during last year's hearings, I referred to the requirement that the structure and procedures of the Department must be attuned to the central tasks of our Nation in the foreign policy field.

CHANGES DURING FIRST YEAR

The first year of a new administration involves unusual expenses which are not easily absorbed into the regular on-going budget of the Department. For example, there were a considerable number of changes in Ambassadors and their deputies; in order to establish urgent and effective contacts and to hold policy discussions with all Ambassadors, it was felt necessary to hold certain regional conferences; we established an around-the-clock operations center; the visits of a large number of distinguished representatives of other governments to establish early contact with the new administration and increases in diplomatic missions to the United States caused an expansion in the responsibilities of our Office of Protocol.

In addition, there have been organization and management developments in the Department within the past year. Some of these have resulted in savings while others have increased costs. Most of the changes are relatively minor when taken alone, but together they represent a most impressive step forward in departmental operations. I will take time to tell you only of the more significant ones.

AMBASSADORS TAKE CHARGE OF ALL OFFICIAL ACTIVITIES OVERSEAS

1. I believe the committee is aware of the President's letter of last May in which he directed our Ambassadors abroad to take charge of all official activities in the countries to which they are assigned. This has substantially strengthened the position of our representatives, and we can now look to our Ambassadors for executive leadership in all U.S. operations overseas.

We have taken this responsibility seriously and have turned much of our administrative effort this past year toward restoring to the Ambassador operational and administrative duties that had gradually been centralized in Washington for a number of years. We plan to continue this program this coming year.

RESPONSIBILITIES AND RELATIONSHIPS OF TOP OFFICIALS

2. Steps have been taken to redefine and clarify the responsibilities and relationships of our top officials. And there have been some changes in the executive team. Fresh talents have been brought into planning as well as operating jobs. We have moved to eliminate excessive layering of organization, duplication, and overlapping of functions.

CRITICAL REVIEW OF EXISTING POLICIES AND PRACTICES

3. Searching and critical reviews of existing policies and practices in every major area of administrative endeavor have been made, and are continuing in an earnest effort to abolish marginal operations, jobs and activities. At the same time, we have had a new program underway to strengthen our administrative capabilities both at home and abroad. We need more capable officers who seek administration as a

career and we are finding some of these. We have reaffirmed our basic concept of administration as being the handmaiden of policy-a positive force that supports programs and gives service to people. We have reiterated the need for a commonsense basis for all of our administrative decisions.

The Department is continuing to search for ways and means of improving its personnel systems. This is a major object of the study being made by the Carnegie Endowment Group headed by former Secretary Herter.

Significant changes have already taken place in the fields of recruitment, career development, and training. We are developing plans to adjust tours of duty in accord with the need for continuity, with hardship conditions at the post, with the class level of the officer or employee, and with the current and long-range needs of the Service. A new Staff Corps policy has been adopted.

While we have made significant savings as a result of some of our administrative changes and have reduced the personnel requirements of administration, we have used these savings for other important purposes.

Our study of reporting by oversea missions has had some gratifying results. As a result of the work of a task force assigned to examine administrative reporting requirements imposed on field posts, 90 reports have been eliminated. A study of political reporting is at mid-point. Our efforts are directed toward elimination or curtailment of marginally useful reporting.

We have initiated a pilot project concerned with the retrieval of information and data by electronic means. If this proves feasible we should indeed have taken an important stride from quill pens to electronics with all the attendant benefits. We shall keep the committee informed on the progress we make. The number of economic reports required by the current economic reporting program (CERP) has been reduced substantially. The number of committees having Department of State participation was reduced by 109.

In the field of communications, we have a continuing program to hold down costs wherever possible, but we must recognize that the steady expansion of business has not made possible a reduction in overall costs. We have, however, cut by 30 percent the number of copies of messages being processed and distributed.

I would like to pause a moment, if I may, to share my concern with you about the Department's limited and outdated communications facilities. Some of you have visited our coderoom installation. There was some concern in the committee about the grades of the people doing this important and sensitive work, and I am assured that we have solved this problem.

It is necessary for us to have accurate, complete and prompt information concerning world problems. Also, of course, there are many international crises and tensions which do bear directly upon our well-being. To cope with these problems and to obtain multilaterally agreed positions concerning them, we must have an efficient, secure and rapid communications system.

The fact that we do not have such a communications system now is not the fault of the committee or of the Congress. The chief fault lies. at the doorstep of the Department. Until the past year we have been content for whatever reason-to rely upon an antiquated system.

The trips of the Vice President and the problems he encountered in keeping in touch with the Department and the White House have borne out the fact that we have not yet brought the Department's communications system into the 20th century. We know what is needed and have plans for achieving our objectives. I would like to comment on this off the record.

DIRECTOR GENERAL OF FOREIGN SERVICE- FOCAL POINT

4. The Director General of the Foreign Service was designated as the focal point for assuring that Ambassadors are adequately oriented, informed and supported.

MARGINAL POSTS

5. I report regretfully that a thorough review of all posts to determine whether we could close or consolidate some of the marginal ones, did not produce the results we were seeking. We have not closed any posts in the last year, nor have we materially reduced the State Department staff at our missions abroad. I am not finished with this process and plan to continue a campaign for reduction into this next

year.

POLICY STUDIES AND SECURITY RESEARCH

6. There are two programs that we have managed to save this year, despite our continued financial difficulties. You were good enough to include funds for policy studies and security research. We have done both and have attained significant results with the funds. expended for these purposes.

