with
other countries;
(4) making efficient and practical use, within the framework of a
joint program for European recovery, of the resources of such par-
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ticipating country, including any commodities, facilities, or services
furnished under this title, which use shall include, to the extent practicable, taking measures to locate and identify and put into appropriate use, in furtherance of such program, assets, and earnings
therefrom, which belong to the citizens of such country and which
are situated within the United States, its Territories and possessions;
(5} facilitating the transfer to the United States by sale, exchange,
barter, or otherwise for stock-piling or other purposes, for such period
of time as may be agreed to and upon reasonable terms and in reasonable quantities, of materials which are required by the United States
as a result of deficiencies or potential deficiencies in its own resources,
and which may be available in such participating country after due
regard for reasonable requirements for domestic use and commercial
export of such country;
(6) placing in a special account a deposit in the currency of such
country, in commensurate amounts and under such terms and conditions as may be agreed to between such country and the Government
of the United States, when any commodity or service is made available
through any means authorized under this title, and is furnished to
the participating country on a grant basis. Such special account,
together with the unencumbered portions of any deposits which may
have been made by such country pursuant to section 6 of the joint
resolution providing for relief assistance to the people of countries
devastated by war (Public Law 84, Eightieth Congress} and section
5 (b) of the Foreign Aid Act of 1947 (Public Law 389, Eightieth
Congress], shall be held or used within such country for such purposes as may be agreed to between such country and the Administrator
in consultation with the National Advisory Council on International
Monetary and Financial Problems, and the Public Advisory Board
provided for in section 107 (a) for purposes of internal monetary
and financial stabilization, for the stimulation of productive activity
and the exploration for and development of new sources of wealth, or
for such other expenditures as may be consistent with the purposes
oi this title, including local currency administrative expenditures of
the United States incident to operations under this title, and under
agreement that any unencumbered balance remaining in such account
on June 30, 1952, shall be disposed ofwithin such country for such
purposes as may, subject to approval by Act or joint resolution of
the Congress, be agreed to between such country and the Government
of the United States;
(7) publishing in such country and transmitting to the United
States, not less frequently than every calendar quarter after the date
of the agreement, full statements of operations under the agreement,
including a report of the use of funds, commodities, and services
received under this title;
(5) furnishing promptly, upon request of the United States, any
relevant information which would be of assistance to the United
States in determining the nature and scope of operations and the
use of assistance provided under this title;
(9) recognizing the principle of equity in respect to the drain
upon the natural resources of the United States and of the recipient
countries, by agreeing to negotiate (a) a future schedule of minimum
availabilities to the United States for future purchase and delivery
of a fair share of materials which are required by the United States
H. Kept. 1655, 80-2
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FOREIGN ASSISTANCE ACT OF 1948
as a result of deficiencies or potential deficiencies in its own resources at world market prices so as to protect the access of United
States industry to an equitable share of such materials either in
percentages of production or in absolute quantities from the participating countries, and (6) suitable protection for the right of
access for any person as defined in paragraph (Hi) of subparagraph
(3} of section 111 (b) in the development of such materials on terms
of treatment equivalent to those afforded to the nationals of the
country concerned, and (c) an agreed schedule of increased production of such materials where practicable in such participating
countries and for delivery of an agreed percentage of such increased
production to be transferred to the United States on a long-term
basis in consideration of assistance furnished by the Administrator to such countries under this title; and
(10) submitting for the decision of the International Court of
Justice or of any arbitral tribunal mutually agreed upon any case
espoused by the Dnited States Government involving compensation
oja national of the United States for governmental measures affecting
his property rights, including contracts with or concessions from such
country.
(c) Notwithstanding the provisions of subsection (b) of this section,
the Administrator, during the three months after the date of enactment
of this Act, may perform with respect to any participating country any of
the functions authorized under this title which he may determine to be
essential in furtherance of the purposes of this title, if (1) such country
has signified its adherence to the purposes of this title and its intention
to conclude an agreement pursuant to subsection (6) of this section, and
(2} he finds that such country is complying with the applicable provisions
of subsection (6) of this section: Provided, That, notwithstanding the
provisions of this subsection, the Administrator may, through June 30,
1948, provide for the transfer of food, medical supplies, fibers, fuel,
petroleum and petroleum products, fertilizer, pesticides, and seed to any
country of Europe which participated in the Committee of European
Economic Cooperation and which undertook pledges to the other participants thereinf when the Administrator determines that the transfer of any
such supplies to any such country is essential in order to make it possible
to carry out the purposes of this title by alleviating conditions of hunger
and cold and by preventing serious economic retrogression.
(d) The Administrator shall encourage the joint organization of the
participating countries referred to in subsection (6) of this section to ensure
that each participating country makes efficient use of the resources of such
country, including any commodities, facilities, or services furnished under
this title, by observing and reviewing such use through an effective follow-up
system approved &?/ the joint organization.
(e) The Administrator shall encourage arrangements among the participating countries in conjunction with the International Refugee Organization looking toward the largest practicable utilization of manpower
available in any of the participating countries in furtherance of the accomplishment of the purposes of this title.
(f) The Administrator will request the Secretary of State to obtain the
agreement of those countries concerned that such capital equipment as is
scheduled for removal as reparations from the three western zones of
Germany be retained in Germany if such retention will most effectively
serve the purposes of the European recovery program.
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(gr) It is the understanding oj the Congress that, in accordance with
agreements now in effect, prisoners of war remaining in participating
countries shall, if they so freely elect, be repatriated prior to January 1,
1949.
WESTERN
HEMISPHERE
COUNTRIES
SEC. 116. The President shall take appropriate steps to encourage all
countries in the Western Hemisphere to make available to participating
countries such assistance as they may be able to furnish.
OTHER DUTIES OF THE
ADMINISTRATOR
SEC. 117. (a) The Administrator, in furtherance of the purposes of
section 115 (b) (5), and in agreement with a participating country, shall,
whenever practicable, promote, by means of funds made available for the
purposes of this title, an increase in the production in such participating
country of materials which are required by the United States as a result
of deficiencies or potential deficiencies in the resources within the United
States.
(6) The Administrator, in cooperation with the Secretary of Commerce, shall facilitate and encourage, through private and public travel,
transport, and other agencies, the promotion and development of travel
by citizens of the United States to and within participating countries.
(c) In order to further the efficient use of United States voluntary
contributions for relief in participating countries receiving assistance
under this title in the jorm of grants or any of the zones of occupation of
Germany for which assistance is provided under this title and the Free
Territory of Trieste or either of its zones, funds made available for the
purposes of this title shall be used insofar as practicable by the Administrator, under rules and regulations prescribed by him, to pay ocean freight
charges from a United States port to a designated foreign port of entry
(1) of supplies donated to, or purchased by, United States voluntary
nonprofit relief agencies registered with and recommended by the Advisory
Committee on Voluntary Foreign Aid for operations in Europe, or (2} oj
relief packages conforming to such specified size, weight, and contents,
as the Administrator may prescribe originating in the United States and
consigned to an individual residing in a participating country receiving
assistance under this title in the form of grants or any of the zones of
occupation of Germany for which assistance is provided under this title
and the Free Territory of Trieste or either of its zones. V^liere practicable
the Administrator is directed to make an agreement with such country for
the use of a portion of the deposit of local currency placed in a special
account pursuant to paragraph 6 of subsection (6) of section 115 oj this
title, for the purpose of defraying the transportation cost of such supplies
and relief packages from the port of entry of such country to the designated
shipping point of consignee. The Secretary of State, after consultation
with the Administrator, shall make agreements where practicable with the
participating countries for the free entry of such supplies and relief
packages.
