this situation has changed the position of the countries. Some benefit from it, those which have raw materials to sell, like most of the Latin American countries. Some of the others which are dependent on foreign imports, like Greece, Austria, and even France, find their international situation much more severe, so that in that area we have a great volume of new problems to deal with.

We are working very closely with Mr. Wilson of the Mobilization Administration with respect to obtaining raw materials, which we are helping them to obtain in an international way. At the same time, we have also stepped up as part of this new situation consideration of what might be called the field of economic defense. By that I mean two things-trying to strengthen the free world and trying to hamper as much as we can the development of the Soviet economy. This involves something which the United States cannot do by itself, and we have had to put in a great deal of time working with other countries in an effort to get them to join in on this kind of program. And all along the line of this new situation of shortages and the new tensions, we have intensified problems which actually were easing up until last summer.

I think it is very natural that, just as we ourselves in the United States have a series of very serious economic problems to deal with in reorientating our country, this carries over to other countries, and the relationships between the countries. At the same time, there are many of the regular problems that are not affected and where the same burdens are with us, regardless.

In a field like aviation, for instance, we might think that would not be much affected. There we have a great many problems of the normal kind, because we operate on fairly short term bilateral agreements, but we also have new problems with respect to a more careful review for some months with respect to such things as the shipment of spare parts to other countries, and we have a shortage of new airplanes in the field.

The shipping field is another one where a whole set of new problems has developed because what seemed like adequate shipping is now proving to be a bottleneck at the present time, particularly if something develops which we very much foresee-that is, a serious shortage of coal in Europe. Coal is a bulk cargo which requires a lot of ships to move. So all I want to do in this introductory comment is to emphasize the fact that those of us concerned with the economic problems in the State Department find ourselves faced with a series of not entirely new problems. Some of them are new; some are intensified problems, and we are doing the best we can with them.

Mr. ROONEY. Will you please address yourself to the budget?

PERSONNEL INCREASE

Mr. THORP. Yes. The budget is virtually the same budget as we presented to you a year ago.

Mr. ROONEY. Oh, no; you are asking for nine additional employees. Mr. THORP. We are asking for 9 additional employees in a total of 303.

Mr. ROONEY. As a matter of fact, you are asking for 11 additional employees, but you are dropping 2 from the investment and economic development staff which is part of the item entitled "Office of Financial Development Policy." Is that correct?

Mr. THORP. That is correct. The main increase is in the Office of International Trade Policy. These additions are in the part of its work which has to do with economic resources, which is where the commodity problems are found. This relates to the problem of rawmaterial shortages, the international stepping up of production, the efforts to get additional sources for the stockpile, and the efforts to restrict the flow of commodities to the Soviet Union. That is why we have asked for these additional people.

In the Office of Financial and Development Policy we believe we can get along with two less people because of the fact that certain work which this Office has had to do in the past with respect to development is now being done by the Technical Cooperation Administration on its own separate, independent budget. So that this, in a sense, is a transfer of work out of the State Department into the Technical Cooperation Administration.

In the Office of Transport and Communications Policy, the increases are (1) in connection with shipping, where we were down to seven people and where the problems have suddenly become major problems again and (2) in connection with aviation, where we have a very heavy schedule of international negotiations to carry out during the next

year.

I would not be frank with the committee if I indicated that this particular budget was one which would make it possible for us to meet our obligations and carry those responsibilities, but at the time this budget was prepared we hoped it would be possible to do it on this basis. But the much greater intensity of the whole program with respect to rearmament has magnified the problems, and I think it is only fair to say that we are going, if those problems continue, to have to have more people to meet our responsibilities.

Mr. ROONEY. Perhaps you are getting the cart before the horse. You are talking about a supplemental appropriation at a time when you are a long way from getting the 11 additional positions.

Mr. THORP. I was merely trying to be frank with the committee as to what the situation is.

PRESENT STATUS OF LEND-LEASE SETTLEMENT

Mr. ROONEY. What is the present status of the lend-lease settlement with the Soviet Union?

