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STEPHEN G. PORTER, Pennsylvania, Chairman. JOHN JACOB ROGERS, Massachusetts.

HENRY D. FLOOD, Virginia. HENRY W. TEMPLE, Pennsylvania.







FRANK L. SMITH, Illinois.




HOUSE OF REPRESENTATIVES, Washington, D. C., Wednesday, January 7, 1920. The committee met at 10.40 o'clock a. m., Hon. Stephen G. Porter (chairman) presiding.

The CHAIRMAN. Mr. Lansing, the committee is taking up the appropriation bill this morning and we will be glad to hear any suggestion you have to make.


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Secretary LANSING. Mr. Chairman, the estimate for this year for our foreign intercourse, that is, from 1920 to 1921, shows a net increase of $1,481,439.34. Now, of that amount almost $1,000,000 is made up of expenses of international undertakings to which the United States is legally obligated by treaty, or else it is obligated by the spirit of friendship and comity. The items to which I refer in that particular are a building in which to house the International Trade-Marks Bureau at Habana, of which the share of the United States is $825,000; then there are other international undertakings of $112,950. That leaves an increase in regard to the force, the diplomatic and consular force, of $543,479.24. This increase may be lumped into three items: Increase in salaries of ambassadors and ministers, $174,333; increase in the salaries of secretaries in the diplo.matic service, $179,041.67; increase in appropriation for post allowances, $200,000. Now, in regard to these items which I have referred to, I wish to confine my remarks to the last three. The others will be explained to you by Dr. Rowe and Mr. Carr, who have had to do with the international undertakings.

The CHAIRMAN. That is, you will confine yourself to the increase in salaries of ambassadors and ministers and secretaries and post allowances ?

Secretary LANSING. Yes, sir; in round numbers, $550,000.
The CHAIRMAN. How much is the post allowance?
Secretary LANSING. $200,000 increase. These are increases.

The CHAIRMAN. I thought you said $200. I wondered about it at the time.

Secretary LANSING. General increases in salaries have not been included in the estimates because that is contrary to the policy which has been adopted by the Executive; that is, not to include any increases of salary. The increases in salaries of heads of missions and of secretaries have been included because they were embraced in the estimates of last year. We have simply adopted the estimates of last year in that particular. They are not, therefore, new items. The importance of making proper provisions for the conduct of our foreign affairs may be briefly set forth as follows: In the first place, it is a matter of common knowledge, I assume, that we have achieved a position in the world and of importance to the world which we never anticipated, and great opportunities have been opened for the development of our commercial and industrial life. It is something I scarcely need to explain or expand upon, because

I it is so patent to all of us, that these opportunities are awaiting us and that if we do not take advantage of them now we lose them, We have loaned approximately $10,000,000,000 to 11 foreign countries. Therefore, we have a financial interest in the world that we never had before. Of course, we have a monopoly to-day of the gold of the world, and we are the principal source of supply of raw materials for the industries of the world. Then we have a great merchant marine, a large part of which is Government owned. There are claims on the part of our citizens which, of course, are really claims of this Government against other nations growing out of the war, of about $1,000,000,000 that will have to be readjusted.

The CHAIRMAN. Do you include that in your estimate against Mexico?

Secretary LANSING. I think there are included about $30,000,000. The Mexican claims will be considerably enlarged when it comes to an adjustment. I do not believe this billion dollars includes all the claims, by any means. I think there are many more besides; but, of course, that requires a very considerable service abroad in handling the claims, if they can be adjusted without going through the formalities of a judicial proceeding.

The CHAIRMAN. May I interrupt you a moment? In what form is the evidence of this indebtedness?

Secretary LANSING. Of the claims?

The-CHAIRMAN. Yes; the claims against foreign countries—the $10,000,000,000?

Secretary LANSING. That is something that the Treasury must answer. I would not want to speak on that except in round figures.

Mr. FLOOD. Mr. Secretary, you are referring to claims outside of loans?

Secretary LANSING. Yes; the billion dollars is outside of the loans. Mr. FLOOD. How much?

Secretary LANSING. A billion dollars. The loans amount to something like $10,000,000,000. Now, we have a very considerable monetary interest in Europe.

Mr. Flood. Mr. Secretary, would you mind stating the character of those billion-dollar claims?

Secretary LANSING. What they are ?
Mr. Flood. Yes, sir.

Secretary LANSING. It would be very hard for me to go into the details of them. They cover submarine sinkings; they cover claims against Great Britain while we were neutral, as to seizure of vessels, and other losses of a like nature.

Mr. Flood. How many nations have claims of that kind against them?

Secretary LANSING. I do not think I could answer that question, but we must have them practically against nearly every nation entgaged in the war. I do not believe there is any nation that we have no claims against. I can give you a full statement in regard to that.

