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refugees, very few of them, are in the Saigon area. They are mostly up along the coast, in the northern and central provinces.

I don't know that I can answer the question as to where we expect it to be consumed.

Mr. POATS. The breakdown, I will have to check for the recordas I recall my memory is about 35,000 tons up country and about 20,000 tons in Saigon per month.

Mr. BELL. Regular consumption.

Mr. POATS. Regular consumption from Government stocks. (The following figures were supplied for the record:)

DISTRIBUTION OF RICE IMPORTED UNDER AID FINANCING

Consumption in the rice deficit areas over and above that produced locally within those areas is estimated at 57,000 M/T per month or 684,000 M/T for 1966. The monthly figure can be broken down as follows:

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In 1965 approximately 420,000 M/T of rice were shipped from the Mekong Delta to the market in Saigon, and from there distributed through commercial channels to the rest of the deficit provinces. It is estimated that the 1966 harvest will be of approximately the same size as the 1965 harvest.

Public Law 480 (title I) and AID-financed imports supplement rice shipments from the delta. In addition to the difference between delta surpluses and deficit area requirements, imports are being used to build up security stockpiles in Saigon and provincial capital cities.

Senator GORE. From a reading of Secretary McNamara's letter and your previous testimony, it would appear that the city of Saigon would face starvation except for our aid, is that correct?

Mr. POATS. Senator, I think the Government could obviously solve its rice problems by withholding rice from the deficit area up north and take care of Saigon. But if it is to take care of this problem in an equitable way, then Saigon would certainly be suffering if it did not have aid.

Senator GORE. I don't raise this point, Mr. Chairman, as an indication of my opposition to this request. Obviously this is a very costly operation, and a very dangerous one, but it would appear that the Vietcong have been discouragingly successful in stopping the rice of the Mekong Delta from going into the hands of the Government in Saigon.

Mr. BELL. There have been two effects of Vietcong action, Senator: One is to prevent planting or cultivation or fertilization of substantial areas, so that the rice harvest is less than it otherwise would be; and the second is the interruption of transportation routes, and the seizure of large amounts of rice directly for use by the Vietcong-the buildup of their stocks, for the use of the larger number of troops that have been brought down from North Vietnam and so on.

So that both because production has decreased in parts of the normally agricultural surplus areas because of the direct effects of the war, and because the Vietcong have seized substantial parts of the rice output, and have interrupted transportation to Saigon and other

cities, it has been impossible to export the normal amount of rice from Vietnam and has instead made it necessary to import rice.

COST OF WAR RELATIVE TO NEED FOR U.S. COMMUNITY DEVELOPMENT

Senator GORE. Well, again, I do not mean to indicate opposition to the AID request. I would like to remind you that I have steadfastly supported the AID program. But I want to put this in perspective. When the Senate Public Works Committee filed its report last year recommending a continuation of the Federal program to assist local communities in the United States in meeting their pressing problems for community facilities, hospitals, schools, water supply, sewage systems, they reported a backlog of $37 billion of unmet local, State and community needs.

This figure was a rather shockingly large one to me, and I think to many people in the country, and yet to relate that to the cost of the Vietnam war, the estimate given us here is that our operations in Vietnam, military, economic, et cetera, will amount this year alone, to approximately one-half the cost of meeting local and community needs in our own country. The Congress and the American people can see from this that the cost of the war is assuming very large proportions.

CONTRIBUTIONS OF OTHER FREE WORLD COUNTRIES

Now, this cost being so great, it seems to me that a basic error in our policy is to go it alone. If indeed there is a problem for the free world why is it that we are not only doing all the fighting but also providing all the economic aid? What is France providing? What is Germany providing? I understand the German budget-military budget-is only about 22 percent of their gross national product. Yet we are spending $15 billion in Vietnam alone this year. Will you tell us what aid other countries are providing in Vietnam, if any?

Mr. BELL. Yes, sir. Fortunately we are not doing all the fighting. The Vietnamese are carrying the major share of the burden. There is a Korean division which is fighting there and there are Australian and New Zealand troops.

