Appropriation Bill, 1944

OF CALIFORNIA

UNIVERSITY OF C

LIBRARY

HEARINGS APR 12 1943

BEFORE THE

DOCUMENTS DIVISION

SUBCOMMITTEE OF THE

COMMITTEE ON APPROPRIATIONS
UNITED STATES SENATE

SEVENTY-EIGHTH CONGRESS

FIRST SESSION

ON

H. R. 1648

A BILL MAKING APPROPRIATIONS FOR THE TREASURY
AND POST OFFICE DEPARTMENTS FOR THE
FISCAL YEAR ENDING JUNE 30, 1944

AND FOR OTHER PURPOSES

83242

Printed for the use of the Committee on Appropriations

UNITED STATES
GOVERNMENT PRINTING OFFICE

WASHINGTON: 1943

EX OFFICIO MEMBERS FROM COMMITTEE ON POST OFFICES AND POST ROADS

EVERARD H. SMITH, Clerk

TREASURY AND POST OFFICE DEPARTMENTS

APPROPRIATION BILL, 1944

WEDNESDAY, FEBRUARY 17, 1943

UNITED STATES SENATE,

SUBCOMMITTEE OF THE COMMITTEE ON APPROPRIATIONS, Washington, D. C. The subcommittee met in the committee room, the Capitol, pursuant to call, at 10:30 a. m., Hon. Kenneth McKellar (chairman), presiding.

Present: Senators McKellar, Tydings, Hayden, Green, Maybank, Lodge, and White.

TREASURY DEPARTMENT

LETTER FROM DEPARTMENT REQUESTING CERTAIN AMENDMENTS

Senator MCKELLAR. The committee will please come to order. The Acting Secretary of the Treasury in response to our letter has addressed a letter to the committee in support of certain amendments to the bill that he recommends be made, particularly the restoration of some of the money taken out by the House, below the Budget estimates.

I will ask that the letter be included in the record at this point. (The letter is as follows:)

Hon. CARL HAYDEN,

TREASURY DEPARTMENT, Washington, February 11, 1943.

Acting chairman, Subcommittee in Charge of the
Treasury Department Appropriation Bill,

United States Senate.

MY DEAR MR. CHAIRMAN: Reference is made to your recent letter with respect to the Treasury appropriation bill for the fiscal year 1944 (H. R. 1648), as reported by the Committee on Appropriations to the House of Representatives on February 2, 1943.

In response to your request for advice from this Department as to any changes in the bill which are deemed by the Treasury to be absolutely necessary, there are submitted the following:

FOREIGN FUNDS CONTROL

APPROPRIATION: "SALARIES AND EXPENSES, FOREIGN-OWNED PROPERTY CONTROL" Page 4, line 10, strike out "$3,100,000" and substitute "$4,350,000". The proposed amendment will restore the appropriation for foreign funds control to the amount submitted in the President's Budget for the fiscal year 1944. The item was reduced by the House Committee on Appropriations from $4,350,000 to $4,100,000. Later, on the floor of the House, the amount was reduced to $3,100,000 by an amendment offered by Representative Taber, of New York.

These two reductions from the amount approved in the President's Budget total $1,250,000. It is respectfully requested that this amount be restored by the Senate Committee on Appropriations.

This appropriation for foreign-owned property control finances the Treasury Department's program of financial and economic warfare. The program is carried on by the Foreign Funds Control in Washington in cooperation with the 12 Federal Reserve banks, acting as field agents of the Control, and the 15,000 private financial institutions in the United States. Foreign Funds Control was set up in April 1940, after the invasion of Denmark and Norway to handle the "freezing control" of foreign-owned assets in this country. The control now extends to the assets of 35 foreign countries totaling over $8,500,000.000. The assets include gold, securities, currency, bank deposits, and many other types of tangible and intangible property. Transactions involving any of these assets are subject to review and licensing by the Treasury Department to insure that the transactions are in the national interest.

The exercise of these broad licensing powers under the Trading with the Enemy Act is an essential part of our war effort. Under these powers, Foreign Funds Control, with the cooperation of the Federal Reserve banks, is carrying on the following activities:

1. It administers trade and financial controls to cut off all trade with the enemy. It prevents American goods and American money from flowing to Axis representatives and Axis sympathizers and their "cloaks" both in occupied territories and in neutral nations.

2. It protects the American-held assets of all the invaded countries to prevent the Axis from looting those assets from the rightful owners.

3. It controls the importation into the United States of currency and securities in order to prevent the Axis from realizing on valuables seized in conquered territories.

4. It directs into the war effort strategic and critical materials held in this country by foreign nationals.

5. It applies financial controls to persons in the United States not otherwise blocked who have been acting on behalf of our enemies.

6. It controls all financial transactions with proclaimed list nationals and, with the State Department, cooperates with Latin-American governments in establishing effective financial controls throughout the Western Hemisphere. 7. It uncovers wealth concealed in this country by the enemy to finance sabotage, espionage, and propaganda here. It ferrets out Axis financial control of American firms.

The question was raised on the floor of the House whether the establishment of the office of Alien Property Custodian results in the duplication of any operations of Foreign Funds Control. The President by an Executive order on July 7, 1942, clearly delineated the respective functions and responsibilities of Foreign Funds Control and the Alien Property Custodian. Representatives of each agency appeared before the subcommittee of the House Committee on Appropriations and demonstrated that there is no overlapping or duplication of effort. Foreign Funds Control is continuously being assigned important new projects of financial and economic control as the war progresses. Many of these projects are confidential in nature but will be explained fully to the Senate Appropriations Committee.

Foreign Funds Control has cut its expenditures almost in half since its peak which occurred during the months immediately following Pearl Harbor. At that time, it was spending at the annual rate of over $9,000,000. During the fiscal year 1943, it will spend approximately $5,000,000. Its work load is expected to continue during the fiscal year 1944 at approximately the same level as at present. Through more efficient operations made possible by increased experience, it is expected that the needs of Foreign Funds Control for the fiscal year 1944 can be reduced to $4,350,000 as recommended by the President. It is clear that a further reduction to $3,100,000 as proposed by the House, could not be made by simple economy measures. Such a reduction would require the elimination of major projects in the Government's program of financial and economic warfare. For obvious reasons, the exact nature of many of these projects cannot be revealed in this communication. These projects will be described, orally, however, in whatever detail may be desired by the Senate Appropriations Committee.

It is urgently requested that the $1,250,000 eliminated from the President's Budget for Foreign Funds Control be restored in full.