NECESSITY FOR POWER FACILITIES

The necessity for these additional generating facilities is vital. New base facilities now being constructed for our forces will cause minimum demand to exceed firm capacity in the latter part of this year.

If funds are appropriated now, demand will still exceed firm capacity until July 1962. Until then we must use an unreliable, nearly wornout power barge and inefficient diesels as primary sources of power, at an estimated excess cost of $1,879,000.

SOURCES OF FUNDS

The $18 million requested would be supplemented by $4.7 million to be derived in Okinawa from the earnings of the present power system.

The total amount of $22.7 million would permit construction of the necessary ancillary facilities and a plant having four 20-megawatt units.

If funding were provided now, the schedule of construction would bring two units on the line in July 1962.

The increase in firm capacity thus provided will then meet known demand, provided the marginally effective barge and diesels can be kept operational.

The last two units would come in on July 1, 1963, and the wornout diesels and power barge would be retired on July 1, 1964.

On this basis, demand would not again exceed firm capacity until 1967.

RESTORATION OF OTHER ITEMS REQUESTED

We also request restoration of the $1 million which the House of Representatives has deducted from project Aid to the Ryukyuan Economy, and the $1,000 deducted from the limitation on the item "Contingencies for the High Commissioner."

The Ryukyu Islands are overpopulated and have very little in the way of natural resources. They are a deficit area requiring substantial outside support, and they are dependent on the United States for this support.

If we are not able to provide sufficient resources for essential public programs and economic development, we cannot expect to retain the good will and cooperation which are essential to successful operation of the base complex.

The $1 million cut in economic aid would require a reduction of $500,000 in the public health program; $300,000 in the education program; and $200,000 in the agricultural land development program. By such a lowering of the public health and education standards which we are trying to reach, we promote intensification of the reversion sentiment.

The cut in funds for agricultural land development will nullify a previously anticipated increase in annual rice production of 1,100 metric tons with a value to the national income of $165,000 per year, thereby preventing a corresponding decrease in the unfavorable trade balance because of the necessity to continue importation of that much additional rice.

Thus, restoration of the $1 million for economic aid will not only provide urgently needed material assistance to the Ryukyuan people, but it will also represent a prudent investment in the political and economic stability which is so essential to accomplishment of the U.S. objectives in the islands.

BUDGET REQUEST REALISTIC

We respectfully submit that our budget request represents a realistic estimate of needs of the U.S. administration in the Ryukyus to achieve these objectives.

As to the reduction in the item "Contingencies for the High Commissioner," the restoration of $1,000 is sought in order to give some measure of relief to the High Commissioner and his staff who have been paying out of their own pockets the excess costs of official representation of the U.S. Government in the Ryukyu Islands.

Thank you, Mr. Chairman and gentlemen, for the opportunity to present this statement. Members of the Department of the Army staff and the Director of Plans and Programs of the Civil Administration are present to go into the details of the budget request as you may desire.

Also, representatives of the Marines and Air Force are here to speak, if you wish, to the urgency of the requirement for powergenerating facilities to serve the needs of their forces in the Ryukyus.

SETTLEMENT OF LAND DIFFICULTIES

Chairman HAYDEN. Are there any questions?

Senator Ellender.

Senator ELLENDER. General, can you tell us in a few words how you settled the land difficulties which have existed in the Ryukyu Islands.

General MEAD. I would like to ask Mr. O'Flaherty to respond to that, please.

Mr. O'FLAHERTY. Senator Ellender, the manner of our acquisition of land and method of paying for it, has been, as you indicated, a source of distress and agitation for some time.

A little over a year ago, a year ago last June, in fact, the Secretary of the Army invited the chief executive of the Ryukyu Islands and representatives of the landowners, to come to Washington to meet with Army and Defense officials; they met with some of the Members of the Congress, they met with the Department of State, and others, to express the essential elements of their discontent.

Basically, they had been led to believe by opportunists who were not addicted to the truth in all instances, that the United States, despite its protestations of never doing so, was in reality taking land from them, taking title to the land, rather than acquiring a long-term interest and leaving the title with the landowners.

This was the essential point of discontent on the part of the Ryukyu Islands. They love their land; it is their livelihood, and notwithstanding assurances from this Government, they had been persuaded that we were taking the land away from them rather than simply using it.

(The attachment to the formal statement of General Mead follows:)

Mr. O'FLAHERTY. It was clear that the solution to the essential problem would be to take a type of interest which could not be construed as a confiscation of title.