Mr. THORP. At the present time the Soviet Union negotiations are taking place. The Soviet Union has designated their Ambassador to negotiate here, and they have sent some people over from Moscow to support him on it. Ambassador Wiley is acting as the negotiator for the United States. They are having meetings now.

I must say it is very hard to anticipate any favorable result out of these meetings. We have placed a formal demand before them for the return of all American ships-merchant ships and naval vessels. Mr. ROONEY. When did you do that?

Mr. THORP. Well, we made a demand for about one-half of the ships several years ago.

Mr. ROONEY. What did you get?

Mr. THORP. We did not get anything I should not say we did not get anything; we got back 27 frigates and 8 merchant vessels; we got a promise of 3 ice breakers, but only 1 has ever come. They say the

other two are stuck in the ice somewhere with broken propellers, and they could not get them out. We have offered to go and clear them ourselves if they will tell us where they are. Other than that, we

have not had any returns from the Soviet Union. Mr. ROONEY. What do we claim they owe us?

Mr. THORP. Our estimate as to what they owe us is somewhat over $2 billion.

Mr. ROONEY. What is the last amount that they admit owing?

Mr. THORP. They talk about $240 million. I might say when they talk about $240 million, that is not a cash offer; that is an offer on the basis of a 50-year credit arrangement at very low interest over the period.

LEND-LEASE DEBT OF GREAT BRITAIN

Mr. ROONEY. What is the present status of the lend-lease debt of Great Britain?

Mr. THORP. That was settled about 3 to 4 years ago.

Mr. ROONEY. What was the settlement?

Mr. THORP. That was mixed up with the sale of surplus. It was about $800 million total.

(NOTE--The exact figure of 622.5 was supplied later.)

Mr. THORP. That was on a long-term credit basis, and the British have made payments as requested in accordance with the agreement. Mr. ROONEY. What are the payment schedules?

Mr. THORP. May I ask Mr. Stinebower, who is responsible for this, to give you the detail?

Mr. STINEBOWER. I believe it was a 55-year period.

Mr. ROONEY. You believe it is? Don't you know?
Mr. STINEBOWER. It is a 55-year period.

(Information that it is a 50-year period was supplied later).

Mr. ROONEY. At how much a year?

Mr. STINEBOWER. I will have to give you that figure for the record.

(The yearly payment is approximately $18 million per year.)

Mr. ROONEY. You do not remember these figures?

Mr. STINEBOWER. No, sir.

Mr. ROONEY. Well, this is the second largest item in your shop, in regard to lend-lease settlements, is it not?

Mr. STINEBOWER. It is the largest item.

Mr. ROONEY. It is the largest agreed item. Let us put it that way. Correct?

Mr. STINEBOWER. Yes, sir. It is the largest item in any sense.

Mr. ROONEY. Well, Mr. Thorp was talking about $2 billion as our claim against the Soviet Union. Now you have told me you have settled with Great Britain for in the neighborhood of $800 million. Are my figures correct?

Mr. STINEBOWER. I was talking about the over-all amount of lend-lease we had given the United Kingdom, which is the largest amount of lend-lease given. Mr. Thorp was talking in terms of the settlement.

Mr. ROONEY. What was the amount of lend-lease given Great Britain, for which we have settled for approximately $800 million?

Mr. STINEBOWER. About $25 billion. Most of that was in the form of military equipment that was consumed in the process of the war. (A corrected figure of $21 billion was supplied later.)

Mr. ROONEY. Do you consider $800 million a good settlement? Mr. STINEBOWER. The principle on which the settlement was made was to make no charge for items lost and consumed and used up during the war. The settlement was in terms of commodities which were in the pipeline afterward and which remained for consumption in the countries when the war was over.

Mr. ROONEY. Mr. Thorp, has any payment on the final settlement with Great Britain yet been received?

Mr. STINEBOWER. None of them are due yet. I think they begin in 1952, but I would have to check that.

(The first payment is due December 31, 1951.)

