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Carry-over provisions of this kind are needed because the size and nature of the military-assistance programs and of the grant economic aid programs for 1952 are based on the assumption that the fiscal year 1951 programs will be completed, even though some of the goods and services programed are not actually delivered and paid for until after the end of that fiscal year. To assure the completion of the 1951 programs, it is necessary to carry over not only funds programed but unobligated as of June 30, 1951, but also funds obligated under procurement authorizations or procurement contracts as of June 30, 1951, which later become "deobligated" by cancellation of the procurement authorizations or the contracts. Without a carry-over provision, these funds would lapse.

For example, the 1951 military-assistance program calls for certain quantities of matériel. The program for 1952 is based on the assumption that all matériel programed for 1951 will be bought and delivered. But because of the long lead time between programing and delivery, much of matériel included in the 1951 program will not be delivered until well after the end of fiscal year 1951; and some of the contracts and orders may, for one reason or another, have to be canceled after the turn of the fiscal year. In order to permit new orders for the same or substitute matériel to be let, it is necessary to continue the availability of these "deobligated" funds during the fiscal year 1952.

In the same way, the 1952 economic-aid programs are based on balance-ofpayments computations and other estimates which are in turn based on the assumption that the 1951 programs will be completed. But procurement authorizations issued by the ECA obligating funds for the 1951 program may have to be canceled after the end of fiscal year 1951 because of shortages of particular goods, failure to get allocations of goods programed, or other unforeseeable circumstances. In order that goods in the same amount may be furnished to complete the 1951 program, these same funds must be reobligated and for this purpose must be continued available into fiscal year 1952.

2. In section 303 (a) of the bill provision is made only for carry-over of unobligated balances of prior year obligations, rather than carry-over of unexpended balances as provided in other sections. The funds authorized by this section for fiscal year 1952 are to be used only for a contribution to the United Nations Korea Reconstruction Agency.

In case any of the procurement authorizations already issued under the 1951 direct grant aid program are canceled, the funds obligated by those procurement authorizations will be allowed to lapse. The carry-over provision will permit the unobligated balance of last year's appropriations for Korean aid, as of June 30, 1951, to be used as part of the contribution to UNKRA and thereby reduce the amount of new funds which will need to be appropriated for that purpose. The unobligated balance of $50 million plus the $112,500,000 requested will make up the total $162,500,000 United States contribution to UNKRA.

3. In section 203 (aid to Near East and independent Africa) and in title IV (aid to Latin America) no carry-over provision for economic aid appears. The 1951 economic-aid programs in the Near East and Africa consisted only of the Palestine refugee and point 4 programs. The Latin American economic program consisted entirely of point 4 aid. These funds are almost fully obligated and the chance of deobligation for this type of program is so remote that it was felt unnecessary to provide carry-over.

Estimates of unobligated and unexpended fiscal year 1951 balances, by sections, proposed mutual security bill

[In millions of dollars]

Sec. 101 (a) (European military):

Unexpended__

Unobligated___.

Obligated

Carried over by S. 1762-$315.8 million plus any of the $3,832.6 million which may subsequently be released from obligation.

Section 101 (b) (European economic):

Unexpended_

Unobligated.

Obligated

Carried over by S. 1762-$62.0 million plus any of the $1,445.0 million which may subsequently be released from obligation.

$4, 681. 8 566. 4

4, 114. 6

1, 380.9 62.9

1, 318. 0

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Carried over by S. 1762-$44.7 million plus any of the $302.1 million which may subsequently be released from obligation.

Secs. 202, 203, and 204 (Near East economic and technical):

Secs. 202, 203, and 204 do not provide for any carry-over.

Sec. 301 (Asia and Pacific military):

Unexpended_.

Unobligated-

Obligated

Carried over by S. 1762-$95.5 million plus any of the $191.6 million which may subsequently be released from obligation.

Sec. 302 (Asia and Pacific (except Korea) economic and technical):
Unexpended.

Unobligated--

Obligated

Carried over by S. 1762-$0.2 million plus any of the $133.8 million which may subsequently be released from obligation. (See supplementary statement attached on southeast Asia programs.) Sec. 303 (a) (Korean rehabilitation):

Unexpended-
Unobligated-.

Obligated

Carried over by S. 1762-$50.0 million unobligated balance in addition to new funds authorized as contribution to UN Korean Reconstruction Agency. The $84.3 million represents unexpended balances of fiscal year 1951 funds, prior year funds not having been carried forward.

Sec. 303 (d) (Korea):

This section does not relate to dollar funds but to counterpart funds. This subsection is required because the Economic Cooperation Act, which has been made applicable to aid to Korea, provides that balances of local currency counterpart funds remaining when the ECA operations terminate shall be disposed of in accordance with congressional direction (sec. 115 (b) (6) of the Economic Cooperation Act). This subsection is intended to provide such congressional direction and authorizes release of these counterpart funds for purposes consistent with the UN assistance programs, in accordance with agreements between the United States and Korea. Sec. 401 and sec. 402 (Latin-American military and technical assistance):

Do not provide for any carry-over in S. 1762. Authority for carry-over exists in other legislation.

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1

SUPPLEMENTARY STATEMENT ON SOUTHEAST ASIA PROGRAMS 1
FISCAL YEAR 1951

The attached tables show the situation as of June 30, 1951.

