Mr. WHEELER. On every receipt we have the total cost included in the item.

Senator ADAMS. To put my question specifically, do you regard it as a gift or a sale?

Secretary WICKARD. I think the English people don't regard it as a gift. I don't know what the administration, the President, and the Treasury Department are going to do about the repaying of this amount of money that is in the lend-lease bill. I suppose the agricultural products will be treated just the same as the others, as far as I know.

Senator GLASS. You regard it as a sale from which you don't expect to get any money? Is that it?

Secretary WICKARD. Since we have been paid ourselves, that is, we buy it through an agent and get our funds from the Government, I wouldn't want to hazard a guess whether the Government is going to get funds back or not from this.

Senator NYE. Which is the accounting agency which takes care of all this?

Secretary WICKARD. We take care of it through Mr. Stettinius'

group.

Senator NYE. So that if there is any accounting, it is done through that office?

Secretary WICKARD. Yes, sir-the same as anything else.

QUESTION AS TO WHETHER SECURITY IS TAKEN FOR ARTICLES TRANSFERRED

Senator THOMAS. I would like to ask the counsel if there is any provision of law requiring you to have bonds or securities or any kind of money when you sell these products or deliver them.

Mr. YOUNG. I am not sure I understand your question, Senator. Senator THOMAS. What does the law require you to have when you turn over commodities under this bill? You furnish the commodities, and what does the law require you to secure in payment or in promise of payment? Bonds?

LEASE-LEND AGREEMENTS BEING NEGOTIATED

Mr. YOUNG. That goes back to this question of basic lend-lease agreements with the foreign countries which are receiving lend-lease help from the United States. Some of those agreements with some of the smaller nations have already been worked out. The negotiations are carried on between the State Department and the foreign government. The British lend-lease agreement is in process of negotiation. Conversations have been carried on continuously between the State Department and the British Government, both directly and through our ambassador in London, about which I believe Mr. Acheson testified in the House.

ELEMENT OF CONSIDERATION CONTAINED IN BASIC LEASE-LEND ACT

Senator ADAMS. His statement is on page 360. May I say this, that the original lend-lease bill gave to the President the right to transfer these articles upon such consideration as he may think proper.

That is, the element of consideration is in the bill. There is the requirement of some consideration. In other words, it isn't a gift bill. Mr. YOUNG. That is right.

Secretary WICKARD. It hasn't been so called. I mean, there is nothing to indicate that it is anything other than a lend-lease bill, and what you quote there I think is the best answer I could give in answer to your question.

Senator NYE. In the first report the President made to the Congress under the provisions of the lend-lease bill, he said, citing section 3 (b) of the act:

Work has started on the agreements to fix the terms and conditions, under section 3 (b), upon which the foregin governments receive the aid.

But in his second report, I have not been able to find and I am told there is no reference whatsoever to that particular phase of it. Do you know of any arrangement that has been made?

Secretary WICKARD. No, sir; I do not and I haven't given any consideration to that. I think that is a matter for the President. Senator NYE. That is not within your province.

Secretary WICKARD. I don't consider it is within my province. Mr. YOUNG. All of those negotiations have been carried on by the State Department, on behalf of the various agencies.

Senator THOMAS. It is a fact, is it not, that a complete record is made by your Department and kept and filed, for the goods turned over, showing the prices you pay for them?

Mr. YOUNG. Oh; yes, sir.

Senator THOMAS. So that in the future we have the basis for adjustment of any financial obligation any of these nations assume? Mr. YOUNG. Yes, sir.

Senator THOMAS. And that is as far as your obligation goes?
Mr. YOUNG. Yes.

Senator THOMAS. You are not required to get any bonds or other evidence?

Mr. YOUNG. No, sir.

Senator GLASS. There may be various considerations. They may be returned dollar for dollar, for whatever we may furnish them. Or we may consider that killing British troops instead of American troops is a consideration, and that we really mean it when we say that is our front line of defense. I think it is.

Senator THOMAS. In any event, that is not the province of our committee. We are to furnish the money and the other fellow is to figure out the law.

PROVISION IN BASIC LEASE-LEND ACT ON CONSIDERATION

Senator ADAMS. Let me read this section 3 (b) to which Senator Nye has referred:

The terms and conditions upon which any such foreign government receives any aid authorized under subsection (a) shall be those which the President deems satisfactory, and the benefit to the United States may be payment or repayment in kind or property or any other direct or indirect benefit which the President deems satisfactory.

Senator McKELLAR. Under those circumstances, of course, there would be no reason for his asking for bonds or money or any other

consideration, because that is covered in full by this law already passed.

Senator NYE. Except, Senator, it was indicated in his first report that the matter was under consideration.

Senator MCKELLAR. That particular part of it is a matter for the administrative or executive departments.

Senator ADAMS. So that there is under preparation an agreement. between this country and Great Britain in reference to the terms, and that is an uncompleted agreement.

Senator MCKELLAR. Under those conditions, Mr. Wickard could not take bonds or anything else.

Senator THOMAS. He couldn't do it if they were offered to him. Senator GLASS. We can't criticize Mr. Wickard for giving his opinion to the farmers. But that doesn't constitute an appropria

tion.

Senator ADAMS. Are there any other questions this morning?
We will recess until 2 o'clock.

(Recess at 12:45 until 2 p. m.)

AFTERNOON SESSION

WEDNESDAY, October 15, 1941.

The hearing was resumed pursuant to recess.

