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 Total original $7, 750,000.00 4,081, 781.71 484, 275. 90 66, 727, 402. 64 88, 483.37 3, 177. 288. 87 23, 909, 965. 17 875, 000. 00 144, 072, 214.02 540, 718. 61 1, 980. 000. 00 1. 659, 443. 18 6, 215, 269. 98 6, 126, 791. 08 4, 049, 948. 21 | Union of South Africa. United Kingdom and colonies.. Total.. 4,081, 781. 71 17, 995, 248. 92 88,483.37 $172, 891.55 $172, 891.55 321, 111. 72 544, 237.56 239, 372. 67 783, 610.23 267, 047. 78 267, 047.78 398, 011. 96 967, 219. 49 398, 011. 96 $29, 218. 74 4, 722, 808. 64 1,037, 723. 65 137, 968, 145. 88 1, 037, 723.65 7,763, 433.37 52, 236, 566. 63 112, 243. 35 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 of GAO. 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. MURPHY. 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 Mr. BONNER. Did any of this scrap go to Hong Kong? Mr. MURPHY. As I understand it, the scrap has not been removed in any bulk. I think a few of the vessels have been floated and moved. As far as I know, the vast bulk of it has not yet been scrapped and moved. Do you know of any? Mr. MEIGS. There was one shipment reported to Hong Kong in early 1949 or late 1948. That was not of scrap. That was some marine supplies, which were involved in the sale, and there have been rumors that there have been small shipments of scrap since then, but I do not believe any of it is that scrap which resulted from the OFLC sale. Mr. MURPHY. The bulk of the vessels were small landing craft, and that was handled by the Office of Foreign Liquidation Commissioner, and then there were some larger vessels which were sold by the Maritime Administration. We had no part in that sale. Mr. BONNER. You had no supervision over the handling of that? Mr. MURPHY. That is correct. That was handled by the Maritime Administration. Mr. MEIGS. Mr. Chairman, it might be of interest to the subcommittee to know that in the OFLC contract for the sale of those vessels, there is a clause requiring the return of that scrap to the United States. Mrs. HARDEN. Pardon me; I was going to ask why they were planning to sell it to Japan instead of permitting us to have it. Mr. MURPHY. Well, they came in because of this clause in the contract; they have now approached us for permission to sell in Japan, I presume because the market will bring a better price there, but I do not know why. But they are now seeking our permission to sell the scrap in Japan, and no decision has been made on that request as of today. SCRAP IN KOREA Mr. BONNER. Does your Department, your section of the State Department, have any contact with the movement of scrap out of Korea? Mr. MURPHY. Yes, sir, we do, and that falls under Public Law 152. The different agencies, particularly the Department of Defense, are right now in consultation with the State Department on Korean scrap, and Mr. Meigs has been the one most actively in contact with them. Anticipating that you would want to know about that, he is here. Mr. BONNER. Mr. Meigs, is the Korean Government shipping a quantity of scrap from Korea? Mr. MEIGS. So far as my information goes, there has not been any movement of scrap out of Korea in any direction. That is not based on any reports that I have received, but merely conversations with people who are connected with that. Mr. BONNER. Your Department does not have a representative out there making reports to you? Mr. MURPHY. Yes, we do. We have an Embassy staff in Pusan. Mr. BONNER. Do they know anything about scrap? Mr. MURPHY. I have seen no reports about any scrap movements. Mr. BONNER. Has anything come to your attention about the estimated quantity of shell scrap that the Army should have received back in scrap, and what has become of it? Mr. MURPHY. No, sir, I haven't seen anything. Mr. BONNER. Do you know anything about that? Mr. MEIGS. No, sir. Mr. BONNER. Have you anybody out there, or is that in your sphere at all? Mr. MEIGS. It is not within our sphere, strictly speaking. Mr. MURPHY. That would be the Department of Defense and 1 understand that some sort of a survey mission has just completed work out in Korea on that scrap situation. Mr. BONNER. Do you have any knowledge about any surplus in that area? Mr. MEIGS. In Korea, sir? Mr. BONNER. Yes. Mr. MEIGS. No. Mr. BONNER. At Okinawa? Mr. MEIGS. Surplus at Okinawa is that which was sold under Office of the Foreign Liquidation Commissioner operations. We have not had any information from the Army or Department of Defense regarding any surplus on Okinawa since the closing of the Office of the Foreign Liquidation Commissioner. Mr. BONNER. Where in the Pacific do you have any knowledge of transactions on surplus property? Mr. MEIGS. In Guam and in Japan and the Philippines, also the Trust Territory. That about covers the area. Mr. BONNER. What is your knowledge about it? STATE DEPARTMENT DISPOSAL POLICY Mr. MEIGS. In compliance with our statement on policy to the various executive agencies, when they have quantities of surplus property exceeding a cost value of $250,000, they communicate with us and ask us for our comments and suggestions as to disposition, and we, when we receive that request, canvass the situation thoroughly and reply, saying we approve or we disapprove of the proposed transaction. In the course of the last 2 years we have had had numerous requests for our comments from the Pacific area, and have in most cases given our qualified agreement to the disposal. In general, the qualifications which we have attached to the disposals have been that the material disposed of be disposed of in a fashion which will prevent its falling into the hands of any persons or nations whose interests are contrary to our own. Otherwise, there has been no tremendous question of foreign policy involved. Mr. MURPHY. You do have some information on particular sales that have been suggested? Mr. MEIGS. Yes. For instance, on Guam the Army has our agreement to the disposal of about $13 or $14 million worth of property. In Japan nearly $4 million, in the Philippines Mr. BONNER. That is in the last 2 years? |