As shown in table 1, $157,318,000 was obligated for program expenses in southeast Asia, Philippines, and Formosa. This was equal to the full amount available for those programs. (Of this total of funds available, it should be noted that $71,384,000 only became available in the final quarter of the fiscal year, most

1 Excludes south Asia programs and administration.

of it for Formosa and the new programs in the Philippines. Of this amount, $41,680,000 was made available for Formosa in the latter part of June.) Table 1 also shows that, as of J'une 30, reported program expenditures amounted to $28,882,450, leaving unliquidated obligations in the amount of $128,435,550. However, as shown in table 2, the estimated total value of arrivals as of June 30 was $43,009,380. Because of a lag in reporting a large part of expenditures to ECA (in particular, because 90 days or longer customarily elapse after a transaction occurs before ECA obtains documents from Emergency Procurement Service), only $28,882,450 had been officially reported as expended by that date, but reports of arrivals received by ECA/Washington from the field indicate that additional shipments to a value of $14,126,930 had actually reached their destination.

In addition, shipments to a value of $5,057,271 were en route and items under contract but not yet shipped amounted to $22,291,044, making a total physical pipeline of $27.348,315 (not reported as expenditures). Thus, goods arrived plus

goods in the physical pipeline on June 30 amounted to $70,357,695.

The value of commitments made but not yet contracted represented the difference between total funds available, $157,318,000 (of which $71,384,000 was made available in the fourth quarter) and $70,357,695, or $86,960,305.

The amounts included in this category of $86,960,305 represent commitments to the recipient governments concerned which they and ECA necessarily take fully into account in developing plans and programs. ECA is not in a position to cancel or change these commitments without agreement on the part of the governments concerned. Moreover, the carrying out of projects such as those of which ECA programs in the Far East consist, and the process of orderly advance planning which ECA is endeavoring to help those governments to establish, require that firm commitments such as these should not be upset at a later date without compelling reason.

SOUTHEAST ASIA SUPPLEMENTARY TABLE 1

Statement of unliquidated obligations of fiscal year 1951 program funds, as of July 1, 1951, by country, shown in 2 parts

PART 1.-STATEMENT OF UNLIQUIDATED OBLIGATIONS BY COUNTRY ARRIVED AT BY SUBTRACTING THE REPORTED EXPENDITURES FROM OBLIGATIONS

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1 Includes $34,000 MDAP funds for Indochina and $246,000 unallocated program funds obligated under an agreement between ECA and the Federal Security Agency (U. S. Public Health Service).

2 Includes $158,000 against obligation of $246,000 under agreement with U. S. Public Health Service.

3 Includes $88,000 against obligation of $246,000 under agreement with U. S. Public Health Service.

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Statement of unliquidated obligations by country showing in separate columns (a) Unliquidated obligatios, (b) Value of contracts made but not reported as expenditures, (c) Value of supplies and equipment en route to destination but not reported as expenditures, (d) Value of sup lies and equipment arrived at destination but not reported as expenditures, (e) Total value of contracted commitments not reported as expenditures (columns (b), (c), and (d)), (f) Reported expenditures, (g) Estimated value of total arrivals (columns (d) and (f)), (h) Value of commitments made but not yet contracted (column (a) minus column (e))

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Includes $88,000 against obligation of $246,000 under agreement with U. S. Public Health Service. 2 Includes $158,000 against obligation of $246,000 under agreement with U. S. Public Health Service. * Includes $246,000 unallocated program funds obligated under an Agreement ECA and Federal Security Agency (U. S. Public Health Service).

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Senator SMITH of New Jersey. If I may make another suggestion, too, yesterday I asked Mr. Horace Smith if he would give us a breakdown in this whole bill by titles of the military, economic, and technical aid. I think what you are asking for in nonobligated funds, or obligated, whichever it will be, should be shown so we have a complete picture, a breakdown by titles and breakdown by countries.

That is not because we do not trust these gentlemen. I trust them fully. But we are going to be asked, "How do you get at these totals?" when we get to the floor, and unless we can say at least we had the figures, even if some of them are secret, we are going to be in a very weak position and they will be saying we gave them a blank check.

(Classified information was supplied to the committee.)

Senator GILLETTE. I thank you, Senator Smith.

I do not want it intimated that there is any suspicion of you gentlemen. We have confidence in you and we want the people we represent to have confidence in us. As I stated when Secretary Acheson was on the stand, this bill represents the expenditure of $186,000,000 to the people of the State of Iowa that I am here speaking for, and they are asking me what it is to be spent for and why, and I want to be in a position to answer.

Senator FULBRIGHT. Senator Gillette, I have a little memorandum here, a committee print of the House Committee on Foreign Affairs, which purports to give in it the unexpended balances as of June 30, 1951, in both the military and the economic programs, if you care to look at it.

Senator GILLETTE. I will be glad to have it, but in addition to the sum that is obligated I would like to know what is under firm obligation that cannot be canceled.

In addition, section 303 provides for the authorization of $112,500,000 for Korean reconstruction, and in addition unobligated balances for assistance to Korea under the Far Eastern Economic Assistance Act. There is another sum, an additional sum here, for Korean reconstruction.

Then the section to which the Senator from Massachusetts referred, on page 9, unencumbered balances, in a special account, pursuant to article V in the agreement between the United States of America and the representative of Korea.

(See explanation, p. 557.)

There is no way, I submit to you gentlemen, that we can intelligently act for those for whom we are trying to act here unless we have something more specific, more concrete, than is presented here. I am confused, and I can't relieve the confusion of those for whom I am speaking unless I have more information than I have been able to get.

GOLD AND DOLLAR RESERVES OF RECIPIENTS

Senator KNOWLAND. There is one additional factor we might get which applies generally. The question was raised as to the gold and dollar reserves of the Republic of China on Formosa. It seems to be the impression in some quarters at least that the Chinese National Government can completely exhaust its gold reserves and currency backing. That is not expected of Great Britain or France. I suggest

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