program. The aid being extended by the United States is a relatively small but vital factor in the aggregate of what must be produced and accomplished for Europe to become self-supporting by June 30, 1952. The progress made toward recovery up to now is largely attributable to the efforts made by Europeans themselves, and the success or failure to achieve adequate recovery by 1952 will also depend principally upon the efforts made in Europe. Continued aid in declining volume by the United States will, however, be an indispensable factor. It is vital during the coming year that European efforts be maximized, since otherwise American aid cannot be productive of optimum or adequate results. To this end it is incumbent upon the participating European countries to take prompt and tangible steps in reducing trade barriers. The reduction of tariffs and the elimination of controls, licensing, and other governmental restrictions upon the movement of goods and upon individual business judgment and initiative are vital to economic rehabilitation. It is essential that fiscal policies of the participating countries be reformed to the extent necessary to stabilize currencies, and that collections of tax levies be enforced so as to support balanced budgets. The expansion of production, consumption, and trade in Europe and throughout the world must continue during the period of the European recovery program and after it has ended if the objectives of the program are to be realized. It would seem important that care be exercised that any tendencies on the part of participating countries to indulge in uneconomic self-sufficiency are not implemented by the investment of aid funds, or funds contributing to requirements for aid, in inordinately high-cost industrial or agricultural productive facilities. If the participating nations will strongly encourage their business interests to reduce costs and to make vigorous efforts by utilizing modern marketing techniques to expand sales to hard currency areas, external aid requirements may thereby be reduced. The committee, therefore, wishes to urge upon the Administrator that while neither this committee nor the Congress has any desire to impose its thoughts and plans, or to interfere with the internal and sovereign affairs of the participating nations, every effort must be exerted to assist western Europe to develop more as an economic unit rather than as a number of smaller, isolated economic entities. It is appreciated that some progress has been made in the removal of trade barriers and travel of peoples among the participating countries. However, it would seem to the committee that if the program is to be the success originally planned, cooperative efforts to a far greater extent than has been in evidence to this date should be made. Another matter which the committee desires to call to the attention of the Administrator is that of tourism. The committee is not convinced that sufficient effort is being made by the responsible agencies of this Government to increase tourism in western Europe by providing reasonable and adequate transportation. There undoubtedly are in this country tens of thousands of individuals who are anxious to visit Europe but cannot do so because of present high costs of transportation. Every agency of the Government should bear in mind the fact that this is a program of the United States and its people rather than a program of the Economic Cooperation Administration. It is recommended that the Maritime Commission make a study as to the feasibility and possibility of converting a number of surplus vessels into one-class accommodations with a view to providing adequate transportation at reasonable cost. It is also urged that the Civil Aeronautics Board make a similar study with the same purpose in view in regard to air transportation. If these arrangements cannot be made under existing legislation, such legislation as may be necessary should be recommended to the Congress. While it is true that at the present time adequate living accommodations are not available in many of the European countries, such accommodations undoubtedly would be constructed provided there was some assurance of reducing cost and restrictions of travel. This increase in tourism would not only provide the necessary dollars to the participating countries, but also would ease the burden on the taxpayer in that a portion of the European dollar shortage would be supplied by those who can afford trips to western Europe. Too small an appropriation would be disastrous. Less than enough would be worse than nothing as it would result in draining our own resources without compensating return. Such return can only result from continuing the momentum of recovery in the participating countries. It was testified, and the committee concurs, that fiscal year 1950 is the crucial year in this program. Excessive reductions will impair the dollar-earning capacity of the participating countries, resulting in a serious threat to the success of the program, not only in 1950, but in subsequent years as well. ALLOCATION OF FUNDS The committee wishes to reiterate the position of the Congress, as expressed in the authorizing legislation, to the effect that this country is not committing itself to furnish any specific amount or any particular commodity to any recipient country. The amount is appropriated as a lump sum to be allocated by the Administrator in such manner as to produce the greatest recovery in all the countries at the minimum cost. Of the amounts contained in the budget estimate for the balance of the current fiscal year, the amount of $1,062,975,000 is estimated for direct aid and the remainder of $11,025,000 for other assistance and for administration. Of the amount of $4,198,200,000 contained in the budget estimate for fiscal year 1950, the amount of $4,122,200,000 is estimated for direct aid and the remainder of $76,000,000 for other assistance and administrative purposes. ASSISTANCE TO GREECE AND TURKEY The committee has approved an estimate of $50,000.000 for continued assistance to Greece and Turkey, which is required pending action on the general military-assistance program. The item is best explained in the following excerpt from the President's message transmitting the estimate to Congress: The Congress has authorized the appropriation of $675,000,000 for assistance to Greece and Turkey, of which