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Mr. Horan. Somewhere in that neighborhood. So you would have to increase it to be fair with the comparison.

Dr. JOHNSON. One way of looking at it is the number of people working in research.

Mr. HORAN. We will get that and the amounts expended, because there has to come a time-can you expand this through the years?

Mr. Grant. Yes. We have the information on a historical basis.

Mr. HORAN. Personnel and amount. The information I have for 1945, when I came on the committee, was $30.3 million. And, of course, the dollar had already slipped a little; to be comparable, would have to be somewhere in the neighborhood of $60 million. Maybe a little less. So we have greatly increased research. It has become a magic door opener to the expenditure of funds.

So we come to the point where we have to think about those things. It is your money we are spending, you know. You are a taxpayer, just like the rest of us. And I don't think you want to retire on a 10-cent dollar, either, do you?

Mr. KOFFSKY. No, sir.
(The information requested follows:)

Appropriations for rest arch, fiscal years 1946-64

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EUROPEAN ECONOMIC COMMUNITY

Mr. Horax. Meanwhile, you are doing some good work down there. I want to take this report back and look through it.

Mr. KOFFSKY. That is "Statistics on the European Economic Community.” We have another volume on this subject coming through which shows acreage production, consumption, price, and so forth, for the important commodities for each of the Common Market countries. From this, we can trace what they do in response to the Common Market agricultural policies.

Mr. HORAN. Meanwhile, you are doing some good work down there. I am rather intrigued with this volume, to sample it, something I am interested in because I think it is vital to our fiscal position, not only at home among ourselves, but it is vital in our foreign relations, and that is the balance of payments, and you have some tables there that I wish you would explain to me, on page 217.

Dr. JOHNSON. What is the question, Mr. Horan? We can give you a written explanation of it.

(The tables and a brief explanation follow :)

European Economic Community: Balance of payments, 1956–60 1 2

(Millions of U.S. dollars 3]

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1 Intra-community transactions are included because they cannot be excluded on the basis of readily a viable data. Thus these balances are indicative primarily of the magnitude of total transactions of the Common Market countries and do not constitute a Common Market balance of payments with the rest of the world.

? International Monetary Fund, Balance of Payments Yearbook, vols. 12, 13. : Where necessary, con versions were made at the following rates: (a) the Netherlands, 3.80 guilders to the U.S. dollar; (6) Belgium, 50 Belgian francs per U.S. dollar; (c) West Germany, 4.20 Deutsche marks per 1.5. dollar.

"Insurance" included in transportation." ""Non monetary gold" included in "other."

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EXPLANATION OF ITEMS IN THE TABLE The primary purpose of this table is to show trends and magnitudes in the balance of payments items; for instance, the table shows that in general exports and imports of the Common Market countries, including intracommunity transactions, have been rising. As stated in footnote No. 1, since intracommunity transactions cannot be excluded, gross items ("merchandise exports” and “merchandise imports”) do not represent a Common Market balance with the rest of the world. The other items in the table do, however, generally reflect the balance of the Common Market countries with the rest of the world since the pluses and minuses of intracommunity transactions would cancel out. Thus, if Germans traveled to France, the French travel item for German tourists would be a plus, the German travel item as it reflects travel by Germans to France a minus of the same amount.

Goods and services, net.-This figure is the sum of the following items listed in the table: "Trade balance" (which in turn is the net of "merchandise exports"

and "merchandise imports”), “Transportation,” “Travel," "Investment Income,” "Government (transactions) not included elsewhere," and "Other." For these items, all positive figures indicate that receipts exceeded expenditures; for instance, the Common Market countries earned more from foreign tourists in their countries than their own nationals spent traveling abroad. On the other hand, the Common Market countries paid out more investment income (dividends and interest) to foreigners who invested in the Common Market countries than their own nationals earned from their investments abroad. Thus for 1960 the figure – 15.6 under "Investment Income." The large positive amount (1,055.5 for 1960) under “Government, n.i.e.” reflects primarily the large receipts gained by the Common Market countries from U.S. Government military expenditures within those countries.

Transfer payments, net.--The change in 1959 and 1960 to large minus amounts (-306.6 and -346.5 respectively) probably reflects primarily private remittances to their home countries of foreign workers (i.e. from non-Common Market countries) employed in the Common Market countries. (Most of these workers have come from Spain, Greece, and Switzerland.)

Capital and monetary gold, net.These figures show that in every year from 1956 through 1960 the Common Market countries have gained gold, foreign exchange, and investment capital. By internationally accepted concept, a minus indicates a net gain in gold and foreign exchange, a plus indicates a net loss. Conceptually, a minus simply means that a country is importing more gold than it exports.

Errors and omissions, net.-Transactions which cannot be identified and placed in one of the foregoing categories. This is a balancing item, thus for 1960: Goods and services, net_

2, 875. 3 Errors and omissions, net_

288.7

Total.--

3, 164. O

Transfer payments, net--
Capital and monetary gold, net_---

-346.5 -2, 817.5

Total

-3, 164. O Mr. HORAN. Go over it briefly.