(d) The Administrator is directed to refuse delivery insofar as practicable to participating countries of commodities which go into the
production of any commodity for delivery to any nonparticipating European country which commodity would be refused export licenses to those
countries by the United States in the interest of national security. When-
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ever the Administrator believes that the issuance of a license for the export
of any commodity to any country wholly or partly in Europe which is
not a participating country is inconsistent with the purposes and provisions of this title, he shall so advise the department, agency, or officer
in the executive branch of the Government exercising the authority with
respect to such commodity granted to the President by section 6 of the Act
of July 2, 1940 (54 Stat. 714), as amended, and, if differences of view
are not adjusted by consultation, the matter shall be referred to the
President for final decision.
TERMINATION
OF
ASSISTANCE
SEC. 118. The Administrator, in determining the form and measure
of assistance provided under this title to any participating country, shall
take into account the extent to which such country is complying with its
undertakings embodied in its pledges to other participating countries and
in its agreement concluded with the United States under section 115.
The Administrator shall terminate the provision of assistance under this
title to any participating country whenever he determines that (1} such
country is not adhering to its agreement concluded under section 115, or is
diverting from the purposes of this title assistance provided hereunder,
and that in the circumstances remedial action other than termination
will not more effectively promote the purposes of this title or (2} because
of changed conditions, assistance is no longer consistent with the national
interest of the United States. Termination of assistance to any country
under this section shall include the termination of deliveries of all supplies
scheduled under the aid program for such country and not yet delivered.
EXEMPTION
FROM CONTRACT AND ACCOUNTING LAWS
SEC. 119. When the President determines it to be in furtherance of
the purposes of this title, the functions authorized under this title may be
performed without regard to such provisions of law regulating the making,
performance, amendment, or modification of contracts and the expenditure
of Government funds as the President may specify.
EXEMPTION
FROM CERTAIN FEDERAL LAWS RELATING TO EMPLOYMENT
SEC. 120. Service of an individual as a member of the Public Advisory
Board (other than the Administrator) created by section 107 (a), as a
member of an advisory committee appointed pursuant
to section 107 (b),
as an expert or consultant under section 104 (e)> or as an expert, consultant, or technician under section 124 (d), shall not be considered as
service or employment bringing such individual within the provisions of
section 109 or 118 of the Criminal Code (U. S. C., title 18, sees. 198 and
203), of section 190 of the Revised Statutes (U. S. C., title 5, sec. 99),
or of section 19 (e) of the Contract Settlement Act of 1944, or of any other
Federal law imposing restrictions, requirements, or penalties in relation
to the employment of persons, the performance of services, or the payment
or receipt of compensation in connection with any claim, proceeding, or
matter involving the United States.
UNITED
NATIONS
SEC. 121. (a) The President is authorized to request the cooperation of
or the use of the services and facilities of the United Nations, its organs
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and specialized agencies, or other international organizations, in carrying
out the purposes oj this title, and may make payments, by advancements
or reimbursements, for such purpose, out of funds made available for the
purposes of this title, as may be necessary therefor, to the extent that special
compensation is usually required for such services and facilities. Nothing
in this title shall be construed to authorize the Administrator to delegate
to or otherwise confer upon any international or foreign organization or
agency any of his authority to decide the method of furnishing assistance
under this title to any participating country or the amount thereof.
(6) The President shall cause to be transmitted to the Secretary General
of the United Nations copies of reports to Congress on the operations
conducted under this title.
(c) Any agreements concluded between the United States and participating countries, or groups of such countries, in implementation of
the purposes of this title, shall be registered with the United Nations if
such registration is required by the Charter oj the United Nations.
TERMINATION
OF PROGRAM
SEC. 122. (a) Alter June 80, 1952, or after the date oj the passage
of a concurrent resolution by the two Houses of Congress before such date,
which declares that the powers conferred on the Administrator by or
pursuant to subsection (a) of section 111 of this title are no longer necessary
for the accomplishment of the purposes of this title, whichever shall first
occur, none of the functions authorized under such provisions may be
exercised; except that during the twelve months following such date commodities and services with respect to which the Administrator had, prior
to such date, authorized procurement for, shipment to, or delivery in a
participating country, may be transferred to such country, and funds
appropriated under authority of this title may be obligated during such
twelve-month period for the necessary expenses of procurement, shipment,
delivery, and other activities essential to such transfer, and shall remain
available during such period for the necessary expenses of liquidating
operations under this title.
(6) At such time as the President shall find appropriate after such
date, and prior to the expiration of the twelve months following such date,
the powers, duties, and authority of the Administrator under this title
may be transferred to such other departments, agencies, or establishments
of the Government as the President shall specify, and the relevant funds,
records, and personnel of the Administration may be transferred to the
departments, agencies, or establishments to which the related functions
are transferred.
REPORTS TO CONQRESS
SEC. 128. The President from time to time, but not less frequently
than once every calendar quarter through June 30, 1952, and once every
year thereafter until all operations under this title have been completed,
shall transmit to the Congress a report of operations under this title,
including the text of bilateral and multilateral agreements entered into in
carrying out the provisions of this title. Reports provided for under this
section shall be transmitted to the Secretary of the Senate or the Clerk of
the House of Representatives, as the case may be, if the Senate or the
House of Representatives, as the case may be, is not in session.
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FOREIGN ASSISTANCE ACT OF
JOINT
CONGRESSIONAL
1948
COMMITTEE
SEC. 124- (a) There is hereby established a joint congressional committee to be known as the Joint Committee on Foreign Economic Cooperation (hereinafter referred to as the committee'), to be composed of ten
members as follows:
(1} Three members who are members of the Committee on Foreign
Relations of the Senate, two from the majority and one from the
minority party, to be appointed by the chairman of the committee;
two members who are members of the Committee on Appropriations
of the Senate, one from the majority and one from the minority
party, to be appointed by the chairman of the committee; and
(2} Three members who are members of the Committee on Foreign
Affairs of the House, two from the majority and one from the minority
party, to be appointed by the chairman of the committee; and two
members who are members of the Committee on Appropriations of
the House, one from the majority and one from the minority party,
to be appointed by the chairman of the committee.
A vacancy in the membership of the committee shall be filled in the same
manner as the original selection. The committee shall elect a chairman
from among its members.
(6) It shall be the function of the committee to make a continuous study
of the programs of United States economic assistance to joreign countries,
and to review the progress achieved in the execution and administration
of such programs. Upon request, the committee shall aid the several
standing committees of the Congress having legislative jurisdiction over
any part of the programs of United States economic assistance to foreign
countries; and it shall make a report to the Senate and the House of Representatives, from time to time, concerning the results of its studies, together
with such recommendations as it may deem desirable. The Administrator, at the request of the committee, shall consult with the committee from
time to time with respect to his activities under this Act.
(c) The committee, or any duly authorized subcommittee thereof, is
authorized to hold such hearings, to sit and act at such times and places,
to require by subpena or otherwise the attendance of such witnesses and
the production of such books, papers, and documents, to administer such
oaths, to take such testimony, to procure such printing and binding, and
to make such expenditures as it deems advisable. The cost of stenographic
services to report such hearings shall not be in excess of 25 cents per hundred
words. The provisions of sections 102 to 104: inclusive, of the Revised
Statutes shall apply in case of any failure of any witness to comply with
any subpena or to testify when summoned under authority of this subsection.(d) The committee is authorized to appoint and without regard to the
Classification Act of 1923, as amended, fix the compensation of such
experts, consultants, technicians, and organizations thereof, and clerical
and stenographic assistants as it deems necessary and advisable.
