The Budget provides for continuation and desirable expansion of the
research activities that are carried on throughout the Federal
establishment and through previously authorized grants to the States.
Additional appropriations will be required for the proposed central Federal
research agency which I recommended last September 6. That agency will
coordinate existing research activities and administer funds for new
research activities wherever they are needed; it will not itself conduct
research. The plan contemplates expenditures through the new research
agency of approximately 40 million dollars for the first year.
These amounts are small in relation to the important contribution they can
make to the national income, the welfare of our people, and the common
defense. Expenditures must be limited for the time being by the capacity of
research agencies to make wise use of funds. The maintenance of our
position as a nation, however, will require more emphasis on research
expenditures in the future than in the past.
Educational expenditures will require a significant share of the national
income in the fiscal year 1947. State, local, and private expenditures for
the current support of elementary, secondary, and higher education are
expected to be substantially above 3 billion dollars in that year. These
nonfederal expenditures will be supplemented by Federal expenditures
estimated at 625 million dollars in the present Budget. Of this amount, the
estimate for veterans' education, as previously mentioned, is 535 million
dollars. Other amounts include 21 million dollars for the support of
vocational education in public schools, 5 million dollars for the
land-grant colleges, 50 million dollars for the present school-lunch and
milk program, 1 million dollars for the Office of Education, and
approximately 13 million dollars for various other items. In view of the
major policy issues which are still under study by the Congress and the
Administration, no specific amount has been determined for the Federal
grants, previously recommended in this Message, which would assist the
States generally in assuring more nearly equal opportunities for a good
education.
Notwithstanding the urgent need for additional school and college
buildings, careful planning will be required for the expenditures to be
made under the proposed legislation to aid the States in providing
educational facilities. A major share of the grants for the first year
would be for surveys and plans.
I have already outlined the broad objectives of our foreign economic
policy. In the present section I shall indicate the Federal outlays which
the execution of these programs may require in the fiscal years 1946 and
1947.
(a) On the termination of lend-lease, the lend-lease countries were
required to pay for goods in the lend-lease pipe line either in cash or by
borrowing from the United States or by supplying goods and services to the
United States. Credits for this purpose have already been extended to
Soviet Union, France, the Netherlands, and Belgium amounting to 675 million
dollars. The settlement credit of 650 million dollars to the United Kingdom
includes an amount preliminarily fixed at 118 million dollars which
represents the excess of purchases by the United Kingdom from the pipe line
over goods and services supplied by the United Kingdom to the United States
since VJ-day and the balance of various claims by one government against
the other.
Credits are also being negotiated with lend-lease countries to finance the
disposition of lend-lease inventories and installations and property
declared to be surplus. For instance, 532 million dollars of the settlement
credit to the United Kingdom is for this purpose. These credits will
involve no new expenditures by this Government, since they merely provide
for deferred repayment by other governments for good: services which have
been financed from war appropriations.
(b) Expenditures from the appropriations to United Nations Relief and
Rehabilitation Administration, which were discarded under war expenditures
above, are estimated to be 1.3 billion dollars in the fiscal year 1946 and
1.2 billion dollars in the fiscal year 1947.
(c) To assist other countries in the restoration of their economies the
Export-Import Bank has already negotiated loans in the fiscal year 1946
amounting in total to about 1,010 million dollars and an additional 195
million dollars will probably be committed shortly. The Bank is also
granting loans to carry out its original purpose of directly expanding the
foreign trade of the United States. In this connection the Bank has
established a fund of 100 million dollars to finance the export of cotton
from the United States. The Export-Import Bank has thus loaned or committed
approximately 1,300 million dollars during the current fiscal year and it
is expected that demands on its resources will increase in the last 6
months of the fiscal year 1946. Requests for loans are constantly being
received by the Bank from countries desiring to secure goods and services
in this country for the reconstruction or development of their economies.
On July 31, 1945, the lending authority of the Expert-Import Bank was
increased to a total of 3,500 million dollars. I anticipate that during the
period covered by this Budget the Bank will reach this limit. The bulk of
the expenditures from the loans already granted will fall in the fiscal
year 1946 while the bulk of the expenditures from loans yet to be
negotiated will fall in the fiscal year 1947. In view of the urgent need
for the Bank's credit, I may find it necessary to request a further
increase in its lending authority at a later date.
(d) The proposed line of credit of 3,750 million dollars to the United
Kingdom will be available up to the end of 1951 and will be used to assist
the United Kingdom in financing the deficit in its balance of payments
during the transition period. The rate at which the United Kingdom will
draw on the credit will depend on the rapidity with which it can reconvert
its economy and adapt its trade to the postwar world. The anticipated rate
of expenditure is likely to be heaviest during the next 2 years.
(e) Since the Bretton Woods Agreements have now been approved by the
required number of countries, both the International Monetary fund and the
International Bank for Reconstruction and Development will commence
operations during 1946. The organization of these institutions will
undoubtedly take some time, and it is unlikely that their operations will
reach any appreciable scale before the beginning of the fiscal year 1947.
Of the 2,750 million dollars required for the fund, 1,800 million dollars
will be provided in cash or notes from the exchange stabilization fund
established under the Gold Reserve Act of 1934. The remaining 950 million
dollars will be paid initially in the form of non-interest-bearing notes
issued by the Secretary of the Treasury. It is not anticipated that the
fund will require in cash any of the 950 million dollars during the fiscal
years 1946 and 1947. Consequently, no cash withdrawals from the Treasury
will be required in connection with the fund in these years.
The subscription to the Bank amounts to 3,175 million dollars. Of this
total, 2 percent must be paid immediately and the Bank is required to call
a further 8 percent of the subscription during its first year of
operations. The balance of the subscription is payable when required by the
Bank either for direct lending or to make good its guarantees. It is likely
that the United States will be required to pay little if any more than the
initial 10 percent before the end of the fiscal year 1947.
I anticipate that net expenditures of the Export-Import Bank and
expenditures arising from the British credit and the Bretton Woods
Agreements will amount to 2,614 million dollars, including the noncash item
of 950 million dollars for the fund, in the fiscal year 1946, and 2,754
million dollars in the fiscal year 1947.