The basic objectives of the Bureau of Inter-American Affairs are to protect and advance the interests of the United States in the Latin American Republics, and within the framework of the inter-American system, to strengthen these countries for defense purposes; to cooperate with them in the achievement of political democracy and stability; to maintain and improve economic cooperation and cultural exchange; and to establish friendly relations based on genuine understanding and mutual respect.

Major steps being taken to accomplish our objectives are:

Preparation for the 10th Inter-American Conference scheduled for March 1954. The Bureau will coordinate and conduct the United States participation in this Conference which will involve the interest of many Federal agencies and will take in the whole range of inter-American political, economic, juridical, social, cultural, and organizational problems. In fiscal year 1955, a conference of chiefs of mission will be held to discuss and plan arrangements for carrying out programs and resolutions adopted at the 10th Inter-American Conference.

Maintain a very close relationship with the other members of the Organization of American States to develop a mutual security program, consistent with the political and economic potentials of each country, which will create a force capable of defending the continent against any foreign aggression or any form of penetration which is alien to the principles of the OAS. Our Latin American neighbors are rising in political importance and their support of U. N. objectives, as well as our ability to assist them, will depend largely on our efforts to achieve full mutual cooperation.

Maintain the principles of nonintervention, juridical equality of nations, solution of inter-American disputes by peaceful means, and consultation in important matters of common interest.

Continue the review of economic conditions in Latin America and the development of regional policies, plans, and agreements designed to stabilize or improve the economy of our friendly Latin American allies; to provide necessary technical assistance; to obtain favorable reception for private capital investments; to increase export-import trade and promote development of strategic materials; and to maintain cooperation on control of exports of military and strategic materials from the continent.

Strengthen the information, cultural, and exchange programs conducted in Latin America to make them a more effective instrument for explaining our objectives and for improving friendly relations.

Enforce the President's economy program by review of all United States activities and expenditures in Latin America; and assure that efficient operations with minimum of expense are achieved in the diplomatic, economic, and consular activities at Foreign Service posts in Latin America.

OFFICE OF THE ASSISTANT SECRETARY

The staff of this Office includes, in addition to the Assistant Secretary and his deputy, a policy information officer and his assistant, the Executive Director and administrative staffs. These staffs provide the executive direction and management for the conduct of relations and Foreign Service activities at 20 missions, 2 consulates general, 31 consulates and 26 consular agencies in Latin America. Included in this staff are six positions to carry out the responsibilities of the Bureau with respect to the educational exchange program in the area, for providing material for the official information program, and furnishing area guidance material to the United States Information Agency.

OFFICE OF REGIONAL AMERICAN AFFAIRS

This Office takes action on regional matters that are of concern to all, or a substantial portion, of the Latin American countries. In addition, it advises the country-desk officers on certain technical matters and country problems, especially those arising from application of regional or other international agreements. Among specific responsibilities of the Office are backstopping the United States representatives to the Council of the Organization of American States (OAS), the Inter-American Economic and Social Council (IAECOSOC) and the various other inter-American organizations, and providing leadership in the execution of policy having application to the Latin American region. To carry out these responsibilities the office has a staff of advisers and functional specialists in the political, economic, labor intelligence, social, and organizational fields.

OFFICE OF MIDDLE AMERICAN AFFAIRS

This Office has country desks which conduct and supervise United States foreign relations with Mexico, Guatemala, El Salvador, Honduras, Nicaragua, Costa Rica, Panama, Cuba, Haiti, and the Dominican Republic. It also collaborates with the Bureau of European Affairs on matters relating to European possessions in the Caribbean area. The area involved, which of course includes the Panama Canal Zone, is very important and sensitive as far as the United States security system is concerned, as well as our import-export trade and our supplies of certain essential raw materials. Relations with these countries are affected by certain unstable political conditions, by anti-United States sentiment in some cases and by the serious threat to our security and objectives presented by the encroachments of Communist sentiment.

OFFICE OF SOUTH AMERICAN AFFAIRS

This Office has country desks which are responsible for the conduct of United States foreign relations with the countries of Venezuela, Colombia, Ecuador, Peru, Bolivia, Chile, Argentina, Brazil, Paraguay, and Uruguay. These countries are a major area of United States private investment and are the producers of strategic materials such as oil, copper, lead, tin, zinc, quebracho, and other items. The increasing importance of international trade and the rise of nationalism, and economic instability in some countries, have placed increased burdens on the area.

GENERAL STATEMENT

For fiscal year 1955, the budget request for the Bureau of Inter-American Affairs is $650,315 for domestic expenses and $6,921,533 for operating 53 Foreign Service establishments throughout Latin America. Our main work is concerned with the conduct of foreign relations with the 20 other American Republics and to perform foreign economic reporting and consular services in the Latin American

area.

Personnel assigned to this area have been substantially reduced since the end of the war. Since 1946 our domestic staff has been reduced from 151 to 91 or 39.7 percent and the Foreign Service from 2,203 to 1,229 or 44.2 percent. During this period our responsibilities have increased, and our political and economic problems are much more difficult and complex than they were in 1946. Communism and nationalism are more formidable now than they were formerly. American investments in the area have increased and now exceed $6 billion. Exportimport trade with Latin America increased from $3.8 billion in 1946 to $6.3 billion or 65.8 percent in calendar year 1953. With the advent of better facilities, the amount of travel has increased with the result that visa services have increased 53.3 percent since 1946 and are being accomplished with fewer posts.

