Mr. THORP. Of course, the European Office is always interested in these problems and works with us closely, but I would accept this as being our responsibility with ECA. What I wanted to say was that the British and the French and various other countries went along part of the way with us on these policies even 2 years ago. The great step forward has come since the attack on Korea. Since the attack on Korea there has been a different attitude in Europe with respect to this whole great matter of trading with Russia, and the situation has tightened up to a very great degree, just in the matter of the last 6 months.

RELATIONSHIP WITH ECA

Mr. STEFAN. Have you made an educated guess of the percentage of ECA money that is going to Russia and Russian satellites to buy war potentials from Marshall-plan countries? Have you worked with ECA on that matter?

Mr. THORP. Yes. We have discussed this with ECA; and, as far as we know, it does not happen.

Mr. STEFAN. Why, they have figures on it.

Mr. THORP. Yes; they have figures of trade with Russia, if that is what you mean.

Mr. STEFAN. I mean they have the percentage showing approximately how much it is. You do not have it?

Mr. THORP. I wonder if their figures are not more related to trade with Russia rather than how much has come out of ECA? We have figures about the trade with Russia from each country and all that sort of thing.

Mr. STEFAN. Does ECA consult with you as to what they should do with these American dollars going into Marshall-plan countries? Do you have any approval or disapproval of them?

Mr. THORP. No; we do not have approval; but I think, if we were disturbed by something which ECA was planning to do, we would take it up with them, and I would expect ECA to give great weight to our attitude. We do not have a formal approval procedure.

Mr. STEFAN. They work absolutely independent of the Department of State, then?

Mr. THORP. Oh, no, sir. What I was saying is that the authority is theirs and the facts are theirs, but we work with them, and we can make recommendations to them on particular subjects; and, when we do, I think they respect our recommendations.

Mr. STEFAN. Now, when their representative goes into a country to do a rehabilitation job and he finally comes to a decision as to how much money he is going to spend in that country, does he do it with the approval of the chief of the regular mission, or does he do it independently?

Mr. THORP. Well, he would not finally make the decision. He would make recommendations.

Mr. STEFAN. He would?

Mr. THORP. Yes, to the ECA in Washington; and he could make that recommendation without consulting the chief of the mission in

person.

Mr. STEFAN. He could make it without consulting the chief of

mission?

Mr. THORP. That is right.

Mr. STEFAN. Have you had a case where the chief of mission indicated disapproval of a loan or grant of American dollars in a certain country by ECA?

Mr. THORP. No, I do not recall of any, but I have not thought about this particular problem for some time. May I ask if Mr. Stinebower knows of any such case where the chief of mission has specifically recommended against such a program?

LOCAL STATUS OF CHIEF OF MISSION AND ECA CHIEF

Mr. STINEBOWER. The chief of mission has sometimes sent in qualifications for consideration here of the programs suggested; but, as you gentlemen know, the decisions are not made there by ECA. They are made by ECA here at Washington.

Mr. STEFAN. In Washington?

Mr. THORP. Yes. In such a case the chief of mission would merely send the recommendations back to Washington to be approved here. Mr. STEFAN. You mean that there has been a case or two where the chief of mission disapproved the use of a grant or a loan of ECA money in a certain country?

Mr. STINEBOWER. What I meant to say was that the chief of mission may not have concurred. In other words, sometimes you will get a joint recommendation from the chief of mission and from the chief of ECA. In other cases the chief of mission or the Ambassador or Minister in the country may send in his comments, which may not be altogether in accord with those of the ECA mission, and they attempt to resolve those here in Washington.

Mr. STEFAN. As I understood from the previous statement of Mr. Thorp, the chief of mission is not always consulted as to what grants should be made in such-and-such a country.

Mr. THORP. No; he does not have to be consulted under the present arrangements. Of course, the ECA people and our people are Americans working in a foreign country, and it is the natural thing for them to discuss their problems together, but there is nothing that establishes the chief of mission as being the responsible officer for all American activities in the country.

