EFFECT OF REDUCTION IN BUDGET REQUEST TO 1957 LEVEL

In the event the Congress, in its wisdom, allows you only the amount you had this year, do you feel any great damage would be done to the overall program?

General GAILEY. I think the program would be retarded.

Mr. PASSMAN. Retarded, or would you just hold your own if you got the same amount of money? You are saving money out of some other programs, so if you got the same amount of money, you would be able to increase some of the programs here by a small amount? I think you have less money for maybe a school building, your contributions are less.

General GAILEY. I think the increase you could make would be of small magnitude.

Mr. PASSMAN. The overall program would go along about as it is now, and these other programs that are so desirable would have to be postponed if you do not have the money.

General GAILEY. We would go like we are now, but we think you should make these contributions and build these few things. Take the hospital at Mayako and the health center at Naha.

Mr. PASSMAN. This is the first time you have had a request for money for the new hospital there?

General GAILEY. Yes.

Mr. PASSMAN. You have not given any consideration to that expenditure until this year?

General GAILEY. Yes.

When I was out there a year ago, sir, it was brought to my attention that there was a great need for this hospital at Miyako.

Mr. PASSMAN. In prior years there had been no request for funds? General GAILEY. Yes. We think if we do not get the $1 million for the program, it would certainly retard the program. We want to get started with the thing.

Mr. PASSMAN. That is the loan part. This $1 million is a new program, a grant so they may, themselves, make more loans than they are presently making.

General GAILEY. Yes. We believe it highly advisable, not only from the standpoint of the economic development of the island, but also from the standpoint of, as the Price committee report pointed out, this is our showcase out there.

Mr. PASSMAN. Would you mind my asking this question? Do you think any of these reports we write up give you encouragement for these new programs? Is there any relationship between reports made available to you and new programs that you request?

General GAILEY. I do not quite understand the question.

Mr. PASSMAN. You mentioned the Price report several times. General GAILEY. The reason I mentioned it, they went out there and made a very fine study, and I certainly think that as a result of their fine study that their report should certainly receive very careful consideration.

Mr. PASSMAN. Oh, it will. I am not being critical of the report, but I am asking the question if the work we do in going out and making these reports helps you in your program?

General GAILEY. I would say yes, it is a help to us.

Mr. PASSMAN. There is one other item I should like to discuss

briefly.

Off the record.

(Discussion off the record.)

Mr. PASSMAN. Mr. Gary.

GENERAL DESCRIPTION OF RYUKYU ISLANDS

Mr. GARY. General, the Ryukyus are a group of islands in the Pacific, of which Okinawa is the largest; is that not right? General GAILEY. Yes, sir, that is right.

POPULATION

Mr. GARY. What is the population of the Ryukyu Islands? Will you supply that for the record?

General GAILEY. I have it right here, sir. It is approximately 810,000 people, and around 600,000 of those live on Okinawa. If those figures are not correct we will make the correction in the record. Mr. GARY. Off the record.

(Discussion off the record.)

AREA

Mr. GARY. What is the area of the Ryukyus?

General GAILEY. The total acreage in the Ryukyus is 542,000 acres. The total acreage in Okinawa is 290,000 acres.

Mr. PASSMAN. Acres or miles?
General GAILEY. That is acres, sir.

GROSS NATIONAL PRODUCT

Mr. GARY. What is the gross national product of the islands? Mr. BARON. Currently, that is in fiscal 1957, the gross national product is 166,800,000 in terms of dollars.

Mr. DENTON. Per year?

Mr. BARON. In terms of a year.

PER CAPITA INCOME

Mr. GARY. What is the average income?

Mr. BARON. The per capita national income is $181 estimated for fiscal year 1957 ending June 30. This is a very recent estimate based on all productive earnings of the entire economy.

EXPORTS

Mr. GARY. What are the exports of the islands?

Mr. BARON. The exports this current fiscal year are 20 millions. They are composed of two major items. One is black sugar, which is a special type of sugar which is exported entirely to Japan. That roughly is just short of 10 million. The other item is also just short of 10 million, which is of scrap. Approximately 35 percent of the scrap is really a processing of scrap that is bought from the military establishments and then we export it to Japan. The other scrap is either generated within the local economy or mined out of the ocean

and has something to do with the previous war carried on there in 1944.

Those two items make up almost all of the exports from the islands.

LITERACY RATE

Mr. GARY. What is the percentage of literacy? Mr. BARON. It is extremely high. Every child that goes to school is literate, and almost all of them are covered. There are older people who predate the Japanese occupation of the islands that do not speak or read Japanese. They speak only an unwritten Okinawan dialect. However, discounting those people, who are about 60 years of age, particularly the old women, almost everybody else is literate because they were trained in a rather elaborate school system operated by the Japanese which trains every child for literacy in the Japanese language. Mr. GARY. How long were the islands under the control of the Japanese prior to World War II?

Mr. BARON. Approximately 70 years.

Mr. GARY. During those 70 years the Japanese did not give the native people much opportunity for advancement; is that correct? Mr. BARON. That is true.

Mr. GARY. And therefore there are very few trained people on the islands?

Mr. BARON. That was the condition in 1945. Since the end of the war, under the United States administration, the local people have been trained in many areas.

Mr. GARY. But practically all of that has been done by the United States since it has taken over?

Mr. BARON. That is true. The former Government officials were almost all brought in from the mainland of Japan and it was really an agricultural community; the busines that was done down there was done by an adjunct of a Tokyo business house.

HEALTH CONDITIONS

Mr. GARY. What are the health conditions there?