(e) There are hereby authorized to be appropriated such sums as may
be necessary to carry out the provisions of this section, to be disbursed
by the Secretary of the Senate on vouchers signed by the chairman.
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SEPARABILITY
23
CLAUSE
SEC. 125. If any provision of this Act or the application of such provision to any circumstances or persons shall be held invalid, the validity
of the remainder of the Act and the applicability of such provision to other
circumstances or persons shall not be affected thereby.
TITLE II
SEC. 201. This title may be cited as the "International Children's
Emergency Fund Assistance Act of 1948".
SEC. 202. It is the purpose of this title to provide for the special care
and feeding of children by authorizing additional moneys for the International Children's Emergency Fund of the United Nations.
SEC. 203. The President is hereby authorized and directed any time
after the date of the enactment of this Act and before July 1, 1949, to
make contributions (a) from sums appropriated to carry out the purposes
of this title and (b) from sums appropriated to carry out the general
purposes of the proviso in the first paragraph of the first section of the joint
resolution of May 31, 1947 (Public Law 84, Eightieth Congress], as
amended, to the International Children's Emergency Fund of the United
Nations for the special care and feeding of children.
SEC. 204- No contribution shall be made pursuant to this title or such
joint resolution of May 81, 1947, which would cause the sum of (a) the
aggregate amount contributed pursuant to this title and (b) the aggregate
amount contributed by the United States pursuant to such joint resolution
of May 31, 1947, to exceed whichever of the following sums is the lesser:
(1} 72 per centum of the total resources contributed after May
31, 1947, by all governments, including the United States, for programs carried out under the supervision of such Fund: Provided,
That in computing the amount of resources contributed there shall
not be included contributions by any government for the benefit of
persons located within the territory of such contributing government;
or
(2} $100,000,000.
SEC. 205. Funds appropriated for the purposes of such joint resolution of May 31, 1947, shall remain available through June 30, 1949.
SEC. 206. There is hereby authorized to be appropriated to carry out
the purposes of this title for the fiscal year ending June 30,1949, the sum
of $60,000,000.
TITLE III
SEC. 301. This title may be cited as the ''Greek-Turkish Assistance
Act of 1948".
SEC. 302. In addition to the amounts authorized to be appropriated
under subsection (b) of section 4 of the Act of May 22,1947 (61 Stat. 103),
there are hereby authorized to be appropriated not to exceed $275,000,000
to carry out the provisions of such Act, as amended.
SEC. 303. (a) Subsection (a) of section 4 of such Act of May 22,1947,
is hereby amended by adding at the end thereof the following: "The Re-
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FOREIGN ASSISTANCE ACT OF 1948
construction Finance Corporation is authorized and directed to make
additional advances, not to exceed in the aggregate $50,000,000, to carry
out the provisions of this Act, as amended, in such manner and in such
amounts as the President shall determine. No interest shall be charged
on advances made by the Treasury to the Reconstruction Finance Corporation for this purpose."
(6) Subsection (6) of section 4 of the said Act is hereby amended by
inserting after the word "repaid" the following: "without interest".
SEC. 864. Subsections (*) and (3) of section 1 of such Act of May 22,
1947, are hereby amended to permit detailing of persons referred to in
such subsections to the United States Missions to Greece and Turkey as
well as to the governments of those countries. Section 302 of the Act of
January 27, 1948 (Public Law 402, Eightieth Congress}, and section 110
(c) of the Economic Cooperation Act of 1948 (relating to investigations
of personnel by the Federal Bureau of Investigation} shall be applicable
to any person so detailed pursuant to such subsection (2} of such Act of
1947: Provided, That any military or civilian personnel detailed under
section 1 of such Act of 1947 may receive such station allowances or
additional allowances as the President may prescribe (and payments of
such allowances heretofore made are hereby validated).
TITLE IV
SEC. 401. This title may be cited as the "China Aid Act of 1948".
SEC. 402. Recognizing the intimate economic and other relationships
between the United States and China, and recognizing that disruption
following in the wake of war is not contained by national frontiers, the
Congress finds that the existing situation in China endangers the establishment of a lasting peace, the general welfare and national interest of
the United States, and the attainment of the objectives of the United
Nations. It is the sense of the Congress that the further evolution in
China of principles of individual liberty, free institutions, and genuine
independence rests largely upon the continuing development of a strong
and democratic national government as the basis for the establishment
of sound economic conditions and for stable international economic
relationships. Mindful of the advantages which the United States has
enjoyed through the existence of a large domestic market with no internal
trade barriers, and believing that similar advantages can accrue to China,
it is declared to be the policy of the people of the United States to encourage
the Republic of China and its people to exert sustained common efforts
which will speedily achieve the internal peace and economic stability in
China which are essential for lasting peace and prosperity in the world.
It is further declared to be the policy of the people of the United States to
encourage the Republic of China in its efforts to maintain the genuine
independence and the administrative integrity of China, and to sustain
and strengthen principles of individual liberty and free institutions in
China through a program of assistance based on self-help and cooperation: Provided, That no assistance to China herein contemplated shall
seriously impair the economic stability of the United States. It is
further declared to be the policy of the United States that assistance provided by the United States under this title should at all times be dependent
upon cooperation by the Republic of China and its people in furthering
the program: Provided further, That assistance furnished under this
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title shall not be construed as an express or implied assumption by the
United States of any responsibility for policies, acts, or undertakings of
the Republic of China or for conditions which may prevail in China at
any time.
SEC. 403. Aid provided under this title shall be provided under the
applicable provisions of the Economic Cooperation Act of 1948 which
are consistent with the purposes of this title. It is not the purpose of
this title that China, in order to receive aid hereunder, shall adhere to a
joint program for European recovery.
SEC. 404- (&) In order to carry out the purposes of this title, there is
hereby authorized to be appropriated to the President for aid to China a
sum not to exceed $338,000,000 to remain available for obligation for the
period of one year following the date of enactment of this Act.
(b} There is also hereby authorized to be appropriated to the President
a sum not to exceed $125,000,000 for additional aid to China through
grants, on such terms as the President may determine and without regard
to the provisions of the Economic Cooperation Act of 1948, to remain
available for obligation for the period of one year following the date of
enactment of this Act.
SEC. 405. An agreement shall be entered into between China and the
United States containing those undertakings by China which the Secretary
of State, after consultation with the Administrator for Economic Cooperation, may deem necessary to carry out the purposes of this title and to
improve commercial relations with China.
SEC. 406. Notwithstanding the provisions of any other law, the Reconstruction Finance Corporation is authorized and directed, until such time
as an appropriation is made pursuant to section 404, to make advances,
not to exceed in the aggregate $50,000,000, to carry out the provisions of
this title in such manner and in such amounts as the President shall
determine. From appropriations authorized under section 404, there
shall be repaid without interest to the Reconstruction Finance Corporation
the advances made by it under the authority contained herein. No
interest shall be charged on advances made by the Treasury to the Reconstruction Finance Corporation in 'implementation of this section.