amount $625,000,000 has already been appropriated. The $50,000,000 herein requested will complete the appropriation of funds authorized by the Congress. The additional funds are urgently needed to permit the uninterrupted flow of assistance to Greece and Turkey. Substantial progress has been made in the repression of guerrilla operations in Greece. However, further United States assistance is required to enable the Greek Government to restore internal security, which is essential to rehabilitation and reconstruction. The additional aid for Turkey would further increase the ability of this nation to maintain its territorial integrity and to continue as a stabilizing force in the Near East. This supplemental estimate of appropriation will be taken into consideration in the recommendation for funds for the military-assistance program, the authorization for which is expected to be submitted to the Congress in the near future. GOVERNMENT AND RELIEF AND ECONOMIC REHABILITATION IN OCCUPIED AREAS The budget estimate of $1,000,000,000 for government and relief in occupied areas (GARIOA), and for economic rehabilitation in Japan and the Ryukyu Islands contemplates an expenditure slightly in excess of $470,000,000 for bizonal Germany, $495,000,000 for Japan, approximately $26,000,000 for the Ryukyus, and $6,700.000 for Austria. Of the amount of $495,000,000 requested for Japan, approximately $116,000,000 would be devoted to economic rehabilitation and approximately $379.000,000 would be expended for military government and relief expenses designed to prevent starvation, disease, and unrest. The budget estimate of $1,000,000,000 for GARIOA is approved in the amount of $850,000,000, a reduction of 15 percent. The requested limitation of $50,000,000 for administrative expenses is reduced to $29,750,000, or 3.5 percent of the total appropriation recommended for this activity. GERMANY With respect to Germany it should be noted that in addition to the amount to be available from the appropriation for GARIOA to meet United States obligations, as the occupying power, to provide minimum supplies for the civilian population, funds for economic recovery and rehabilitation in Germany are also provided in the general appropriation for the European recovery program. According to present plans the administration of our activities in Germany will undergo a substantial revision about July 1 of the current calendar year. The Department of the Army, under present plans, is expected to transfer its governmental responsibilities in Germany to the State Department and to the ECA. If a German Government can be established as is presently anticipated, it will administer most of the governmental activities now under Army jurisdiction. The authority over economic assistance activities, both those of a relief nature to be financed from the GARIOA appropriation and those of an economic recovery nature to be financed by the ECA appropriation, would be combined. Encouraging economic recovery in western Germany has been achieved during the past year. From a level of approximately 45 percent of prewar production prevailing about a year ago, production generally is running now at approximately 86 percent of prewar. This achievement has done much to alleviate tense and perhaps dangerous conditions formerly prevailing. In 1947 German exports totaled $250,000,000; in 1948 they amounted to $680,000,000; and in 1949 there is a likelihood that exports will exceed $1,000,000,000. Notwithstanding this level of exports, western Germany is still a deficit economy, and continued assistance from the United States is needed if Germany is to become self-supporting and if the European recovery program is to succeed. JAPAN Substantial progress has been made since the end of hostilities so that now the industrial index approximates 70 percent compared with the prewar period 1930-34. Coupled with the devastation and disruption of Japanese economy itself is the fact that trade in the Far East has recovered more slowly than that of any other part of the world. Japan's sources of supply for coking coal, iron ore, food, and a wide variety of industrial raw materials continue to be interrupted because of unsettled conditions in the Far East. Rehabilitation is progressing steadily, and military officials anticipate that by a year from now the industrial index will increase to approximately 87 percent of the prewar base period. Japan is a densely populated area and was never self-sufficient as to food requirements. Its population has been swollen by repatriation of its nationals from colonial areas and the soil has been depleted by the production strains experienced during the war years. Therefore it is necessary to continue to furnish basic supplies including foodstuffs and fertilizer to support the Japanese population in order to prevent disease and unrest. Apart from this basic program, funds are required for economic rehabilitation, including purchase of industrial raw materials as well as plant rehabilitation, so that Japan's exports may be reconstituted and that Japan may eventually become restored to economic selfsupport. The committee is inclined to the conclusion that some of the extensive control and planning activities now being carried on are unnecessary with respect to Japan's recovery and constitute an actual deterrent to recovery. Greater freedom to Japanese initiative and ingenuity should expedite recovery and lessen the burden of expense to the United States. LIMITATIONS AND LEGISLATIVE PROVISIONS The following legislative provision not heretofore carried in any appropriation bill is recommended: On page 9, line 14, in connection with National Military Establishment, Government and Relief in Occupied Areas: Provided further, That the President may transfer to any other department or agency any function or functions provided for under this appropriation, and there shall be transferred to any such department or agency such unobligated balances of this appropriation and, without reimbursement and without regard to the appropriation from which procured, such property as the Director of the Bureau of the Budget shall determine to relate primarily to any function or functions so transferred; and any funds so transferred may be expended either under the authority contained herein or under the authority governing the activities of the department or agency concerned. |