Mr. BEALE. It is possible for the interest to be waived, and I have read considerable discussion in the newspapers as to whether it will or will not be done. That is a problem for the Secretary of the Treasury. Mr. BONNER. Any other questions? You know nothing about the system of supplies to the national defense in Great Britain, the Ministry of Supply? You said you knew nothing about that? Mr. BEALE. Well, I know only in the sense of what the general responsibilities of the Ministry of Supply are, but I do not know the specific question that Mr. Brownson asked me as to exactly whether they brought back, had arrangements for bringing back, their supplies. Mr. BONNER. Well what do you know about the supply system of their national defense? Mr. BEALE. I confess, sir, I know very little about it except in the most general terms. Mr. BONNER. What do you know in general terms? Mr. BEALE. Only that they have responsibility for the iron and steel industry, the motor car industry for allocations to the domestic economy and to the export trade. Mr. BONNER. What agency supplies the Navy, the Army, and the Air Force? BRITISH MILITARY PROCUREMENT AGENCIES Mr. BEALE. Well, procurement for the Navy is the responsibility of the Admiralty, but procurement for the ground forces and air forces is the responsibility of the Ministry of Supply. Mr. BONNER. Then they have two supply systems? Mr. BEALE. Once you have moved out of procurement of munitions and directly related items, you move into two other areas. One, they have a Ministry of Raw Materials, of which Mr. Stokes is the head, and that covers, for example, nonferrous metal ores. The product of nonferrous metal ores is the responsibility of the Ministry of Supply, but the raw materials, nonferrous metal ores themselves, is a responsibility of the Ministry of Raw Materials, and there is a further complication in that the textile trades are a responsibility of the Board of Trade. That is a step further removed. They are, needless to say, concerned with defense in the procurement of uniforms, but they are not directly under the Ministry of Supply. Mr. BONNER. Well, the Textile Board supplies uniforms for all branches of the service. Mr. BEALE. That would be the Mr. BONNER. Whereas we have three branches of the national defense individually purchasing their own textiles; is that correct? Mr. BEALE. I would assume that the demands of the three branches of the services in England would be made known to the Board of Trade, which would be responsible for procurement as I would understand their responsibilities, procurement of anything that involved textiles, per se. Mr. BONNER. One board for all services? Mr. BEALE. Yes, like the Department of Commerce in the United States. There is no exactly comparable agency in the United States Government comparable to the Board of Trade, but I suppose the Commerce Department would be as close as you could come to it. Mr. BONNER. The Commerce Department here has nothing to do with supplying textiles to the armed services. Mr. BEALE. No, but the general responsibilities of the Board of Trade are broader than this problem of procurement, and I just make a comparison in that sense. Mr. BONNER. Thank you, sir. Mr. MORELAND. Now we have Mr. Meigs and Mr. Murphy from the office of the Lend-Lease and Surplus Property Staff. STATEMENT OF FRANCIS T. MURPHY, CHIEF, LEND-LEASE AND SURPLUS PROPERTY STAFF, STATE DEPARTMENT, ACCOMPANIED BY CARROLL M. MEIGS, STAFF ASSISTANT Mr. MURPHY. Mr. Chairman, my name is Francis Murphy. I am Chief of the Lend-Lease and Surplus Property Staff. I do not have a prepared statement. I anticipated that the committee with its questioning would focus on the problems in which they were most interested. My small division or staff is part of the economic area as distinguished from the political areas in the State Department, and we cover the entire world as far as administering surplus property and lend-lease matters are concerned, so it would be extremely difficult to attempt to generalize, but I am happy to be here and help the committee in what I think is going to be a very useful and effective undertaking in making this world survey. Mr. BONNER. Now, just what do you do with respect to surplus property? STATE DEPARTMENT HANDLING OF SURPLUS PROPERTY Mr. MURPHY. We administer the affairs that were formerly conducted by the office of the Foreign Liquidation Commissioner, which went out of business in June of 1949. That office handled the disposal of surplus property under the Surplus Property Act of 1944 which, as you all know, was superseded by Public Law 152 which became effective on the 1st of July, in 1949. Now, by administering, I mean that we manage the interests of the United States in these long-range surplus property agreements. They represent obligations to United States of about $2 billion. Now, that covers the disposals that were actually made by the office of the Foreign Liquidation Commissioner. In addition to that, when Public Law 152 came into force title IV provided that each executive agency owning property abroad would be responsible for its disposal, but that it must make those disposals in conformance with our foreign policy, so that within the State Department this staff, of which I am the Chief, was designated to work with all of the other Federal agen cies in seeing to it that the foreign policy of the United States was protected and furthered by whatever they did in the field of surplus property disposal. Mr. BONNER. You haven't any activity in Alaska with respect to surplus property? Mr. MURPHY. No, sir; we do not cover Alaska, Hawaii, Puerto Rico, the Virgin Islands, or the zone of interior. Mr. BONNER. How about Japan? What is going on with respect to surplus property as far as your agency