SEC. 407. (a) The Secretary of State, after consultation with the
Administrator, is hereby authorized to conclude an agreement with China
establishing a Joint Commission on Rural Reconstruction in China, to
be composed of two citizens of the United States appointed by the President
of the United States and three citizens of China appointed by the President
of China. Such Commission shall, subject to the direction and control
of the Administrator, formulate and carry out a program for reconstruction
in rural areas of China, which shall include such research and training
activities as may be necessary or appropriate for such reconstruction:
Provided, That assistance furnished under this section shall not be construed as an express or implied assumption by the United States of any
responsibility for making any further contributions to carry out the purposes of this section.
(b) Insofar as practicable, an amount equal to not more than 10 per
centum of the funds made available under subsection (a) of section 404 shall
be used to carry out the purposes of subsection (a} of this section. Such
amount may be in United States dollars, proceeds in Chinese currency
from the sale of commodities made available to China with funds authorized under subsection (a) of section 404> or both.
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FOREIGN ASSISTANCE ACT OF 1948
And the Senate agree to the same.
That the Senate recede from its disagreement to the amendment of
the House to the title of the bill and agree to the same.
C. A. EATON,
J. M. VORYS,
K. E. MUNDT,
S. BLOOM,
J. KEE,
Managers on the Part oj the House.
A. H. VANDENBERG,
A. CAPPER,
A. WILEY,
T. CONNALLY,
W. F. GEORGE,
Managers on the Part of the Senate.
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STATEMENT OF THE MANAGERS ON THE PART OF THE HOUSE
The managers on the part of the House at the conference on the
disagreeing votes of the two Houses on the amendment of the Senate
to the amendments of the House to the bill (S. 2202) to promote the
general welfare, national interest, and foreign policy of the United
States through necessary economic and financial assistance to foreign
countries which undertake to cooperate with each other in the establishment and maintenance of economic conditions essential to a peaceful and prosperous world, submit the following statement in explanation of the effect of the action agreed upon by the conferees and
recommended in the accompanying conference report:
The differences between the House amendment and the bill as
agreed to in conference are noted below, except for incidental changes
made necessary by reason of agreements reached by the conferees and
minor clarifying changes.
TITLE I
FINDINGS AND DECLARATION OF POLICY (SEC. 102)
The bill as passed by the Senate stated the restoration and maintenance of individual liberty, free institutions, and genuine independence
as resting upon the establishment of sound economic conditions, stable
economic relationships, and the achievement by the European countries of a healthy economy, free of extraordinary outside assistance.
The amendment as passed by the House added political as well as
economic conditions and relationships to the criteria. The House
recedes in view of the concept that the European recovery program
is primarily an economic undertaking although political arid other
gains will be the byproducts.
PARTICIPATING COUNTRIES (SEC. 103)
Section 3 (a) of the Senate bill provided that other European countries not now in the 16 country group might become participants in
the program after fulfilling the steps required by the bill, but no such
countries were named. The House amendment, in section 103 (a),
inserted the word "Spain" in this provision but left in this qualifying
language:
Provided such country adheres to, and for so long as it remains an adherent to, a
joint program for European recovery designed to accomplish the purposes of this
title.
Thus, the House left it to the joint action of the European nations to
provide for inclusion of Spain.
In conference it was felt wiser not to mention Spain or any specific
country which might become a participant by fulfilling the required
conditions.
The merits of the question of including Spain are not being passed
upon. This enterprise is open to Spain whenever the participating
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FOREIGN ASSISTANCE ACT OF
1948
countries desire to have Spain enter the partnership. Under the
theory upon which the partnership has been launched and organized,
the United States leaves to the participating governments the initial
decision on the admission of a new partner.
Nothing in the bill closes the door on Spain's participation. In the
view of the managers on the part of the House, it is unnecessary to
attempt to open a door that has never been closed in this legislation.
The provision in the amendment as passed by the House for assistance to the Free Territory of Trieste or either of its zones under the
Foreign Aid Act of 1947 until such time as the territory or either of
its zones becomes a participating country has been retained with an
amendment which makes it clear that the $20,000,000 authorized to
be advanced by the Reconstruction Finance Corporation pending an
appropriation may be made available under the authority either of
subsection (a) of section 114 of S. 2202 or subsection (d) of section 11
of the Foreign Aid Act of 1947. The amendment agreed to in the
committee of conference does not increase the authorization for
appropriation under either the bill or the Foreign Aid Act of 1947.
In the event that Trieste should be returned to Italy, funds authorized for assistance to Trieste will, of course, remain available for the
general purposes of the act under which they were authorized.
GENEEAL FUNCTIONS OF ADMINISTRATOR (SEC. 105)
The House amendment to S. 2202 (a) directed the Administrator to
consult with the Secretary of State in the event the Administrator
believed that any action, proposed action, or omission of action on the
part of the Secretary of State was inconsistent with the purposes of the
European recovery program, and (b) specified that differences between
the two officials in this regard should be referred to the President for
final decision when the officials concerned were unable to settle these
differences themselves.
The Senate recedes with an amendment which confines the relevant
area of differences to functions under the European recovery program.
The effect of this amendment is to make it clear that the Administrator's right to carry differences with the Secretary of State to the President is no more than equivalent to the corresponding right of the
Secretary of State with respect to disagreements with the Administrator.
PUBLIC ADVISORY BOARD (SEC. 107)
The amendment to S. 2202 as passed by the House specified that the
members of the Public Advisory Board should have broad and varied
experience in business, labor, agriculture, and the professions, as well
as in matters affecting the public interest. The House recedes from
its position.
It was the view of the committee of conference that the qualifications of the members of the Public Advisory Board should be related to
their broad and varied experience in matters affecting the public
interest without reference to economic interest groups.
PERSONNEL OUTSIDE UNITED STATES (SEC. 110)
There was retained in substance the provision of the amendment
passed by the House requiring certification by the Secretary of State
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FOREIGN ASSISTANCE ACT OF 1948
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or the Administrator of his belief in the loyalty of individuals employed
for, or assigned to, duties under title I. Certain changes were made
(1) to permit consideration of information in addition to the Federal
Bureau of Investigation report; (2) to require certifications of belief
as to loyalty rather than "unquestioned loyalty"; and (3) not to bar
persons who may have belonged to organizations opposing specific
statutory enactments as distinguished from organizations advocating
the overthrow of the government by force and violence. The proviso
contained in the House bill was deleted, however, since the language
which was retained made it clear that present employees of the government might be temporarily assigned to such duties for a period of
three months pending the Federal Bureau of Investigation report and
certification by the Administrator or Secretary of State.
It is recognized that the burden of other duties of the Secretary of
State and the Administrator will preclude their making personal
evaluations in each case of the Federal Bureau of Investigation reports.
It is therefore envisaged that this function may be delegated by the
Administrator and the Secretary of State to trusted subordinates,
although the responsibility for the selection and retention of employees
loyal to the United States would remain in the Secretary of State and
the Administrator in their capacity as head of their respective agencies.
NATURE AND METHOD OF ASSISTANCE (SEC. Ill)
The Senate recedes on the provision in section 111 (b) (1) (i) of the
amendment as passed by the House respecting the assignability under
the Assignment of Claims Act of 1940 of moneys due or to become due
under letters of commitment. A clarifying amendment has been
added by the committee of conference to identify such moneys as
those due under the letters of commitment rather than under the
contracts to which the letters of commitment relate.
