by ECA officials as a difficult goal but generally possible of attainment. There should be no relaxing in the drive to attain this objective. However, the attainment of this goal ought not to be considered the sole measure of the success or failure of the Marshall plan. While the committee is aware that economic recovery will not solve all of the problems of western Europe, the Marshall plan has made a notable contribution toward curbing the spread of disorder and communism and toward giving hope for eventually achieving an improved standard of life. Also, permanent progress toward European cooperation will result from the present program and will continue to be effective even after mid-1952. Section 1 II. AMENDMENTS APPROVED BY COMMITTEE 9. UNIFICATION OF EUROPE The committee examined carefully the progress made during the year among the European Recovery Program countries toward economic and political integration. The voluntary steps taken over the past year, such as the Brussels treaty, the work of the OEEC, and the Council of Europe, clearly indicate that the Economic Cooperation Act has created an unusual opportunity for advance in this direction. In order to express its approval of these developments, the committee adopted an amendment to the statement of policy in the preamble of the act by inserting the words "to encourage the unification of Europe." This objective of encouraging European unification is thus declared to be the desire of the people of the United States. Nevertheless, the committee feels strongly that the impetus toward unification must come from the European peoples themselves without interference or dictation from the outside. Section 2 10. SALARY CEILING The original act permits the Administrator to compensate 100 top personnel without regard to the provisions of the classification act. It further provides that 25 of them may be paid salaries up to $15,000 per year, the other 75 being limited to $10,000 per year, the ceiling prescribed by the classification act at that time. Since then Congress has raised the ceiling to $10,330. This amendment would conform the $10,000 limit in the Economic Cooperation Act to the present ceiling set in the Federal Pay Act of last year, or to any further changes which may be authorized by Congress. 11. STATUS OF DEPUTY UNITED STATES REPRESENTATIVE IN EUROPE Section 3 In the amendments proposed by the ECA, it was suggested that the deputy representative be given the compensation of a class 2 chief of mission ($20,000 plus allowances). In view of the fact that the deputy representative is often called upon to represent the Administrator in Europe in the absence of the United States special representative, the committee recognized the desirability of giving the deputy statutory status as an ambassador and increased compensation. The committee believed, however, that a class 3 status ($17,500 plus allowances) would be more appropriate. At the same time, in view of the importance of the post, the committee proposes that the deputy be appointed by the President and confirmed by the Senate. 12. PAY AND ALLOWANCES OF CHIEFS OF SPECIAL MISSIONS Section 4 An amendment suggested by ECA would have given the Administrator the discretion to raise the pay and allowances of the chiefs of special missions from the present maximum of $13,500 (and allowances) to $15,000-$17,500 (and allowances). The committee recogized the merits of ECA's contentions in this matter and the great importance of the work done by the mission chiefs, but has decided to limit the increase to $15,000 plus allowances. Sections 5 and 10 (a) 13. OCEAN TRANSPORTATION The original Economic Cooperation Act requires in section 111 (a) (2) that the Administrator, so far as practicable, shall see that at least 50 percent of the goods shipped from the United States under the program shall be transported on United States flag vessels to the extent that these are available at market rates. The proper interpretation of the words "at market rates" has been the subject of much dispute. The Administrator has taken the position that this meant "world market rates." Others have claimed that this meant "United States-flag vessel market rates." The difference in interpretation is important because, in the case of bulk-cargo vessels, the rates for United States-flag vessels are often substantially higher than those of flag vessels of other countries. The Administrator has testified that he regards the provisions of this section as burdensome and has requested that this phrase be clarified. The committee, therefore, adopted an amendment to this section by changing the phrase "at market rates" to "at market rates for United States-flag vessels." This will require the Administrator, in carrying out the provisions of this section, to make use of United States-flag vessels if they are available, even though at higher rates. In this connection the Administrator pointed out that, in addition to the extra dollar costs that would be involved in paying higher rates, there was another serious problem in that these higher rates were reflected in the delivered costs of commodities delivered in Europe. The Administrator, therefore, requested an additional amendment which would permit him to waive counterpart deposits to the extent that the cost of transportation on United States-flag vessels exceeded the cost of transportation on vessels of other flags. This amendment will permit the Administrator to absorb these higher freight costs and thus prevent them increasing the delivered costs of commodities in Europe This is particularly important in the case of coal because the delivered cost of coal shipped from the United States has, in practice, determined the prices for imports from other countries, including imports from Poland. As a result, these other countries have been able to obtain prices far above their domestic prices, which has resulted in much higher costs to the participating countries. Furthermore, higher prices for a basic commodity, such as coal, tend to raise the whole level of costs in the economy. It was suggested that the committee should not act on this subject since there is legislation pending in the Congress relating to the 50-50 shipping arrangement. The committee, however, considered that this question has such an important bearing upon the ECA program that these two amendments should be adopted in order