MI. ROONEY. When do we get some of the principal, if ever?
Mr. STINEBOWER. Those principal payments begin December 31,

1951.

Mr. ROONEY. In what amount?

Mr. STINEBOWER. I will have to check the figure.

(The amount is approximately $18 million, consisting of both principal and interest. However, in accordance with the agreement the United States has received the equivalent of $17.5 million in local currency and real estate.)

Mr. ROONEY. Do you know whether or not Great Britain has made any payments on their obligations to Israel, India, Egypt, and other countries?

Mr. THORP. Yes; they have. In connection with their sterling balances, which are obligations in the pound sterling, they have made payments. Those sterling balances were left after the war, and there have been some reductions, although at the same time other obligations have been built up. So that actually the British position is not one of an over-all great reduction in her foreign obligations.

RECIPROCAL TRADE PROGRAM

Mr. PRESTON. Mr. Thorp, you are in charge of the reciprocal trade program?

Mr. THORP. Yes; I am.

Mr. PRESTON. For the last year or two I have been raising this question each time you gentlemen have come before us. I was just looking to see if I raised it last year, and I could not find it at the moment the question of the reciprocal trade agreement this Government has with the Republic of Cuba concerning the import tax which they charge on lumber.

They have constantly violated their agreement with this Government and have charged an import tax on all lumber shipped in from this country, while they have permitted similar lumber to come in from some of the Latin American countries-Honduras in particularwithout the enforcement of the tax. I have called this to the attention of the State Department repeatedly, and Mr. Butler, the Ambassador, has made numerous representations to the Cuban Government about this, always receiving the same promise of some action in the future but which never has become a reality.

I think a sufficient length of time has passed to permit our Government to press the Cuban Government to live up to their agreement with us and, if they are not going to, to take some steps of a retaliatory nature to let them know they cannot make an agreement with us and get by indefinitely with failing to live up to it like they have been doing.

Are you familiar with that situation?

Mr. THORP. I am not familiar specifically with the lumber one. I have two comments to make. One, I basically agree with you that in the case of reciprocal trade agreements, if the other country fails to live up to its obligations, it is our duty to take action. And I can say that with some confidence, because that is what we have done with Mexico. Mexico failed to live up to her part of the agreement with us, and we gave Mexico plenty of opportunity to work the situation out, and when they failed to do it we terminated the agreement with them.

In the case of Cuba, I am more familiar with the difficulties we have had over textiles than I am with lumber. I do know in the textile field we have had real difficulty about the trade agreement and have been having discussions with them.

I will be very glad personally to move in on this lumber problem, with which I am not familiar. I certainly would entirely agree that this Government cannot be in a position of having its undertakings with other countries violated.

Mr. PRESTON. I hope you won't treat it as de novo, because it has been in existence for some time.

Mr. THORP. I will get caught up on it right away and move on from there.

DUPLICATION OF FUNCTIONS OF COMMERCE DEPARTMENT

Mr. PRESTON. I am wondering, Mr. Thorp, if there is considerable duplication and overlapping of this section and our Office of International Trade in the Commerce Department. Hearing your general statement and the general statement given by the Office of International Trade of the Commerce Department, I for one recognize a striking similarity. What about that?

Mr. THORP. We have worked very closely together, and I am not aware of duplication. We have had a number of special studies made to make sure that was not the case. By and large, it is our responsibility to carry out negotiations with other governments. We have to be concerned with particular things which are done which have a bearing on the over-all foreign relations. We are not in a position to do many of the things which the Office of International Trade does, which has experts in much greater numbers than we do on the specific commodity situations, for example. But I think the two offices work well together without duplication. A large part of our work is related directly to the relationship with other governments.

Mr. PRESTON. Do your people make a study of the available supplies throughout the world?

Mr. THORP. No. We take that from the Department of Agriculture or the Department of Commerce or the Department of the Interior, which ever it may be. We could not pretend in our small handful of people to have experts on any of those things. We have to rely on the rest of the Government.