The Bureau is continuing the prosecution of the second phase of its modernization program which was begun during the fiscal year 1955. One of the main objectives of this particular program is the development of suitable press equipment to allow the printing of currency 32 subjects to a sheet instead of 18. The success of this project will represent primarily improvements in quality, increased production, and reduced processing costs.

BUREAU OF THE MINT

The estimate for the Bureau of the Mint for fiscal 1957 is $3,650,000, the same amount appropriated for 1956. The demand of the public for coins, which has been low, has increased sharply during the current fiscal year, necessitating overtime operations within the limits of available funds. Inventories of coins in the mints and Federal Reserve banks are low. The mint will continue to produce as many coins as possible to meet a continuing demand, and to restore inventories.

The Philadelphia Mint has contracted for improvements to modernize melting and rolling equipment, which will increase capacity and reduce unit manufacturing costs. It is planned to complete these improvements in the fiscal year 1957.

UNITED STATES COAST GUARD

The estimates for the Coast Guard total $202 million for 1957. The general level of operations planned for 1957 is essentially the same as for 1956, the only significant change being the operation of additional loran stations to be added to the present loran system. These implement the Joint Chiefs of Staff program for greater loran coverage, and the cost of construction is included in current Department of Defense appropriations.

The increase in the 1957 estimate over 1956 appropriations amounts to $6,947,000, which results primarily from operating additional loan stations; civilian pay increases authorized by Public Law 94; more military personnel separations on expiration of enlistment, with consequently higher expenses for recruiting and training replacements; small increases in the reserve training and capital construction programs; and a larger number of retired personnel. As before, the cost of the ocean station program is being budgeted by the Department of Defense.

The Commandant of the Coast Guard is prepared to discuss these items and other phases of the estimates when he appears before you.

BUREAU OF NARCOTICS

The estimate for the Bureau of Narcotics for 1957 is $3,250,000 or $260,000 over the appropriation for the current year. Of this increase, about $154,000 is for pay-increase costs as a result of Public Law 94. The balance will be used to employ 15 additional narcotic agents and 4 clerks.

That, Mr. Chairman, replies to a question which was asked earlier These additional employees are needed to reduce the current back log of cases and to step up the investigation activity against those individuals and organizations that distribute the large quantities of illicit narcotics amongst our States and cities.

SECRET SERVICE DIVISION

For the Secret Service, White House Police, and Treasury Guard Force, we are requesting $4,520,000, an increase of $492,000 over the 1956 appropriation. Over half of the increase, or $261,500, will be required to cover the increase due to changes in pay scales authorized by Congress and not included in the regular appropriation for 1956. The balance of the increase is requested to maintain the 1956 level of employment plus 25 additional agents with related expenses, necessary to cope with the increasing number of check and bond forgery cases pending investigation, and to replace old equipment meeting replacement qualifications.

The Secret Service received 43,990 cases for investigation in 1955 as compared to 41,363 in 1954, an increase of 2,627 cases. Although 40,627 cases were closed in 1955 as compared with 37,412 in 1954, this Service had a backlog of 18,585 cases at the beginning of the fiscal year 1956. Based on the current receipt of cases it is estimated that the backlog will increase to 19,620 at the beginning of the fiscal year 1957.

That is one case where we do have a little more backlog in our estimates than we start the year with, not very much, but one we are not satisfied with.

During the past fiscal year, $1,027,179 in counterfeit notes and coins was confiscated as compared to $355,299 in 1954, representing an increase of $691,880. Through effective enforcement in capturing counterfeit plants during the past fiscal year $919,722 in counterfeit notes and coins was seized before it could be placed in circulation. Due to this effective work the actual loss to the public was only $107,457.

That is, as far as we can trace it.

The requested strengthened enforcement force will enable the Secret Service to maintain its efficient protective assignments and further serve the public in combating counterfeiting, forgery and other crimes.