Specific changes in personnel and activities since the end of the war at Foreign Service posts in Latin America may be summarized as follows:

Posts. Twenty-nine consulates and vice-consulates were closed since 1946, of which four were closed at the beginning of the fiscal year 1954. This has not hampered the performance of work and better efficiency was achieved by centralizing the work among the remaining 53 posts. The need for maintaining consulates is under continuous review and there are indications that two new posts will soon be required in Brazil and Venezuela. No provision has been made in this budget request for additional posts.

Political and labor.-In addition to the chief of mission and his deputy who provide executive direction over all United States agencies and programs in the 20 Latin American countries, there is a limited number of officers and clerks who work on the collection, analysis, and reporting of information on the domestic political and labor developments in those countries. During the period from 1946 to fiscal year 1955, this staff has been reduced from 127 to 43 or 66.1 percent. At present there are no political or labor officers in eight of the embassies, and this budget does not provide for any additional officers. However, the conditions are such that steps must be taken to strengthen and improve these activities which are becoming increasingly important because of the threat of communism and nationalization; political unrest and increased activities of subversive elements; and the steadily developing labor movement and its important role in the political life and activities within the countries.

Economic.-The Foreign Service is responsible for the collection, analysis, and reporting of economic data as requested by the Federal agencies through the comprehensive economic reporting program (ČERP) which is coordinated through the Division of Foreign Reporting, Department of State. The Foreign Service also performs a vital role in promoting trade by negotiating trade agreements and reporting on trade controls, tariffs, legislation, and other economic devices which tend to restrict trade. These staffs prepare trade directories and lists and answer numerous trade inquiries. They assist American and foreign businessmen on trade and investment opportunities, explaining American customs and import regulations, and taking action on discrimination practices against American business interests.

During the period from 1946 to fiscal year 1955, the staffs engaged in these economic activities were reduced from 540 to 210 or 61.1 percent, and the volume of reports declined from 57,104 to 20,467 or 64.1 percent. The present volume of reporting is based on reporting prescribed by the CERP system, but we are not quite able to produce all requested reports with the present level of personnel.

There are at present backlogs of 9 percent in CERP requested reports and 27 percent in single time requests. It is estimated that 32 more positions are necessary to clear up this work, but no provision has been made in this budget for these additional personnel.

Consular services. Since 1946 the volume of citizenship, passport, invoice, and notarial and protective services has been maintained at a constant level, but visa services have increased 53.3 percent and the volume reached 215,298 for fiscal year 1953. A total of 145,709 visas have already been issued during the first 6 months of fiscal year 1954. The volume will be even greater since this Bureau has instructed the posts to accelerate the issuance of visas to crewmen as prescribed by the Immigration and Nationality Act. Based on the issuance of crew list visas and estimates from posts, it appears that 18,000 crewmen will require visas in the Latin American area. As of March 31, 1954, visas have been issued to 2,461 crewmen and the applications of 989 others are now being processed. Up to this point, the increased demands for all consular services are met, although the staffs have been reduced since 1946 from 513 to 435, or 15.2 percent. This was accomplished by consolidating consular districts, centralizing visa offices, and streamlining the processes. On the other hand, visa applications are given more careful investigation and screening, and indications are that the visa load will increase at least 5 percent more during the next year. It is estimated that 29 additional consular positions will be required to meet this increased demand during fiscal year 1955, but they are not provided for in this budget. Consular operations in this area are almost self-sustaining. Fee receipts have increased from $614,725 in 1946 to $1,319,374 in 1953, and on the basis of current collections it will exceed $2 million during fiscal year 1954. These receipts are deposited into the United States Treasury as miscellaneous receipts.

Administrative.-Since 1946 the Foreign Service administrative staffs engaged in accounting, communications, transportation, security, supply, and building services have been reduced from 995 to 461, or 46.33 percent. One hundred and eighty-eight of these were reduced since January 1, 1953, under the current economy program.

Economy program

During the Department's economy program in fiscal years 1953 and 1954, the domestic and Foreign Service operating expenses for the Bureau have been reduced $2,087,888, or 21.6 percent, below the actual obligations level of fiscal year 1952. A breakdown of this decrease by type of expense follows:

1. Personal services.-Domestic and Foreign Service positions were reduced from 1,822 to 1,320 or 502 at a gross saving of $1,864,078 (21.8 percent) in salaries and allowances. This included a decrease in domestic positions from 138 to 91 at an annual salary saving of $177,940 (21.8 percent), and Foreign Service personnel were reduced from 1,684 to 1,229 at an annual salary reduction of $1,316,751 (21.6 percent) in salaries. Allowances were decreased $369,387 (22.7 percent) and this included a saving of $53,485 in quarters allowances for marine guards who were placed in Government owned or leased quarters.

2. Travel. Reducea $40,141 or 25.8 percent. Travel from the Bureau was decreased $13,291 (52.1 percent) and field travel by $13,714 (17.2 percent). Automotive transportation expenses in the field were also reduced $13,136 (26.1 percent).

3. Communications. Field communications costs were reduced a net amount of $12,110 (10 percent), after absorbing a new cost of several thousands of dollars in pouch service costs which were taken over from the Post Office. In addition, outgoing telegraph volume from the Bureau was reduced by $7,032 (32.6 percent). 5. Post operating expenses. Reduced $119,149 (35.9 percent) including supplies and equipment which were decreased $115,170. Restrictions were applied to reduce inventories, and only emergency replacements or security equipment were purchased. Other miscellaneous post expenses were reduced $3,979 (9.3 percent). 6. Building expenses.-Reduced $52,410 (10.1 percent) which includes a decrease of $9,450 in official residence expenses, and $42,960 less in the cost in maintaining leased and Government-owned buildings for Foreign Service posts in the area. Chairman BRIDGES. Mr. Holland, will you discuss your request, please.

Mr. HOLLAND. Yes, I am delighted to have this chance to be here with you today.