It should be noted that the Senate recedes on the language inserted
in section 111 (b) of the amendment as passed by the House requiring
expenditures for commodities or services procured offshore to be
accounted for exclusively on such certification as the Administrator
may prescribe "in regulations promulgated by him with the approval
of the Comptroller General." Experience has shown that with respect
to procurement outside the United States, particularly through normal
trade channels, it is frequently impossible to obtain all the standard
documentation required for auditing of accounts. Hence the Administrator is authorized to prescribe the documents required in
support of expenditures for offshore procurement. The purpose of the
amendment made by the House was to assure that the Administrator
would obtain the approval of the General Accounting Office in promulgating regulations prescribing the documentation to support such
expenditures for offshore procurement.
It is contemplated that the regulations would not specify such
documentation with great particularity, but would indicate general
requirements assuring appropriate expenditure, while leaving details
of documentation to the discretion of the Administrator who would be
free to take into account the exigencies of individual situations.
The Senate recedes on the provision in section 111 (b) (3) of the
amendment as passed by the House including among the guaranties
which may be made the guaranties of investments in enterprises pro-
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FOREIGN ASSISTANCE ACT OF 1 9 4 8
during or distributing informational media. The members of the
committee of conference recognize that the nature of the information
media industry is such that in many cases the investment to which
the guaranty will apply will have been made in the United States and
the product of the investment sold or exhibited abroad. In these
cases the guaranty might well apply to the convertibility of foreign
currencies earned by the sale or exhibition of the products of the
industry, to the extent of the dollar cost of production wholly attributable to those specific products.
The Senate also recedes on the provision in section 111 (b) (3) of
the amendment as passed by the House requiring that when any
payment is made under a guaranty, foreign currency or credits in
such currency in respect of which the guaranty was honored shall
become the property of the United States. This provision will, of
course, apply only to the amount of local currency or credit in such
currency for which payment is made under the guaranty.
PROTECTION OF DOMESTIC ECONOMY (SEC. 112)
The House recedes on the provision written into section 112 (c) of
the amendment passed by the House requiring that not less than 50
percent of the corn to be transferred by grant to the participating
countries should be in the form of corn derivatives other than intoxicating liquors.
Section 12 (d) of the bill as passed by the Senate provided detailed
rules to be followed by the Administrator in the procurement of surplus agricultural commodities in order to protect the domestic economy. The term "surplus agricultural commodity" was defined as
any agricultural commodity, or product thereof, produced in the
United States which is determined by the Secretary of Agriculture
to be in excess of domestic requirements. In section 112 (d) of the
amendment passed by the House there was added to this definition
"canned foods and domestically produced fishery products which are
determined by the Secretary of Agriculture to be in excess of domestic
requirements. The House recedes on this amendment. The generality of the definition remains intact.
AUTHORIZATION OF APPROPRIATIONS (SEC. 114)
Section 14 (a) of the bill as passed by the Senate provided that the
Reconstruction Finance Corporation was to be repaid without interest
from appropriations authorized under the bill for advances made by
it in pursuance of the bill. In section 114 (a) of the amendment passed
by the House the language was changed to provide for repayment
"from funds made available for the purposes of this title." The
Senate recedes on this amendment. This is in keeping with the
acceptance by the committee of conference of the portions of the
House amendment relating to public-debt transactions. A clarification is necessary: funds may be made available for assistance to any
participating country out of the Reconstruction Finance Corporation
advance prior to a determination whether such assistance should be
by way of grant or loan. When such determination is made, the
Reconstruction Finance Corporation will be repaid from appropriations made under section 114 (c) or from proceeds of the sale of notes
under section 114 (c) (2) as the case may be.
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The Senate recedes on the language adopted by the House in section
114 (c) insuring annual authorizations during the life of the program.
BILATERAL AND MULTILATERAL UNDERTAKINGS (SEC. 115)
The bill as passed by the Senate in section 15 (b) (4) would require
a participating country where applicable to agree in the basic bilateral
agreement to undertake measures, to the extent practicable, to locate
and control in furtherance of the joint program assets, and earnings
therefrom, situated in the United States and belonging to citizens of
such countries. Section 115 (b) (4) of the House amendment changed
this language to a requirement to identify and "put into active use"
such assets and earnings. The Senate receded on this part of the
House amendment with an amendment changing the word "active"
to "appropriate". This provision does not require the liquidation
of the assets to which it applies. For instance, investments would
be considered as being put into appropriate use if the income therefrom were being used in such a manner as would contribute to the
furtherance of the recovery program.
Section 15 (b) (5) of the bill as passed by the Senate provided for
a clause in the bilateral agreement, if applicable, under which a
participating country would undertake within reasonable limits to
facilitate the transfer to the United States, for stockpiling purposes,
of materials required by the United States as a result of deficiencies
or potential deficiencies in its own resources. The House amendment
in section 115 (b) (5) included "other" purposes along with stockpiling so as to indicate that scrap iron, and any similar materials which
are immediately needed in our economy, need not be stockpiled.
The Senate receded on this portion of the House amendment. In the
opinion of the committee of conference materials such as scrap iron,
should be available for transfer to the United States under this provision for immediate use and not for stockpiling.
In section 115 (b) (9) the House amendment added to the undertakings which might be applicable to the bilateral agreement an
undertaking reinforcing the provisions included in the Senate bill
respecting the acquisition of materials required by the United States
as a result of deficiencies or potential deficiencies in its own resources.
The participating country was to undertake to provide future schedules
of minimum availabilities to the United States for future purchase and
delivery, and also to provide an agreed schedule of increased production of such materials in repayment on a long term basis of grants or
loans made by the Administrator to the participating country. The
Senate recedes on this portion of the House amendment with amendments making it clear (1) that the bilateral agreement need only contain an agreement by the participating country to negotiate in the
future for providing such schedules and (2) that a portion of the increased production of such materials would be transferred to the
United States on a long term basis in consideration of assistance
furnished to the participating country under Title I rather than in
repayment of specific loans or grants.
Section 115 (b) (10) of the House amendment added to the undertakings which might be applicable to the bilateral agreement an undertaking to submit for the decision of the International Court of Justice
or any mutually agreed tribunal any case espoused by the United
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FOREIGN ASSISTANCE ACT OF 1948
States Government involving compensation of a national of the United
States for governmental measures affecting his property rights. The
Senate recedes on this amendment. It should be pointed out that in
making its decision as to whether to espouse a claim, the United States
Government will give due regard to the availability of local remedies
and to the question whether such remedies, if available, have been
exhausted by the United States national concerned.
OTHER DUTIES OF THE ADMINISTRATOR (SEC. 117)
Section 17 (c) of the bill as passed by the Senate would give discretionary authority to the Administrator to defray ocean freight
charges on relief packages sent by United States voluntary nonprofit
relief agencies or by American individuals and consigned to residents
of participating countries receiving aid under grants. Section 117 (c)
of the amendment passed by the House provided for a number of
extensions and refinements of this authority. It also made the defrayment of such expenses mandatory and included port charges and
the handling costs from the post office at the port terminal to shipside
along with the ocean freight charges as expenses which might be
defrayed. The House recedes on the mandatory requirement and on
the inclusion of port charges and handling costs from the port terminal
post office to shipside. It was the considered judgment of the members of the committee of conference that the subsidizing of expenses
beyond ocean freight would result in an excessive drain on the funds
authorized to be appropriated by this bill.
The House recedes also on an additional provision which would
authorize the Administrator to grant equal benefits to American relief
agencies which deliver packages from stock piles abroad. It was the
view of the members of the committee of conference that with the
removal of port charges and the cost of handling from the terminal
post office to shipside an equitable balance is struck between individuals and organizations shipping relief packages directly from the United
States on the one hand and organizations which stock-pile relief supplies in Europe on the other hand.