Senator GORE. While there is one Korean division there, how many divisions do we have in Korea?

Mr. POATS. Two.

Senator GORE. So we have two in Korea and Korea has one in Vietnam and we are paying for all three.

Mr. BELL. I beg your pardon. There are other troops as well as U.S. troops in South Vietnam. There are not as many other troops as I would like to see or you would like to see, Senator.

Senator GORE. I was particularly addressing my question to the participation of other free nations in the economic area.

Mr. BELL. On the economic side, I believe that we provided for the record last Friday a complete listing of the types and amounts, nature of economic aid which is going into South Vietnam from some 30 other countries. It is not in total nearly as large as I would like to see or I am sure you would like to see, Senator.

Nevertheless, it is significant. There are hundreds of people from France and Germany and Australia and other free world countries

who are in South Vietnam. There are millions of dollars worth of assistance of various kinds going in there each year. We have, as I say-I think we submitted it for the record on Friday-an eight-page summary listing each and all of these activities. To make my point clear, however, I would not argue at all that there is enough assistance from other countries. We want more, we are continually urging them to provide more.

Senator GORE. I realize, Mr. Bell, that the policies of other countries are beyond your grasp, but you are an agent of President Johnson. I raise this point to express my own concern at not only the mounting cost of this operation but, more importantly, the fact we are virtually going it alone militarily and economically in trying to save South Vietnam. I believe this must have been one of the purposes for which the President referred the issue to the United Nations. This country, with 6 percent of the world's population, must realize that there are bounds beyond which we cannot go, and still meet our own essential needs here at home. Other nations must be encouraged and persuaded to assist.

Mr. BELL. Right.

Senator GORE. Collective security has been violated in the case of South Vietnam. I hope we return to the practice of collective. security.

The CHAIRMAN. The Senator's time is up.

Senator Williams?

Senator WILLIAMS. Mr. Chairman, earlier the Senator from Alabama was gracious enough to yield to me and I used a good bit of the time and if he has questions I would like to return the favor to him

now.

Senator SPARKMAN. I would be pleased for the Senator from Delaware to go right ahead.

CORRUPTION AND CURRENCY BLACK MARKET OPERATIONS

Senator WILLIAMS. Mr. Bell, is it not true that to a large extent the problem of corruption relates back to the black market currency?

Mr. BELL. Well, in terms of the war effort, Senator, I would say that the most serious problem is not corruption in the standard sense, either with respect to American aid, where I believe it is relatively small, or in the currency market which has nothing to do-or very little to do with American aid. I think the most serious problem in South Vietnam in this field is preventing goods, such as drugs, medicines, explosives, chemicals from reaching the Vietcong.

Now, much of this is not a problem of corruption in the standard sense. The Vietcong has civilian agents who can go into the markets in Saigon or the coastal cities and simply buy from drugstores or other stores items that the Vietcong need. The problem for us and for the Government of Vietnam is to prevent those items from being transported to the Vietcong back in their jungle bases.

Now, this is a very significant problem from the standpoint of the effective prosecution of the war effort.

Senator WILLIAMS. I understand that, but when they go into these drugstores to buy goods, do they approach the merchant on the basis

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that they are willing to pay for them in the ratio of 150 piasters to the dollar?

Mr. BELL. No, sir; they don't use dollars, not at all.

Senator WILLIAMS. I mean the prices can be higher, they offer them more money than they can get if they sell it

Mr. BELL. No, sir; they appear as ordinary customers and they buy at ordinary prices.

Senator WILLIAMS. Mr. Bell, would you please furnish the committee with the names of each military and civilian employee of the U.S. Government over the past 20 years who, during his employment, was found to be engaged in currency black market operations. I want this report to name their position of employment at time of black market operations, along with a record in each case of all subsequent employment as employees, consultants, advisers, or contractors of any governmental program and to list their salaries at time of their subsequent job. This report does not need to include the names of minor military personnel who blackmarketed cigarettes, and so forth, during his regular military assignment.