Mr. GILLIES. The health conditions have improved generally with the introduction of some of the modern methods used by the United States. There are still some serious problems in health, particularly tuberculosis.

Mr. GARY. What is the mortality rate?

Mr. GILLIES. The mortality rate, the latest figure I have, in 1955, is 5.8 per thousand. Of the deaths from common diseases in 1955, 310 died from tuberculosis; 7 from malaria; 19 from measles; and 9 from influenza.

Just to illustrate the improved conditions, comparing those figures with 1940, the 310 compares with 839 from tuberculosis; the 7 compares with 78 from malaria; the 19 compares with 65 from measles. One of the problems in public health is the scarcity of trained Ryukyuan doctors. They get their training in Japan. They return to the Ryukyu Islands. They are in great demand and are few in number, and they just do not leave their practice to return for postgraduate work and keeping up with the advances in medicine. We are hoping to correct that in a small way by training those Ryukyuan doctors in the Army hospitals in Okinawa.

Mr. GARY. What are the present facilities for handling tuberculosis?

Mr. GILLIES. They are probably inadequate in terms of hospital beds. There is a home-care program designed to combat the disease. The main problem there is, there are infectious people, people who are in an infectious stage of the disease who cannot be adequately isolated in the small Ryukyuan home under the home-care program. They are continuing to spread the disease and more hospital beds are needed.

Mr. GARY. You have a request for a new hospital. What are your hospital facilities now?

Mr. GILLIES. In the area where this new hospital would be located there are only 30 hospital beds on that island of Miyako, where the population is 75,000 people.

Mr. GARY. Is this a general hospital?

Mr. GILLIES. It will be a general hospital, with emphasis in the initial stages on using the number of hospital beds required for the hospitalization of the severe tuberculosis cases.

Mr. GARY. In other words, you will have a tuberculosis ward?
Mr. GILLIES. Yes, sir.

POLITICAL SITUATION

Mr. GARY. General, what is the political situation with reference to the island so far as the United States is concerned? This is not an independent island but, as I understand it, is it under a United States mandate?

General GAILEY. The United States has the right to exercise all and any powers of administration legislation and jurisdiction under article 3 of the treaty.

Mr. GARY. The treaty with Japan?

General GAILEY. Yes.

ECONOMIC DEVELOPMENT FINANCING

Mr. GARY. What about this loan fund to assist private business? To whom is that money being loaned?

Mr. BARON. That money is being loaned to Ryukyuan business organizations and businessmen. That is for the business part of the loan.

The loans also cover housing loans, which are a substantial portion of the Ryukyuan reconstruction finance fund. Loans are made to individual Ryukyuan householders who are capable of qualifying for loans. That means they are able to pay back the loan of the money to build the house over a period of years in installments.

Mr. GARY. Are all loans made to native Ryukyuans?

Mr. BARON. Yes, sir.

Mr. GARY. None are made to United States citizens that go there to conduct businesses?

Mr. BARON. No. The United States citizens that go there to conduct businesses invest their own capital for their basic operations. Mr. PASSMAN. Will the gentleman yield?

Mr. GARY. Yes.

Mr. PASSMAN. But it is not a loan as far as we are concerned. It is an outright gift to the Ryukyuan Government and they make the loans and the loans are repayable to the Ryukyuan banks? We do not recover any of it, do we?

Mr. BARON. The United States is the technical owner of this fund, although the fund has been ruled by the Comptroller General as being not general moneys of the United States Treasury but only United States funds in its capacity as the administrator of the islands, and the funds can only be used in the administration of the islands.

Mr. PASSMAN. We never recover any part of it?

Mr. BARON. The United States generally does not recover any of the funds.

Mr. PASSMAN. Thank you.

Mr. GARY. Actually, what we are doing is establishing a revolving fund; is that not correct?

Mr. BARON. That is correct.

Mr. GARY. We put so much money in this revolving fund and the money is loaned to the Ryukyuans to benefit their economy by helping the business people and the home buyers on the Ryukyus. Then, as the money is paid back it goes into this fund and is reloaned. It is a continuous process; is that correct?

Mr. BARON. That is correct.

STATUS OF THE RYUKYUAN RECONSTRUCTION FINANCE FUND

Mr. GARY. What is the status of the RRFF at the present time? Mr. FORD. May we have a definition of RRFF for the record? Mr. BARON. RRFF stands for Ryukyuan reconstruction finance fund. It was established in late 1950 and has been operating continuously to date. Generally it is the major source of long-term lending credit to the Ryukyuan businessmen. By "long term" we mean in excess of 5 years.

Mr. GARY. It is similar to our old RFC and our present Small Business Administration?

Mr. BARON. Yes; there are many items of similarity. The fund is operated as a United States fund but it is operated exclusively by the Bank of the Ryukyus. All funds are loaned on an installment basis. All funds are loaned with the absolute intention of repayment. It is not in any sense a subsidy to the borrower in any way.

SOURCE OF FUNDS OF RRFF

Mr. GARY. Is the Bank of the Ryukyus operated by Ryukyuans or by United States personnel?

Mr. BARON. It is operated by Ryukyuans. It has its own staff and operates as an independent unit. As of the 30th of June 1957 the funds advanced by the United States Civil Administration total 2,004,000,000 yen. That, at the rate of 120 to 1, would be approximately $16 million or $17 million that has been put in there. Those sources came from the previous counterpart gains that we made back from the collection of sales of commodities in the main in the early 1950's. This 120 million yen-or $1 million-that we are asking for at the present time, will go as a capital contribution of the United States into this fund and raise it from 2,004,000,000 to 2,124,000,000.