Senator ADAMS. The committee will come to order. Mr. Appleby, you might go ahead now.

DEPARTMENT OF AGRICULTURE

STATEMENT OF PAUL H. APPLEBY, UNDER SECRETARY OF AGRICULTURE

FOOD SITUATION IN GREAT BRITAIN

Mr. APPLEBY. Mr. Chairman, I brought back a great quantity of material, and I have not had time yet to finish analyzing it all, and formulate precise statements on which I would like to stand. My generalizations would be, I think, accurate, but would be subject to modification in the direction of precision.

Senator THOMAS. Will you tell us how much time you spent-and where?

Mr. APPLEBY. I was a month in England, and the time was spent in three ways: Conferences with officials, visits to food establishments, visits to farms. Our conferences were mostly with those in the ministry of food, the ministry people in London and in north Wales, where is the administrative headquarters-they are decentralized in that way, and with the ministry of agriculture in London, and with the ministry of economic warfare, and others. We saw eight Cabinet members. We visited scores of farms and visited county agricultural committees. We have been on ships, through the docks; we visited warehouses, wholesale houses, and retail stores; we visited restaurants. We talked to workers, talked to people on the trains; we talked to people everywhere.

PHYSICAL CONDITION OF PEOPLE

Senator THOMAS. In what shape are these people? Are they all starved, like we Americans were, when you got back?

Mr. APPLEBY. I think it is generally agreed that most people over there have lost weight, and, of course, as always happens, some of them could lose weight profitably. You should not shed too many tears over that. And yet I think it is true that with the mass of people they all have lost some weight they should not have lost. In one group of eight Americans-I don't know how true this would be generally-all but one had lost weight.

Senator THOMAS. Was that because of the lack of food or the nature of the food?

Mr. APPLEBY. It would probably be both. It is not food that the Americans are familiar with, not food that they like as well. But on the other hand, I suppose possibly, knowing the limitation, one feels hungry right to begin with, and certainly I ate things I never eat at home, and I did that very constantly, and I ate about everything in sight. I was constantly hungry. I lost weight.

MORALE OF ENGLISH PEOPLE

The English people do not complain of being hungry. I do not believe you could find a single person who would really admit he did not have enough to eat. For example, on a train one time in a compartment, one man made a remark that sounded as if he was complaining he did not have enough to eat. Everybody else in the compartment immediately began to protest that they had plenty and they knew he had plenty. He said, "Oh, I didn't mean that." He backed up right away. They are proud and they do not want any of their confidence undermined. They are not complaining about anything; they are not complaining about costs. That was one of the amazing things to me. The wealthy people, for example-I tried to start discussions with them about costs and taxes. They were not interested in talking about it. They were not interested in talking about how long the war was going to last. That was too academic. There was just one effort that they were concerned with-winning the war.

They are not concerned with the 100-percent excess profits tax, and the very high income taxes. A man with a million dollars a year before the war, simply has $25,000 now.

CHANCES OF PROFITEERING SLIGHT

There isn't any real chance to profiteer. The efforts that are made to profiteer are by small shop holders who do not have any employees, or who do not keep much in the way of books, and they think they can get away with charging some person a little extra, but the papers are full of prosecutions, and there are very harsh penalties.

ECONOMIC PICTURE IN THE BRITISH ISLES

Senator THOMAS. What comments have you to make about prices over there to the public generally?

Mr. APPLEBY. Well, we have to start with a general view of their economic picture. They are spending now 90 percent of their pre-war income, and of course they could not do that if prices had not moved up. Both production and prices have moved up and they are spending now in excess of 60 percent of their present national income, and that does not count some of the obligations the Government is underwriting in the way of bomb damage and later settlement with farmers. whose farms have been taken over. But current expenditures, obligations that are recognized and fixed, are taking in excess of 60 percent of their present national income.

Senator MCKELLAR. Are prices higher there, generally, than here? Mr. APPLEBY. It depends. They have a policy of enforced saving, which means they are trying to divert as much energy as they can from the production of goods not essential to the war, and they have taxes put on in line with that policy to discourage purchases.

TAX ON CLOTHING

There are taxes on clothing. You can buy clothing only with coupons, and you get a very small amount of coupons.

I have told about my experience in that respect. My bag was lifted off a train and for a week I was without it and had only the clothing I had on. I had to get some clothing coupons. I received two-thirds of a year's supply and I bought with it a pair of pajamas, two shirts, two suits of underwear, a tie and two pairs of socks. That was two-thirds of a year's supply.

Nobody in England is as well off, or nearly as well off, as they were before the war. They are spending two-thirds of the national income on this public effort. The people can't buy nearly as much, in that situation, as they did before the war.

One thing I think is clear; the workers and the poor, relative to the consumable national income, are better off than they were before. There is a more even division of the income that is consumable. The wealthy are living out of their capital, with the kind of taxes they have, and the responsibility they have to live up to. They finance themselves in their public responsibility. They give their cars— women who had chauffeurs are now in uniform driving their own cars in the public service; they make donations to destroyed libraries to buy technical books they need, and to all kinds of good causes. The wealthy are using up their capital fast.

Senator THOMAS. Is there a feeling over there that the people are paying their full quota of taxes? In other words, is there any tax evasion?

Mr. APPLEBY. Of course, I don't know that any one would claim 100-percent success for anything of that kind, but there is a general feeling, and I think it is justified on the basis of what I saw, that the people are trying their best to build up in a way superior to anything that was in their experience before, or in ours.