Mr. STEFAN. The chief of mission is the representative of the United States politically and diplomatically. Why should he not be consulted?

Mr. ROONEY. I do not believe Mr. Thorp said that.

Mr. STEFAN. Mr. Thorp said he does not have to be consulted. Mr. ROONEY. Yes; he said he does not have to be consulted, but he did not say that he was not consulted.

Mr. STEFAN. No; they do not have to be, and in some cases they have not been, according to the testimony here. What I am driving at, Mr. Chairman, is why bypass the chief of mission, and why have diplomatic representatives in foreign countries? We have about 300 regular American missions scattered over the world with representatives of the United States in charge of those offices. Now, the head of the mission and his staff know more about conditions in a country than any new men coming in. Along comes an ECA representative with diplomatic status of at least social value, making it possible for him to bypass the chief of mission with the result that he is looked upon in some countries as keeping the books, and our

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chief of mission becomes nothing but a glorified clerk, and the effectiveness of his political association with the government of that particular country in which he represents our own United States relegates him to disrespect and he is bypassed not only by the representatives of some agencies of the United States, but certainly by the officials of the government where he represents our Government. Then we find these conditions that exist here, which makes our own Foreign Service absolutely ineffective, in my opinion. That is what I was driving at.

STOCKPILING

Your next point was about stockpiling. What do you do about stockpiling? We have an agency set up for that.

Mr. THORP. The stockpiling problem comes in these terms. The great problem, of course, in terms of stockpiling, is to find sources and make arrangements to get an even larger amount of materials to be available.

Mr. STEFAN. Do not the commercial attachés in the foreign countries do that?

Mr. THORP. Well, someone has to act as liaison between our people abroad who are working in those embassies and consulates and the agencies here in Washington who are concerned with the stockpiling itself, because very frequently the program is done through private contracts, but in order to make sure that as much comes out as possible the State Department tries to get the foreign government to facilitate the flow of goods to the United States.

Mr. STEFAN. We do that through our representatives in the missions?

Mr. THORP. That is done primarily through our representatives abroad.

Mr. STEFAN. These 300 people that you have working with you do that through correspondence with the agencies in Washington and the attachés in the various missions?

Mr. THORP. Yes.

Mr. STEFAN. And you have them get in contact with the representatives in that particular country?

Mr. THORP. That is always a problem, depending wholly on the caliber of the people and the country. Sometimes when we are dealing with foreign governments we do it through Washington. When we do it in Washington we send the ambassador abroad information to keep him up-to-date on what we are doing, but if it happens that the Government has an ambassador here we do it here if they prefer. I would say that as a general rule it is done abroad.

Mr. STEFAN. Who else works on that stockpiling besides the commercial attachés in the field and your other correspondents?

Mr. THORP. In the Government, of course, the Munitions Board, which is in the Defense Department sets the goals for the stockpile. At the present time the purchasing is done by GSA, the General Services Administrator, Mr. Larson, and he develops the contracts or whatever arrangement is made, insofar as it is possible to work out a purchasing arrangement. Very frequently he does his purchasing through private channels, so that insofar as the foreign government is concerned, Mr. John Doe in the foriegn country has made a contract to sell to Mr. Smith in the United States, and Mr. Smith, in turn, is acting for Mr. Larson in General Services Administration.

Mr. STEFAN. Does Commerce come in there?

Mr. THORP. Does Commerce come in?

Mr. STEFAN. Yes.

Mr. THORP. Yes, Commerce comes in in connection with the general discussions. There are various experts in Commerce as to what are possible sources and in developing plans for getting these things, but I do not think that Commerce has any part as such in the actual process.

Mr. STEFAN. I just cannot figure why there should be so many agencies working on this one particular thing.