Section 117 (d) includes a provision which was in section 112 (g)
of the amendment as passed by the House relevant to the authority
of the Administrator to refuse delivery to participating countries of
commodities or products which go into the production of any commodities or products for delivery to any nonparticipating European
country, which commodity would be refused exp >rt licenses to those
countries by the United States in the interest of its national security,
and further authorizing the Administrator to intervene in the national
interest in the enforcement of section 6 of the act of July 2, 1940
(54 Stat. 714), as amended. The Senate recedes with an amendment.
Under the amendment as agreed to by the committee of conference,
it is contemplated that pursuant to the authority conferred by section
6 of the act of July 2, 1940, as amended, regulations will be promulgated by the President under which the Administrator can make
a finding whether the denial of export licenses with respect to particular
commodities destined for nonparticipating countries in Europe have
been refused in the interest of the national security of the United
States or whether they have been refused on other grounds.
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JOINT CONGRESSIONAL COMMITTEE (SEC. 124)
Section 24 of S. 2202 as originally passed by the Senate contained a
provision for a Joint Committee on Foreign Economic Cooperation,
to be composed of seven Members of the Senate and seven Members
of the House of Representatives to be appointed respectively by the
President of the Senate and the Speaker of the House. The function
of this committee would be to study continuously the programs of
economic assistance to foreign countries, review progress under these
programs, and assist the related standing committees of the Congress
having legislative jurisdiction relevant to the program.
The House amendment to S. 2202 omitted this provision. Section
108 of the House amendment provided, however, that the United
States Special Representative in Europe should keep the chairmen
of the Committee on Foreign Relations and the Committee on Appropriations of the Senate and the Committee on Foreign Affairs and
the Committee on Appropriations of the House currently informed
on his activities. A similar provision respecting the Chief of the
Special Mission to China was included in section 405. These two
provisions in the House amendment were to implement the legislative
and appropriating committees concerned in carrying out their responsibilities under the Legislative Reorganization Act of 1946.
The House recedes with an amendment. The provisions for the
United States Special Representative in Europe and the Chief of the
Economic Mission to China to make special reports to the committee
chairmen concerned are omitted. As a substitute for the provision
for a joint congressional committee as contained in the bill as passed
by the Senate, the bill as revised in the committee of conference provides for a joint committee to consist of 10 members equally balanced
as between the two Houses of Congress, of which 3 members from
each House will be from the committee having legislative jurisdiction
and 2 members from each House will be from the committee haying
jurisdiction with respect to appropriations. The joint committee
thus envisaged will maintain the balance as between the two major
political parties and questions of policy and purse will be brought
into a common focus.
The Senate's view emphasizes the need of a joint committee having
a special obligation to follow up on the effectiveness of operations
carried out in this new and far-reaching experiment in foreign relations.
The view of the House, on the contrary, emphasizes the need of protecting the primary responsibility of the legislative committees and
of the appropriations committees concerned in the feeling that supervision is most effective when linked to responsibility.
It is the view of the majority of the managers on the part of the
House that the formula worked out in the committee of conference
is a most satisfactory compromise between these two points of view.
TITLE II
The Senate receded with an amendment to the House amendment
inserting title II in the bill. The purpose of the amendment as agreed
to in the committee of conference is to set up a more convenient
formula for computing the contribution to be made to the Children's
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34
FOREIGN ASSISTANCE ACT OF 1948
Fund by the United States. The following is the method of computing the amount of the United States' contributions under this
amendment:
The entire resources of the fund consist of contributions from three
sources:
Category (1): Contributions by governments other than the
United States for the benefit of persons within their own territory;
Category (2): Contributions by governments other than the
United States for the benefit of persons outside their own territory;
Category (3): Contributions by the United States.
The United States is authorized to contribute up to 70 percent of the
total resources contributed by all governments, including the United
States. The contributions by the United States, however, are not
expected to exceed the sum of the contributions by other governments.
Contributions by other governments for the benefit of persons outside
their own borders, i. c., category (2), must match United States
contributions on a 72-28 basis.
Thus, taking the total resources as 100 percent, category (3), contributions by the United States, are not expected to exceed 50 percent
but may reach 70 percent. If the contributions by other governments
for the benefit of persons outside their territory, i. e., category (2),
equal exactly 20 percent, there will be 30 percent in category (1).
For every $2 contributed by other governments for the benefit of persons outside their borders the United States may contribute as much
as $5 to the Fund. In case no country makes a contribution to the
Fund for the benefit of children inside its own borders, the $5 contributed by the United States would be matched only by the $2 in
category (2). The United States contribution would then amount to
70 percent of the total resources, as authorized in the proposed language of the bill. If, however, other countries contribute 30 percent
of the total resources for the benefit of children within their own
borders, the United States contribution will be just 50 percent of the
total resources.
TITLE III
The amendment as passed by the House included military-type aid
to Greece, Turkey, and China in title III. As a result of the action
taken by the committee of conference military-type aid to Greece and
Turkey is retained in title III and military-type aid to China is shifted
to title IV.
TITLE IV
,
CHINA
The managers on the part of the House accepted changes which
considerably shorten the text of the bill, consolidate aid to China in
a single title, adjust the time period of the authorization from "until
June 30, 1949" to a "period of one year", and adjust the amount
authorized to the change from 15 months to 12. The purpose clause
of the House bill was retained, as well as the provision on rural reconstruction. The Senate provision on an advance by KFC before
appropriation was accepted.
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FOREIGN ASSISTANCE ACT OF 1948
35
ADMINISTRATIVE PROVISIONS
The managers on the part of the House accepted the clause from
section 2 of the Senate bill, providing that aid to China is to be provided under the applicable provisions of the Economic Cooperation
Act of 1948 which are consistent with the purposes of this title. This
clause is a substitute for the complex provisions of the House bill.
All of section 403 of the House bill with the exception of the authorization of funds, and the last clause relating to rural reconstruction,
together with section 405 of the House bill, are thus replaced by three
lines from the Senate bill with no change in effect, embodied in section
403 of the conference bill.
CHINA
AMOUNT AUTHORIZED
The amount authorized was changed from a total of $570,000,000
for approximately 15 months to a total of $463,000,000 for a period
of 12 months. The new figure is slightly more than four-fifths of the
former House figure, reflecting the assumption that the scale of aid
will be highest at the beginning of the program and decline thereafter.
Of the total authorization it was agreed that $125,000,000 should
be provided under the language of the Senate bill allowing for aid of
military character, with $338,000,000 remaining for the economic
reconstruction type of aid. In making this adjustment the allotment
for military aid is slightly larger in proportion to purely economic aid
than in the original House bill. These changes are embodied in section
404 of the agreed bill.
RURAL RECONSTRUCTION
The so-called "Jimmy Yen" provision of the House bill, consisting
of subparagraph (h) of section 403, together with the whole of section
404 of the House bill, was retained as section 407 of the agreed bill.
The amount authorized was modified from a fraction of the total
United States dollars to include either United States funds, Chinese
funds made available under agreement, or both.
RFC CLAUSE
The Senate provision allowing an advance of $50,000,000 by the
Reconstruction Finance Corporation against the program for China
was accepted by the managers on the part of the House. This reduces
the authorization in this connection from $150,000,000 to $50,000,000,
but in the judgment of the conferees this smaller amount will be entirely adequate for the practical needs of the program. This provision
is now Section 406 of the bill.
C. A. EATON,
J. M. VORYS,
K. E. MUNDT,
S. BLOOM,
J. KEE,
Managers on the Part oj the House.