Dr. JOHNSON. First of all the goods and services show a net plus balance for the European Economic Community of $2,875 million. Then you have below that item the details, in million dollars of exports and million dollars of imports, with the trade balance, and a minus item for transportation, a plus item for travel, investment income, the other items not included elsewhere.

Mr. HORAN. Let's take travel. I have seen that one. We have an unfavorable balance of payments

Dr. JOHNSON. The travel item is tourism very largely. Mr. HoRan. The net then in the balance of payments is in favor of the European Economic Community, $2,875,300,000. That is weighted, isn't it?

Dr. JOHNSON. Yes.
Mr. HORAN. This is in millions of U.S. dollars?
Dr. JOHNSON. They do show a favorable balance of payments.
Mr. HORAN. And the footnote indicates the exchange rate!
Dr. JOHNSON. Yes.

Mr. HORAN. I presume the exchange rate in terms of dollars is decreasing. Decreasing in guilders, is it?

Dr. Johnson. I think it has been quite stable. I have not checked Mr. Horan, so that I know the conversion of all of these foreign currencies. But I think they have been fairly stable through this period from 1956 to 1960.

Mr. HORAN. You can check that for the record. Dr. Johnson. Yes. (The information requested follows:) The exchange rates of the member countries of the Common Market have remained quite stable during the period mentioned. All of these currencies have been uite strong, especially since 1959. The French franc had been under pressure in the years roughly 1956–59, but with the introduction of the new franc in 1960 the French rate also became very steady. All these countries are members of the International Monetary Fund and under its rules—to which the United States as an IMF member also adheres—the exchange rate of a member currency can fluctuate only three-fourths of 1 percent either above or below its par value, that is, a maximum range of 142 percent. Actually the fluctuation for most of the currencies of the Common Market member countries have been narrower than this maximum.

Mr. Horan. The next one in the footnote is Belgium. We ended the war, I believe, in debt to Belgium and to Switzerland; is that right? I am sure we were in Belgium, most of it ship handling charges.

I am one who doesn't believe that at the time when we were talking about the vital need for tax reduction, which might come about, and tax reform as proposed with a $5,000 floor, will wreck every parochial school in the United States. I think we ought to pay some attention to holding down unnecessary expenditures. That is the reason I hope that we can have the fullest kind of coordination in our research work, because it has grown. I don't say that as an enemy of yours, Mr. Koffsky. I want you definitely to understand that. I am just being frank.

Mr. Chairman, I think I probably said too much, but that is about all that I have.

Mr. WHITTEN. May I say that the statistics from which my colleague has been asking his questions certainly seem to be most informative. There is certainly within this book lots and lots of information which is very valuable and considers many problems. I can't say that I have mastered it. When asking questions I paid some attention to the organization and creation of the European Common Market. I call attention once again to the fact that, as usual, the United States has been the prime mover, in my opinion, in building up the Common Market. Whatever its future benefits may prove to be, it also is creating some real problems for us, and doubtless will create some in the future.

I think I mentioned earlier it is most disturbing to see in today's paper where President de Gaulle, of France, was considering whether the French would help us to strengthen the position of the U.S. dollar at our request. It brings to mind that after World War II we insisted that France recognize all parties in its Parliament, and as a result they had so many parties that almost each Member had a party. They were helpless, which in turn led to General de Gaulle's return. So we just don't know where these efforts will lead.

Gentlemen, we appreciate your appearing before us. I think you made a good showing in connection with this matter. We are glad to have our old friends back and to welcome you with us, too, Mr. Steele.

I repeat, that we have tried to ask the questions that came to mind in order that you might provide for the record the full and complete story or information in connection with it. I hope you will see that it is put in that proper order.

WEDNESDAY, MARCH 6, 1963. .

STATISTICAL REPORTING SERVICE

WITNESSES HARRY C. TRELOGAN, ADMINISTRATOR, STATISTICAL REPORTING

SERVICE CHRISTIAN A. STOKSTAD, ASSISTANT TO THE ADMINISTRATOR,

STATISTICAL REPORTING SERVICE GLENN D. SIMPSON, DEPUTY ADMINISTRATOR, STATISTICAL RE

PORTING SERVICE BRUCE W. KELLY, CHIEF, RESEARCH AND DEVELOPMENT BRANCH,

STANDARDS AND RESEARCH DIVISION, STATISTICAL REPORT

ING SERVICE RICHARD K. SMITH, DIRECTOR, AGRICULTURAL ESTIMATES DIVI

SION, STATISTICAL REPORTING SERVICE RUSSELL P. HANDY, DIRECTOR, FIELD OPERATIONS DIVISION,

STATISTICAL REPORTING SERVICE CHARLES F. KIEFER, DIRECTOR, OFFICE OF MANAGEMENT SERV

ICES JOHN J. KAMINSKI, CHIEF, DIVISION OF BUDGET AND FINANCE,

OFFICE OF MANAGEMENT SERVICES GEORGE WALDMAN, CHIEF, BUDGET BRANCH, DIVISION OF BUDGET

AND FINANCE, OFFICE OF MANAGEMENT SERVICES CHARLES L. GRANT, DIRECTOR OF FINANCE AND BUDGET OFFICER,

DEPARTMENT OF AGRICULTURE

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