I have not attempted to list all of our accomplishments of the last year or to detail any of them. I am confident that Mr. Jones, Mr. Crockett and other witnesses can furnish any details the committee might desire.

To make the Department more manageable and more effective, in my view, is a never-ending task. Much more needs to be done. Organization studies of Department elements to improve our structure, manpower utilization and general effectiveness will continue.

SUMMARY OF FISCAL YEAR 1963 BUDGET REQUEST

Now, if I may, I would like to summarize briefly our budget requests. The Department's request for all regular appropriations totals $335,064,000, an increase of $43,981,502 over our base for 1963.

The increase of $11,699,329 in the salaries and expenses item, the category principally related to the Department's administrative structure, is approximately one-fourth of the overall increase.

Major items in the balance of the increase are for the foreign buildings program ($14,250,210); contributions to international organizations ($7,033,000); mutual educational and cultural exchange activities ($26,811,186), and the Center for Cultural and Technical Interchange Between East and West at Hawaii ($5,043,000).

Increases in other appropriations amount to $2,535,301.

These increases are offset by decreases for nonrecurring requests amounting to $23.3 million.

I would like now, Mr. Chairman, to discuss in more detail the request for salaries and expenses.

SALARIES AND EXPENSES

Under "Salaries and expenses" we are requesting a total appropriation of $144,210,000. Considering adjustments for nonrecurring costs in 1963, this is an increase of $11,699,329, over the 1963 base, exclusive of supplemental funds which may be made available by the Congress.

While I admit that an $11 million increase sounds like a lot of money, we have deliberately planned a lean budget for 1963 with little leeway for the unforeseen. I regret the lack of a contingency fund to enable us to meet emergencies without disrupting vital activities and operations.

The Department is a living organization. Worldwide events force changes, unforeseen and unpredictable, from day to day. Such changes invariably make budgetary adjustments necessary for they cannot in most instances be anticipated in time to get into the budget cycle. We are grateful to this committee for its understanding of the Department's need for flexibility in its funding. We are grateful for the consideration the Appropriations Committee has given when we have had to ask for supplemental appropriations. But I am convinced that this is not the way for us to manage our affairs.

I know the committee is aware of the fact that despite our best efforts and good intentions a variety of factors in combination with requirements previously unseen have forced the Department to ask for a 1962 supplemental appropriation of $3.5 million, now pending in the Congress.

I believe, and I hope the committee shares my personal view, that it is more important to have a lean and well-supported department than to have large numbers of people who are without resources to do their jobs properly.

For years the Department has allocated too much of its available funds for salaries of people and too little for their support. In this new budget the Department proposes to strike down this imbalance in resources to have enough but not too many people, and to support them with the funds they must have to perform to the best of their abilities.

Our concentration, therefore, in the fiscal year 1963 budget is in the appeal for the funds which we shall need to make it possible for those who are in the Department and in the field to get the best job done. This is our 1963 budget theme in the spirit of the President's call for a lean, fit and efficient Federal establishment.

For these reasons, we are requesting no new salaries and expenses positions in 1963, but we are requesting more funds for the support of our present staff. Of necessity there will be movements of personnel in line with developing priorities and needs. For example, staffing in new African posts. But we intend to meet these requirements as they occur by shifting personnel without increasing total positions.

PURPOSE OF FISCAL YEAR 1963 INCREASE

The salaries and expenses increase is requested by the Department for the following purposes:

1. The opening of 10 new posts in Africa and 3 in the Far East, and the elevation of 2 posts, will cost an estimated $1,698,781.

2. Oversea wage and price increases are estimated at $1,259,267. 3. An amount of $1,085,844 is required to finance the full-year costs of positions established in fiscal year 1962 for staffing new posts in Africa, additional oversea security operations, added consular and commercial activities and courier service for Africa.

4. We are requesting $3,970,800 for administrative activities such as home leave and transfer travel ($2,948,800), and $1,022,000 for supplies, replacement of equipment, oversea leases, rest and recuperation travel at certain hardship posts abroad.

5. In line with our 1963 budget policy we are asking $1,151,876 for improved support to our existing staff. Included are requests for additional travel, internationally, domestically, and within countries of assignment. Also, continuing costs of a vitally needed African medical program for our personnel ($106,500) and an African supply center ($138,500). The initial costs of the last two items are requested in the proposed supplemental estimate recently submitted to the Congress.

6. $770,200 is requested for communications expenses. Of this amount, $403,800 is for equipment for use in transmitting classified telegrams; $153,400 for courier travel; $195,000 for the increased cost of telegrams, and $18,000 for the first-year maintenance cost of the new telegraph switching center in Paris.

7. $570,300 is requested for security activities, including $125,000 to continue development of security equipment and $445,300 for the purchase of protective equipment.

8. Policy research studies have been of value and we are asking for an additional $300,000 for this activity in 1963.

9. The balance of $892,261 is for within-grade salary costs, increased language and functional training, and increased consular activities and political activities.

I would like, Mr. Chairman, to add a word about a few of the other major appropriation items carrying substantial increases.

FOREIGN BUILDINGS PROGRAM

An appropriation request totaling $30 million is being made for this program for fiscal year 1963, consisting of $27,795,000 in the regular dollar appropriation and $2,205,000 under the Public Law 480 appropriation. This represents an increase of $14,250,210 over fiscal year 1962 in which $10,710,815 was available under the regular appropriation and $5,038,975 under the foreign currency (Public Law 480) appropriation. The size of the increase is due to the fact that authorizing legislation was available in 1962 for only $10 million, and an