credits owed to or owned by the Treasury of the United States. The testimony before the committee indicated that foreign currencies or credits were not being utilized to the extent they should."

JUSTIFICATION

The educational exchange program concentrates primarily on the interchange of persons between the United States and other countries and the development of projects which will further our objectives. The special role of the international educational exchange service is to encourage, facilitate and promote the interchange of those persons who in themselves and in their activities are significant in the formulation and maintenance of a favorable sentiment toward the United States. All such persons are "key" persons-newsmen, officials, intellectuals, for example-persons who have access to and can be influential in groups forming public opinion in foreign countries.

The House allowance of $12 million, which is a reduction of $10 million from the budget estimate of $22 million submitted to the Congress, will seriously curtail the educational exchange programs throughout the world. Even in the 20 countries where programs will be carried out under the authority of the Fulbright Act (Public Law 584, 79th Cong.) necessary dollar support costs including scholarships will have to be greatly reduced. All other programs throughout the world would have to be either eliminated or drastically reduced. The House action has the following effect on the program:

1. Reduction in grant program

The reduction in grant costs and program expenses amounts to $8,167,873. The House action necessitates the following reductions in program level. The number of grants on a worldwide basis will be reduced 2,344 below the planned level for 1956 and 1,877 below the 1955 level.

Of the 4,816 grants which would be available under the adjusted program, 4,377 would have to be in foreign currencies. These could only be used for the expenses of Americans going to the 20 countries where these foreign currencies are available or for the travel expenses of foreign grantees. The 1956 budget request included 1,471 dollar grants which would be awarded to some of the same foreign nationals who would receive foreign-currency grants. Under this reduction, this number has had to be reduced to 153, or by approximately 90 percent. Thus, in addition to the net reduction of 2,344 grants, an additional 1,318 dollar grants would have to be eliminated with the probability of an actual reduction of 3,662 in the number of grantees. (It is theoretically possible that foreign nationals awarded foreigncurrency grants for travel could obtain dollar support elsewhere, but only at the expense of program objectives. However, such nongovernmental dollar support is obtained as a result of the efforts of the contract agencies whose funds for such purposes are being proportionately reduced in this adjusted budget.) Consequently, the cut actually eliminates 3,662 grantees under the program.

These drastic reductions will result among other things in complete elimination of the program in 31 countries of the free world including such ones as Turkey, Peru, Sweden, Hong Kong, and the majority of the African countries.

Only $1,422,897 will be available for Public Law 402 grants unconnected with Public Law 584 foreign-currency operations. This represents a cut of 64 percent below the present level and 80 percent below the level planned in the President's request. This inadequate amount is all that will be available to cover the leader and specialist program in the 20 countries where there are Public Law 584 program and the entire program for all categories (including leaders, specialists, teachers, students, professors, researchers, and special projects) in all countries of the free world.

Sixty-three percent of the total appropriation will have to be used in only 20 countries for Public Law 584 foreign currency operations alone. The sweeping

reduction in the dollar request cuts the dollars available for United States expenses of foreign nationals who receive foreign currency travel by two-thirds below the present operating level. Thus, almost the entire cut will have to be applied to the foreign nationals coming to the United States. This will have the following effects:

(a) A lowering of selection standards because most of foreign currency travel grants will be awarded to those who can obtain private dollar resources for stateside expenses, scholarships, etc.

(b) An elimination or reduction of priority projects of political significance which depend on full grants (covering both dollar and foreign currency expenses) from this Government for their implementation.

(c) A greater drain on United States educational institutions for free scholarships to support foreign nationals who get only their travel.

(d) An increase in the number of Americans participating in the Public Law 584 program.

Disproportionate cuts for the various areas will result from the foreign currency limitation, which although it makes possible the provision of sufficient funds for Public Law 584 foreign currency grants in 20 countries, will limit severely the dollars needed to assure effective utilization of these funds and to carry out operations under Public Law 402 throughout the world. The following table shows why this is the case:

Thus, the severe dollar cut makes impossible the increased programs which had been planned for the Far East, Near East and Latin America. Instead it greatly increases the percentage of the program in Europe and will result in a distribution of grants throughout the various regions of the world entirely out of line with the original program plan for the 1956 fiscal year.

In addition to funds for the restoration of grants to the planned level, it is also important that program items, such as foreign grantee orientation which must be reduced by $160,856, be restored in order to operate an effective program.

2. Reduction in aid to American-sponsored schools in Latin America

The 1956 budget request of $250,000 for aid to American-sponsored schools in Latin America must be cut back to the 1954 level of $128,250, a reduction of $121,750.

Assistance to these schools is necessary in view of the role of these schools in moulding opinion and training national leaders favorable to the United States. Reports from our diplomatic missions consistently attest to the importance of our aid contributing to the effectiveness of these schools, which enroll approximately 70,000 students each year, and request reinforcement of our effort to strengthen inter-American solidarity and combat alien ideologies.

The reduction from the 1956 request will not make it possible to maintain adequate professional services and provide sufficient guidance to these schools to maintain United States standards of teaching and administration and to reflect the North American way.

3. Deletion of $2,400,000 limitation for administrative expenses

The limitation of $2,400,000 for administrative expenses of the $12 million program approved by the House is in proportion to the amount of $4,110,377 requested for 1956 for a $22 million total program. However, the limitation amount is not adequate to carry out the 1956 program and to complete the 1955 program. The 1955 program which totaled $18,577,547 carries over into 1956 since most of the grantees to whom awards are made in 1955 will be on their grants in 1956. Necessary services by the International Educational Exchange Service and its contracting agencies must be provided in implementing this

Any

program as well as planning and awarding grants.under the 1956 program. such limitation on administrative expenses will seriously impair the carrying out of a program on which commitments have already been made.

It was stated in the House report that the administrative expenses for this activity have been entirely too high, and therefore a limitation was placed in the appropriation text. The request of $4,110,377 for this purpose in 1956 represents 18.7 percent of the total appropriation request, but represents only 13 percent when compared with the total estimated program for 1956 of $31,530,000. This includes in addition to the appropriation request, $266,622 in program funds available under the Finnish program (Public Law 265, 81st Cong.) and $9,263,378 in private funds for support of the grant program included in the 1956 budget.

International educational exchange activities-Effect of House of Representatives action (H. R. 5502) on 1956 educational exchange program

14. United States Advisory Commission.