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EC'V.-TIT CO:u;:.:UTION ABf.'INI^TPATION
.
Washington, D. C.
August 26,
1948
Honorable 7; ill lam liar tin, Jr.
Chairman, Erport-Import Bank
734 - 15th Street, N. d.
Tfashington, D. C.
. Martin:
In crder to sin-plify and facilitate arrangements for furnishing
assistance under the Economic Cooperation Act, this Administration
proposes to adopt a consolidated procedure for db ar;inj-; r. I
.-'its
and loans. The proposed procedure, set forth belor, will eliminate the
necessity for identifying
rticular transaction- with loanr, and
thereby eliminate dual documentation by the Export-Import Bftok and curb
•.. 1 is tr stive exense:
1. The total allocation to a participating county Till be
fi:-ed lor ee.ch charter. Assume it is 1100,000,000,
2. The loan-grant ratio will be fixed : or each country in
•"-•( ith the statutory standards (Section lll(c)(l).
Assume that* in the case of a psrtici3]sr country, thi;; ie
--ant and 20^' loan. It would t.~en be contei^dated t. c
roxiniately 20^ of the assistance authorised. • ould be
used ir order to finance i. port:;; of capita ecuipi'>;nt '-.,nd
of raw Etaterials for use in conn>-ctiI a itsl development. Tnus, alt-.ourh the procedure outlin-'-c. beloi
I the present R tag in?jn of each it-~m author!
at a loaa Item or
;" it iters, the substantive effect of
the ' - I ram will be tiM sairie as tiiat •-?;- suiting' iron' t:^
sent procedure*
The partleiptttiag country/" v:ill enter into a loan agi-cnent with th'~. Export-Ipcort Bank b. i
i .t : ill s.>y
to a credi':, or te:.D fied by thv Adrinistrcitcr in
consultation v.ith the National Advisory Council, for
yOOO,d
"CA will then allocate 120,00 ^006 (obtained by the execution of a iot« to the Treasury) to |ht cr -c.it of the
port Banlc for &. loc.n to the Bertie ipatinc country.
f
Ail it^nsF v-:Ill be j.••.-.rocessT.c- fcf thou h the rere fi-snt L t v r ^ y,
receiving in each transaction the dccutr.entation reruir^d
)fulati0fn Ix'o, 1. The rro.iej \viil 1
: .-.nded directlj by
G>, out of ap .-roprj.
imca as in the case of grants.
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As EGA rakes payments (to the country, or to a bank or a
supplier) , or at such other time or times as the Adrinistrator may choose within or at the end of each - uarter,
;.,CA will give a certificate to the Export-Irrport Bark setting iorth s~ach amounts of each advances as are attr
to th-.- loan, and will be entitled to rei -•bv.:t to that
extent by th
.dent country from the yroce ds of the
loan. The Export-Import Bank will issue it-:- check against
the 1CA certificates,
le to the country, for delivery
as instructed by the Administrator. (The Check will be
delivered to the country representative in I
if ices
and immediately endorsed over to EGA as r
• _ . s V;EK- nt of
the ex
• already made a? described above.)
7.
The, ptrtieipttiBt WMmtl^ wiU
.
I AMMII I
";te
to I
--ort-Irport Bank at the beginnir
: . u&ri -e.r.
The iiote will state thst it i;.
jt-ive only foe trie
rt Actually advanced. Sincr tk«S« or dit:. i ill not
carry intv.^:.- t until 1952, t
ote
111 not give ri&e to difficulties.
8, The o
-.1 be t
ntation t . ••-•••- -t-I.-oort Bank wil
vive
tificates of VCA cesc ir;:d in (o) i fa .ve.
If
area to acquiesce in t
rc.tln;
lined above, they will be ;-ut into efiect : ortlvv/ith.
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Sincerely yours,
/s/
Paul lie j':: man
Adndnistratcr
lures out-
September 15, 19A8
Peer £'r. hobbinan:
Since our ackncy/l dfMnpit of September £, 194-3 of your letter of
August 26, 1948, the Board of Directors of th-s. bank has given thcurbt
to your 'propose 1 Mto adopt t, consolidated procedure for drawing upon
••• . p ft** &nc5 thereby "eliimmto ths- n^connity for
identifyin;K &ny particular transaction ?;ith loan£n .
As ha£ boea made known to various members oi the -i.cono-v.ic
Cooperation Ad- ini; trr.tion, including Bte-srs. Bisseli, i^mdorson end.
.ler and th«ir subordinates, at the time of the drs.lt ing oh our
Arreeraeut GJ MBJ 21, 194B ftfid .hi discussions since that
time, , i do ..ct ;:.ub^cribe to tl.^e theory that :;' Eeo o 1< Oil -r£.tion
hot of 194S drtti'VS r:o distinction b01
other than
the fact tiuit oblir^,tionf;: OTt taken to evidence cre;,h.t.: . it huu b-^en
our
\
. , intended, c,nd the t the Act provides,
that E real distinction is to b* dbrw
^v\;3n the t. o ::'gri:;t: of
L stance and that the di;2tinctioi
ttd
shculc: he creir/i isi
_ce
I
'ting from the basic principle to h
n subscribe —
i should ~-e a urdfied, ever-all program control! --d
tad directed I,/ \
i:-'iBtrator.
ho. ver, we recognize that the Act veets ID the Aoi.inistri--.tor
te:, right to fete. ••; in ••: tfew approach to be folioiA'ed in the extent-ion
of credits uncer the Act. Since ' e iitve n^:?vez' raioeu. an=:; i )t nor
intend to rai«e a jurisdictionai isr.-u-:, I
1 p&r-id to follow the
;
to the extent we m£t; : ..:- /: ._n tc- requirements
of the Act in BO far as tlv-v i ly to th?
Section lli(c)(2) of th^ Act requires that t,:ie Bf,--.kj| BJ a
inu.ni,
Llikh each crrdit, -.iisburse the fmdl k Jnher %o or
fo?'
ant o.' th ; :v o- lii:.: o.ountiy, receive its :• ''ii: -•-• t.Lon-': in
evidence b
,
::--:• eeive payments on
, -;ines^, AccordftTed, u,on authorisation of thf /;h.inistrwtcr, to
estaolish a line oh ereciit upon condition that disbursements will be
-, to or' for tVv account of tb. :.
ountrv et
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such times and in such amounts as shall be certified to the Bank by the
Administrator.
Fe believe this type oi rpreenfiDt, to Y/hich o::ly the Bank and the
r,orrovvin;s country will be parties, rill permit th^ Economic Cooperation
Ad* .••inistration to achieve toe purposes vhich are expressed in your letter
of August 26, 1948, It will necessitate, hc~ ever, that the Adrinistrctor
a.nd th~ respective countries -:-.-nter into independent arrangements with
re- -oect to the mechanics of t'-o combined grant a.nd loar< procedure rather
than providing for these matt^cs in the credit agreements as has b-"en
d by the Efionoinic Cooperation Ad;v:inistrs.tion.
It i;/ understood, of ccLirpe, that our ttUKtirm&dttii .'
May 21, 1943 Is rociil--a by t'vl:: cxc/.;s.nre of letters.
^nt of
Sincerely pcur^.