Mr. Flood. I would like to see that myself. I do not know about the other members of the committee.

Claims of the United States against foreign Governments will amount to in the neighborhood of a billion dollars or more. Of these about $800,000,000 will lie against the Central Powers, and approximately $30,000,000 against Mexico.

It is to be understood that these amounts are derived from statements of individuals and are not the result of investigations by the Department of State.

The claims arise out of such events as the loss of life and property due to submarine warfare, the injury to or destruction of American property in territory of the enemy or allies of the enemy, or territory which has been in enemy occupation; the detention or seizure of American-owned goods by countries associated with the United States in the present war; the loss of life by or personal injury to American citizens; the damage to or destruction of property in Mexico and other neutral countries.

The number of all of these claims is approximately 3,700. Many of these have been presented to the department as formal claims against foreign Governments prepared according to regulations of the department as distinguished from claims which have been filed in less formal manner. The claims prepared include approximately 450 against Germany, 30 against Austria, and 85 against Turkey. Total, 565.

About 125 claims have been filed against Great Britain, and there are, in addition, on record some 800 cases of seizure or detention of goods by Great Britain.

The CHAIRMAN. In what way will these claims be adjusted, by a commission of some sort ?

Secretary LANSING. That depends entirely upon the success of our efforts abroad. If we can avoid a commission, it is better. If we can, adjust them by direct diplomatic means. It saves very considerable time. A claims commission always drags, and as a result payments are deferred. If we can do it by direct negotiation, we save time and our people get their money just that much sooner.

The CHAIRMAN. There is no doubt about that.

Secretary LANSING. So I point out to you that we have at least ten times as much interest in a monetary way in Europe as we ever had before. Since 1913 our ships engaged in foreign trade have increased 357 per cent. Our passport correspondence has increased 991 per cent, and the foreign trade has increased over 100 per cent, all of which indicates that we are going to have a very heavy burden imposed upon our diplomatic and consular officers abroad, a much heavier one than they had before. Then, of course, we still have war going on in Russia and Siberia, Turkey is in a state of ferment, and the relations between this country and Germany and Austria and Hungary have not yet been restored.

We are being constantly urged to give assistance to the various countries in Europe that are suffering, and economic assistance is required. That means renewal of trade relations. The result is that we have very heavy responsibilities imposed upon us, and we have to



discharge our legal and moral duty in safeguarding the interests of our own Government and people abroad. We have to utilize the great opportunities we have in the matter of commercial and industrial interests, and, in addition, we must furnish economic aid to these countries. That does not necessarily mean that we should give them money, but we must provide so that they can restore themselves to a more or less normal condition.

Mr. FLOOD. Give them a credit?

Secretary LANSING. Possibly a credit for the purpose of conducting their trade relations with us in a proper way. Of course, this question of exchange is a very serious one, and how soon that will be adjusted no one can tell, but I am not enough of a financier to give an opinion in the matter at all. Our political and economic interests will become more or less fused. They are very closely related, and when you come to the directing influence it is, in the last analysis, political; I mean internationally speaking it is political.

Our economic policies are very closely allied to our political policies and they have to be directed more or less by the organization which has control of political matters in the world. I think I spoke to some of you gentlemen here once before about reorganization of the State Department. Mr. Porter knows about it and Mr. Flood, I know, remembers it, because he was here at the time, and some others know about it. Of course, that is right in line with any expansion that we might make in our foreign service. If we do not have our foreign service expanded, we can not do the work any more than we can do the work if we do not reorganize the Department of State on a more businesslike basis than we have to-day in order to meet the present conditions.

Mr. Flood. What do you think of the chances of getting the enlargement you ask for in the State Department?

Secretary LANSING. I do not know. I thought there was no use in discussing it before the Congress reconvened. Of course, if the treaty is approved, it will impose upon us a very considerable burden on account of the number of commissions that we may have to enter upon and which will all come under the Department of State.

Mr. ACKERMAN. If it is approved in the form in which it is now, without regard to reservations or no reservations, about how much money would that require ?

Secretary LANSING. I have not estimated that so far, but as I recall it there are something like 23 or 24 missions provided for in the treaty, which is quite a heavy burden in itself to handle. Then we have, I think, in the neighborhood of 20, and maybe more-international commissions that we have to conduct.

Then there is another question of great importance which ought to be considered in this relation. The activities of our Government in the foreign field, although extensive, have been conducted by several departments independently of each other, following no welldefined line of coordinated effort and without regard to any wellconceived general policy. The question of duplication of work or of effort in the foreign field is secondary to the broader considerations of unity of purpose and the force to be gained through a concentration of energy under a central control. The day has passed when this Government could undertake to conduct its foreign affairs with scat

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