OFFICE OF PRODUCTION AND DEFENSE LENDING

The Office of Production and Defense Lending, under the immediate direction of Assistant Secretary Robbins, encompasses the activities which became the responsibility of the Secretary of the Treasury under the provisions of the RFC Liquidation Act and related Executive orders. These activities include administration of the Federal Facilities Corporation, the liquidation of the Reconstruction Finance Corporation, and the lending programs conducted under title III of the Defense Production Act and section 409 of the Federal Civil Defense Act. All of the activities named are financed from income or from funds previously made available rather than annual appropriations. However, under the Government Corporations Control Act, the activities are subject to annual limitations on the amount of available funds to be used for administrative expenses. The limitations requested for these activities in 1957 total $1,310,000, a reduction of $1,065,000 from the $2,375,000 authorized for fiscal year 1956.

The 1957 estimates for the Federal Facilities Corporation provide for cleanup activities in connection with the Government's synthetic rubber and tin programs. The program to dispose of the synthetic

rubber facilities has been completed, except for the plant at Institute, W. Va. A contract for the sale of this plant has been negotiated and is now before the Congress for review.

LIQUIDATION OF THE RECONSTRUCTION FINANCE CORPORATION

The liquidation of RFC is being carried out as expeditiously as possible consistent with maximum recovery of the Government's investment. At the same time, every reasonable consideration is given to the borrower and the community in which his business is located. The estimates for the liquidation of RFC anticipate total budgetary receipts of more than $186 million during fiscal years 1956 and 1957. Realization of this amount will reduce the Government's investment in RFC programs to about $72 million by the close of fiscal year 1957. Those, of course, are estimates. Things could happen to vary those estimates either way.

Of that investment $54 million will be in the assets acquired under RFC's former lending programs, and the balance in assets remaining from liquidation of terminated World War II programs.

Following the recommendation made by the Appropriations Committee last year, new loan activity under the civil-defense lending program was discontinued at the start of the current fiscal year. The budget does not provide for any new activity under this program in fiscal year 1957.

In connection with the hurricane and flood disasters of last August, the President authorized the use of the Defense Production Act lending authority to aid in the reconstruction and replacement of defense production facilities destroyed or damaged in major disasters. A number of new loan applications were processed and approved under this program.

Wherever possible, the loans previously made under both the Civil Defense and Defense Production Acts are placed with private financing institutions or refinanced.

ADMINISTRATIVE OFFICES OF THE SECRETARY

The estimate for 1957 for the Administrative Offices of the Secretary is in the amount of $2,922,000, an increase of $242,000 over the current appropriation. This increase includes funds for the following: (1) $173,000 for the salary raises authorized by Public Law 94, 84th Congress; (2) $51,900 for the cost of steam furnished to the Main Treasury Building and Annex, which in prior years was furnished by General Services Administration without cost-a corresponding reduction is being made in their estimates; (3) $4,500 for an increase in electric current rates; and (4) a net increase of $12,600 in personnel services costs to enable the Office of the Secretary to maintain its level of employment which would otherwise be reduced.

As already mentioned, the work of the Office of Production and Defense Lending is directed by an Assistant Secretary of the Treasury. It is my judgment that continuation of this post for the year 1957 will best serve the interests of the Government.

Further liquidation of the RFC assets, as well as direction of the other activities of the Office of Production and Defense Lending, should as heretofore have the direct, continuous attention of a ranking

Treasury official, preferably one with experience and standing in the field of banking.

Much progress has been made, but there are many problems still to be worked out.

Whereas fixed liquidation payments will amount to only about $52 million during the fiscal years 1956 and 1957, our estimates anticipate collections of nearly $162 million contingent on sale of loans and securities to private institutions and upon arrangements for refinancing. Such negotiations require the services of a person equipped by experience and official position to deal with the senior executives of banks, insurance companies and investment houses.

The RFC loan pool also requires the continued attention of the Assistant Secretary. The establishment of this pool and the accompanying arrangements with banks to service the hundreds of loans in the pool made it possible for the Government to save several millions of dollars in administrative costs.

Aside from such requirements as these, the Treasury Department has a need in other respects for an officer experienced in loans and credits. For instance, the Assistant Secretary has been delegated to serve in the Secretary's stead as an ex officio member of the Loan Policy Board of the Small Business Administration. This is the statement which we submit for your consideration.