TP. McC, Martin, Jr,
The Honorable
Paul G. Ko.,'1 man, Ad: ini>;tr£tor
:oi;:lc Cooeration A
\
:
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Chronology
"FOREIGN ASSISTANCE AC'!1 OF 1948"
Public Law 472 * 30th Congress
(Prepared in Library, Export-Import Bank)
Title I. "Economic Cooperation Act of 1948"
Documents
1947
Dec. 10
Dec. 19
"European Recovery Program - Basic Documents and
Background Information". Prepared by the Staffs of
Senate Foreign Relations Committee and the House
Foreign Affairs Committee. (3.Res. 167}
S. Doc. #111
President's Message transmitting "Program of United
States Support for European Recovery."
H. Doc. #478
Outline of ERP. Draft Legislation and Background
Information. Submitted by State Dept. for the use
of Senate Foreign Relations Committee.
Committee Print
1948
Jan. 6
House Administration Bill, by Mr. Eaton.
H.R. 4840
Jan. 8 thru
Feb. 5
Hearings held before the Senate Committee on Foreign Relations on "0..^. Assistance to European
Economic Recovery." ^/
Jan. 12 thru Hearings held before the House Committee on "United
States Foreign Policy for a Postwar Recovery
Mar. 10
Program, the First Step Being Consideration of Proposals for a European Recovery Program, including
H.R. 4840, H.R.4579 and similar measures." &
Jan. 22
Brookings Report on "Administration of United
States Aid for a European Recovery Program,"
,
Committee Print
I/ Popularly kno»vn as "ERP" (European Recovery Program)
2/ Senate Hearings held Jan. 8-10, 12-15? 1943 included in Part 1. Mr. wn. MeC.
Martin's statements on pp. 429-4AA. Part 2 includes Hearings held Jan. 16, 19,
20-24, 26-28. Part 3 concludes Hearings, Jan. 29-31, Feb. 2-5.
J/ House Hearings, Part 1. Hearings held Dec. 17, 1947 were on the Herter Bill,
H.R. 4579, introduced November 25, 1947, cited as the "IL'mergsney Foreign
Reconstruction Act, 1948". House Hearings in Part i. continued Jan. 12-15,
20-22, 27-29, Fob. 3-5, 10-12, 1948. Mr. win. McG. Martin's statement en
pp. 752-769. Part 2 concludes Hearings, Feb. 17-20, 24-27, Mar. 2-5, 8, 10,
1948. Mr. C* E. Gauss' stateraent on China Aid on pp. 2176-2194.
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Document*
Date
Feb. 9-13
Senate Committee met in Executive Session to
prepare a bill for reporting. Committee agreed
to meet on Feb. 17 to vote on reporting the bill.
Feb. 17
Senate Foreign Relations Committee unanimously
agreed to introduce and report the Committee
draft of a bill to provide for ERF.
Feb. 23
"The Economic Cooperation Act of 194-8" introduced
by 3fir. Vandenberg for himself and Mr. Connally.
Referred to the Committee on Foreign Relations.
S.2202
S.2.202 reported without amendment from Committee
with Senate Report.
S.Report # 935
Feb. 26
Mar. 1-12
Debated £.2202 in the Senate. Various amendments
proposed.
Mar. 13
S.2202 passed the Senate with several amendments.
Mar. 15
The Senate passed bill, S.2202 "'The Economic Cooperation Act of 194-8" introduced in the House.
Referred to House Committee on Foreign Affairs.
S. 2202 Amended
House Foreign Affairs Committee rejected a motion
calling for immediate action on Senate approved
S.2202. House Committee proceeded to work on a
bill to incorporate EBP with military aid to China,
Greece and Turkey, and economic aid to China.
Mar. 17
A "single package" foreign aid bill, to include
ERP, military aid to China, Greece and Turkey and
economic aid to China, was agreed upon by the House
Committee. (See Appendices A & B).
Mar. 19
House Foreign Affairs Committee completed work on ^
the Senate approved bill, S.2202.
Mar. 20
Mar. 22
Mar. 22
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*4
'•'- >
S. 2202 reported to the House with amendments and
House Report.
H. Report #1535
S.2202 made special order of business under House
Res. 505.
H. Report #15B7
H.J.Res, 355 by Mr. toigglesworth. Reported, considered and adopted, making appropriations for
foreign aid. This bill provides 55 million for
aid to Austria, France and Italy r<hich is to be
deducted from the money provided by the Foreign
Assistance &.ck of
H.J.Res. 355
-3Documents
Date
Mar. 23
8.2202 debated in the House. Various amendments
proposed.
Mar. 31
S. 2202 passed the House as amended. House asked
for a conference.
ADI*. 1
S.2202 Revised
Senate agreed to House amendment to text of bill,
with an amendment; disagreed to the House amendment to the title; insisted upon its amendment.
Asked for a conference with the House.
House disagreed with Senate amendment to Mouse
amendment to text of bill; further insisted on its
amendment to title. Agreed to the conference asked
by the Senate. Conference report to be filed by
midnight, April 1.
Apr. 2
Apr. 3
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Conference Commituee report on S.22 02 v?as adopted
by both Houses, thus clearing the bill for the
Preeident's £ ignature.
H. Report 1655
S.2202 signed by the President, thus becoming
Public La'A No. 472
Public Law 472
Title II. "International Children's Emergency Fund
Assistance Act of 194-3."
APPENDIX A
"FOREIGN ASSISTANCE ACT OF 194S"
Public Law 472 - 80th Congress
Title III. 'Greek-Turkish Assistance Act of 194-3"
Documents
Date
1943
Mar. 15 & 17 Senate Committee on foreign Relations held hearings in executive session on !'Aia to Greece and
Turkey."
Mar. 19
Bill drafted and approved by a unanimous vote
Mar. 22
Mr. \-r.-indenbt.rg, from the Committee on Foreign
Relations, reported S.235<3> a bill tc amend
Public Law 75 approved May 22, 1947 to provide
assistance to Greece and Turkey with Senate
Report.
Mar. 23
Included in
S. Report 1017
S. 2358, and
S. Reoort 1017
S. 2358 debated and passed by voice vote in the
Senate.
Referred to House Committee on Foreign Affairs
Superseded by S. 2202, amended
Apr. 1
Conference report to accompany S. 2202
H. Report 1655
Apr. 3
S. 2202 "Foreign Assistance Act of 1948<f was
signed by the President thus becoming a Public
Law.
Public Law 472
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"FOREIGN ASSISTANCE ACT OF 194.8'
Public Law 472 - 30th Congress
Title IV. "China Aid Act of 1943"
Documents
Date
Feb. 19
President^ Message on Aid to China
Feb. 20
Text of Proposed China Aid bill and Background
Information on Economic Assistance Program for
China. Submitted by State Department to the
House Committee on Foreign Affairs.
Mar. 19,20, Senate Committee on Foreign Relations held
& 26
executive hearings.
S.Doc. 120 and
H.Doc. 536
Committee Print
Wot available
Mar. 22
Senate Committee drafted, bill, approved by
unanimous vote.
Mar. 25
Sen. Vancenberg reported the bill from Committee
on foreign Fa-lotions with Report.
Mar. 30
S. 2393 bill to provide aid to China was debated
and passed b"j- voice vote in the Senate.
Mar. 31
S. 2393 referred to House Committee on Foreign
Affairs. Superseded by S. 2202, Amended.
;\pr. I
Conf3rence report to accompany S.2202
B.Report 1655
Apr. 3
S.2202 "Foreign Assistance Act of 19/4-8" was signed by the President chus becoming Public Law.
Public Law
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£.2393 c-nd
S,Report 1026 and
S.Report 1026 Anen
@FedFRASER