is concerned? DISPOSAL OF SURPLUS TO JAPAN Mr. MURPHY. During the period of the Surplus Property Act of 1944 we sold to Japan under credit agreements property at a sale price of approximately $14 million and we are administering these agreements. We draw down local currency when we need it to pay United States expenses, and at the moment we are engaged in rewriting part of the agreement as a result of the peace treaty. There will be a subsidiary agreement in which we will redefine and change some of the terms of payment in order to make it possible for us to draw down Japanese currency and use up that $14 million. Mr. BROWNSON. Mr. Chairman, may I ask at that point what valuation was used in arriving at that $14 million? Mr. MURPHY. That is a charge against the Japanese. It does not represent the original cost to Uncle Sam. Mr. BROWNSON. Do you have any factor for estimating the original acquisition value of that property? Mr. MURPHY. Not with me. I can tell you the world-wide average, the average return was about 20 cents on the dollar. I think it was higher, I think we got more in Japan because it was somewhat of a selected sale. I can get for the subcommittee the exact figure, if you wish. Mr. BROWNSON. We would like to have that if we could, please. (The material referred to follows:) Department of State-Status of surplus property credit agreements with foreign entities under the Surplus Property Act of 1944 as of June 30, 1951 $7,750,000.00 4,081, 781.71 484, 275.90 88,483.37 13, 063, 636. 35 3, 177. 288. 87 875, 000. 00 144, 072. 214.02 14, 034, 716. 93| 24, 927, 595.80 1, 550, 279. 81 1, 980, 000. 00 $1,819, 487. 29 739, 307.01 13, 038, 116.94 8,357, 986. 84 1, 158, 611. 19 $5, 930, 512. 71 84, 026. 72 4,358, 890.71 $321, 111. 72 8, 920, 762. 7146, 079, 237. 29 $172, 891.55 $172, 891.55 321, 111. 72 17, 995, 248. 92 398, 011.96 137, 968, 145. 88 1, 037, 723. 65 560, 344.67 16, 707, 790. 93 3, 969, 388. 66 3,981, 508. 32 95, 260. 72 267, 047.78 237,667.93 328, 530. 79 2,668, 171. 172, 331, 828. 83 5, 187, 153. 21 443, 283. 55 35, 520, 230.66 4 100.000.00 1, 350, 116. 63 4. 423, 842.30 6, 126, 791. 08 1, 412, 250. 00 2, 543, 060. 82 Turkey. Union of South Africa. United Kingdom and colonies.. Total. 1,056, 033. 707. 12 155, 655, 550. 33 960, 475, 020. 45, 7, 636, 446. 13 1, 251, 887. 798, 888, 333.92 1 Includes payment in United States dollars, local currency, real estate and improvements and allowances for claims. To be drawn in local currency by the United States to meet foreign building operations, Fulbright, and administrative expenses. 3 To be drawn in local currency by the United States to meet foreign building operations and Fulbright expenses. Claim by Saudi Arabia for $100,000 pending decision ofGAO. Mr. BONNER. What was the nature of the property? Mr. MURPHY. In general, the run of the mill war surplus, as I recall it, principally motor vehicles, some construction equipment, medical supplies. Mr. BONNER. In Japan? Mr. MURPHY. In Japan; yes, sir. These were supplies that were on hand in the various Army depots in Japan. Mr. BROWNSON. These were all in Japan. None of these were moved into Japan from surrounding bases to be disposed of; is that right? Mr. MURPHY. That is correct. Mr. BROWNSON. These were in Japan? Mr. MURPHY. That is my understanding; yes, sir. Mr. MEADER. Was that a bulk sale? Mr. MURPHY. No, Mr. Meader, it was not a bulk sale. There were, I think, five separate contracts all under the long-range credit agreements, but it was not a bulk sale in the ordinary sense. Mr. BROWNSON. What were the dates of those transactions? Mr. MURPHY. I do not recall the exact date. I know it was 1947 and 1948. Mr. BROWNSON. The reason I ask is because at the end of the war we did not have anything in Japan because we were not in Japan until then. Mr. MURPHY. Oh, yes; you had to build up these supplies after the war. Mr. BROWNSON. They were built up apparently in late 1945 and 1946 and then were sold in 1947? Mr. MURPHY. That is right. Mr. BROWNSON. So it would seem to me that they must have been moved from some of those surrounding islands to Japan. Mr. MURPHY. They undoubtedly were by the Army, but they were not moved for the purposes of this particular transaction, which was the case in Korea. Property was moved in to meet a particular requirement there. I would like to mention for the subcommittee that the exact dates and the terms of these agreements are all available in the reports that we furnished Mr. Roback. Mr. ROBACK. We have the information. We also had a memorandum prepared for members on some of the background material. I believe most of the members have that. Mr. BONNER. Did the State Department have any consultations with the Maritime Commission when they made a couple of contracts with a British concern with respect to scrapping the ships that had been lost at Okinawa and in the Pacific? SALE OF SCRAP IN OKINAWA Mr. MURPHY. I think you are probably referring to a contract that the Office of the Foreign Liquidation Commissioner originally made with American firms for the sale of the hulks that are under water off Okinawa. Mr. BONNER. That was a British firm. Mr. MURPHY. Mollers now own it, I believe, but they are the thirdparty owner. We originally sold those hulks I believe to the China Merchants & Engineers, Inc., which was a firm in Seattle, Wash. They resold their interest to the Oklahoma-Philippine Trading Co. Neither of those firms, as far as we know, actually did anything to scrap the vessels and move them, but the Oklahoma-Philippine outfit resold to Mollers, and as I understand it Mollers now owns the interest in those vessels. They have asked for permission to dispose of the scrap to Japan. We have a request from them before us now for consideration. 94756-52-6 |