Mr. GARY. I do not want to prevent any member of the committee from asking any questions that he might have, but I suggest that since the statement of the Under Secretary is broken down into the various bureaus, we would probably save time if we would withhold questions relating specifically to any bureau until we reach the presentation of the bureau's request. If anyone has any general questions that he would like to ask Mr. Burgess at the present time, he may do so.

INVESTMENT IN GOVERNMENT BONDS

Mr. SIEMINSKI. Although my questions might seem theoretical I wish to ask a few. I know how practical these gentlemen are. It was quite revealing to me when you stated that this great investment in bonds by our people has helped to stabilize our economy. Do you know whether on the world front men of finance like you and the Secretary are making similar efforts to have that sort of bond buying take place among the people of Europe and on the other continents?

Mr. BURGESS. I have been around a good deal, and I have asked that question wherever I have been because I am very much interested in it. A great many countries have such programs. The British, for example, have a program of savings bonds, and it is somewhat similar to our own. The French have one not quite of the same pattern, but nevertheless it is a savings program, and also the Italians, so it is really quite general. I think we do it better than some of the others. Mr. SIEMINSKI. Is it true, Mr. Secretary, that only United States citizens can buy our Government bonds?

Mr. BURGESS. Oh, no; anybody can buy them.

Mr. SIEMINSKI. Foreigners can buy them?

Mr. BURGESS. Yes, sir.

Mr. SIEMINSKI. In this connection I have in mind just one problem. There seems to be a controversy on this Aswan Dam in Egypt. One reads if we do not help to finance it the Russians will, and we are told,

as Congressmen, that that is going to be the nature of the game. If we do not finance it the Russians will. I know that is the practice in salesmanship-frighten the prospect. Through the World Bank and other financing programs is there not available enough money to keep it out of that sort of a political complication?

Mr. BURGESS. I think that there is, Mr. Congressman. The World Bank is available in that particular case. They have had a mission over there going into it, and they have been exploring the thing thoroughly. They have been discussing it with the Egyptians. Of course, the World Bank functions in the currencies of many nationalities, of the 58 countries that are members of it, so that if they want to borrow some francs, Italian lire, or sterling some of the bank's loan could be in that form. So that really is a good way to bypass this direct competition between ourselves and the Soviet. Of course, you will never get away from some competition, economic competition with the Soviet. You cannot avoid that.

I am told that I did not state correctly the answer about selling savings bonds to American citizens. They are sold to American citizens or any people residing here. We do not sell them abroad, except to American citizens.

Mr. SIEMINSKI. The purpose of my question was to develop that information and then find out if a foreigner in Egypt who is interested in this dam or some person in India learns that he as well as people in America can buy bonds from our Government he may wonder whether he as an Indian, or, he as an Egyptian, cannot send whatever he may be able to send to Uncle Sam or some other place and start reaping this profit that he reads about in America.

Mr. BURGESS. Of course, the savings bond is the only one where there is any limitation. That is a registered bond. Take for instance, a 3-percent bond sold this past year, that is a bearer bond. You can buy it in registered form or in bearer form. An Egyptian or Italian can buy that bond. We do not sell them abroad, but if he gets the dollars over here he can buy them.

Mr. SIEMINSKI. Do you feel that our Treasury Department is getting its licks in on the world front in terms of the message that other branches of life in America are getting their licks across? For example, in the United States Information Agency Service they will talk about our schools, and in Profile of America, you will read many flattering and stirring sentiments on why we behave as we do.

I wonder whether your story in Treasury with our people is getting across to the people abroad so that public opinion in the world can force governments abroad to do for people there what we do here. Are you up to date in that approach?

Mr. BURGESS. I have had a good deal of contact with it. Several years ago I was chairman of the monetary committee of the International Chamber of Commerce, and we made a report that went to all of the different governments and that had very wide international distribution. Of course the kind of thing we talk about in finance reads a little different from the thing that a farmer in Iowa receives on the news agency's broadcast, but I do think that our ideas about financing have had very wide international circulation, and it is a very interesting thing that Europe has swung, since the war, back to ideas of sound money, balanced budgets, and honest money, very much along the line we have been talking of.