to resolve the controversy over this particular section of the act. Section 6 (a) 14. GUARANTY FOR INFORMATIONAL MEDIA The original Economic Cooperation Act authorized the making of guaranties up to $15,000,000 during the first year of the program for informational media. These guaranties were to extend only to conversion of local currency receipts into dollars up to the amount of the investment. This amount was later reduced from $15,000,000 to $10,000,000 by the Congress in the appropriation act. The committee believes that these funds have proven helpful in the wider dissemination of information by representative American informational media. Outstanding examples include the increased circulation in the participating countries of such publications as the Paris edition of the New York Herald Tribune, the Reader's Digest, and various scientific publications. The committee considered at some length the desirability of increasing the amount authorized for informational media guaranties for the second year. It was decided, however, in the light of ECA experience during the current fiscal year, that the $10,000,000 figure fixed by the Appropriations Committee last year seemed appropriate for the coming year. Section 6 (b) 15. GUARANTIES OF CONVERTIBILITY The committee considered several proposals, including those made by the American Bar Association, to alter the provisions of the basic act authorizing the Administrator to guarantee the convertibility into dollars of foreign currency secured from new American investments in participating countries. Three questions were presented by these proposals: (1) Should the terms of the guaranties be broadened? (2) Should part of the ECA appropriation be earmarked for the sole purpose of making guaranties? (3) Should a separate fund, additional to the ECA appropriation. be provided for this purpose? The committee felt that, insofar as the ECA countries were concerned, broadening the terms of the guaranties would not result in substantial amounts of increased investments unless the guaranty was made so broad that. in fact, this Government would assume most of the risks which private capital should be expected to carry. The proposal to earmark a certain part of the ECA appropriation for the sole purpose of making guaranties would, in the opinion of the committee, jeopardize the program. If private investors did not come forward promptly with projects of the right type at the right time, the effect would be that the segregated funds, which are urgently needed in the coming year, would be used ineffectively or would be immobilized and not be used at all. As to the proposal to set up a separate fund additional to the ECA appropriation, the committee noted that there is currently under way a study of the desirability of developing a program of promoting American investments abroad on a world-wide basis. It is understood that recommendations will shortly be made to the Congress by the executive branch with respect to such a program. The committee is disappointed that the guaranty program has not been more productive but hopes that, as recovery proceeds and stability develops further, American risk capital will increasingly seek investment opportunities in Europe. At the present time guaranties can be made only from the $1,000,000,000 public-debt funds provided for in the original act. Only about $20,000,000 of these funds remain available. The amendment proposed in section 6 (b) of the present bill would authorize the continuation of the guaranty program with appropriated funds after this $20,000,000 has been exhausted. Section 7 (a) 16. FLOUR-WHEAT RATIO Public Law 472 provided that 25 percent of all wheat shipped under the European Recovery Program should be in the form of flour. The Administrator recommended elimination of this provision on the ground that it had the effect of increasing the cost of the program and that milling byproducts are no longer urgently needed in the United States in view of the greatly improved supply of coarse grains. After extensive discussion, having in mind the nature of the requirements of the participating countries, and in consideration of the fact that a certain amount of flour would normally move to some of them in any event, the committee decided to reduce the stipulated percentage of flour from 25 to 15 percent. 17. PRICE LIMITATION FROM APPROPRIATION ACT Section 7 (b) The committee decided to add to the basic legislation the price provision in section 202 of last year's appropriation act. It provides generally that commodities should not be bought at prices higher than the market price prevailing in the United States. This provision continues the statutory basis under which the Administrator has been policing the prices paid for ECA commodities. Administrative procedures are now implementing successfully this provision. Section 8 18. AMOUNTS AUTHORIZED Total amount.-The present legislation carries the following authorizations: For the period Apr. 3 to June 30, 1949_ For forward contracting- Total amount authorized.......... ---- $1, 150, 000, 000 5, 580, 000, 000 Section 8 (a) Authorization for April-June 1949.-The Foreign Aid Appropriatio Act (Public Law 793, 80th Cong.) empowers the President, upon the recommendation of the Administrator, to obligate or expend the full amount appropriated for the purposes of the Economic Cooperation Act by April 2, 1949, if he deems it necessary for the purposes of that This was found to be necessary and substantially all of the funds will have been obligated by April 2. Accordingly the ECA requests an authorization of $1,150,000,000 to carry the program through April 3 to June 30, 1949. Authorization for the fiscal year 1949-50. The following table illustrates the past and proposed illustrative division of American aid: European recovery program—United States aid, 1948–49 and 1949–50 1 Represents purchase price of goods procured or to be procured by U. S. Government agencies, but not yet authorized for procurement by participating countries. * Consists of dollar costs of strategic materials, ocean freight on relief packages, technical assistance, investment guaranties, administrative expenses, and confidential fund. Rounded downward to $4,200,000,000 in total request. The following table illustrates the presently estimated composition of the 1949-50 import program by commodity groups and major sources. |