Mr. BELL. I would be glad to do that, Senator. I think the number will be quite small.

Senator WILLIAMS. I hope it will.

Mr. BELL. Right. I would be glad to do so.

Senator WILLIAMS. I hope you will furnish that. Because this is not a new problem just developed in South Vietnam.

Mr. BELL. That is right, sir.

Senator WILLIAMS. It is one that has been troubling us for the last 10 years in many of the southeast Asia countries.

Mr. BELL. Not only in southeast countries.

Senator WILLIAMS. And in many other countries.

Mr. BELL. Some of the largest cases of this type were in Germany after World War II.

Senator WILLIAMS. In all of the countries where we have had problems dealing with related currencies. Suppose you go back and furnish a list of the employees of the government involved.

Mr. BELL. I am not speaking of the military; I am speaking of the civilian.

Senator WILLIAMS. You can put the military if you want but separate it.

(The information requested had not been received at the time this hearing went to press.)

CONTINGENCY FUND REQUEST

Now, as to the $100 million that you are asking for the contingency fund--how much did we appropriate to the contingency fund in fiscal 1966 ?

Mr. BELL. $50 million.

Senator WILLIAMS. $50 million. And how much is asked in the 1967 budget?

Mr. BELL. $70 million, sir.

Senator WILLIAMS. Is it going to take another hundred million between now and June 30? Is this $70 million a realistic figure or

is this a part of the plan to put in for more supplemental requests so that you can reduce the request for fiscal 1967?

Mr. BELL. No, sir.

Senator WILLIAMS. I am not objecting to the $100 million, but I just want to know if this is a little fancy bookkeeping.

Mr. BELL. No, sir. We are asking for a generous fund for the remainder of the fiscal year, because we have run into a lot of changing circumstances this year and a lot of unanticipated requirements financed from the contingency fund. We don't know that we will use any of this additional $100 million. I assume that there will be emergencies which will require us to use some of it. Assume that $50 million of it is used, Senator and $50 million is left over on June 30. At that time, under the normal timetable at which these things move, we will be testifying before either the House or the Senate Appropriations Committee on our appropriations for fiscal year 1967. It has been our practice, under my administration, to put before those committees the amounts of funds that we have remaining on June 30 in the expectation that they would be subtracted from our request or that the appropriation for fiscal year 1967 would be reduced by a corresponding amount. I don't know what part, if any, of this $100 million will be left on June 30. But if it is-if any is left, it will be properly related to the appropriation requirements for fiscal year 1967, so they might be reduced accordingly.

Senator WILLIAMS. All right.

Now, in other words, whatever is left of this $100 million you are recommending that we as Members of Congress reduce your request for $70 million next year down proportionately?

Mr. BELL. Yes.

Senator WILLIAMS. And if you have $70 million left, we will strike it out entirely next year; is that correct?

Mr. BELL. Yes, assuming the $70 million were reappropriated. Senator WILLIAMS. Getting back to what I said before, we are in effect appropriating in a supplemental bill money which would nor mally be requested in the 1967 budget.

Mr. BELL. No, sir; because we have indicated a need for we think we would like to have-a $70 million contingency fund for fiscal year 1967. If the $100 million we are now asking for it not used in the present fiscal year, it will revert to the Treasury unless reappropriated. Suppose $70 million of it were left on June 30; the Congress would either reappropriate this $70 million or appropriate a new $70 million. In either event, we would only have $70 million in fiscal 1967 and there would be no additional funds available in fiscal 1967 because of the $100 million we are asking for now.

JUSTIFICATION FOR CONTINGENCY FUND REQUEST

Senator WILLIAMS. Would you tell this committee what worldshaking development that you foresee in the next 4 months would decrease your need to $100 million whereas you will only need $70 million in the 12 months beginning July. You must be figuring something extraordinary will be handled and disposed of by July 1.

Mr. BELL. If we had a specific proposition before us for the use of any of these moneys, we would, of course, be asking for it on the basis

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