It was proposed, and agreed eventually, that the United States pay annual rent for that land which is required on a short-term basis and for land which is required on long-term bases, prepay up to 10 years advance rental.

This simply consists of an indefinite leasehold in all instances.

ACREAGE AND RATES INVOLVED

Senator ELLENDER. How many acres were involved? Do you remember?

Mr. O'FLAHERTY. At that time, 42,000 acres.

Senator ELLENDER. What was the rental rate? I remember a figure of $75 per acre.

Mr. WOHL. We are now paying for some 45,000 acres what will be an annual rental of $6 million.

Senator ELLENDER. What does that mean per acre?

Mr. WOHL. I will figure it out in a moment.

Senator ELLENDER. Six million dollars?

Mr. WOHL. For the use of 45,000 acres.

Senator ELLENDER. Well, it is much worse than I expected.

Mr. WOHL. It is about $135 per year per acre.
Senator ELLENDER. $135 per year per acre.

is an outrageous rental?

Do you not think that

Mr. WOHL. This is rental which corresponds to rental for similar lands in the local economy.

In other words, between landowner and tenant relationships outside of the United States.

Senator ELLENDER. As I recall, a figure of $75 per acre had been mentioned to me previously. I thought that was outrageous. But now you have it up to $135.

Mr. WOHL. $135 an acre on the average.

BASIS OF PAYMENTS

Senator ELLENDER. And do you pay them in advance for 10 years or is it a contract for 10 years?

Mr. WOHL. There are two bases for payment. Where we have only a limited requirement-that is, 5 years or less-only annual rentals are involved.

Where our requirements are indefinite, the landowner has the option of either getting an annual rental or electing to receive 10 years' prepaid rental.

Senator ELLENDER. In other words, 10 times $135.

Mr. WOHL. That is correct.

LAND FOR CULTIVATION

Senator ELLENDER. How many acres of the remaining land are arable?

Mr. WOHL. We have within our holdings what was originally 16,000 acres that were arable.

This represented 20 percent of the total arable land in Okinawa. Our utilization has changed the form of 11,000 acres so that they are no longer arable because of our construction on them.

The remainder of 5,000 acres remain arable and the landowners are permitted to continue to farm these acres so long as their utilization does not adversely affect our requirements.

Senasor ELLENDER. How many acres altogether?

Mr. WOHL. That would be 69,000 acres, roughly, remaining arable within Okinawa Island per se.

Senator ELLENDER. Are these acres worked by the natives?
Mr. WOHL. Yes.

POPULATION AND EMPLOYMENT

Senator ELLENDER. What is the population now?

Mr. WOHL. The population on Okinawa is roughly 700,000.
Senator ELLENDER. 700,000?

Mr. WOHL. That is correct.

Senator ELLENDER. How many of those people are employed in one way or another on the island by our forces there?

Mr. O'FLAHERTY. Approximately 40,000.

Senator ELLENDER. There are many there in business, I presume, doing pretty well?

Mr. O'FLAHERTY. Yes, sir.

ECONOMIC AID TO RYUKYUS

Senator ELLENDER. How long have we been giving economic aid? What was the amount for last year?

Mr. O'FLAHERTY. $1 million last year.

Senator ELLENDER. Why are you making it $4 million this year? Mr. O'FLAHERTY. This is recognized as a requirement, Senator Ellender, for the social and economic environment of the area.

Senator ELLENDER. Who determines the requirement? Do they, or do you?

Mr. O'FLAHERTY. The requirement is self-evident, sir, on the basis of investigation.

Senator ELLENDER. Are you patterning the island after the United States or the other islands in the Pacific?

Mr. O'FLAHERTY. Since this area is our responsibility it is the considered opinion of the administration that we should endeavor to reach and maintain a level of living that does not cast discredit on our administration of the area.

In other words, there is inevitably bound to be some degree of comparison made with other surrounding countries.

Senator ELLENDER. It is so much better there, though, than it has ever been. I have been there several times. There has been

misery there all the time, particularly when the Japs had it.

Mr. O'FLAHERTY. Yes, sir.

Senator ELLENDER. Here you are trying to make utopia out of it with our money?

Mr. O'FLAHERTY. The Japanese Government subsidized this area. As you say, it is an impoverished, a deficit area, and the Japanese Government had subsidized it before the war.