Mr. THORP. It is not so many agencies. You have the agencies interested, which decide what should be in the stockpile, and you have the purchasing agency, which is the General Services Administration. Then you have the State Department which deals with the Government getting it to facilitate the shipments. Now, I could build up a story where there would be a lot of other agencies involved as well.

Mr. STEFAN. Yes, so could I. You have not mentioned the armed services.

Mr. THORP. Yes, the armed services who are also interested, and then you have also a case where it is a matter of opening up some new deposits in a foreign country where possibly the Export-Import Bank might come into it.

Mr. STEFAN. Are you the only agency that can facilitate these shipments?

Mr. THORP. No, but in terms of dealing with a foreign government where that is a problem we are responsible. Many times there is not any problem with the foreign government, and we do not get into it at all, but in those cases where there is a problem with a foreign government, then that becomes the State Department's responsibility.

ADDITIONAL EMPLOYEES

Mr. STEFAN. Why do you need these nine additional employees, Mr. Thorp? What are they going to do?

Mr. THORP. They will be involved in the stockpiling which we have discussed and also in the whole commodity problem, the problem of sources, and the problems that arise because of the increased shortages of war materials. Take sulfur, for example, and the fact that the three virtual heads of governments who have been here in the last several months have all wanted to talk about sulphur. We have to have somebody in the State Department who can arrange that. They need to know enough about sulphur to know how to bring it into the picture, and that is a question of working with people in many additional agencies.

Mr. STEFAN. And no other agency of government can do that except your agency?

Mr. THORP. There is no other agency of government, I think, to whom Mr. Attlee should go when he comes over here, none other than the State Department. If Mr. Attlee started going all through the United States Government talking to everybody, I think the Government would find itself in a very disorderly way, and the problems I am worried about are the problems that will come from this Government and from foreign governments.

MONETARY AFFAIRS STAFF

Mr. STEFAN. Mr. Thorp, you have a monetary affairs staff in your Bureau?

Mr. THORP. Yes, sir, that is right.

Mr. STEFAN. What do they do?

Mr. THORP. Well, that staff is particularly concerned with problems that relate to foreign exchange and problems relating to the supply and handling of gold in the world. They are essentially concerned with monetary and commercial banking problems.

FOREIGN CREDITS

Mr. STEFAN. Are they concerned with foreign credits?

Mr. THORP. They might be concerned with things like shifting short-term credits in terms of commercial loans, and so forth. Longterm credits becomes the problem of the investment and economic development group.

FOREIGN CREDITS FOR EXPENSES ABROAD

Mr. STEFAN. I do not know whether I should direct this question to you and your monetary staff or not, but it is rather difficult for me to determine exactly how much in foreign credits could be available to the United States for all the expenses abroad. That is a problem that is complicated by the type of agreements, and so forth.

There are all kinds of provisions in treaties, some of them providing specifically for funds to be used for certain purposes. Specifically, am referring to the counter-part funds. Do you have a staff handling that?

Mr. THORP. Well, we have been involved in negotiating these matters, and we are supposed to be the experts, but actually, I think, in terms of the total amount, and matters of that sort, that Mr. Wilber can give the information.

Mr. STEFAN. Can you tell me how much counter-part funds there are now, the total?

Mr. WILBER. We have a total available of $890,000,000.

Mr. STEFAN. I had $750,000,000.

Mr. WILBER. The balance available as of December 31 for the program was about $750,000,000. I think that is where your figure comes from.

Mr. STEFAN. Yes.

Mr. WILBER. I have the amounts here by countries, of the program that we have already planned, according to the building fund, Fulbright, and for administrative expenses. I will be glad to give you either the total or detail figures.

Mr. STEFAN. About one-third has been earmarked for use in strategic materials. Why could not more of that be earmarked for procurement of strategic materials, outside of what we have for the acquisition of buildings for the Foreign Service?

Mr. WILBER. I believe the strategic materials is a portion of the ECA counter-part funds.

Mr. STEFAN. They get 5 percent.

Mr. WILBER. That is correct. But that is a large sum, in total.